Foodservice 101: Weighing Your Opportunity with C-Stores

Posted on September 13, 2017 by Caitlin Orosz under Foodservice 101

Foodservice programs are growing among convenience stores [c-stores], despite their competitive nature, mostly because of the high margin opportunity. As consumers look for quick and healthy food options, the accessibility of a convenience store is hard to beat.

Convenience store foodservice, defined by Technomic, is “any prepared food and beverage, even if it’s as simple as a pot of coffee or a fountain dispenser.”

The National Association of Convenience Stores reports that non-foodservice items in convenience stores have a 27% margin, while foodservice products have a 57% margin. And, since oil prices fluctuate and consumers pay at the pump, it’s important for convenience stores to find profitable opportunities in other offers. In 2014, c-stores reported $213.5 billion in non-fuel total sales.

Today, there are close to 140,000 c-stores that offer foodservice programs. 90% offer basic foodservice, such as hot and/or cold beverages and grab ‘n go options. 7% have premium programs, and only 3% have super premium programs.

c-stores foodservice

Many c-store retailers are altering their strategy to include a restaurant-like theme, and consumers report that they see convenience stores to be as capable as restaurants.

  • FONA International reports that c-stores are the only segment to see a “significant increase in breakfast patronage over the past few years.”
  • Sandwiches are the most popular c-store menu item.
  • IFMA’s Strategic Series notes that beverages play an important role for c-store profitability; 42% of c-store foodservice sales are non-alcoholic beverages.

 

Who is the c-store customer? The demographic is largely made up of millennials; more than half of the shoppers are under 40. 85% of millennial c-store foodservice customers come in once a week or more. About 53% of c-store foodservice consumers say a brand-name ingredient could increase likelihood of purchases. Compared to 2014, 44% of consumers say they’re visiting c-stores more often, and they’re buying more food while they’re there.

Generally, consumers select a c-store based on location – it’s close to their home, on their way to a location, or they were already stopped to purchase fuel. Foodservice drives traffic and sales for c-stores, but manufacturers should remember that most of these stores offer basic foodservice programs, meaning limited production and experience. Plus, c-stores have serious competition from segments like fast casual and drug stores.

“C-store operators are paying attention to what consumers are interested in and are updating their products to provide a fresh variety of dining choices to consumers,” said Ann Golladay, senior project director at Datassential. Today, you’ll find c-stores with ethnic food options, adventurous limited time offers [LTOs], made-to-order options, and even beer taps.

The opportunities remain — after all, most consumers pass at least one convenience store every day and foodservice is the convenience operator’s strategic priority.

As c-stores consider the future of foodservice, they know that consumers want non- or minimally- processed foods, quality ingredients and fresh options. Manufacturers can support the growth of c-stores and their newest initiatives – delivering fresh, natural and exciting menu options. Manufacturers can determine which products to provide c-stores for healthier options and consumer-driven purchases.

As this foodservice segment continues to evolve, there are plenty of chances for manufacturers and distributors to help c-stores meet modern consumers’ needs.

Manufacturers can also benefit from easy program planners to establish and modify trade promotions with retail-like flexibility. Don’t miss out on the exciting growth opportunities with c-stores because your technology solutions don’t support the segment’s unique dynamics.

Join Blacksmith Applications at our Smoke Jumpers XVI event on Thursday October 26th (FORGE User Conference) for a review of new and improved planning tools. FORGE release 8 includes a comprehensive upgrade of our tools for planning a range of events [e.g., programs] with either direct buyers [e.g., wholesalers, distributors and direct retailers] or indirect buyers [e.g., banners, operators and local stores]. This upgrade allows users to evaluate the economics and volume for the plan in total as well as for each individual event. Registration is open until Friday, September 29th.

Source: CSP Daily News, 8 Fundamental Stats on C-Store Foodservice