Convenience store profits often rise higher with the right bakery program. However, figuring out the best route to profits takes planning.
Some convenience stores are expanding their bakery beyond pre-packaged snack cakes through proprietary programs or just partnering with the local bakery in town. Some chains have invested significant capital in bakery programs.
The total fresh bread and rolls market was estimated at $13.6 billion in the 52 weeks ending Aug. 10, 2014, which was up 1.1% compared to the same period in 2013, according to Chicago market research firm Information Resources Inc. (IRI) data. Unit sales rose 0.4% to more than 6 billion.
The immediate past president of the Retail Bakers of America, Ken Downey, now heads his own consulting firm, KGDSR LLC, based in New Jersey. Downey said there is no time like the present for retailers to expand bakery offerings for the simple fact that fresh baked items promise a good rate of return.
“Nothing generates more gross margin than bakery items,” Downey said.
Whether customers are in store to grab a cup of coffee or a fountain drink, “they’ll say ‘I’ll get a snack also,’” Downey said. Oftentimes, that translates into an impulse purchase of a bakery item or fresh-made bread on a grab-and-go sandwich.
BIGGER WITH BAKERY
Over the last few years, QuikTrip has been building bigger stores. New locations are 5,700 square feet with bakery displays holding fresh baked offerings. The company has locations in at least a dozen states. The Tulsa, Okla.-based convenience store chain delivers fresh-baked doughnuts, bagels and sandwich rolls and refrigerated commissary items to every QuikTrip store. QuikTrip currently operates about 710 locations and all receive fresh bakery items daily.
QuikTrip has developed a distribution network that streamlines the shipments of fresh food and commissary products that are going to each of QuikTrip’s stores. The effort supports QT Kitchens, QuikTrip’s initiative of offering fresh food made daily via its own bakery and commissary.
The company operates commissaries/bakeries in Atlanta; Belton, Mo.; Dallas; Phoenix and Tulsa, Okla.
Every day, fresh sandwiches, wraps, salads, fruit and various pastries are made in-house and then delivered to locations, said QuikTrip spokesman Mike Thornbrugh.
A growing number of c-store operations use bakery programs to grab impulse dollars through seasonal promotions, such as selling gingerbread items during the Christmas holiday or pumpkin cookies during Halloween. QuikTrip is no exception.
“The challenge is to keep being creative; we have chefs, bakers, food scientists working in harmony. Their task is to keep improving our offer,” Thornbrugh said.
Because of health trends sweeping the entire food industry, more consumers are shunning baked goods that are packed with sugar, carbs and calories.
More c-stores are expanding bakery programs to satisfy consumers’ penchant for healthier goods. Steadily, chocolate éclairs and glazed doughnuts are being challenged by whole wheat bagels and artisan breads. The gluten-free market is also substantial, with sales estimates as high as $10.5 billion in 2013 and a projected worth of $15.6 billion in 2016, according to the Mintel International Group.