As customers opt for fresher and healthier foods, c-store operators share how they’re adapting to customer preferences.
By Erin Rigik, Senior Editor
As the fresh and healthy foods trend continues its upward climb, multiple channels, including quick-service restaurants (QSRs), drug stores and convenience stores are competing for the business of hungry customers.
Walgreens has introduced super stores featuring sushi counters and fresh-made salads. CVS announced in June that it was adding a fresh foods category, including produce. Even QSR giant McDonald’s has announced a shift in strategy for offering more healthful options.
Millennials, ages 18-34, are driving the shift to fresh foods and beverages, according to a recent report by the NPD Group, a Chicago-based research firm. This news is surprising because this generation is at an age where people usually eat lower-quality fresh items in favor of time-saving options.
Millennials, many of whom came of age during the country’s last recession, were hit hard by the economic downturn. Many ate out less, but still focused on restaurant-quality freshness they could make at home. Today, the Millennials continue to demand that freshness while on the go.
“‘Fresh’ is key for convenience store foodservice programs, as it is for all foodservice providers,” said Donna Hood Crecca, senior director for Chicago-based research firm Technomic Inc. “Today’s consumer prioritizes freshness. In fact, three in 10 consumers who rarely visit c-stores for foodservice cite lack of fresh appearance and fresh taste for food as a reason for their low rate of visits. Fresh is the leading descriptor that contributes to quality, followed closely by ‘prepared daily,’ which also indicates freshness.”
More than one-third of consumers say that the availability of fresh fruits and fresh vegetables could help improve overall value at c-stores, according to Technomic data.
Convenience stores today are adapting their business models to fit to these demands.
In Portland, Ore., convenience store chain Green Zebra Grocery seeks to increase access to healthy food, as part of its stated mission. It is working to pioneer a new model of convenience store that offers these fresh and healthy foods.
While Green Zebra currently has one location in Portland, with a second store set to open early next year, it has many more sites in the planning stages, and aims to have 20 locations by 2020—not just in Portland, but in Seattle and California. Future stores will span 4,000 square feet to 8,000 square feet.
In addition to normal c-store items like snacks and beer, Green Zebra offers an array of fresh, organic and local produce. “Produce is about 10% of our store sales, so it’s significant,” said Green Zebra CEO Lisa Sedlar.
Also on the menu are sustainably-raised seafood and meat local to the area. “One of the things about our model is supporting local and thinking about the impact that one small store can have,” Sedlar said. “Our one small store has around 100 different local vendors. Some of those are through distribution, but even so, when you combine that with the local jobs that we’re creating and the local economy that we’re boosting as a result of this one small store and then you multiply that across 20 stores in a few different markets, there’s really a lot of impact that you can make on your regional food economy.”
Green Zebra held a local vendor fair where it invited vendors to present their products. It drew more than 200 different vendors from around Oregon and Washington. “We were able to select local vendors from that process and, of course, our distributor partners are helping us a great deal.”
Its convenience store model includes a kitchen within its deli where everything is cooked from scratch. Included in the deli offering are grab-and-go fresh sandwiches, 30 different salad selections—including chicken salad, tuna salad and pasta salad—a full salad bar for customers who like to customize their offering and a range of hot foods. In-store chefs make the food right while c-store staff members work the deli counter.
“Our salad bar and our hot foods bar are our No. 1 and No. 2 best sellers, respectively, over the whole store, so you can tell that people really want healthy and convenient food,”Sedlar said.
The store also does a big business with beer and wine sales, compared to a large format grocery store. About 16% of store sales are in beer and wine, and 20% come from the deli.
In keeping with its healthy image, Green Zebra doesn’t sell tobacco products.
But will Green Zebra’s healthy offering translate outside of Portland? Sedlar believes it will.
“Sometimes I think people think that Portland is its own little holistic Mecca and that we live in this little bubble, but a lot of trends start on the West Coast,” she said. As Green Zebra expands its footprint outside of Portland, Sedlar is confident the healthy and fresh concept will translate.
Another motivating factor for Green Zebra is seeing that many customers live in food deserts in the West, where c-stores might be their only place to purchase food.
“We think that everybody deserves the choice to have healthy foods,” Sedlar said. Healthy foods have been trending in the double digits for the last decade and it looks like it’s going to continue to grow, so there is a lot of demand.”
Her advice to other c-stores looking to delve into healthy and fresh foods is to consider local healthy foods, including those that are organic and non-GMO.
“It’s not as hard as you think to incorporate healthy and fresh options, and your customers will definitely benefit from it and they definitely want it,” Sedlar said.
Green Zebra puts more staffing on the floor to help customers with selections and to drive sales. “A big part of our model is giving the best possible customer service. It helps us drive sales by having employees that are knowledgeable about the products we sell out on the sales floor,” Sedlar said.
Green Zebra isn’t the only c-store into fresh offerings. 7-Eleven offers fresh produce such as bananas and apples, packaged salads and cut fruit in its “Fresh to Go” program, as well as healthy items such as wheat bread and turkey in its 7 Smart program, Techomic’s Crecca pointed out. Made-to-order programs, such as the sandwich programs at Sheetz and Wawa, convey fresh. QuickTrip offers made-to-order toasted sandwiches and pizzas via its QT Kitchen format, featuring the tagline “Fresh is Good.”
