C-Stores Make A Mark On Takeout Meal Market

Senior Editor

Fast feeders gain at breakfast, but c-store lunch sales show promise

Although restaurants continue to be the primary provider of takeout meals, convenience stores have become an ingreasingly important source of prepared foods, according to research by The NPD Group.

During the recession, c-stores have fared a bit better than quick-service restaurants (QSRs), Bonnie Riggs, NPD’s restaurant analyst, told Convenience Store News. “The vast majority of c-stores’ business is takeout, which accounts for 95 percent of all visits, with the greatest percent of the business occurring at the morning meal and snacks, but lunch meal business is growing strongly,” she said.

Thirty-four percent of c-store visits occur at breakfast, she said, noting 16 percent of visits take place at lunch time, and 5 percent at dinner time. A whopping 45 percent of visits for immediately consumed items were identified as snacks.

“While lunch only accounts for 16 percent of visits, that business is up 4 percent,” Riggs said, crediting retailers’ use of QSR tactics such as 99-cent menu items and combo meals. “That is pretty good considering lunch overall has been weak and the quick-service industry lunch business has been down 3 percent.”

Unfortunately for the c-store industry, its bread-and-butter breakfast business has fallen off 3 percent, as QSRs gained morning market share.

“Convenience stores have to do some marketing initiatives against the morning meal, because it’s such a big part of their business and because it is a daypart that has shown the strongest traffic growth longer term and improved traffic performance recently,” Riggs said, noting NPD predicted the a.m. daypart would be the first to show strength as the recession came to an end.

The c-store industry’s snack business, however, has remained stable. “In this downturn, ‘flat’ is the new up,” she said.

Despite great efforts to broaden the base, the convenience store take-out customer continues to skew toward younger males, Riggs noted. “Trying to attract women is an opportunity. What do you offer that would appeal to them for the morning meal or lunch? Lighter options and healthier items.”

Since women are the heaviest users of specialty coffee, Riggs advised convenience store operators to improve their quality and promote that aspect of the foodservice program. “Ice coffee and slush drinks also have high appeal for women,” she said.

Consumers told NPD they choose QSR restaurants over food stores because they or their kids like the fast feeders; the QSR satisfies a craving; or they want a treat or a specific menu item.

Generally, however, the number of quick-service restaurants declined 1 percent, or 2,521 units, from April 1, 2009 to March 31, 2010, according to NPD’s Spring 2010 ReCount, a census of U.S. commercial restaurant locations.

What’s more, visits to U.S. restaurants declined 3 percent for the year ended May 2010. Plus, consumer spending at restaurants declined 1 percent, the first decline in dollars NPD reported since it began tracking the foodservice industry nearly 35 years ago. Riggs noted the restaurant industry has never experienced such a prolonged period of weakness. “We’ve been through four recessions prior to this and have never seen anything like this,” she noted, adding the industry is entering its eighth consecutive quarter of negative traffic counts.

“We’ve never before seen a sales decline,” said Riggs. “That the convenience store industry is holding its own in this tough market means it obviously is doing something right — price, value and convenience.”

For comments, please contact Barbara Grondin Francella, Senior Editor, at [email protected].