Choosing the Right Road to Branded Foodservice

ATLANTA — Although many convenience store chains when moving into the prepared food market have launched their own proprietary foodservice programs, this isn't the only option for success. C-stores with fewer resources, or those who know their strengths lie elsewhere, may want to consider a branded program.

When VERC Enterprises Inc. began experimenting with foodservice in the 1980s, it didn't find success on its own. VERC partnered with Dunkin' Donuts to open the first small Dunkin' kiosk inside a c-store.

"And man, did that really work," President and CEO Leo Vercollone said during the "Branded Foodservice: Should You Partner or Do It Yourself?" educational session at last week's 2016 NACS Show. "If you own the morning, you own the day."

Today, VERC stores boast 22 Dunkin' Donuts units, multiple Subway locations, and a private-branded bagel shop.  "We do not operate any of these," explained Vercollone, who sees this as a good thing. "I have specifically proven I can't manage foodservice — it's wonderful to have someone who can."

Teaming with a branded partner, though, does bring some unique challenges that proprietary programs don't face. For instance, if there is a standalone Dunkin' Donuts location near a particular VERC store, Dunkin' may not want to compete with itself, leaving VERC unable to offer it at that store.

Like VERC, Pilot Travel Centers LLC is another chain that found little success when trying to do foodservice on its own, according to fellow NACS Show presenter Mark Romano, vice president of Pilot. However, today it has hundreds of branded foodservice programs with a wide variety of chain partners.

When choosing a branded partner to work with, Romano advised that c-store operators think hard about what each potential partner offers in terms of market segmentation; operations support; innovation; the concept financials; capture rate; and the strength and health of the brand itself.

"What kind of support are they going to give you?" he asked. "The support really is the key to success."

Romano also recommended that retailers examine themselves for an honest analysis of their organization's core strengths. Disciplined execution is particularly important as a foodservice operator, he said.

C-stores with the right level of manpower may want to consider separating foodservice employees from those who work at cash registers or elsewhere in the store, according to Romano. At Pilot locations, foodservice team members have separate uniforms, job codes and pay ranges.

The 2016 NACS Show took place at the Georgia World Congress Center in Atlanta from Oct. 18-21.