Investigating Convenience Foodservice Innovation

NATIONAL REPORT — It has been said many times this year: Now may be the best time to be a convenience store retailer. By almost every measure, 2015 was one of the best years in convenience store history. Gas prices were down — in fact, fuel sales as a percent of total sales was down 7 percent, according to the latest Convenience Store News Industry Report. That means only one thing: all growth in the channel is coming from inside the store. 

Of all the in-store categories, foodservice, and prepared foods in particular, is the most important category for future growth. Foodservice sales grew by 7 percent last year, outpacing the overall 5-percent increase in in-store sales. More importantly, foodservice is the c-store’s most profitable category, generating $96,662 in gross margin dollars per store last year, a 5-percent increase.

Given the importance of the foodservice category, Carbonview Research decided to investigate what are the most innovative products consumers want, and which of these products retailers can implement to drive traffic and sales to their stores. 

Based on ideation sessions conducted with culinary students in Chicago in 2015, we tested and evaluated 18 new and innovative foodservice concepts. We surveyed both consumers and retailers during the summer of 2016 to get a comprehensive look at appeal, uniqueness, relevance, likelihood to purchase (consumers), likelihood to implement (retailers), and impact vs. effort (retailers). The concepts were split into two distinct groups: food and beverage product concepts and technology/services enhancement concepts. 

The following is a list of each group’s concepts:

Food & Beverage Product Concepts

• Create-Your-Own Doughnut Bar
• Create-Your-Own Salad Bar
• Create-Your-Own Pasta Bar
• Create-Your-Own Ramen Bar
• Create-Your-Own Burrito Bar
• Create-Your-Own Yogurt Bar
• Craft Section
• H20 Flavor Station
• Food Trucks

Technology & Services Enhancement Concepts

• 24-Hour Access
• Drive-Thru Window Service
• Going Green Initiative
• Loyalty Program
• Coffee Warmer
• Beverage Cooler
• Faster Checkout by Sensor
• Curbside Service
• Passenger-Side Packaging

Prior to concept evaluation, we asked consumers what they wanted to see at convenience stores and what they valued most at the stores they shop at. Consumers said variety, cleanliness, price value, convenience, and quality/freshness are most important to them. Sixty percent of consumers said they didn’t think there was anything new of interest at the c-stores they shop, but 79 percent of them said they would consider visiting c-stores more often and buy food, beverages and snacks if they offered new products and services that were of interest to them. 

Similarly, we asked retailers for feedback on what they most wanted in the prepared foods category, what is currently missing, and what can be improved upon. Retailers said they desire foodservice innovation, but agreed they need to take a lot of potential issues into consideration when deciding what new products to introduce. Such factors as customization, variety, lower margins, cost implications, technological enhancements and the commitment it takes to implement a product all impact their thinking. 

This understanding of what is important to both consumers and retailers can help us when examining the concept evaluation results.

We then introduced our 18 concepts to consumers and retailers. When evaluating our concepts overall, we found that among consumers, the concepts that resonated the most with them were the ones that showed a higher likelihood to purchase or higher likelihood to visit more often. We found many similarities in the ones that consumers rated high and retailers rated high.

RISING TO THE TOP

To summarize the best of the best concepts, we chose three out of the 18 as our top picks:

H20 Flavor Station

We called this one “The Quick Win” for the following reasons:

• Was seen as unique and relevant among consumers.
• Moderate to high likelihood to purchase compared to other food and beverage concepts.
• 60 percent say they would visit a c-store more often if H20 Flavor Station was offered.
• Rated the most favorable among retailers.
• One of three food and beverage concepts that is of high mutual interest to both retailers and consumers
• Retailers rated this the only concept as high impact on increasing business and low effort to implement/execute.

Create-Your-Own Burrito Bar

We called this one “The Big One” for the following reasons:

• Most popular among consumers for being customizable, prepared in front of them, and fresh.
• 68 percent say they would visit a c-store more often if burrito bar was offered.
• Rated most favorable among consumers.
• Rated second favorite among retailers.
• One of three food and beverage concepts that is of high mutual interest between retailers and consumers.
• Retailers rated this as a high impact on increasing business; however, they also rated it as high effort to implement/execute.

Loyalty Program

We called this one “The High Hanging Fruit”— it takes more effort and requires more time, but usually is the most rewarding — for the following reasons:

• Most popular among consumers for being relevant, rewarding/appreciated, and having discounts/savings/giveaways.
• 71 percent say they would visit a c-store more often if a loyalty program was offered (the highest of all the tech/services concepts).
• Rated most favorable among consumers.
• Rated most favorable among retailers.
• Was of high mutual interest between retailers and consumers.
• Retailers rated this as a high impact on increasing business; however, they also rated it as high effort to implement/execute.

Editor's note: For a complete breakdown of the data by concept, contact Laura Nicklin at Carbonview Research. She can be reached at (224) 404-2154.