Ordering Up Success in Fresh Food

CHICAGO — In the digital-first era that the convenience store industry is entering, accuracy in ordering is of extreme importance. After all, if customers have a bad experience, they are less likely to place another digital order from that retailer in the future.

Customer orders, however, aren't the only key aspect of ordering for a successful foodservice program — ordering inventory for the program itself is equally critical. Between meeting demand and reducing shrink, c-store operators have little room for error, according to a recent Convenience Store News webinar sponsored by Applied Data Corp. (ADC).

"What is ordering? What we're really getting into is the replenishment of raw ingredients," said Shamus Hines, CEO of ADC, noting that this includes everything from pepperoni slices and cheese for pizza to bread and lettuce for sandwiches. "Whatever favorite foodservice item it is, there's a little bit more complexity involved with the ordering process we're talking about today."

Why should retailers care about ordering? Because "foodservice continues to matter a lot to c-stores," Hines stressed. According to ADC data, even after taking a hit in 2020, nearly a quarter of c-store sales (23 percent) can be attributed to foodservice, while 36 percent of c-store profits are attributed to foodservice. Not only that, but 15-20 percent of restaurants closed due to the COVID-19 pandemic, which means restaurant dollars are up for grabs.

"It should be a major focus for any c-store," he said.

Potential profits can easily be lost if the foodservice category is not managed properly. As much as 35 percent of food produced in retail is wasted. Thus, investing in efforts to push this figure down makes sense, as doing so will have a strong impact on profits.

According to Hines, ordering is a core solution for many of the challenges convenience stores are grappling with today. Retailers must have the product — or a backup to the product — to make the sale, which has grown more difficult in the face of supply chain challenges. Retailers also need to account for the increased complexity of online orders. Ultimately, this is achieved through writing better orders, he said.

"The ordering process needs to be as simple and efficient as possible," Hines advised.

He noted that while all retailers must consider the omnichannel experience, the "real magic" for c-stores happens inside the store, and foodservice will serve as the biggest differentiator there.

It is likely retailers need to order from multiple vendors to offer a quality, reliable foodservice experience, so they need an ordering system that can handle that, according to Hines. He predicts the winners of the future will be those who use technology smartly, with a solid ordering and inventory management system necessary to handle inevitable complexities.

In addition to providing a major financial return on investment, the chief executive cited that a good ordering system will:

• Create more efficient store operations;
• Provide more accurate orders, which will enable more accurate product pricing and margins;
• Improve in-stock position;
• Reduce waste; and
• Improve product quality.

Dodging Roadblocks & Achieving a Smooth Ride

Common roadblocks when it comes to ordering are that it is traditionally a manual, labor-intensive process using pen and paper; it relies on store associates to do mental math and forecast accurately; ordering fresh food is often done the same way as ordering for other categories despite its different needs; and there's often poor recipe data and organization.

Expecting store-level employees to become data experts and accurate forecasters is a particularly "huge pitfall" when they are also expected to focus on the customers in front of them, according to Sarah Montgomery, director of strategic accounts at ADC.

If retailers order and stock fresh food the way they do products like candy and tobacco, "you're likely missing a lot of that inventory," she said. However, technology-assisted, accurate foodservice ordering ensures the "right stock at the right time."

Resistance to change is common, but the retailers doing well today are focused on change management and laying a good foundation. Focusing on operational excellence should come before technology, according to Montgomery, because if a current process isn't being followed, the likelihood of success for a new process or new technology is low.

Retailers should have patience as "there is no finish line," she said. "It's a constant discipline."

She advises retailers to focus on data integrity because planning for the future is "difficult to impossible" without a handle on what is already being sold and and how it's being sold.

Perpetual inventory that is continually tracked and ordered regularly is both "super important" to the fresh food ordering process and unique from other aspects of ordering, Montgomery noted.

C-stores should use technology to enhance the customer experience and help with the overall program, but not view tech as a single fix-all.

"Technology is not magic. It doesn't fix everything," Montgomery said. "However, it's absolutely going to propel you into greater success much faster."

An on-demand replay of this webinar, "Ordering for Foodservice: Lessons Learned From Doing It the Hard Way," is available here.