Convenience Foodservice Retailers Urged to Find Their Niche

NATIONAL REPORT — Foodservice has become an integral component for today's convenience store operators.

Industry data shows most operators understand its importance. Almost all of the retailers surveyed in the 2023 Convenience Store News Foodservice Study said they sell prepared food and hot dispensed beverages, with prepared food generating the bulk of revenue in the foodservice category — an impressive 54 percent of total foodservice sales.

Having foodservice options and differentiating them in ways that drive consumers to your location are different parts of the foodservice puzzle, though, and the only way to complete the picture is to create a program that distinguishes your offerings from your competitors'.

"Foodservice has really become the key differentiator for c-stores. Good food is what compels people to seek out and talk about a particular brand — and even drive farther to visit one," said Peter Losee, vice president of marketing for Bowling Green, Ky.-based Bluegrass Ingredients, which partners with its customers to craft tailored flavors and formulations.

"These days, most consumers have multiple stores to choose from on their drive home from work or when they're out running errands. The right food can compel a consumer to pull into one store over another, whether that's a busy mom or dad looking to get gas and a healthy take-and-heat dinner for the family or a working millennial who may be making multiple stops in a single day," he added.

And increasing foot traffic isn't the only benefit differentiation delivers. It also is key to "building loyalty in short order" and ultimately boosting the bottom line, according to Losee. "Foodservice offerings," he said, "can serve as an important revenue opportunity for c-stores often constrained by tightly controlled and competitive prices."

Recent numbers show just how significant a revenue opportunity those offerings can be. Foodservice sales industrywide were up 19.5 percent in 2022, marking the second consecutive year of stellar convenience foodservice sales, according to the 2023 CSNews Industry Report, while the average gain in foodservice sales per store was $54,956, driven by an additional $44,845 per store from prepared foods.

Tracking Trends

Continually monitoring trends can help c-store operators plan foodservice programs that will be ready when a burgeoning trend becomes a mainstream one.

"For c-stores, it's really all about staying one step ahead of that target consumer," explained Losee, who noted that Bluegrass Ingredients' culinary and R&D experts perform that kind of monitoring "to keep our customers one step ahead of what's coming."

[Read more: Pilot Co. Debuts New Quick-Service Food Concept]

It is an approach Pilot Co. takes, according to Jamie King, senior director of food and beverage for the Knoxville, Tenn.-based travel center chain with more than 870 locations serving an average of 1.3 million guests per day.

"Pilot takes pride in our constant curiosity to learn guests' preferences and find new ways to meet their needs. That's why our chef and culinary team conduct sample testing in our stores, directly interacting with guests and collecting in-the-moment feedback," King said. "Not only does this provide priceless interactions with our guests, but it also allows us to deliver what they desire."

What foodservice trends are tracking currently?

"On the flavor front, the dominant trend is all about fueling enhanced experiences. Consumers — especially the increasingly influential Gen Z cohort — want bold new flavor combinations they can share with friends in person and on social media," Losee reported. "That's a real opportunity for c-stores, which already have a head start in the snacking space where these new flavor innovations fit naturally."

Paying attention to daypart trends is another way retailers can ensure their foodservice menu includes not only items customers crave, but also some that stand out from what they can find a few miles down the road.

Purchase incidence of breakfast sandwiches, for example, jumped over the last year, putting them ahead of c-store standards like pizza and hot dogs, according to the 2023 CSNews Realities of the Aisle Study, an annual look at c-store shopper behavior.

King confirmed that Pilot has been tracking this trend over the past few years and, as a result, the retailer "curated breakfast offerings that are perfect for the morning commute — think of burritos, which are easy to eat while on the road, as well as our recent Sausage Waffler, a syrupy waffle sandwich with sausage, egg and cheese."

Value is also an integral component to consider when transforming trends into standout foodservice offerings. The percentage of shoppers who said they didn't buy prepared food at a c-store in the last month because it was too expensive jumped 15 points year over year, according to the Realities of the Aisle Study. Price/value is now the No. 1 factor shoppers list as being important to them when purchasing prepared food at a c-store.

The value trend is something Bluegrass' experts are seeing, too. "One trend that we're particularly focused on as an ingredients provider is around reengineering value. Reformulations in ingredients and recipes can help enhance flavors to match evolving consumer demands, while better navigating challenges like supply chain shortages or surging costs," Losee said.

Ideas That Differentiate

So, what are some specific ways c-store operators can differentiate their foodservice offerings to stand out in what has become a crowded and competitive category?

Upgrading menus in ways that move past old-school convenience store fare is a good place to start.

"The industry is quickly leaving hot dog rollers and microwaves behind in favor of much more appetizing options. Prepared food and commissary kitchens have really taken things to the next level in recent years," Losee said. "It starts with food that looks and tastes good — food that's healthy and easy to serve and eat. There are competitive advantages to be found in healthier options, higher-quality options, more variety, and more."

Healthier options, in fact, offer a big opportunity for retailers willing and able to commit to quality offerings, data shows. Among health-conscious and health-neutral shoppers, only 41 percent said they are somewhat satisfied with the selection of healthy/better-for-you foods at c-stores, leaving room for improvement, according to CSNews shopper research.

Pilot is one operator answering the call for healthier fare. "We continue to expand our healthy, grab-and-go options," King said. "Our fresh-cut fruit is a simple yet delicious choice. We offer protein-packed snack boxes, with variations based on what our guests are craving."

The bottom line, according to King, is to combine quality, consistency and innovation when planning foodservice offerings that differentiate you from your competitors — always keeping in mind the kind of store you want to be.

"First, determine who you want to be as a brand and decide what you're trying to accomplish. At Pilot, we strive to be the preferred choice for all interstate drivers," he said. "For decades, our desire has been to offer high-quality and consistent items that create the best guest experience possible. This applies to foodservice, from innovation in creating our offerings to maintaining health and safety standards in our kitchen and displays. Something as classic as our hand-roped pizza crust or center-of-the-plate entrée is the perfect example of innovation, quality and consistency."