Meeting the Demand for Fresh Foods

Joe Bush | Convenience Store Decisions | Sep 16, 2011

All convenience store operators should be looking at adding a foodservice solution to some degree, whether it’s simply a fresh-brewed coffee program and a roller grill or a more elaborate set up with national and proprietary brands. Foodservice isn’t just hot right now, it is the industry’s sustenance to survive this ailing economy.

But foodservice can be overwhelming for those with limited experience. Before jumping into any foodservice offering, make sure you are ready and never bite off more than you can chew. Start small and learn to be great, then expand from there.

Options exist that don’t require a lot of additional staffing, hundreds of square feet of store space, expensive equipment or 12 kinds of bread. In short, there is a foodservice solution for chains and stores of all sizes.

Foodservice experts agree that the first step any c-store chain should take prior to expanding food operations should not be to write down pros and cons of co-branding, commissary, proprietary, or partnerships with local restaurants or bakeries. Instead, your first step should be to make sure you’re ready for any type of foodservice in the first place.

Preparing for Foodservice

“Operators very often think it’s kind of a silver bullet,” said Arlene Spiegel, president of Arlene Spiegel & Associates, a restaurant and hospitality consultancy. “The first thought always seems to be, ‘Oh, if I bring in made-to-order sandwiches or I bring in a Little Caesar’s pizza, it’s going to drive more traffic.’ In the convenience store arena, success is measured by the square inch. What is the return on investment of every vertical, horizontal and cubic square inch of the space that you’re willing to give up in order to bring a foodservice component into it?”

Once you pass that test, walk around your stores. Are they spotless? Are your employees friendly and knowledgeable? Are they prepared to deal with foodservice?

“The best selling points are the workers themselves, and the fact that the store is clean,” said Rudy Miick, founder and president of Miick & Associates, a restaurant and hospitality performance firm. “As a customer, I have no time to waste in the convenience store. I’m pushing through and you’re actually restoring me. The actual definition of a restaurant is a place one goes to be restored. I don’t need great food, I just need something that’s edible and affordable and fast. Can I create a clean, affordable, ‘wow’ factor in my store that doesn’t cost me a dime? Have I swept, have I mopped, etc.? The real empowering part of that message is, ‘Oh, I don’t have any money, I can’t compete with the big boys.’ Actually, with cleanliness and a great staff, you can.”

Spiegel noted the bottom line is that if you aren’t taking care of the basics —the checklist items that need crossing off whether you offer foodservice or not—complicating matters is not wise.

“There’s no question that you need to be a good operator before you should even think about foodservice, which is an added challenge,” Spiegel said. “If you’re not rotating your shelves, dusting off your products, monitoring your traffic patterns or effectively marketing your brand, then don’t even think about it.”

Passing the Food Test

It’s become a cliché, but foodservice is a commitment that begins at the highest level of the company and needs to be treated more like a separate business than as just another in-store category. “This is where the big challenge is,” Spiegel said. “Most convenience store operators think about their store being a big real estate venue to sell packaged goods. Foodservice is a fresh program, and it needs more attention than some shelf-stable bag of chips.”

If you pass that test, let’s assume you don’t have deep pockets or much tolerance for risk. Consider these variables: where are your stores? What is the demographic surrounding them? Where do your customers work, and what do they like to do on the weekends? There’s no sense picking a theme or organizing a menu without considering the human aspect.

If your stores are near an interstate and you are choosing just one daypart, pick lunch, Miick said. Stores on the way to and from office parks and manufacturing areas should go for the higher margin of breakfast.

“It’s all about lifestyle drivers and what’s the demand in any particular venue,” Spiegel agreed.

Tim Finnerty, a veteran operator and consultant in the convenience store, franchise and restaurant industries, helped American Retail Services West of Oceanside, Calif., with its pilot foodservice program. Branded Porter’s Mill, the concept at a c-store in Newport, Ore., features a baker who comes into work at 4 a.m. to make pastries and breads; dedicated employees to serve customers rather than a self-serve aspect; and a menu that offers made-to-order sandwiches, pizza, wings, hot dogs, salads, oatmeal, biscuits and gravy, and soy milk smoothies.

A good oven, under-the-counter refrigeration and a table to assemble food is all you need for a program that can service all three dayparts, according to Finnerty. “You can’t just pick a daypart if you have too much invested in equipment and you have to have labor from four in the morning to two in the afternoon,” said Finnerty. “With imagination you can do a lot of different things.”

Finnerty’s model, even at a minimum, adds the expense of specialized labor.

“The greatest cost of doing business in a convenience store is labor cost and the greatest disappointment to the guests or the customers coming into the stores are the stores’ employees,” Spiegel said. “Typically a convenience store operator has a training program that is very retail-oriented versus foodservice-oriented. Knowing how to merchandise, rotate and market food items is a whole different way of thinking than putting chips on a shelf.”

Options Available

For most operators who are not willing to commit to a big full-service program where they give up real estate, train staff and partner with suppliers, the best plan is to keep it simple.

What could be simpler than having food made and delivered daily? Commissaries can do this, as can local restaurants or bakeries.

Miick suggested that operators look to their local chamber of commerce for partners who can deliver freshly made food daily. The cost of this option is product and space, and the time it takes an employee to order for the next day.

Spiegel concurred that this option solves the problem of credibility—consumers not believing a convenience store can sell fresh food—more cheaply than a franchise-model, while leveraging a local business’s popularity.

Russell’s Convenience in Denver has an interesting success story with this distribution model. Udi’s, now nationally known, approached Russell’s about selling its sandwiches when it was still a local entity, in the 1990s. Russell’s, with 12 stores aimed at business professionals, tried it and hasn’t stopped. Managers order each day for the next and, in addition to sandwiches, Udi’s provides granola and salads.

“It’s what brand equity is all about,” said Spiegel. “Folks who live in a local area, when they see that your cupcakes come from a local bakery and you get to share that cupcake company’s brand, you’re giving a lot of compelling reasons for someone to come in and buy it. You’ve overcome the credibility problem.”

It also shows that you’re supporting your local merchants in the area, and you’re also keeping the carbon footprint down because it’s local.

“If you’re selling your cupcakes, muffins and scones from ABC local bakery, that local bakery should cross-promote you by saying, ‘You can also find our products at this local convenience store chain.’ It’s a win-win,” Spiegel said.