NACS SHOW REWIND: Making the Choice Between Branded or Proprietary Foodservice

ATLANTA — With foodservice evolving into a critical category for the convenience store channel, an important question arises: not whether or not retailers should offer prepared food, but should their food be offered as part of a proprietary program or a branded partnership?

Both options have legitimate pros and cons, and retailers should plan carefully to decide what best fits their operations, according to Sherryn Diamond, foodservice director at High's, winner of the Convenience Store News 2023 Foodservice Innovators Award in the Best Use of Technology in Foodservice Operations category. She shared her company's foodservice journey with consultant Julie Swift during the 2023 NACS Show education session entitled "Branded vs. Proprietary Foodservice Programs: What is Best for You?"

Top-of-mind considerations include equipment, distribution, labor, sanitation, the role of technology, stationary vs. mobile units, the role of manufacturer brands, culture and evolving level of competency.

[Read more: McLane Brands Proprietary Pizza Program as Foodservice Evolution Continues]

Advantages of branded partnerships — such as Krispy Krunchy Chicken, Little Caesar's, Subway and many other options — include the fact that c-stores won't have to build up an already-established program name and reputation, and they'll be able to offer consistently good food from the start. They can also take advantage of their branded partner's marketing and advertising tools, training programs, standard operating procedures, and plans for equipment and kitchen layout.

"You don't have to create recipes. They're already there for you," Diamond said. "There's a comprehensive training program in place. Ninety percent of the time your equipment and kitchen layout are sourced, and obviously you're able to provide your guests with consistently good food. Perfect. So it almost sounds like this could alleviate a lot of the feeling of being overwhelmed with everything you have to learn and do to implement in your c-store."

Downsides to branded partnerships include:

• Potentially higher initial costs;
• Required royalties and advertising fees;
• The inability to negotiate food and equipment costs;
• Being locked into a menu;
• Promoting a separate brand from the c-store's; and
• Depending on location, possibly market saturation of the partner brand.

Retailers should consider their long-term plans before bringing a separate brand into their stores, according to Diamond. "It gives somebody a seat at the table, and it may compete with your brand," she said. "You just have to figure a way to make your brand stand apart from their brand and have its own story."

Proprietary foodservice programs offer multiple notable advantages for operators that are playing the long game when it comes to their reputation as a dining destination. In addition to allowing them to develop and build on the current brand, proprietary programs let c-store retailers create a food destination specific to their brand, offer local ingredients and recipes, and exceed customer expectations but offering great, unique food. The margins on proprietary foodservice are also stronger.

One of the biggest downsides to proprietary programs? "Foodservice is hard," Diamond said. "I don't think I'm telling anybody something that they don't already know. It's a lot different than opening a box of candy and placing it on the shelf — it requires different skillsets than operating the store side of our business."

C-store operators will also need to find or build marketing and advertising resources; create extensive kitchen processes and procedures, such as those related to nutrition and safety; and creature a culture change inside and outside the store, taking into account everyone from store associates to district managers.

High's opted to launch its proprietary High's Kitchen concept and take a three-phase, crawl-walk-run approach to developing and enhancing the program — something Diamond doesn't regret at all.

"It absolutely has made High's better. We're becoming known for something," she said, noting that the program is offering financial returns as well. "We've had high double digit growth for five years running. It gets better every year."

The 2023 NACS Show took place Oct. 3-6 at the Georgia World Congress Center in Atlanta. The 2024 NACS Show will be hosted at the Las Vegas Convention Center Oct. 7-10, 2024.