C-Stores Enrich Coffee Programs

Anymore convenience retailers are expanding their foodservice programs with beverage options offering more, better and different.

By Pat Pape, Contributing Editor

Whether it’s a homemade coffee, a beverage shop latte or a convenience-store brew, Americans turn to coffee when they want to get going, and that trend shows no signs of stopping. In fact, about 62% of American consumers drink some version of coffee every day, according to the Harvard T. H. Chan School of Public Health.

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Coffee is an important c-store category that drives store traffic. The 2017 State of the Industry Report from the National Association of Convenience Stores (NACS) pointed out that hot-dispensed beverages made up 3.74% of overall c-store sales in 2016, and coffee fans often pick up another item or two to go with their beverage.

However, consumer tastes continue to change, new products appear on the market and competition isn’t going away. In response, many c-store operators are focused on making their coffee bars even more inviting, while keeping vaults better stocked with cold, bottled java.

York, Pa.-based Rutter’s toasted the New Year with an updated coffee offering.

“We had six flavors that we’d always carried – two house blends and four additional offerings,” said Chuck Moyer, foodservice category supervisor at Rutter’s. “We didn’t change our house blends. They have a loyal following and have been a staple of our program. But the other four have been converted into new offerings. We’ve always offered quality products, but we thought we could take it a step higher and differentiate ourselves from the competition.”

The 70-store chain recently introduced an upgraded decaffeinated coffee. “We felt this could be an easy customer segment to capture because decaffeinated is that flavor you carry because you have to,” said Moyer. “For most of the industry, it’s about 10% of coffee sales. It never moves, never grows. But that doesn’t mean that there isn’t the ability to capture customers from your competition and grow that flavor.”

The new offering is decaffeinated using a special water process, not the typical chemical procedure. “It’s more of the clean-label product that people are seeking these days, and it’s a much better-tasting, quality, decaffeinated offering,” Moyer said.

Hazelnut, Rutter’s standard flavor option, had long enjoyed a loyal following, but like decaf, it made up 10% of sales.

“We now offer LTO coffee flavors that will change four times a year,” said Moyer. “The goal is to have something new and exciting that every customer can take advantage of at some point during the year.”

The stores got ahead of the 2018 coffee launch by rolling out Harvest Spice, which is similar to Pumpkin Spice, in the fall. “The ideal time to convert to a new flavor is when offering the No. 1 flavor profile of the year,” said Moyer. “Next, we rolled into the holiday with Buttered Rum Cake and got great feedback. It has a great aroma and will run through February. Then, we’ll bring out a spring flavor and another in the summer.”

The chain has offered a coffee that fits the popular dark-roast profile, “but it was more a high-caffeine option that just happened to be dark roast,” said Moyer.

“We found a nice upgrade—a quality European dark roast that still provides the high-caffeine kick customers want,” Moyer added.

Recognizing that terms such as “free trade” and “Rain Forest Alliance” are meaningful to many coffee drinkers, Rutter’s replaced it’s 100% Rain Forest blend with a bi-annual LTO that will be a sustainable-origin coffee. That means the beans come from a single, distinct coffee-growing region, and the first offering was Bogota Sunrise from an area in Colombia.

“It’s something we’ve been seeing in the coffee industry,” said Moyer. “A portion of the cost of the beans goes directly back to the farmers. They get the money for the [original] sale and additional funds go back to help them learn better farming techniques and water management.

It helps them be more sustainable and directly impacts their lives and communities. We’ll do a different sustainable origin coffee every six months.”

Last year, Pilot Flying J, Knoxville, Tenn.-based travel center, announced it would spend $500 million during a five-year initiative to update existing locations, starting with a fresh, new logo and more contemporary store exteriors.

Inside, the network of 750-plus locations has begun making improvements, including testing novel options for the coffee bar, such as bean-to-cup coffee equipment. The self-serve equipment lets customers select their preferred cup size, grinds whole beans of their choice and works much like a French press to deliver a hot, fresh cup of coffee.

“We are dedicated to food and beverage innovation,” said Caitlin McCall, associate beverage innovation and development manager. “In 2018, we’ll continue to test the bean-to-cup program. We test platforms extensively and are identifying if these units will honor our guests.”

The same equipment also can produce cold coffee, and Pilot Flying J is interested. “We’re continuing to invest in this segment because of the growth we’re seeing in this category,” said McCall.

Retail sales of refrigerated cold-brew coffee grew a whopping 460% from 2015 to 2017, with sales expected to reach $38 million for last year, the Mintel Group reported.

“Despite the fact that cold brew has revolutionized coffee house menus and garnered increased media attention due to its popularity, the average consumer is not highly engaged with iced coffee or cold brew,” said Megan Hambleton, beverage analyst at Mintel, who added that many consumers may see cold brew as an occasional treat.

Rutter’s currently sells iced coffee in half of its stores, “and one of my goals is expanding it into as many stores as I can,” said Moyer. “We serve fresh-brewed iced coffee utilizing our fresh, iced-tea brewers. It’s a self-serve option. Customers take a fountain cold cup, add ice and self-pour. Then, they dress it at the condiment bar like any hot coffee.”

Scott Zaremba, president of the Lawrence, Kan.-based convenience store chain Zarco USA, installed cold-brew coffee machines in his stores after customers requested it.

“People really like it,” he said, adding that pre-packaged nitro coffee is an even bigger hit. “We just have not seen a big push—for us anyway—of customers wanting dispensed, high-caffeine nitro. Maybe it’s because Red Bull and Monster are packaged. Our customers go the vault and buy it cold.”

There were a number of nitro and cold-brew coffee options – both in the bottle and on tap – showcased at the most recent NACS Show, Moyer noted.