Fresh Food And Drink Percolates

The focus is on having a strong presence in coffee, fountain beverages and grill

Kangaroo Express is building its Fresh program one ingredient at a time. The recipe calls for a strong presence in coffee, fountain beverages and grill, according to company executives, and the appetite for all three is building.

The first to percolate was the coffee program with Kangaroo Express' Bean Street Coffee offering, the cornerstone of the retailer's Fresh initiative, which began rolling out chainwide in the third quarter of 2010. According to John Fisher, senior vice president of marketing and merchandising, coffee is at the base of the Fresh pyramid, the foundation on which all fresh food initiatives will be built. On top of that comes fresh bakery and the stores' commissary.

The Fresh program is intended to build the chain's business and allow Kangaroo Express to be a serious player in food, declared Fisher.

Currently, the chain dedicates approximately 25 percent of its retail space to Fresh, which presents differently in the stores since the footprints range from 4,000 to 12,000 square feet. The components are there, or will be very soon.

All stores offer the chain's proprietary Bean Street Coffee program with the coffee bar, under the playful campaign, “We Brew It, You Do It.” Available are a range of coffee selections and upbeat promotions that continue to build a loyal clientele and enhance consumption. Fisher is extremely proud of the Bean Street blends, stating simply, “our coffee is a better experience. The coffee is brewed correctly, and the price will always be right.”

Also expanding is the chain's fresh foods/sandwiches area and bakery offerings.

Executives found that sales grew when fresh prepared sandwiches were added to the units that had an attached quick-service restaurant (QSR). Today, 250 Kangaroo Express stores have up to six varieties of fresh-made sandwiches delivered two to three times a week. By the end of this year, 400 stores will have the full Fresh layout consisting of coffee, sandwich bar, enhanced fountain/frozen beverages and bakery. Fisher said the company is still working out the capital expansion for the rest of the chain.

Bakery is rolling out to all existing stores with the full Fresh program, beginning with 120 units in the North Carolina cities of Raleigh and Charlotte. Bakery wasn't initially in those units since the program wasn't completed with the Bean Street rollout, so the chain is back-filling there first. The bakery lineup includes four different types of doughnuts, cheese croissant, three types of seasonal muffins and cookies. There is a heavy focus on the morning daypart, but muffins and cookies sell all day long. This is a thaw-and-serve program, and additional offerings are still in development.

Also in a growth mode is Kangaroo Express' fountain drink offerings, including frozen beverages, as well as its grill business. While the company's fountain program is underdeveloped compared to the industry average, executives reported that thanks to aggressive marketing campaigns such as the refillable Roo Cup launched in conjunction with the “Salute Our Troops” fundraising effort, sales are up double digits year over year and the push is on to build sales with more creative programming that draws in younger consumers who have embraced “Roo Cups” and are ready to make “Roo Runs.”

An extension of the fountain and frozen initiative is the grill program, which also was underdeveloped, said Dave Henninger, vice president of marketing services. This summer, the chain launched a $1.50 hot dog and 20-ounce fountain drink combo meal that drove up sales 50 percent chainwide. Henninger noted that some store locations had the grill in the wrong place — at the back of the store — and those units experienced a reset, with the grill moved to the front with an “in-your-face display to drive sales.”

Also, the retailer marketed the offerings, added point-of-purchase signs at the pumps and installed big standees in the stores. “We want to be in the hot dog business,” declared Henninger, noting that the chain was expecting to sell one million hot dogs in August — “and that's a big deal for us.”

Kangaroo Express accomplished that goal and then some, and decided to keep the grill on high. New radio spots, featuring Roo, are expected to help build sales.

Another key component of the chain's fresh food program is its 240 QSRs attached to its c-stores. These units, which include 140 Subways, The Pantry's own Aunt Em's brand, Dairy Queens and Krystal restaurants, comprise the lion's share of the offerings with a few Church's, Quiznos, Hardees, B&R and one Bojangles.

More will be done with this part of the business. In fact, Fisher said the $90 million QSR franchising operation is growing at a rate of 8 to 9 percent a year. The company said it is so well run by a league of top-notch restaurant executives that The Pantry is looking at possibly expanding into free-standing restaurants. “It's the franchise part of the business. If we're running out of c-store locations, why be constrained?” he asked. “They're profitable and we're good at running them. We're leveraging that food expertise on the c-store side of the business.”

Fisher said the better they operate the restaurants, the better the association is with Kangaroo Express. The average tenure within the company's restaurant ranks is 20 years, and Fisher wants to maximize that talent and knowledge to further develop the restaurant franchise part of the operation. Further, it is that expertise he's also looking to utilize on the food side of the c-store.

“The important thing is that it all adds up to brand experience that gets people to come back. We're at their corner and we deliver,” he said.