Customers are demanding fresh prepared foods, but how can retailers overcome the perception of gas station food?
By Erin Rigik Del Conte, Senior Editor
The National Advisory Group (NAG) Conference delved into Burning Issue No. 4, “The Future of Fresh Foods in Retail,” on Tuesday morning.
Matt Lally, manager, analytics and insights, Nielsen Perishables Group, started off the session with a look at the continued evolution of prepared deli.
How people shop for food continues to evolve. In the past there was a grocery dominant channel, the center store was growing and innovating, and fresh was driven by commodity. Today, channel competition is high, center store is growing slowly, and demand for ‘fresh’ is causing change and innovation. Disruptions are also changing the way customers buy food from e-commerce to delivery to meal kits to on-demand services. Channel lines are blurring for fresh purchases.
One important takeaway is that Millennials are willing to purchase fresh products from any channel, which is good news for convenience stores.
Deli and deli prepared are growing faster than traditional departments and customers are buying fresh-prepared foods for the convenience, as they look for ways to make their lives easier.
Consumers are also looking for healthy. “This is something they want. The challenge for you all is to figure our how your programs play into this program and how consumers are perceiving the products sold in your stores,” Lally said.
William Baine, CEO of Git N Go Markets, gave an overview of his foodservice program. Git N Go conducted store renovations in 2016 that added new floors and ceilings, and LED lighting at the deli counter. “We’re trying to counter the consumer’s opinion of our food. We want consumer to know we are serious about food,” Baine said.
Today, the chain is focused on fresh, and is working on its biscuit program. When Baine switched to using fresh eggs for his biscuits, sales doubled. What’s more, switching to fresh burgers in 2016 brought a large increase in burger sales.
“Small and medium size chains should be able to manage (the move to fresh) even better than large chains,” he said.
Mario Spina, CEO, The Pride Stores Inc., talked about the chain’s three restaurant concepts and its commissary. Pride Stores began its foodservice journey into offering restaurant quality food in a gas station five years ago, and hired a chef who created the three concepts, which include Urban Counter, with made-to-order fresh burgers and handcrafted milkshakes among other food; Taco Urbano; and Pride Café.
No matter what the c-store did, its food was seen as ‘food at a gas station,’ even with fresh, made-to-order food featuring local ingredients.
“So we changed how we promote it,” Spina said. Instead of trying to separate out the program, it embraced that it sells gas station food, and introduced 10-second video advertisements showing the food being fresh prepared.
“We previously had a former company create sandwiches for us, and when we took it over—we didn’t do any advertising, just changing labels and up-scaling the offer, and putting it in grab and go—we had a 40% lift without advertising,” he noted.
When it comes to waste, both retailers agreed it’s an important part of the food equation.
Git N Go strives for less than 8% waste. “But if it gets too low we know we’re missing sales and ask them to bring it up,” Baine said.
“We shoot for 10%,” Spina said. “We make ours out of the commissary and self distribute, so there is more waste that way (compared to a program like Git N Go has). No waste means you’re missing sales. If don’t have some waste, you’re not doing it right.”
The NAG Conference continues through Wednesday, Sept. 13, in Nashville, Tenn.