By Tim Powell
Q1 Consulting recently finalized its in-depth research into the convenience store prepared foods channel. The study investigated both retailers and shoppers, and tested many of the “truisms” of convenience stores—such as foodservice perception, freshness and any changes in the frequent “Bubba” user.
Q1 selected some of the top findings from the research that may deviate slightly from historical notions in a channel that changes incrementally, relative to Quick Service and Fast Casual segments.
Branding and logos equate to shopper trust in prepared foods. Food brands that consumers recognize and buy frequently are top influences when purchasing prepared meals. Self-service/grab and go is also one of the top three influences of purchase. In terms of brands, consumers likely want to trust what they are buying, no matter if it’s a recognized store brand or “appears” like a strong national brand (could be a control brand mimicking a national brand). Perception of brand is established through appearance, such as packaging, brand imagery and appeal of food.
Hot and cold sandwiches are among the top five prepared food items purchased in a c-store. Both are purchased prepackaged (from a warmer when hot). However, 69% would prefer a sandwich prepared in-store, rather than one prepackaged or one prepared by the consumer/shopper. The reality is likely that few retailers have made-to-order (MTO) capabilities (and could not do MTO anyway) yet shoppers also want to be in-and-out of the store. Prepackaged wins on the fast checkout and convenience fronts, even though MTO is a customization preference.
Better-for-you is increasingly important in the segment. Q1 has observed a sharp increase in frequent customers desiring “better-for-you” prepared food and bakery items since c-stores began regularly offering these items. The single most influential feature is “fresh,” and “made fresh on site.” “Fresh” is largely associated with the way an item is packaged.
Retailers (still) focus on price when buying. Price is the primary selection factor for selecting food packaging products, according to 52% of convenience stores. Quality is a factor for 20% of c-stores. Other selection factors include quantity in shipment, the ease and functionality, design, sizes offered and eco-friendliness. When asked about “unmet needs” in packaging, retailers wanted more durable materials/products. Packaging is a must-have for retailers. It is a necessary cost. Tying patron satisfaction to packaging will be necessary (which is a theme in Q1’s research) to justify higher costs to retailers who simply look at packaging as a commodity.
Commissaries are cementing their importance. Prepared food preparation varies by the category. The general preparation method is prepackaged (commissary), followed by some assembly on site and made-to-order on site. For hot and cold sandwiches, off-site and on-site commissaries are common, but roller grill items are delivered prepackaged and heated and merchandised on site. The overall message is that consumers need to be in and out of a store in less than five minutes, so grab and go becomes very attractive.
Q1 looked at Canada too. The c-store segment is not as developed in Canada. Few stores offer proprietary foodservice. Most are national quick-service restaurants. The size of prepared foods is approximately $3 billion. And the 23,000 estimated stores are largely single-stores without foodservice. Canada-based c-store retailers believe that competition, product variety and floor/store space are three major barriers to growing foodservice (all 10%). Others include keeping prices competitive, finding a customer base and product availability.
Overall, the convenience store prepared food segment continues to evolve and grow. As new consumers fill the void—Millennials replacing Gen X—convenience stores will find that needs, attitudes and behaviors will continuously change. It is an exciting segment with tremendous growth potential.
Q1 experts help food and beverage clients make sense of this cyclical industry by interpreting the data they possess, deriving meaningful insights, and developing product and marketing strategies that create stakeholder value. Contact Tim at [email protected] or (312) 602-9899.