Pizza Power

With plans to open more pizza-only stores, Casey’s General Stores is bringing in the dough

Casey’s General Stores Inc. is a force in the pizza business. In 2012, the Ankeny, Iowa-based convenience store chain sold approximately 12 million whole pies and 48 million slices, offering an array of single-topping options, as well as specialty varieties such as Taco Pizza; Chicken, Bacon and Ranch; Meat Galore; Bacon Cheeseburger; and Buffalo Chicken.

Casey’s also runs a monthly drawing on its website where customers can enter to win a coupon for a free pizza and at the end of 2012, it added pizza delivery as an option to 50 stores. Today, more than 325 locations deliver pizza along with 2-liter sodas.

“There is absolutely a need for pizza in the convenience store space,” said foodservice consultant Ed Burcher, president of Burcher Consulting in Oakville, Ontario, Canada. “I think people gravitated to deli, sandwiches and subs, and are just starting to see the benefits of pizza if done well. I think it’s underserved and there is an opportunity there for c-stores.”

Any convenience store operator looking to begin a pizza delivery business like Casey’s needs to be sure it’s done right because c-stores will be competing with companies such as Domino’s Pizza and Pizza Hut, according to Burcher.

“It has to be done well and to the standards the other companies have set, such as the 30-minute delivery expectation,” he explained. “Safely delivering products to the guests in that timeframe and hot is not easy. If you set it up well, it’s something in the evening and weekend daypart that can augment a foodservice business.”

After seeing Casey’s pizza delivery commercials this past fall, Burcher did some research and discovered that the company is the fifth largest pizza chain in the United States based on number of outlets. Both Casey’s home delivery and its freestanding stores give the chain a point of differentiation from the competition, he said.

Additionally, pizza delivery was one of the top reasons Casey’s reported strong results for its 2014 fiscal second quarter, ended Oct. 31. Prepared food and fountain sales saw a 12-percent increase year over year, with margins averaging 61.8 percent.

NEW AVENUES

Although Casey’s has already built up a strong pizza program over the years, that doesn’t mean the retailer is without opportunities for further growth in this area.

Last year, Casey’s opened its first Casey’s Pizza Express, a standalone pizza-only location that reportedly sold between 120 and 140 pizza pies per day right from the start. In December, the company announced plans to open five more Pizza Express locations in the Des Moines, Iowa, metro area based on the successful results from the initial store.

“This is a way we can supplement our business,” Casey’s Chief Operating Officer Terry Handley told the Des Moines Register, noting that the Pizza Express stores are part of the chain’s efforts to expand in prepared food, a growth area for the business.

Casey’s is not the first c-store retailer to try a spinoff. While at Wawa Inc., Burcher said the c-store chain tried opening a slimmed-down, foodservice-only version of its stores, but it didn’t work because the concept did not meet guest expectations.

“If this works for them [Casey’s], it would give c-stores more outlets for their foodservice products outside of convenience and gas locations,” said Burcher.

Another way Casey’s intends to grow its pizza business is with line extensions. After testing a new flatbread pizza line in the inaugural Pizza Express location, Casey’s decided to begin rolling it out chain-wide this January. This thin-crust version is priced the same as Casey’s traditional pizza at $11.99 for a large, single-topping pie and $15.99 for specialty varieties.

“In terms of a pizza program, this is a logical line extension,” Burcher said. “Flatbread appeals to a different demographic — probably a younger audience and more female in terms of how it is being positioned. They are following the trends of QSR [quickservice restaurants] and fine dining.”

Most recently, Casey’s announced plans to add frozen yogurt to its home delivery service and the company said it’s working on adding an online ordering function to its website.

“I think online ordering is a no-brainer, and I’ve talked with people trying to do it through mobile apps and online,” Burcher said. “It has to be routed to the kitchen production system, and the technology is there. It’s about tying it together and making it seamless for the guests.”