Consumers Poised to Purchase Prepared Foods at C-stores

By Debra Chanil

The continued growth of foodservice sales at convenience stores -- particularly prepared foods and hot beverages -- provides more reasons than ever for c-store retailers to jump onto the foodservice bandwagon.

According to the 2009 CSNews Industry Report, the entire foodservice category at convenience stores grew 7.7 percent on a sales-per-store basis last year. That's significantly better than the overall 2.5 percent sales-per-store increase achieved by all in-store categories combined in 2008. Sales of prepared food rose 9.1 percent on a per-store basis last year to $89,340 -- resulting in an addition of $7,470 in sales to the average store. Food prepared both on- and off-site accounted for 59.3 percent of foodservice category sales in 2008.

In order to gain a greater understanding into the reasons behind c-stores' growth in the foodservice area, Convenience Store News partnered with Nielsen Homescan on an exclusive new consumer study designed to uncover:

-- Why consumers shop convenience stores;
-- What types of prepared food do they buy at convenience stores;
-- What influences their decision to buy prepared food at c-stores; and,
-- What other services offered by c-stores are most important to them.

The results of the data suggest food quality and in-store execution greatly impact a consumer's choice to purchase and consume prepared food from a convenience store.

It's no surprise the No. 1 reason to shop a particular c-store, according to the survey, was convenience. After all, convenience is the name of the channel, and with more than 144,000 c-stores in the U.S., the channel has four times as many stores as any other retail channel.

However, while 53 percent of households said they shop a c-store because "it has the most convenient location," almost three-quarters of households cited something pertaining to efficient operations. Adding up the responses to "I can find quickly what I want," "It is a clean and organized store," "It was a quicker checkout" and "It usually has what I want in stock," a total of 73 percent of consumers cited an attribute about the store's operational excellence.

Interestingly, middle- and higher-income households ($35,000 annual income and higher) were more likely to cite "convenient location' than lower income households (below $35,000 per year). However, the lowest income households (less than $25,000 per year) were the most likely to cite the attributes pertaining to efficient operations, such as finding what they want quickly in a clean and organized store.

Only 7.6 percent of consumers said purchasing "ready-to-eat" items to consume right away was their "primary reason" for visiting a c-store, indicating how foodservice -- for all its growth at c-stores -- is still nowhere near a destination trip for most consumers.

One-third of consumers (31.9 percent) said they purchased prepared food while at a c-store to buy other items. However, it is instructive that another third of respondents said the biggest influence on their decision to purchase prepared food at a c-store was that the food looked fresh (20.3 percent) or smelled good (11.7 percent). Only 20 percent, or one-fifth of households, cited price as the main influence on their decision to buy. This may indicate one of two factors: c-stores have some price elasticity when it comes to prepared foods, as long as the quality is top-notch; and, in many cases, prepared foods at a c-store are already perceived by many consumers to be a relatively less expensive compared with fast-food and casual restaurants. The lesson for retailers appears to be: If you want to sell prepared food, it must look fresh and smell good. Then, cross-merchandise foodservice with other items to take advantage of consumer impulse purchases, and you've hit a homerun.

The study also ranked the top prepared food items purchased by consumers. Doughnuts/muffins topped the list, followed by sandwiches, hot dogs, breakfast sandwiches, cookies/brownies and cooked chicken. The bottom three categories were salads, pizza and soup. The overall ranking is probably influenced by availability, since not as many stores offer pizza and soup, as doughnuts and muffins, but the ranking does illustrate the growing importance of sandwiches in the mix, which came in higher than hot dogs, even though hot dogs on roller grills are almost everywhere at stores throughout the industry.

The CSNews/Homescan survey also asked consumers to rate the importance of various products and services offered by a convenience store. Gasoline, of course, was No. 1, followed by hot or cold beverages. However, prepared food came in third, outranking ATM, lottery, car wash and gift cards -- another indication of the importance of prepared food.

Convenience Store News commissioned The Nielsen Co. to conduct consumer research through its Homescan Panel of more than 100,000 households. A sub-sample of panel members who shopped at a convenience store between Feb. 25, and April 22, completed a trigger survey within days of their most recent c-store visit. Responses for a total of 6,892 shopping trips (or visits or occasions) are included in the final results.
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