“The majority of ‘new’ ideas are simply new interpretations of old ideas,” said Louie Sheetz, vicepresident of marketing for Sheetz Inc. “Over thelast 30 years, we’ve taken advantage of opportunities like this Foodservice Show and NACS to learn from others. Alot of success in this industry is capturing an idea you’ve seen andchanging it to fit your business model. If you are not constantlyinnovating to meet the needs of consumers, you might as wellhand the business over to your competitors.”
That was the message delivered by Louie Sheetz during thekeynote address to conclude Convenience Store Decisions‘ 2007Foodservice Show in Fort Worth, Texas.
The second annual Foodservice Show, the only conferencefocused solely on foodservice in the convenience class, provedonce again that it’s a completely unique event. This year’s conference provided attendees keen insight on industry trends fromconsultants like David Bishop, food safety expert Marsh Robbins,human resources specialist Mel Kleiman and marketing consultant John Matthews. The show also provided an open forum todiscuss industry trends through working roundtable lunchessponsored by Solo Cup Co. and Frozen Beverage Dispensers(FBD), and exhibitor presented seminars from Gilbarco/VeederRoot, Espresso Specialists and Hot Stuff Foods, not to mention theopportunity to network on the trade show floor and in one-on-onestrategic planning sessions.
Foodservice innovators honored
As part of the 2007 Foodservice Show, CSD honored two chainsfor their outstanding commitment to foodservice. Accepting theaward for Exxon Mobil Corp., Joe Chiovera, who, as categorymanager of concept development, was instrumental in designingthe company’s On the Run Café brand, and foodservice categoryspecialist Mike Kerby. Both credited employees for their storelevel execution.
“We are confident that we have created a strong offering, but it’sour employees that deserve so much of the credit for deliveringgreat service to our customers every day,” Kerby said. “Withouttheir dedication, we wouldn’t be here accepting this award.”
ExxonMobil operates a network of more than 1,300 On the Run convenience stores acrossthe country.
John MacDougall, president of Nice N Easy Grocery Shoppes in Canastota, N.Y., accepted the small chainfoodservice award with company Executive Vice President ofFoodservice Jack Cushman.
“Foodservice was a savior for our company as we lost gasoline and cigarettes sales to Native Americans,” MacDougall said. “Ten years ago, we knew we faceda tough decision: come up with something new to replace thosesales or become irrelevant. That’s when we made the decision toget into foodservice.”
Nice N Easy operates more than 80 locations in upstate NewYork and is getting set to offer its proven Easy Street Eatery conceptto retailers outside of its operating family—thereby strengtheningthe brand and expanding its reach.
Experience speaks
Sheetz is one company the entire industry looks to as a foodservice innovator. Louie Sheetz explained that as the companysaw shifts in the percentage profit contributed from its three majorcategories—food and beverages, convenience/grocery and petroleum—it needed to change its business model, which is why itdeveloped its convenience restaurant concept.
“In 1988, our core business—convenience and grocery items—represented 40% of our business. In 1995, that percentage droppedto 27% and today it represents 18% of our total gross profit dollars,” said Sheetz. “Seeing our core business shrink was a strongindication that we needed to replace those revenue dollars, andstill deal with the competition that was coming from many different directions. We took that opportunity with food. In 1995, foodonly represented 40% of total gross profit dollars. Today it’s 58%.”
As the company explored its options, it was experiencingsteady growth, making $1.8 billion in net inside sales, excluding gas. Sheetz concluded the time was rightto take a chance.
“Rather than being satisfied with success, this was the best time for us to stopand say, ‘What about tomorrow?'” Sheetzsaid. “Don’t be forced to change. Tryto stay ahead and create the trends oftomorrow.”
As the company was examiningconsumer trends, it identified quality,indulgence and convenience as key elements to any foodservice program. Butmore importantly, Sheetz discovered anuntapped customer that it could turn itsattention towards.
