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Low Pricing Helps Drive Value, But Ultimately Hurts Quality Perceptions

NEW YORK -- Too many c-store foodservice operators focus solely on the cost side of food when pricing foodservice items. With this approach, operators lose sight of a product's full revenue potential. Prices that are too low may actually hurt consumers' perception of food quality in a c-store, presenting a critical barrier to attracting new business.

In a recent consumer survey, Technomic found that c-stores did not rate as a top foodservice segment in doing a "really good job" with value for the money. This is disconcerting, considering that c-stores strive to be known for providing quality food at low prices. In addition, c-stores do not rank in one of the top three foodservice segments for food freshness, appearance or portion size.

For the question: "In general, which type of food establishment does a
"really good" job at offering the following?" consumers responded positively as follows:

-- Good value for your money: quick-service burger restaurant (56 percent of respondents); quick-service sub shop (41 percent); local independent deli (21 percent); and supermarket deli (21 percent).

-- Fresh Ingredients: quick-service sub shop (44 percent); local independent deli (39 percent); bakery/café (27 percent).

-- Good portion sizes: family-style restaurant (36 percent); casual dining restaurant (34 percent); quick-service sub shop (33 percent).

-- Sandwiches that are appetizing in appearance: quick-service sub shop (35 percent); casual dining restaurant (34 percent); family-style restaurant (33 percent).

A potential theory to explain these low ratings is that too-low pricing has a domino effect on the entire foodservice experience, thereby bringing down perceptions of quality, freshness, taste and appearance in its wake. For example, if a c-store offers a slice of breakfast pizza for 59 cents, but the fast-food restaurant across the street is charging $1.69 for a similar offering and a fast-casual restaurant nearby is charging $2.50, this likely communicates to the c-store customer that the breakfast pizza is made with really cheap ingredients and therefore is probably not very good.

My guess is that customers are not balking at the higher, non-c-store prices because they have come to equate a certain level of quality with a certain level of pricing. As a result, one of the first steps c-stores should take to enhance consumers' perception of their foodservice programs is to test consumer willingness to spend slightly more money on foodservice items. Pricing alone will not solve the problem, though, so here are some additional ways to increase customer acceptance of higher prices:

-- See what the restaurant competition is charging for similar items. How much is the flat-bread sandwich at Subway? How much is the flat bread sandwich at Panera?

-- Improve menu descriptions. While this has improved over the past few years, there is still room to develop creative product names and enhance product descriptions.

-- Use c-store foodservice leaders as the benchmark for pricing. Visit a Rutter's, Quik Check, Thornton's and/or Wilson's Farms -- in addition to industry trailblazers Sheetz and Wawa. If you can't make a visit, check the Web sites of these operators and download their foodservice menus.

-- Consider "Barbell" pricing, which basically means offering two-tier pricing options. For example, Quiznos offers a $3 and $4 version of its Torpedo subs to meet the budgets of its consumers.

Don't forget, of course, that c-stores must have good, quality food before consumers will be willing to pay more for such items.

Other columns by Tim Powell:

C-Stores Are Well Positioned for Consumer Value Demands

Roller Grill Remains Critical to C-store Foodservice

Trends in Convenience Store Foodservice

Tim Powell is C-store Foodservice Program director for Technomic, a fact-based research and consulting firm that helps restaurants and food suppliers grow profitably with business-building guidance. He can be reached at [email protected].

Editor's Note: The opinions expressed in this article are the author's, and do not necessarily reflect the views of
Convenience Store News.
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