Mine Your C-store's Hidden Gold
Most convenience store operators know that foodservice sales should be one of the fastest-growing, most profitable segments of their business. They know that excellent foodservice offers a way to differentiate themselves from the competition. And they know that quick-service restaurants (QSRs) can provide valuable foodservice lessons for c-stores because they’ve had 50-plus years of experience — both good and bad — that they can learn from.
On the other hand, many operators may not know the importance of having a menu strategy and optimized menu communications. This is a pity because the “opportunity to optimize” is like a goldmine hidden in your store.
Of course, you must perform some hard work to reap the riches. Success is based on data-driven research, consumer insights and strategic thinking. It is, most emphatically, not based only on pretty pictures.
The three examples in this article should bring that point home. Two illustrate QSRs that discovered the goldmine, and a third shows how a company that partners with c-stores realized huge sales growth by using similar strategies.
Jamba Juice — Total Store Communications
Earlier this year, Jamba announced a brand transformation, including dropping “Juice” from its name and doubling down on the healthfulness of its offerings.
The company had become the market-leading “smoothie” brand, but a major internal research project uncovered some disturbing facts. Consumers found a disconnect between the “healthfulness” branding objectives and the actual menu communications. Clearly, there was a need to showcase new, healthful menu items, but the menuboard was difficult to navigate and/or understand, and in-store communications were not used to support the menu.
The first step was to develop a new menu strategy. Menu categories and items were evaluated and prioritized based on hard data, such as sales and profits, industry trends and consumer research. Then, the team — composed of senior Jamba executives and King-Casey — performed an analysis to determine which menu items would stay (or go), how the items should be merchandised, and how to leverage store communications to achieve the brand’s business objectives.
Next, new menuboard schematics were designed to reflect the new menu strategy and to prioritize specific menu categories and individual items. The design leveraged “hot zones” — those menuboard areas where customers are most likely to look first when ordering. They should communicate your best-selling and most profitable items. Two alternative menuboards were tested in nine stores prior to system rollout. This validation testing resulted in increased sales of high-profit items, higher incidence of add-on sales, improved customer ease of use, and stronger “healthfulness” brand impression.
Finally, the team worked with the store-design group to develop “path-to-purchase” communications that reinforced the new strategy. These communications respond to the fact that consumers have different behaviors, attitudes and needs in different areas or zones of a store. Understanding and leveraging the “customer zone” concept is a major differentiator for improving sales.
Top 20 QSR — Test, Test & Re-Test
This example provides further proof of the adage, “You can only improve what you can measure.”
The QSR wanted to grow food sales with an emphasis on burgers and chicken, shift drive-thru to a positive margin contributor, improve customer perception of variety and value, and speed throughput.
Accordingly, the team analyzed key performance metrics (financial and operational) and identified the menu categories and items with the greatest sales and profit potential. These recommendations were translated into alternative menuboard strategies, which optimized product placement and balanced space allocation to actual sales.
These strategies were first validated using quantitative consumer research. Then, the best strategy was tested for 18 weeks in 25 stores. The new strategy increased net sales, transactions and profit per check. It also led to a trade-up to premium sides and high-margin desserts. Extrapolated, the test results indicate a systemwide sales increase of $15 million.
C-store Partner — A Data-Driven Approach
The biggest chicken chain you may have never heard of was founded in Louisiana 30 years ago, and has grown rapidly recently. Krispy Krunchy Chicken (KKC) now has 2,400 outlets in 46 states, most of which are licensed c-stores. Despite this growth, KKC knew it could do better.
After a stakeholder survey found unhappiness with the menuboards, KKC pursued a path similar to our previous examples. They developed a new menu strategy, used a data-driven approach to optimize menu communications, and had consumers validate a selected strategy that was rolled out via digital menuboards.
Payback was immediate: overall sales grew by significant double-digits; sales of high-profit, high-priority items increased; incidence of sides increased; and average checks increased.
KKC CEO Neal Onebane says: “Our new menu strategy and the effective optimization of menu communications has contributed significantly to the growth in KKC sales and profits.”
Connect the dots. If KKC had double-digit growth, so did its c-store partners’ chicken sales.
Based on the above examples, the key takeaways for c-store operators are to:
- Use data-driven consumer research to assess current offerings and identify new menu offerings where needed;
- Develop a menu strategy that documents how the food and beverage items you offer will achieve your business goals;
- Use the menu strategy to prioritize, organize and optimize your menuboard; and
- Leverage customer zones in your store to reinforce menu strategy and communications.
Howland Blackiston is a principal at King-Casey, a premier restaurant consulting firm specializing in quick-service restaurants, fast casuals and convenience stores.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.