The Complexities of Human Capital

For convenience store operators, identifying ways to simplify labor management and reduce labor costs is more important than ever.

While c-stores reached record in-store sales in 2013, store operating costs increased as well, leading to a decrease in industry pretax profits from $7.2 billion to $7.1 billion, according to the National Association of Convenience Stores (NACS). That’s in large part due to a 19.5 percent increase in employees, many of whom are needed to handle continued growth in the foodservice category. Labor and health-care costs top c-store retailers’ expenses. 

Factoring in Foodservice

Growth in foodservice has created new labor challenges for c-store operators. The complexities of increased foodservice business vary depending on the strategy retailers employ, the range of their food and beverage offerings, and the physical layout of their stores and hours of operation, noted Steve Montgomery, president of b2b Solutions LLC, a Lake Forest, Ill.-based consultancy for the c-store retailing/petroleum marketing channel.

“The labor requirement for a retailer that utilizes a commissary approach is far less intense that one who elects to use a made-to-order strategy. Another example would be one that elects to utilize a third-party operator who is a tenant in their stores such as some retailers have done with Subway or Dunkin' Donuts,” said Montgomery. “The strategy and the physical layout of the store may require a dedicated foodservice staff.  And in other cases, the retailer may be able to cross train and cross utilize a common workforce for both their store and foodservice offers.”

Retailers whose employees handle foodservice products in some capacity must also complete varying levels of additional foodservice training and operators may have to pay a higher salary to foodservice employees, added Montgomery.

One of the ways in which retailers may offset labor costs related to foodservice growth is by using an internal or third-party commissary instead of preparing product on the premises, which may result in a more consistent product and decreased labor costs, Montgomery said. This approach does require frequent deliveries to the store and accurate sales forecasting to ensure fresh product availability, however.
 
Another approach could be to transition from raw to ready products, requiring c-store employees to assemble foodservice offerings rather than prepare them from scratch, he added.

Seeking Software Solutions

To deal with the complexities of increased foodservice business and to reduce labor costs across the board, c-store retailers are seeking out labor management solutions from providers such as PeopleMatter, a Charleston, S.C.-based supplier of workforce management technology built specifically for the foodservice industry.

The cloud-based PeopleMatter Platform can be used to unify and streamline employee hiring, training and scheduling, thereby improving operational efficiencies and reducing labor costs.

“[PeopleMatter] really helps us to find the right candidate for our business,” said Roger Ahlfeld, vice president of human resources for Rockland, Mass.-based Tedeschi Food Shops. “Turnover is very important in our industry and being able to find people who are committed to the company and take care of our customers the way we want them to is extremely important.”

Similarly, PeopleMatter's integrated hiring and learning management system has helped Waycross, Ga.-based Flash Foods to streamline its HR processes, automate tasks and paperwork, reduce turnover, increase consistency and completion of employee training and improve candidate quality with pre-employment screenings, according to PeopleMatter.

The company’s talent management solutions played an important part in Flash Foods’ 40 percent decrease in turnover over a five-year period, PeopleMatter noted. “Ensuring your team is fully trained is the best way to save on existing labor,” affirmed Jenny Bullard, chief information officer for Flash Foods.