Foodservice for the Convenience Store Industry
While convenience stores have offered fresh, prepared foods for years, it is only over the last decade that the trend has accelerated. The reason is two-fold:
- More and more time-starved consumers want on-the-go meal solutions, and
- Retailers have found that foodservice can deliver new customers inside the store, and at a higher profit level than for items like gas.
The result is that convenience stores have continued to evolve from gas stations that happen to sell food to food retailers that happen to sell gas.
The overall convenience store foodservice category includes: food prepared on-site, commissary/packaged sandwiches, hot dispensed beverages, cold dispensed beverages and frozen dispensed beverages.
Recommended food-service companies for the convenience store industry:
Convenience store foodservice category includes: food prepared on-site, commissary/packaged sandwiches, hot dispensed beverages, cold dispensed beverages and frozen dispensed beverages.
Food Prepared On-Site
Many retailers have successfully turned their conveniences stores into popular destinations for both hot and cold foods prepared onsite, such as deli sandwiches, flat breads, hoagies, breakfast sandwiches, hamburgers, pizza, grilled chicken sandwiches, salads, soups and wraps.
A growing number of retailers use touch-screen ordering kiosks that allow customers to customize their selections, which streamlines speed of service and ensures the accuracy of orders. And to execute food prepared on-site effectively, foodservice management basics ar a must: proper menu management, customer service and product consistency.
Food prepared on-site leads the overall foodservice category, accounting for more than 62%percent of total foodservice sales in 2011.
Convenience stores are stepping up their foodservice programs to keep up with competition from quick-service and fast-casual restaurants, as well as grocery store prepared meals. Many retailers offer a proprietary foodservice program where sandwiches, wraps and other fresh food items are prepared at a commissary.
Hot Dispensed Beverages
Coffee is without a doubt the hot beverage of choice in convenience stores and the number one subcategory of the hot dispensed beverages category, generating 77% of the category’s sales. This category typically delivers nearly three-quarters of its sales during morning service hours.
Coffee consumers are looking for coffee blends that focus on freshness, flavor and quality. Customers also like being able to personalize their beverage, with condiments such as flavored creamers, varieties of milk, flavor shots, whipped toppings and flavor sprinkles such as nutmeg and cinnamon. To generate excitement at the coffee bar, some convenience store retailers offer seasonal blends, such as pumpkin spice during the fall and gingerbread coffee in the winter.
In fact, competition for the coffee customer is fierce, as consumers have more locations than ever to choose from, including coffeehouse chains such as Dunkin’ Donuts, Starbucks and quick-service restaurants such as Subway and McDonald’s with its McCafÃ© program.
Also popular in this category are hot teas and cappuccino/specialty coffee, which deliver high margins for retailers.
Cold Dispensed Beverages
Nearly every convenience store (94%) carries cold dispensed (fountain) beverages, making this product a true convenience store classic. Sales in both 2010 and 2011 were solid, which is likely due to aggressive promotion and pricing strategies and product innovations.
Recent trends in fountain drinks have focused on “better-for-you” options, with health-conscious consumers looking for more choices and natural ingredients. Many retailers are also choosing to offer their own proprietary fountain program to maximize gross margins.
Retailers also focus on the ice, which can make up to as much as 50% of fountain drinks, and most consumers enjoy chewing on the ice once the liquid is gone. As a result, many retailers offer a softer ice cube known as “nugget” or “chewy ice”.
Frozen Dispensed Beverages
This category got its start in 1965 when 7-Eleven introduced the Icee; the name was later changed to Slurpee.
About 71% of all convenience stores offer frozen dispensed beverages, even though the category itself makes up a small portion of an average convenience store’s overall sales. Consumers typically enjoy frozen drinks as refreshing “snack” during the day. The popularity of these frozen drinks has also caught on with amusement parks, movie theaters, food courts and quick-service restaurants.
Trends in this category, like cold dispensed beverages, lean toward more “better for you” products, such as green tea and pomegranate, which also helps attract female consumers. Bold flavors such as bubble gum and root beer float are popular with teens.