Chevron Goes the "ExtraGood" Mile

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Chevron Goes the "ExtraGood" Mile

By Renee M. Covino

SAN RAMON, Calif. -- With traditional profit sources drying up and foodservice out in front as the new "staff of life" for c-stores—Chevron is not about to be left in the dust.

And so its ExtraMile c-stores are currently rolling out a food destination identity known as "ExtraGood to Go," a concept meant to awaken customers’ senses to a more targeted and appealing food and beverage extravaganza, convenience-style.

"We have, by far, the strongest petroleum brand in the West. Chevron holds the No. 1 market share and brand value. All the research in any respect shows we are clearly ahead on that level," said Danny Roden, vice president of Chevron’s Global Marketing for the Americas, in a one-on-one interview with CSNews Online. “But we felt in order to compete with supermarkets and other food players, we needed to empower our franchisees with a greater strength in foodservice. ExtraGood to Go offers greater potential for success—and with it, we can offer our franchisees much greater buying power with better margins on the food side."

Additionally, the program hits target customers right where they want it most—in their stomachs.

"Foodservice is a very important part of our business because it’s important to our target customer, the heavy c-store shopper," said Nancy Cabell, Chevron’s franchise CVP program consultant. "We know they’re coming in very frequently and one of the reasons they stop in is to get food, so it’s important that we have a consistently good offering. These customers are important to our overall business, too, because when they buy food, they often buy at least one other item—such as a bag of chips or a drink—so we see this as a key profit opportunity."

In pilot tests earlier in the year, ExtraGood to Go, or EGTG, proved to be squarely on track. "Sales increases in the food area were huge. We saw significant double-digit increases during the pilot program," Roden relayed.

Initially, the EGTG team, which includes Cabell and Don Tovar, category manager for Chevron’s U.S. foodservice, were unsure how quickly a program of this scale could be executed. "But after the first meeting with our management team, they said, ‘We love what you guys are doing, how do we deliver this in 2009?’" Tovar explained.

Leveraging the Economic Downturn
The economic downturn provided more incentive to get the first phase of EGTG up and running. "We view the economic downturn as a really good time to regroup and build our business, and get more food customers coming in," said Cabell. "Our business doesn’t stop just because there’s a recession."

In fact, during these times, the company is seeing customers trading down. We’re getting customers now from Starbucks, other restaurants and foodservice operations," said Tovar.

And so, with a lot of management support and a team of resources behind the effort, all 450 ExtraMile sites are targeted to be converted to the new EGTG program by Aug. 1.

"We’re really pleased with how it’s going, and we intend to keep growing it," said Roden, explaining the company plans to add around another 100 franchisees to the program each year for at least the next two years. "By the end of 2011, we expect to have 400 franchisees total, in addition to the 250-plus company-operated ExtraMile stores, all converted over."

The modular design of the ExtraGood to Go program is a key part of its appeal, according to Tovar. "One of the main aspects was to make it scalable so that from a consumer perspective, they are effectively having the same experience across the network. That’s what truly makes this a success," he said. "All of the core elements are scalable to a variety of store formats—from a 500-square-foot Island Market-style site all the way up to our largest store format, which is about a 3000-square-foot interior floor plan. Frankly, we want it to be seamless to our customers whether they’re in a franchise store or a company-operated location.”

Foodservice Front and Center

Upgrading the look and presentation of the foodservice offering is ExtraGood to Go’s primary focus. "Everything we’re doing with this program is about getting food front and center to the customer," according to Cabell.

The core elements and offerings released now in the first phase of EGTG include:

-- At-the-pump Teasers -- These "column banner messages" are essentially "beauty shots" of key foodservice items, along with different daypart promotions, jutting out from the canopy columns at the gas pumps. "It establishes in our customers’ mindset that something different is happening inside," said Tovar. "It sets up the EGTG foodservice destination identity."

-- EGTG in Lights -- Stores that are big enough, and whose city ordinances allow for it, will sport an illuminated oval window sign that shows the ExtraGood to Go identity through to the outside. "We want to signal to customers that we have foodservice throughout the day, from very early in the morning until 10 o’clock at night," Cabell said. "Up to this point, we haven’t done a good job in the evening hours getting that message across. So this will give it good visibility even from outside the store."

