Finding the Right Foodservice Formula

The days of gas-and-smokes convenience stores are not completely a thing of the past, but retailers are putting more and more distance between themselves and the traditional image of the convenience channel through a sharpened focus on foodservice.

A retailer’s approach to foodservice differs, however. Some operators take the proprietary route — Wawa Inc., Sheetz Inc. and Sunoco LP’s Stripes come to mind. Others take the branded route, partnering with quick-service restaurant (QSR) chains or other food franchises.

These days, there’s also a growing number of c-store operators who believe the right foodservice formula is not one or the other, but rather both proprietary and branded. Temple, Texas-based CEFCO Convenience Stores is one of them. The retailer operates 227 c-stores and 19 QSRs in Alabama, Arkansas Florida Louisiana Mississippi Oklahoma and Texas.

CEFCO, also likes variety in its QSR partnerships. In its mix of 19 QSR units is Subway, Which Wich, Huddle House and Sonic. Its newest partner, Sonic, just joined the lineup with the opening of CEFCO’s latest prototype store in Panhandle, Texas, in March. Which Wich is also fairly new to the retailer’s customers. CEFCO opened its first Which Wich sandwich shop inside its store at 608 Highway 80 E. in White Oak, Texas, late last year.

When looking for the right QSR to partner with, CEFCO “first and foremost” considers whether that branded offer will satisfy a consumer need at that particular store above and beyond its regular offerings, explained Brett Giesick, chief retail officer for CEFCO.

“We also consider how much more return we can extract with the incremental build-out. Lastly, similar to choosing real estate for the store site, we analyze traffic counts, patterns, demographics and competition for the particular market,” he said.

And like dating, there are no set rules about who asks who out, so to speak. According to Giesick, it works both ways — though no decision is ever made lightly.

“Ultimately, CEFCO conducts an awful lot of diligence on who we choose to partner with, and similarly the franchisor does the same on us to ensure it will be a good business relationship,” he said. “We are strategic in identifying enough franchise options so that we can operate in any markets we play in By having multiple options available, we can overcome proximity issues that might preclude us from opening a QSR in a protected radius.”

At the same time, CEFCO offers a proprietary food program at several stores. It has approximately 50 Fresh Eats Café locations that provide meal-centric offerings. Additionally, CEFCO offers various daypart food options out of open air coolers and hot cases in all its locations.

“This is not an either-or option as our QSRs are typically in an endcap position and adjoined to the c-store; therefore, we carry our full line of convenience store products,” Giesick noted.

The benefits of branded partnerships include creating an additional destination driver for the site, as well as the incremental financial benefits, he cited. On the other side of the coin, there are some challenges. Selecting QSR and casual-dining partners is often a long courting process as both parties have conditions they want taken into consideration, he explained.

“We believe to be successful, we need a separate operating structure (district and regional levels) to participate in required franchisor training and cascade this knowledge and foodie passion to the restaurants we operate,” Giesick said. “Our food operations team is laser-focused on providing great food and service to the consumer, as well as executing both CEFCO’s and the franchise partner’s processes.”

SONIC BOON

While CEFCO just opened its first Sonic location, this is not the first time the brand that traces its roots back to a root beer stand has partnered with a convenience channel player.

Sonic and Oklahoma City-based Love’s Travel Stops & Country Stores Inc. continue to expand their relationship. In January, Love’s opened its third Sonic Drive-In at the Love’s Travel Stop in Holcomb, Kan., at the intersection of U.S. Highway 400/50 and North Big Lowe Road.

Unlike the first two Love’s Sonic units, however, the Holcomb restaurant is its first “flexible format” location. Flexible format is a line of new drive-in formats that allow diners to experience Sonic seated at a table rather than only in their cars. Sonic offers various flexible formats — from the traditional drive-in model with up to 29 dining stalls and a drive-thru, to customizable indoor spaces, allowing guests to pick up meals in their vehicles or dine in.

“Love’s Travel Stops has been a great partner, and we have been able to communicate our brand’s needs while maximizing the benefit the drive-in has to the travel stop location and its customers,” a Sonic spokesperson told Convenience Store News.

Sonic wants to keep growing its footprint in the convenience channel. The company is looking for partnership opportunities with c-store retailers that are branded, established in the industry, and have well-run operations. In a nod to its commitment to the channel, Sonic recently became a member of NACS, the Association for Convenience & Fuel Retailing.

TAKING A SLICE

Like Sonic, Italian fast-casual restaurant chain Fazoli’s has set its sights on convenience stores. The channel has a key role in the Lexington, Ky.-based company’s expansion plans. Fazoli’s, now owned by private-equity firm Sentinel Capital Partners, operates 123 company restaurants and 91 franchised restaurants currently. Eight of the franchised units are in convenience stores, including three Kwik Stop units operated by Rainbo Oil Co., headquartered in Dubuque, Iowa. Overall, Fazoli’s c-store presence now includes the states of Colorado, Indiana, West Virginia, Tennessee and Indiana.

At convenience stores, the Fazoli’s offering usually takes the form of a drive-thru endcap where the restaurant chain’s line of freshly-made, premium pasta dishes, subs and salads are sold.

Fazoli’s President Carl Howard explained that between 2008 and 2015, the company has been in a transformative period — from a struggling quick-service restaurant brand in a sea of QSRs, to what he now describes as a “fast-casual innovator.” The transformation has focused on improving the quality of both its food and service, he noted.

Later this year, technology upgrades, including new point-of-sale, back-of-house and manager systems, will roll out. A freestanding restaurant prototype was also recently unveiled.

“We’ve also increased our focus on innovation and hired new talent, such as a vice president of strategy and continuous improvement; a new senior director of franchise sales; and additional field marketing personnel,” Howard reported.

Along with Fazoli’s, other QSR players making news in the convenience channel are:

• Fuddruckers inked a franchise agreement with Westlake, Ohio-based TravelCenters of America LLC. A new Fuddruckers restaurant at the TA Travel Center at 30732 Highway 441 South in Commerce, Ga., near the Tanger Outlet Center and Atlanta Dragway, offers table and lounge seating for 101 guests.
• Pilot Flying J, operator of more than 650 Pilot Travel Centers and Flying J Travel Plazas across North America, opened its first Auntie Anne’s Pretzels inside its new Pilot Travel Center in Schulenburg, Texas. The facility has a Taco Bell and Cinnabon, too.
• Stewart’s All American Corp. and On the Move Corp. (OTM) signed an exclusive agreement that calls for the development of 250 Stewart’s Express locations exclusive to On the Move convenience stores. These locations will be throughout Florida and Georgia. OTM said it plans to include a Stewart’s Express in as many of its c-stores as possible, offering a full menu of hamburgers, hot dogs, cheese steaks, French fries, Stewart’s Root Beer and unique-flavored ice cream floats, shakes, cones and sundaes 24 hours a day.