Serving Up a Financially Successful Foodservice Program
ALEXANDRIA, Va. — Along with developing an appealing menu, planning compelling promotions and campaigns, and other steps, it's important for convenience foodservice operators to take return on investment (ROI) into account.
Brad Chivington, senior vice president and general manager at High's of Baltimore, recommends that operators perform site assessments during which they look at several variables, such as location, store size, sales volume and competition, and then create a prioritization list for each. This should be done annually.
"We look at this as a crawl, walk, run approach to foodservice," he said during the recent NACS Crack the Code Experience, noting that foodservice will not necessarily make an average location good, but it will make a good location better.
Things to consider in calculating the ROI of foodservice include:
- Food and paper costs;
- A menu offer that connects;
- Food selection;
- Presentation, taste and consistency;
- Recipes and procedures;
- No shortcuts — details matter; and
- Training and education.
Budgets must be realistic relative to what c-stores can afford to spend, and they should factor in elements such as menu contents, equipment needed for the menu, and advertising.
High's found that one bonus of investing in foodservice is that for every $1 generated by new foodservice sales, another $1 is generated in sales elsewhere in the store, according to Chivington. The largest gains have occurred in dispensed beverages, snacks, packaged beverages, and candy.
He stressed that it is important to establish measurements while calculating ROI, and suggests c-stores standardize equipment and establish a baseline for measuring growth.
C-stores can expect added costs associated with foodservice, but these costs can be managed to drive sales and profits. Lighting, packaging, taste, quality and consistency are all key. C-stores should also keep an eye on foodservice trends. "Trends are your friends," he said.
During the menu development and budgeting process, c-stores should add some "higher-quality key items," said Dallas Wells, vice president of foodservice at High's. They should consider products that would be "unexpectedly delicious to your customer."
Examples of this are quality fried chicken programs, heritage small-batch ice cream, and personal pizzas made by hand "onstage."
Regional items are especially worth considering, as by their very nature they are already doing well in the regions where the stores operate.
New ideas and better products can be found by visiting food shows, local restaurants and regional suppliers.
As they crunch the numbers, retailers should set targets for their operational costs to create a target profit margin, and invest in a system that tracks and organizes their data.
Wells estimates that high-speed ovens are currently leading the charge in terms of efficient and effective ways to make breakfast sandwiches and baked items.
Detailed reports that track items and their dates of sale, as well as discounts, net sales, waste quantity, waste cost and much more, enable retailers to use real data to make actionable changes. Viewing the same figures over time also helps accurately track progress toward goals.
The NACS Crack the Code Experience was a five-week digital event that brought together convenience store industry retailers and suppliers virtually in lieu of an in-person NACS Show this year. It ran from early November to early December.