MUFSO Panel Cautions Restaurants to Watch C-stores

DALLAS -- Restaurants usually look to each other for competition, but non-traditional competitors such as convenience stores, grocery stores and drug stores pose more of a threat these days, according to industry experts at the 2012 Multi-Unit Foodservice Operators (MUFSO) Conference, which took place at the Hilton Anatole Hotel on Sept. 30-Oct. 2. Panel members who participated in "Stealth Competition: Who's After Your Share of the Market?" noted that such competitors are improving themselves by using lessons learned by traditional restaurant operators, reported Nation's Restaurant News.

"Home-meal replacement has faded away in the restaurant side of the business," said Steven Johnson, Grocerant Guru, Foodservice Solutions, who moderated the panel. "But in grocery stores, convenience stores and retail drug stores, it never faded away. It was studied and tested, and implemented."

Baby boomers purchase prepared food from nontraditional outlets nine times per month, 34- to 54-year-old consumers make such purchases four times per month, and 18- to 34-year-old consumers purchase food there at least eight times per month. In general, all consumers shop at these outlets at least three times per month.

Convenience is a primary motivator. "We have some valuable real estate," said Sheetz Executive Vice President Louie Sheetz. "We're strategically placed when the customer is out for the day. And we're an opportunity for today's multitasking consumer to do more than one thing with that stop."

Nontraditional competitors offer a wide range of food items, are well financed and are pervasive, panelists stated. "Most of you are used to startups with two or four or six units coming after your business," Johnson stated. "Now you've got Walgreens and Duane Reade, with 7,500 [units], as a true threat to your business. Walgreen's also has over $78 billion in sales."

Experts named grocery stores as the biggest threat to restaurants, particularly targeting quick service and fast casual outlets, according to NRN. However, restaurants' smaller, more convenient parking lots and better checkout experience are advantages.

Still, nontraditional competitors are improving their offerings all the time. Sheetz is especially focusing on broadening its offerings and improving speed of service, which Louie Sheetz noted is "more and more important" to consumers.

"We've taken the [made-to-order (MTO)] line and moved it to MTGo," Sheetz said. "It's sandwiches, wraps and salads for when you're in a hurry and don't have time to access the touch screen order pad and wait for us to prepare your food. That line has seen incredible growth in the last four years."