“Freshness is a key competitive point and convenience operators as a whole need to sharpen their commitment to freshness to compete with others who are vying for the on-the-go foodservice occasion, such as fast-food restaurants, drug stores and even mass merchants,” Crecca said. “While strides are being made by numerous operators, c-stores overall have room for improvement on the freshness front.”
C-stores can convey freshness by posting ‘made on’ dates on products in their grab-and-go section, offering clear packaging, allowing customers to see the food being made and monitoring the appearance of displayed food. Delivering on fresh requires a true commitment to foodservice operations, from attention to sourcing to safe food handling to merchandizing.
Rutter’s Farm Stores, with 60 locations in York, Pa. has long been viewed as a leader on the healthy and fresh foods front. Ryan Krebs, director of food services at Rutter’s, noted fresh is always a huge component of attracting health-conscious customers, as is transparency. Customers, he said want to see their food being made.
“We have an open kitchen, so customers are watching us make our food products, package them and then put them in our grab-and-go section,” said Krebs. “Some customers literally take them out of our hands as we’re carrying them out there because they just saw that product being made and they know it’s fresh.”
Rutter’s offers a line of fresh salads (pictured on p. 68), including garden salad and Caesar salad, all made in house. In addition to large salads, Rutter’s offers side salads that are about half the size as a large to appease a smaller appetite or someone who doesn’t want a whole salad as a meal.
“We’ve recently added different choices of proteins on those salads—even in our cold case—such as grilled chicken breast, ham, turkey, tuna salad and so on,” Krebs said.
In addition to fresh-made salads, Rutter’s offers some trendier packaged salads that include a four grain salad, a sesame noodle salad and a Caprese salad. These items offer something “outside the box” for Millennials or those seeking something besides a green leaf lettuce salad.
In the grab-and-go section, guests can also select fresh cut fruits ranging from pineapple to mixed berry to mango, cut veggies with dip, regular or Greek yogurt or yogurt parfaits.
All sandwiches and subs are made on breads that are baked in store. “We also have different bread choices, including a multi-grain ciabatta bread, which people looking for a healthier option than white-flour bread can select,” Krebs said.
Even if customers end up purchasing something more indulgent instead, healthy salads and sandwich options are still a strong traffic driver.
“I believe that happens all the time. Someone may come in because they know they can get a salad, but decide they want a burger instead,” Krebs said. “So offering a variety of products along a spectrum is very critical.”
Rutter’s food services director pointed out that even within a family, each member might be looking for a completely different choice, such as a burger for dad, a salad for mom and so on.
Above all, customers are demanding choices and the ability to customize their options.”I’m not going to decide for my customers what they want to eat. I want them to have exactly what they want,” Krebs said. “With our fresh-made salads, customers order them off our touchscreens and select from about 40 different topping options. We give them the salad base and say, ‘You customize this exactly the way you want.’”
Constantly updating and expanding menu choices helps Rutter’s ensure it’s giving its customers what they most want.
For example, Rutter’s recently debuted a black bean and chipotle veggie burger, which has been a strong seller, to cater to vegans, vegetarians and customers who want a healthier choice compared to a normal burger. Patrons can get turkey bacon as an alternative option to regular bacon, or select an egg white patty instead of a regular egg patty or turkey sausage. Rutter’s also has a 100-calorie roll. All the options allow customers to decide to go healthy on a given day.
“Millennials have a very strong voice and they are beginning to look at healthier options. The price point is no longer as much as a driver in the convenience store industry as what it was 20 years ago. They aren’t looking for two hot dogs for $1. They want a good hot dog. They want an all-beef hot dog. They want something that’s local,” Krebs said.
He added buzzwords such as grass-fed, organic and gluten-free—are product descriptions Millennials pay attention to—and something foodservice operators need to include if they want to capture a wider slice of this customer base.
“(Millennials) don’t necessarily always make healthy decisions, but they want to feel there are healthier options available,” Krebs said.
He noted that in order to succeed with fresh and healthy food, c-stores must get away from the idea that cheapest and easiest is best. “That kind of thinking will hold you back from moving forward.”
Krebs noted the convenience store industry needs to adapt to more of a restaurant-style set up to compete with the demands for fresh foods, including having prep lists and producing foods on site, rather than bringing everything in pre-done at the lowest price. “Our industry is going to be needing people who either have a restaurant background or can adapt to a restaurant-style setting because they are producing food now,” Krebs said. “If you are serving a base that is aware of the quality of food you are producing, then there’s always a cost associated with that. If you’re getting away from the value engineering, then obviously more labor and more quality foods become a part of that.”
But there’s also a return on investment associated with a higher quality offering. He suggested c-stores consider first and foremost how they want to be identified when it comes to food. “I’ve always considered Rutter’s to be identified with quality food,” Krebs said. “Customers are willing to invest in and come back to something that they perceive as having the quality value they’re seeking.”