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Capitalizing on the Opportunity in Dispensed Beverages

Food-forward retailers can't overlook the profit potential of hot, cold and frozen drinks.
Angela Hanson
Toby Sparks and Paul Servais at CFX 2024
Tony Sparks (left) and Paul Servais talk best practices and future trends in dispensed beverages.

TAMPA, Fla. — Succeeding in foodservice isn't achieved by laser-focusing on prepared food. Significant opportunity is available in dispensed beverages, which offer high margins, room for creativity and basket-building encouragement.

There are three major reasons to invest in dispensed beverages, according to Tony Sparks, former head of Customer Wow! at Curby's Express Market in Lubbock, Texas: the beverage customer has more brand loyalty; trip frequency is higher; and the quality perception between beverage and fuel is higher than between food and fuel.

[Read more: Developing the Recipe for Foodservice Success]

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Sparks and Paul Servais, retail foodservice director for La Crosse, Wis.-based Kwik Trip Inc., shared their insights on beverage best practices and future trends during Convenience Store News' 2024 Convenience Foodservice Exchange event.

"We went all-in on beverages," Sparks said, describing the development of Curby's expansive dispensed offering, which includes a tea bar with approximately 40 varieties, handmade Zoomies and Red Bull Refreshers energy drinks, Twisters craft soda concoctions and other c-store staples.

The stacked colors of Zoomies present a particularly good marketing opportunity on social media, he noted. But the beverage category as a whole is Curby's sales leader. "Between the grocery part of the business, the food part of the business and the beverage part of the business, the beverage by far is leading," Sparks said.

Curby's received the Gold Medal for Dispensed Beverages Innovator of the Year in CSNews' 2024 Foodservice Innovators Awards program.

At Kwik Trip, where dispensed beverages make up roughly 11% of foodservice category sales, the company has opted to deal with increased beverage competition by leaning into its self-serve offerings.

"We went after it with espresso machines that the guests could serve themselves, push a couple buttons, make a drink," Servais said. The chain later added self-serve smoothie machines and bean-to-cup coffee units. "We went after nitro last year, the nitrogen coffee cold brew, and it's crazy how well it sells already," he added. 

Investment in self-serve dispensed equipment over the past decade has provided some valuable reliability to the foodservice category, according to Servais. 

"How we look at it at Kwik Trip is, how do we compete with all the corner stores that now have coffee at some sort of drive-thru, and how do we compete with ourselves and our cooler doors? This has been our solution so far and it's working pretty well," he said. "Are we growing our sales at a really fast clip? No. But are we maintaining our numbers from the last couple of years with a little bit of growth? Absolutely."

To boost basket sizes, Servais suggests offering breakfast sandwiches near the coffee area, while Sparks recommends having fruit such as bananas, apples and oranges near dispensed tea, as they both have a healthier halo.

[Read more: Convenience Foodservice Alliance Convenes in Tampa]

"I know this is maybe counterintuitive, but if you have a Red Bull cooler close to the fountain machine, you'll get more traction out of that," Sparks added.

One trend that convenience retailers may want to think twice about is subscription programs, which have seen more experimentation in recent years but Servais doesn't view as having a strong future.

"The concept is grand, but the controls you can put on that are next to none," he said, noting that some c-store chains that previously launched beverage subscriptions have since backed off from the idea.

Sparks encourages retailers to take beverage inspiration from other operators, including non-convenience retailers. "The truth of it is that everything you see on that menu we copied from somebody else and tried to do it a little better," he said. "It wasn't necessarily that we were focusing on a certain demographic; it was more a response to what we were seeing in the marketplace."

The ninth-annual Convenience Foodservice Exchange event, held May 2-3, was an exclusive networking and experience-focused conference that gave attendees actionable knowledge and research to strengthen their foodservice business. 

Sponsors of the 2024 Convenience Foodservice Exchange included gold sponsors Ferrero Foodservice, Hunt Brothers Pizza LLC, The J.M. Smucker Co., Krispy Krunchy Chicken, LSI Industries, Southern Visions LLP, Stuffed Foods and Sugar Foods Corp.; silver sponsors Steritech and Supplyit By Jera Concepts; and Innovation Zone sponsors Bite Inc., Shiftsmart and Upshop. 

About the Author

Angela Hanson

Angela Hanson

Angela Hanson is Senior Editor of Convenience Store News. She joined the brand in 2011. Angela spearheads most of CSNews’ industry awards programs and authors numerous special news reports. In 2016, she took over the foodservice beat, a critical category for the c-store industry. 

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