Food Service

Food Service

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Provided by NACS Online

C-Store Food-Service Info
While convenience stores have offered fresh, prepared foods for years, it is only in the last decade that the trend has accelerated. The reason is two-fold:

  1. More and more time-starved consumers want on-the-go meal solutions.
  2. Retailers have found that food service can deliver new customers inside the store and at a higher profit level than for items like gas, which has razor-thin profit margins.

The result is that convenience stores have continued to evolve from gas stations that happen to sell food, to restaurants that happen to sell gas.

The overall food-service category is broad and largely includes non-packaged consumables: 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 convenience stores into popular destinations for both hot and cold foods prepared on-site, such as deli sandwiches, flat breads, hoagies, breakfast sandwiches, hamburgers, pizza, grilled-chicken sandwiches, salads, soups and wraps.

A growing number of retailers including Sheetz®, Wawa®, Rutter’s and MAPCO Express® use touch-screen ordering kiosks that allow customers to customize their selections, which streamline speed of service and ensure the accuracy of orders.

Overall, food prepared on-site in 2007 was the third largest product contributor by gross-profit contribution, representing 6.6% of all in-store sales and a total inside gross profit of 11.35%. It is also the food-service category leader, accounting for 47.27% of total food-service sales.

Commissary / Packaged Sandwiches
Retailers such as 7-Eleven® have a proprietary food-service program where sandwiches, wraps and other fresh-food items are prepared at a commissary.
At 7-Eleven®’s Commissary and Combined Distribution Center (CDC) in Long Island, fresh foods are prepared and delivered to more than 670 7-Eleven® stores in New York, New Jersey and Pennsylvania. Through sophisticated inventory and computerized ordering systems, 7-Eleven® store operators place their orders by 10 a. m. each day for deliveries that begin the very same day. The computer system quickly consolidates these orders and transmits them to the CDCs, commissaries and bakeries that support 7-Eleven® stores across the country.

Upon receipt of the stores‘ orders, 7-Eleven® sandwiches, salads and baked goods are prepared fresh that same day. Fresh-food products are immediately stamped with the time and date after they are made. Other perishable and time-sensitive products are delivered throughout the day to be sorted for that night‘s delivery. Trucks are then dispatched to deliver each store‘s merchandise between 9:00 p.m. and 5:00 a.m. the next day.

For Oklahoma-based QuikTrip, its QT Kitchens commissary program prepares and delivers thousands of sandwiches and baked goods daily to the convenience retailer’s network of more than 500 convenience stores.

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 nearly 78% 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 like 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 Starbucks®, quick-service restaurants such as McDonald’s® and the growing presence of Dunkin’ Donuts®.

To capture loyalty among its customers, retailers such as New Jersey–based QuickChek® adhere to the "20-minute rule" to ensure the freshness of its coffee. The retailer prepares each pot of coffee using exacting standards, including triple-filtered water and consistent temperatures.

Also popular in this category are hot teas and cappuccino, 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. Margins are solid (45%) and represented about 12% of all convenience-store food-service sales in 2007, according to NACS data.

The trend in fountain drinks is shifting toward "better-for-you" options, with health-conscious consumers looking for more choices and natural ingredients. Examples of these beverages include flavored and diet iced teas such as green, black or white tea, diet lemonade, diet drinks such as Crystal Light and fruit juices touting the antioxidant qualities of pomegranate or the acai berry.

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, retailers such as Flash Foods, Parker’s and Spinx® 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 75% of all convenience stores offer frozen-dispensed beverages. Consumers typically enjoy frozen drinks as a 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.

Nice N Easy Grocery Shoppes has rolled out a proprietary frozen-drink program called "Chillville" which offers customers the choice of carbonated and noncarbonated flavors and an energy drink. And the Froster®, a proprietary program offered by Mac’s more than 20 years ago, lures teens with its fun and wacky flavors, including the Atomic Wedgie.

Trends in this category, like cold-dispensed beverages, are leaning toward "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.

For an extra pick-me-up, retailers such as 7-Eleven® have capitalized on frozen coffee, a nod to the popular Starbucks Frappuccino®. In 2008, 7-Eleven® introduced the Slurpuccino, which is available in Hazelnut and Cafe Latte. And unlike a pricey coffeehouse frozen coffee which can cost more than $4, convenience stores can sell a 12-ounce frozen coffee for half the price, or about $2.

For more information, please visit www.nacsonline.com.

Important Sam's Club Disclaimer: All content, including but not limited to, recipe and health information provided is for educational purposes only. Such content is intended to supplement, not substitute for, the diagnosis, treatment and advice of a medical professional. Such content does not cover all possible side effects of any new or different health program. Consult your medical professional for guidance before changing or undertaking a new diet or exercise program. Advance consultation with your physician is particularly important if you are under eighteen (18) years old, pregnant, nursing or have health problems.

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