CHARLOTTE, N.C. — Despite ongoing challenges, convenience stores should feel optimistic about the future of foodservice, according to Joyce Baird, strategic account manager atresearch and consulting firm Foodservice IP.
During a presentation at the recent 2021 Convenience Store News Convenience Foodservice Exchange event, she discussed various factors affecting the current convenience foodservice market and steps retailers can take to boost their programs.
1. Been There, Done That
"We've been there, we've done this, we've been through crises," Baird said, pointing to major historical events such as the 1918 Spanish Flu, the stock market crash, and The Great Recession.
While all of these events had major effects on society, they weren't the end of the world or of any retail channels. Similarly, retailers that persevere and deal with the effects of the COVID-19 pandemic, such as the labor crisis and disruptions to the supply chain, will eventually find themselves on the other side as things improve.
2. Prepared & Delivered Food Is Thriving
A wide range of away-from-home food options are taking off. Ghost kitchens, turnkey solutions and wholesaler/distributor-provided commissaries are just a few examples of services that existed prior to the COVID-19 pandemic and are thriving now.
3. Ecommerce Has Accelerated During COVID-19
Consumers across all demographics have increased the number of foodservice purchases they make via ecommerce vs. more traditional means. And it isn't just a temporary measure until the pandemic is over. Baird pointed to a retirement community that brought on a tech person specifically to teach residents how to use smartphones, including for delivery services.
To make the most of this, c-store retailers need to keep in mind the reasons customers purchase more through ecommerce (quality, cost savings, and convenience), and what will push them to purchase less (a poor experience or substituting other channels.)
4. Foodservice Is Necessary
In America, people plan going out to eat more than they plan anything else. Not everyone has time to prepare food, making the foodservice category necessary.
Consumer sentiment is changing with age. "Bubba" is no longer the primary c-store customer, and younger consumers tend to view c-stores as places they can get anything, rather than falling back on the stereotype of bad gas station food.
5. C-store Foodservice Is Positioned to Fight for Share of Stomach
The foodservice category at c-stores is estimated to reach $12.2 billion in 2023, according to the Foodservice IP 2021 Convenience Store Foodservice Report, with hot snacks, chicken and pizza leading the way.
With category growth comes competition growth. C-store operators should treat all food outlets — including fast-food restaurants, regional quick-service restaurants (QSRs) and coffee/doughnut stores — as competition. Doing so will keep them better positioned to fight for share of stomach.
"Make sure you're looking at what all is around you," Baird said.
6. Seek Strategic Advisors, Not Vendors
Vendor partners shouldn't just be companies that supply product, they should be advisors that know foodservice. Strong knowledge of how the category works is key, and they need to be aware of what keeps retailers up at night.
Retailers should expect supplier companies to do their homework and come to the table with solutions; know hard and soft costs, including detailed product information down to the last ingredient used; deliver product and service innovation, including good communication, trust and a willingness to bring new ideas such as marketing initiatives; mutual investment, with the ability to commit and reinvest in their business; and the willingness to prioritize the retailer.
Vendors should also be able to show they are already familiar with competitive offerings, provide fact-based evidence to support their ideas, and come up with two or three ideas that fit a c-store's concept.
7. Rigorously Execute on the Restaurant Basics
A winning value proposition consists of consistently solid basics (including service, food and unit appearance) combined with resonating points of differentiation (such as customer lifestyle integration, hospitality, menu desirability, atmosphere, concept essence, and manager presence.) C-stores that position themselves to follow through on these basics will be in a solid competitive position.
8. Prepare for Post-COVID Changes
Safety and cleanliness are part of the new foodservice reality. Customers may not even know they're looking for these things, but still feel relieved when they see cleaning products inside a store.
Contagion concerns, poor ventilation and lack of masks are among the reasons customers give for not feeling safe in a store. Retailers need to have a plan for addressing these concerns to make their customers feel welcome.
9.Flexible Organizations Thrive in Uncertainty
It's impossible to know what is coming, but c-store operators are capable of planning for multiple outcomes, whereas a lot of companies just have one strategy.
Retailers should evaluate implementation steps, not just the end result, and remain a "stubbornly" agile and flexible culture. Basing their decisions on what's happening in practice, not in theory, will lead to better outcomes.
10. The Forecast Is Bright
C-stores experienced a negative impact in 2020 due to the pandemic, but they have had a leg up on competitors in 2021, and will continue to, as essential businesses. They also benefit from consumers viewing them as similar to QSRs.
Looking ahead, foodservice will remain an integral part of c-store profitability and patron desires. Not all stores will be a fit for prepared food and dispensed beverages but, as a whole, the industry can expect good things from the category, according to Baird.
The 2021 Convenience Foodservice Exchange was sponsored by gold sponsors Community Coffee, Sugar Foods Corp., Tyson Convenience and Uno Foods; and silver sponsors Core-Mark and SupplyIt.
For more coverage of the 2021 Convenience Foodservice Exchange, check out the December issue of Convenience Store News.