“We took a strong look at the Sheetzconsumer and found there was a hugepool of ‘neutral’ consumers that coulduse us for food, but weren’t because theywere turned off at buying food from a gasstation,” Sheetz said. “So we began planning for a convenience restaurant conceptthat could win over those neutral customers while still satisfying our existingcustomers.”
More than 60 people within the Sheetzorganization had a hand in developingthe convenience restaurant, working in 12groups that focused on everything frombuilding design and logo to the choice ofcore products, menu development andmore. The first convenience restaurantwas approximately 10,000 square feet,the bulk of which was an enormous testkitchen for chef Keith Boston to create thefare that would break the “conveniencefood” mold.
The state-of-the-art kitchen was visibleto the customers, who could relax at themore than 100 seats inside and outside ofthe building. The company also placed thegas pumps behind the building to create aperception that the store was a “restaurantwith gas instead of a gasstation with foodservice,” Sheetz said.
One of the main objectives withthe concept was to make $50,000 aweek in food and beverage sales.It surpassed expectation by earning $100,000 in food and beveragessales in its first week.
But Sheetz was also open to sharing that the experience was far fromflawless. The company learned from the things that didn’t work and used them to its advantage.
For example, it originally built two convenience restaurants—one in Altoona, Pa. and one in Raleigh, N.C.—and learned there were a lot of costsinvolved, from initial investment to laborto utilities. (The units required a staff of atleast 22 a day.)
“It was an expensive lesson, but wewere prepared to leverage our wins withour losses,” Sheetz said. “The idea withthis prototype was to try new things. Wegathered a list of about 100 things wereally wanted to try with the intent thatif you get one winner, it would be worthit. It hurt and it cost us, but it was necessary. We’ve taken the best attributes andapplied them to the other restaurantswe’ve built since.”
The concept has turned into a homerun for Sheetz and it credits the company’s commitment and guts for the success. “Innovation inspires our employees andour customers,” he said. “Pioneeringis part of our company culture and itrequired a large investment of capital aswell as human resources. But the convenience restaurant represents a giant leapfor Sheetz.”
Facts and figures
The two-day conference kicked off itseducation seminars with David Bishop, apartner at Willard Bishop, who laid outthe current foodservice situation in theconvenience industry.
“Anyone realizes the risk of enteringthe foodservice segment is going to behigh,” said Bishop. “However, that highrisk also comes with high rewards.”
Bishop noted that for much of theindustry, gasoline is still one of the majordraws, however, the low profit marginsmake it hard for retailers to add to theirbottom lines. While 2006 proved betterthan 2005, penny profit margins are stillon the decline. Tobacco, another major draw for theindustry, is also showing a decline, andtaxes could only escalate it, he said.Incorporating foodservice into a store’soffering is one of the best ways to offsetthis decline.
“Foodservice offers a solution for driving traffic into the store and increasingprofits,” Bishop said.
But if you are
going to offer foodservice, you better be prepared to do it safely.Marsha Robbins, environmental healthspecialist and president of HACCPplus.com,gave attendees more than a few things toponder when it comes to food safety.
“Local, state and federal laws are theminimal standards for food safety programs,” Robbins said. “We have to becontinually raising the bar.”
Robbins didn’t pull any punches. Shewas quick to share statistics about whatcan happen when food safety isn’t takeninto consideration and show disturbingpictures illustrating violations.
“There are more than 13 million foodborne illnesses a year—more than ninemillion are viral, four million are bacterialand more than 357,000 are parasitic—and 71% of deaths are bacterial caused,”Robbins said. “Companies shouldn’t takecomfort in health department inspectionscores. They’re in your stores for twohours a year getting a snapshot of youroperation. The onus falls on operatorsto incorporate best practices into theirprogram.”
Robbins was also quick to praiseSheetz for how it handled the contaminated tomato outbreak that caused 564confirmed salmonella cases in its fiveoperating states. “Sheetz took responsibility for the situation and has workedtirelessly to resolve it,” she said. “Betterstill, it took the experience and used it tocreate a better program.”
