By John Lofstock, Editor
Faced with mounting competition from fast-food operators, along with razor-thin fuel and tobacco margins, Paul Dirnberger knew the heat was on to develop a foodservice program that met customers’ demands for a quality offering that is served fast, doesn’t taste like cardboard and won’t break their pocketbooks.
Dirnberger, president of the 26-store Rhodes 101 chain in Cape Girardeau, Mo., also needed a concept that wouldn’t take up too much space in his stores and had strong brand recognition to drive new business. He found it in Hot Stuff Food’s Food Xpress.
“One of the most attractive aspects of the Xpress program is its diversity,” Dirnberger says. “The offering allows us to offer multiple products at varying price points for all three dayparts that are affordable enough for customers to eat every day and offer portability for consumers on the go.”
Products range from stuffed biscuits, breakfast taquitos and baked goods in the morning to pizza, egg rolls and chicken wings for lunch and dinner. The dynamic menu helps Rhodes maintain a consistent customer count even as external factors, such as fuel prices, leave people with less disposable income.
“I don’t think you can overlook the negative impact high gas prices have had on this industry,” Dirnberger says. “With a quality-driven foodservice program, we have been able to maintain our customer count and even attract new business from price-conscious customers looking for foodservice value.”
Complimenting Rhodes’ offering is its popular fountain program. Partnered exclusively with Coke, each store features two 16-head fountains that serve dozens of carbonated and noncarbonated drinks ranging in price from 69′ to more than $1.50. In the 14 stores equipped with Xpress, Rhodes experiences a 40% crossover from foodservice to the soda fountain.
“We do not tie the fountain program into the fast food offering primarily because we don’t have to,” Dirnberger says. “Discounting or giving away fountain products would cannibalize sales and eat away at our profitability. It would be a bad business decision.”
Part of the reason Dirnberger ended up with Hot Stuff in 2004 is because he found other fast-food chains wanted control of the fountain and coffee programs as a condition for branding with Rhodes 101an agreement he didn’t support.
“Hot Stuff is one of the easiest companies I’ve ever worked with. We still have control of the fountain, we have a proprietary Rhodes Mountain Roast coffee program and we still sell Krispy Kreme doughnuts,” he says. “The company recognizes what it takes for c-store operators to be successful and they are not trying to jeopardize that.”
It is not lost on Dirnberger that guiding Hot Stuff Foods from its days as Orion Food Systems is company President Des Hague, the foodservice guru responsible for building up 7-Eleven’s Big Eats program and rolling it out to some 5,000 U.S. stores.
“Few companies offer the kind of support where you can get the president on the phone to help you solve your problems,” Dirnberger says. “But Des knows what we are up against and he offers solutions. That’s part of the value of this program.”
Ironically, Hague might have created a headache for himself and other Hot Stuff marketers in growing 7-Eleven’s foodservice business. Three of the concepts his team created Big Eats, Go-Go Taquitos and Dreammm Donutseach generated more than $50 million in sales last year, making all three a top 10 concept in its respective category.
“Every good retailer should strive to be David winning the battle over 7-Eleven’s giant,” Hague says. “7-Eleven doesn’t plan on falling, so the ongoing competition is great for the industry and especially the customer.”
Ready for the Xpress lane?
Hot Stuff’s grab-and-go prepackaged sandwich offering features upscale meats and cheeses, a variety of sizes and a seven-day shelf life, resulting in less spoilage for marketers.
And the company is sweetening the pot for chains. Operators meeting annual wholesale sales target of $100,000 at the Xpress offering will get a $5,000 food credit per year for the first three years they operate the concept.
The foodservice chain is also getting aggressive with pricing. Retailers can open a Hot Stuff Xpress with a $15,000 investment, which includes three free “enhancer” concepts to support the program: Caffe Origins coffee, LifeSavers frozen carbonated beverages and Oscar Mayer roller grill.
The minimum requirements for prospective franchisees include about 50 square feet, a high-speed oven, freezer, food prep area, Hot Stuff signage and the Xpress foodservice display case.
Hot Stuff pushes the enhancers because its research found that nearly eight of 10 adults drink coffee daily or occasionally, compared to 77% in 2001an increase of 5.4 million. Hot beverage sales and frozen dispensed beverages both experienced double-digit growth last year, according to the National Association of Convenience Stores’ State of the Industry (SOI) report.
