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10/11/2022

Let’s Get Serious About Foodservice

Strategies that convenience brands must embrace to grow their foodservice business.
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The Eatery at American Natural
The Eatery at American Natural

For some time now, the convenience store industry has been transitioning toward a foodservice focused business model. The reasons are clear. Foodservice is currently the second largest revenue category after tobacco. In addition, the average profit margins are higher on foodservice items than general merchandise.

Clearly, foodservice is a serious business growth area.

Some convenience brands have improved and expanded their foodservice menu offerings. Some have created signature food and beverage offerings. Some have added “kitchen,” “eatery” or similar terminology to their name to signal their shift to a foodservice focus.

A few have upgraded their store designs to better support their foodservice offerings. And some have experimented with off-premise offerings, such as delivery, curbside pickup, and even drive-thru.

These are all positive things to do. But for convenience brands, these changes have been evolutionary (beneficial, useful, but gradual). In contrast, major competitors in the foodservice arena, including quick-service restaurants and fast-casual brands, have been making revolutionary changes in foodservice (innovative, dramatic and fast).

What’s Holding Up Revolutionary Changes?

The reality is there are roadblocks preventing convenience brands from truly equaling and surpassing what the QSRs and fast casuals are doing.

Consider the following barriers to making revolutionary changes:

Cultural Resistance to ChangeDeep-seated ideas about how to run a c-store business can clash with what’s needed to successfully run and grow a foodservice business. Stop thinking like a c-store and start thinking like a restaurant. That’s who you’re competing with.

Perceptions of Disadvantages Some in the convenience channel are put off by a belief that there may be more drawbacks associated with building a foodservice business than there are advantages to making the effort. Perceived disadvantages can be lost sales of add-on items and impulse sales; increased labor costs; the need for more space for foodservice; and the impact on store operations.

Lack of a Crisis For many convenience brands, there has been no stunning crisis to drive revolutionary improvements in foodservice. Even during the COVID years, c-stores did well while many QSRs lost 50 percent of their business. That’s the kind of crisis that has stimulated dramatic and revolutionary changes in that segment of foodservice. So, for those frustrated c-store managers who don’t see top management moving fast enough, pray for things to get worse.

How to Get Serious About Foodservice

There are six absolutes to follow if you want to get serious about growing your foodservice business. Embrace as many of these as possible. Your key foodservice competitors (the leading QSRs and fast-casual brands) have already done so.

1. Brand Your Foodservice Business

Let there be no question in the consumer’s mind that a critical part of your business is the food and beverages you offer.

One way to go about this is to create a foodservice identity. One of the fastest and easiest ways to communicate your foodservice focus is to create nomenclature for your brand that lets consumers know that you are more than gas, snacks, groceries and smokes. For example, Enmarket has its Eatery, there’s Parker’s Kitchen, and so on.

Another method is to design a foodservice environment. From the moment a customer approaches and enters the store, the space itself should reinforce that “this is a great place to get great food.” American Natural, a Pennsylvania based c-store operator, developed a new foodservice-centric store design inspired by a vision to “be the Panera Bread of convenience.” 

The food and beverage aspect of the brand dominates the 2,800-square-foot interior. Branded as “The Eatery at American Natural,” the store features an open kitchen design; counter, table, lounge and outdoor seating; made-to-order gourmet sandwiches; and barista prepared beverages.

2. Develop a Proprietary/Signature Menu

You will need more than new roller grill recipes to stand out from the “sea of sameness” that is typically associated with c-store food. A key distinguishing element is to develop something craveable that your brand can be known for.

Some examples of convenience brands that have nailed this strategy are: Parker’s, where the star of the show is the chain’s “always fresh, never frozen” chicken tenders; Wawa, where the centerpiece of its foodservice offer is built-to-order hot and cold hoagies; Texas Born (TXB), where customers line up for the freshly made, locally sourced tacos, quesadillas and tenders; and Buc-ee’s, the destination those who crave beef jerky and freshy smoked Beef Brisket BBQ.

3. Create a Menu Strategy

Do you have a documented menu strategy?

There’s no menu strategy if you can’t score 100 percent on this simple test:

  • Each menu item has been prioritized based on its importance to the brand.
  • There is a specific action plan for how each key menu item and/or category will contribute to the brand’s business performance.
  • The tactics needed to execute the plan are clearly in place.
  • There are specific goals and measures in place to evaluate results.
  • The menu strategy has been shared throughout the organization.
  • The menu strategy is understood throughout the company.

The leading QSR and fast-casual brands develop a well-documented menu strategy linked to high-level business objectives. This is a document that sets forth how the products on the menu are prioritized and how they help the brand realize its business objectives.

The menu strategy is used to guide all in-store foodservice merchandising posters, banners, window clings and, of course, the menuboard itself. A menu strategy also can help identify what new menu items should be developed, and which current items can be eliminated.

The menu strategy establishes product and category priorities, and helps the brand decide how communications should be developed to get the desired business results. Creating and agreeing on a menu strategy is how world-class foodservice communications are developed. 

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menu strategy pyramid
MENU STRATEGY PYRAMID

4. Offer Off-Premise Solutions

QSR consumers have made it clear that they find the greatest convenience when using off-premise solutions, such as drive-thru, curbside pickup, digital ordering, and delivery.

QSR and fast-casual brands derive more than half of their food and beverage sales via off-premise options. These brands are continually finding ways to optimize their off-premise strategies. And yet, many convenience brands seem on the fence as to whether they should fully embrace off-premise foodservice strategies.   

5. Develop a Foodservice Culture

Convenience brands need to start thinking more like a restaurant than a traditional c-store. That takes a shift in culture. There are things you can do to make cultural change a reality, such as establishing a commitment at all levels, starting at the top.

Nothing happens in any organization without the demonstrated support and commitment of senior management. If top management is not yet convinced, prototype ideas at select locations and communicate successes and opportunities using the language of top management (the language of money).

Additionally, identify and prioritize foodservice objectives in the annual business plan. Linking your foodservice business objectives to the business plan — with clear measureable objectives, responsibilities and rewards is a dependable way to shift the company culture to foodservice.

6. Embrace Continuous Improvement

QSR and fast-casual brands are not standing still. They are continuously making improvements to their menu, menu communications, and foodservice operations. They are finding ways to leverage technology to make the customer experience easier, faster and more enjoyable.

Starbucks, for instance, has assigned improvement teams to each of the customer touchpoints along its entire foodservice path to purchase. The teams are continually making improvements to all of these touchpoints.

How many of these six absolutes has your brand implemented? 

Howland Blackiston is a principal of King-Casey. Established in 1953, King-Casey is a restaurant and foodservice business improvement firm. It provides strategic menu optimization advice and a range of services to help clients manage overall food and beverage offerings affecting their positioning, reputation, and business growth. For information, visit king-casey.com, or contact Tom Cook at (203) 571-1776 or [email protected].

Editor's note: The opinions expressed in this column are the author's and do not necessarily reflect the views of Convenience Store News