-- Immediate Traffic Interruption -- Within 10 to 15 feet of a customer entering the EGTG store, "we put a traffic interrupter, we also call it a stanchion element," explained Tovar. It’s a freestanding floor banner that "catches a customer’s eye and is intended to influence [his or her] purchasing behavior," he said. "It’s a quad-panel approach and gives us the opportunity to talk about multiple foodservice messages." Similar to the outside banners, this element will feature monthly daypart promotional offerings and will highlight the EGTG foodservice identity.

-- HydraZone -- This is what Roden refers to as "the sexiest piece" of the ExtraMile format. It is basically a multi-tiered "open cooler" positioned right near the entrance, featuring many popular beverages including energy drinks and mineral waters. "The obvious question was, is it going to take away sales from the regular cooler doors? And we found it gives significant incremental sales, actually," Roden explained. "So it’s one of the pieces that really makes ExtraMile stand out—it’s very cleverly designed."

-- Van Houtte Coffee -- The Van Houtte brand is Canadian-based and is a coffee selection Chevron started using in its chain of stores in British Columbia, Roden said. "It’s a quality coffee offering that we decided to use down here as well now," he added. The coffee area is a self-serve island that is set up like a fancy coffee cart, complete with a striped yellow canopy overhead. Like HydraZone, its tall signage is purposely very visible upon entering the store.

-- Johnsonville Roller Grill System -- EGTG’s "link" program is exclusively partnered with Johnsonville. "They are premium sausage products, which we feel is appropriate," Tovar said. One of the best practices the EGTG program employs here is to bring all grill items up to "food safe temperature," which Tovar identifies as 165 degrees minimum, before they’re placed on the grill. "Because this is a primarily customer-serve environment, we want everything the customer sees to be ready-to-eat," he explained. "So rather than do that on the grill or a piece of equipment that is effectively intended as the merchandising vehicle for the customer, we’ve chosen to do it behind the scenes. We don’t ever want a customer to come up and be dissatisfied with a product because it isn’t already up to the food-safe temperature and immediately ready-to-eat."

-- Refined Food Warmer Program -- In the past, the food warmer program was one of "great latitude and flexibility -- too much so," said Tovar. "We think there was customer delivery inconsistency because of it." And so Chevron "pulled a fair amount of product out," including items such as egg rolls and pizza. Now, Don Miguel Monster Taquitos are featured on the top shelf, Foster Farms corn dog items on the middle shelf and Ruiz Tornado products on the bottom shelf. "Every store will have this merchandising configuration," he said. Stores will have flexibility in selecting flavor options and also in a "heat and eat" section of the deli case.

-- See-through Packaging -- ExtraGood to Go is working with foodservice manufacturers (such as Ruiz, Don Miguel, and Johnsonville) to make sure customers can use their sense of sight when choosing a packaged food item, by viewing it through a see-through "window" in the wrapping, according to Tovar. "That eye appeal is important, so we made this a presentation preference moving forward," he said.

-- Upscale Lighting -- Spotlights and lighting enhancements are now a standard part of the new foodservice program, both on the food items themselves and on menu boards. "Even the hot warmer and roller grill are now very illuminated," stated Cabell. "In the customer feedback we got, they really noticed the lighting—it shows we’re not hiding anything—we want the customer to see the products and feel confident that they are appealing and appetizing."

-- Iced Coffee Add-on -- Where there is space by the fountain beverages, EGTG stores are taking on a new iced coffee program. "We think it’s a huge profit opportunity," said Tovar. "Thanks to things like McCafe, we have customers coming in looking for that product. We’re working to get in on the front end of this opportunity in c-stores."

Even before the implementation of EGTG is complete, the team is already looking ahead to program enhancements such as more bundling of food and drink promotions, as well as the aforementioned "heat and eat" program, where customers can choose from a robust variety of meal items and heat them to their liking in the store’s microwave.

"We are also looking at fresh food supply chain enhancements," Tovar stated. "We’re already testing supplier capabilities to bring in fresh products such as fresh deli sandwiches, fresh fruit and fresh bakery goods. We think it’s a good way to go; it gives us a leg up to be more competitive with commissary operations."

But even before that gets underway, ExtraGood to Go will be rolling out phase one of the program. "In August, we will focus on tidying Phase One up, getting the execution locked down," Cabell explained. "Then in September, October and November, we will have aggressive promotion and advertising in each of our markets. We plan to have a fantastic second-half of the year."

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