According to the National Association of Convenience Stores’ (NACS) most recent State of the Industry report, average sales per store in 2016 of cold dispensed beverages were $52,457 and frozen dispensed beverages were $23,414, almost 98% of c-stores sell cold dispensed beverages and 96% offer the frozen type.
Cold dispensed remains popular with retailers because it offers more than a 50% gross margin and frozen dispensed offers almost 65% margin, among the highest for c-store categories.
“Cold and frozen dispensed beverages continue to be high areas of focus,” said Kathy Holt, foodservice/c-store lead at JPG Resources, a food consultancy based in Battle Creek, Mich. “I’m seeing increased interest in slush-type drinks that may have health or other benefit components with fruit or vitamins.”
Warrenville, Ill.-based PRIDE Stores, which operates 12 stores, has experienced a move away from carbonated soft drinks in the fountain segment.
“We’re moving into the direction where what’s popular in our cooler doors is popular in our carbonated dispensed beverages,” said Nicolette Jaeger, loyalty and foodservice manager.
Holt sees c-stores doing a great job with store loyalty programs, but aside from these and bundling offerings with food, there is nothing too innovative in fountain promotions. This is where retailers can step up their game.
“In terms of promotions, definitely our club cards for fountain drinks have been our go-to, with a Buy 5, get the 6th free offering,” said Jaeger at PRIDE Stores.
Des Moines, Iowa-based Git ‘N Go stores, which has four locations, hasn’t discounted its dispensed beverages beyond 99 cents for some time.
“It looks like RaceTrac stores are not doing the Sodapalooza [free refill fountain promotion] this year, and that may mark an industry reflection point in discounting fountain to drive inside sales,” said William Baine, CEO of Git ‘N Go. “I see 59-, 79- and 99-cent promotions on billboards from some large chains, however, so the race for large discounts is not over. With our drive-throughs, we compete more with the fast food chains for this business, and 99 cents gets the lines going.”
The challenge remains in getting more fountain heads, with big soda players owning leases and not willing to step aside, said Holt.
In terms of trends, along with fruit flavors, more coffee-type drinks like frappucino have helped propel the cold and frozen dispensed category.