Profiting on the P.M. Snack
Convenience stores with diverse foodservice options have established themselves as go-to destinations to satisfy consumers' after-lunch appetites. According to a 2012 study conducted by The NPD Group/CREST, afternoon snacking accounts for more than 40 percent of convenience store traffic -- an increase following a two-year decline.
We attribute the upswing in snacking to shifting consumer behavior. People would rather save time and money by snacking than dedicate hours and funds to full meals. In fact, the combined 15-percent decline in traffic during the lunch and dinner dayparts shows that an increasing number of people are shunning full meals in favor of several snacks throughout the day. Other p.m. snack drivers include portion control and specific cravings.
C-stores own the total foodservice snacking occasion, capturing nearly a quarter of the market. However, the rise of p.m. snacking has not gone unnoticed by the rest of the foodservice industry. C-stores will face stiff competition to maintain ownership of this growing daypart.
Hamburger quick-service restaurants (QSRs) are a close second in the segment; these retailers have grown their snack traffic by nearly 20 percent in the past five years and currently own about 19 percent of the total market. Nonetheless, c-stores still hold the advantage because only 11 percent of hamburger QSRs' overall store traffic is related to the snacking category. Conversely, convenience stores are already thought of as a snack-time hub and face a comparatively easier challenge – capitalizing on existing traffic.
Against this backdrop, it is more important than ever for operators to understand that the post-2 p.m. hours are not simply a time to sell leftovers from lunch. Rather, operators should commit to growing the afternoon snack daypart because it is a major opportunity to increase foodservice profits.
Here are three steps operators can follow to build a p.m. snack program that will keep consumption going long past lunchtime.
Replenish Hot Sandwiches
Hot sandwiches are one of the strongest-performing offerings in c-store foodservice, but many operators are not taking full advantage. Recent Sara Lee Foodservice video research on consumer behavior shows that conversion rates at the roller grill drop by 18 percent after 2 p.m. because the grills are not replenished with new product following the lunch rush. This decrease in roller grill purchases can easily be turned into an opportunity for growth by stocking roller grills and warmers with a full variety of options that look fresh and appealing.
Remember, the p.m. snack is its own daypart – not just the leftovers from lunch.
Keep in mind that a bit of waste is normal during any daypart and the p.m. snack is no exception. It is better to sell eight hot dogs and throw away three than to sell no hot dogs and throw away the one remaining from lunch.
Create P.M. Snack Deals
We all know that deals are an effective way of encouraging customers to spend more money per visit. For the second consecutive year, research from The NPD Group/CREST indicates that c-stores have shown an 11-percent increase in deal purchases, vs. a 2-percent increase in the non-deal segment. Operators should use proven deal tactics, like bundling, to drive p.m. snack sales.
Our data suggests that the most effective bundles will be combinations of hot food items and fountain drinks. Carbonated, non-carbonated and frozen soft drinks have seen total growth of nearly 25 percent since last year, and hot dogs and corn dogs are up 7 percent. Hot dogs, burgers and chicken sandwiches currently constitute 13 percent of all snacking purchases in c-stores. Operators should use these trends to develop their p.m. snack deals.
Educate Your Customers
Customers cannot take advantage of deals they don't know about. Therefore, growing p.m. snacks will require changing consumer behavior and driving awareness through customer communications. It is critical to publicize your p.m. snack offerings through educational signage and other marketing channels.
Promote your p.m. snack deals on pump tops, at your point-of-sales and at other locations throughout your store. Thirteen percent of shoppers surveyed by the NACS Convenience Tracking Program have indicated that they purchased food items because of promotions or sales, and many more consumers have made promotion-driven purchases -- even if they are unaware of it.
Don't Miss Out
Remember that establishing your p.m. snack program will be an ongoing process. However, c-stores have the opportunity to become the big winners in this emerging category and carve out significant profits for years to come. Replenishing hot sandwiches appropriately, creating p.m. snack deals and educating your customers about this daypart are all key parts of the equation.
Although changing consumer behavior will not happen overnight, the payoff will be worth the wait.
John Oros is the senior manager of business development in the convenience store channel for Sara Lee Foodservice. He can be reached at [email protected].
Editor's note: The opinions expressed in this article are the author's and do not necessarily reflect the views of Convenience Store News.