Foodservice Sales Still Rising

Both sales and profits continue to grow, while lunch remains the top daypart

Representing almost 15 percent of in-store sales for convenience store operators, foodservice remains a strong category for both chains and single-store owners alike as sales and profits continue to climb in 2013. Many retailers are expanding their offerings, and both branded and proprietary programs remain popular options.

Almost two-thirds of c-store operators expect to see their foodservice sales increase by the end of this year, up slightly from 2012, according to the Convenience Store News 2013 Foodservice Study. This number jumps to 75 percent for chains alone.

CSNews conducted its annual Foodservice Study in June to collect in-depth data on foodservice and build upon the category data collected for the CSNews 2013 Industry Report. The Foodservice Study asks c-store retailers to review their current year’s sales, as well as their sales and profits from the previous year.

Only 4.4 percent of retailers predict 2013 sales will decrease, while one-third expects them to hold steady with last year’s sales. Profitability is up for operators, as 60.3 percent expect to find an increased bottom-line foodservice profit this year, compared to 54.7 percent in 2012. Nearly 30 percent expect to match last year’s profit numbers.

As reported in the CSNews 2013 Industry Report, foodservice accounts for 14.3 percent of in-store sales and 24.2 percent of in-store gross margin dollar contribution industrywide. Overall, foodservice sales grew 7.6 percent in 2012, with prepared food leading the way. Of total foodservice sales last year, prepared food represented nearly two-thirds, up 0.8 percent in share from 2011. The most popular items are sandwiches, hot dogs, pizza and chicken.

Meanwhile, hot dispensed beverages, including coffee, cappuccino, hot chocolate and hot tea, make up almost one-quarter of the category, although share was down 0.6 percent in 2012. Cold dispensed beverages showed no change in share from 2011 to 2012.

Carbonated fountain brought in the majority of sales in this subcategory, which makes up 8.5 percent of overall foodservice sales. Frozen dispensed beverages represented 4.1 percent of foodservice category sales and fell 0.2 percent in share from 2011.

When it comes to competition, 75 percent of respondents believe their biggest opponents are other c-stores, and almost half (48.4 percent) named McDonald’s as a competitive threat. Sandwich shops, such as Subway and Quiznos, also remain on the c-store radar, with more than 40 percent of retailers reporting this segment as competition.

SALES BY DAYPART

The lunch daypart, which falls between 11 a.m. and 1:59 p.m., is still bringing in the majority of foodservice sales in the c-store industry (32.5 percent), followed by breakfast from 6 a.m. through 8:59 a.m. (23.7 percent). Dinner also remains a popular daypart, capturing 15.7 percent of sales. Compared to last year, the three snack dayparts — morning, afternoon and evening — increased slightly, with the largest increase of one percentage point seen in the morning snack daypart.

The majority of respondents (76.8 percent) offer a no-touch foodservice program, meaning grab-and-go, prepackaged and self-service items. Two-thirds (66.9 percent) offer some touch, which is assembled on-site, thawed and served, or roller grill; and nearly the same amount (66 percent) offer full-touch, made-to-order programs.