Fostering Proprietary Foodservice

To put a brand on their brand, more convenience retailers are entering the proprietary foodservice pool.

By Jeffrey Steele, Contributing Editor

As convenience stores increasingly become go-to options for breakfast, lunch and dinner, more and more operators are mulling the decision to launch proprietary foodservice options or partner with a co-brand. They know either alternative carries the potential of mouth-watering profit gains from increased customer traffic and dollar sales from the lunch and dinner crowds.

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While breakfast is a growing trend in the channel, lunch and dinner are stalwart dayparts for many retailers such as Fishkill, N.Y.-based Flory’s Convenience and Deli, which serves New York’s Hudson Valley. The popular c-store chain has tried both branded and proprietary programs. Director of Operations Paul DiPalma said the four-store chain has in the past used branded programs from Blimpie and Vie de France. It currently has one location with a Dunkin’ Donuts, but leases out the operation.

It chose to move away from branded and create its own proprietary program based around the Flory’s brand. “We prefer not to be told what to do,” DiPalma said.

Flory’s features hot food at both lunch and dinner, promoting with online ads and faxed and emailed promos to local employers. Homemade sausage and peppers, steak with onions and a Friday tilapia are all proven winners with hungry customers. Lunch represents the big meal seller for the stores. Dinner decidedly is less so, DiPalma said.

At dinner, Flory’s offers what DiPalma called “a KFC-style chicken with fries,” as well as packaged items prepared earlier for mid-day.

“We package soups and meals in the cold case for people to take,” said DiPalma. “What’s most popular at dinner are the cold specialty sandwiches and salads. During the day, it’s the hot items.”
The chain features two sit-down and several more stand-up tables frequented by local business folks and construction workers at lunch time. “We have more seating outside—eight tables—and they’re always filled during the summer,” DiPalma said.

When mulling the consideration of whether to embrace proprietary or branded foodservice programs, a company’s current level of expertise must be a consideration.

So said Jeff Lenard, vice president of strategic industry initiatives with the National Association of Convenience Stores (NACS). If you’re coming at foodservice as a newbie, branded programs are a solid option because a co-branded partner has the tools, knowledge and brand recognition you lack. “One of the challenges with proprietary programs is [operators] have to spend a lot of time selling their brand story,” Lenard said. “That is particularly difficult when you’re selling gas.”

He recalls seeing statistics at a restaurant industry trade show indicating 80-90% of new restaurants close within a year of opening. A factor in the high mortality rate is that restaurant entrepreneurs allocate too much money on the opening. “But you still need money to sustain the operation,” Lenard said, pointing out yet another reason for strongly weighing the advantages of a branded program.

The downside of co-branded partnership is that a c-store splits the profits along with the risk. Moreover, there’s less say in menu offerings. “You don’t have as much control, risk or as much work to do on brand recognition,” Lenard said.

Proprietary programs also provide a number of advantages. If you are able to create specific items you can prepare better than others, patrons have no other option than to visit your establishment, Lenard said. “That makes you more of a destination,” he added. “You also have more control over the menu. You can switch things up more.”

Many argue an operator has to be “all in” when launching a proprietary program, and must bring aboard the right people with the right expertise, not just in preparing food, but in food safety, equipment and more. Lenard agrees these can be daunting hurdles. But added today more than ever, solutions exist to address the challenges.

“The good news is there are an awful lot of graduates of culinary schools, who are attracted by the idea they can own a menu, try something new in a smaller space and not have to be the third or fourth in line at a fancy restaurant seating a couple hundred people,” he said. “They’re the same skills, but executed in a smaller space.”

Succeeding during the dinner hour can be a struggle, whether you’re a c-store operator or a quick-service restaurant. But the edge goes to c-stores in being able to cater to late diners, Lenard observed. “That dinner hour may go considerably later than seven o’clock,” he said. “That dinner hour may go all the way to breakfast.

“Also, with such a high percentage of people today in single-living situations, as opposed to being married with children, the dinner hour is often not at the traditional hour. It could be after the movies, after working out or whenever you think dinner should be. That could present opportunities in grab-and-go or fresh-prepared foods.”

NACS has commissioned surveys regarding when consumers are most inclined to make gasoline purchases, Lenard said. The findings have strong and intriguing implications for those seeking to launch or tweak food service programs.

It’s no secret c-stores with foodservice programs are increasingly moving toward higher-quality, healthier-for-you offerings.

Among the operators witnessing the trend at both his and other stores is Steve Magestro, president of the 11-store Saukville, Wis.-based Mad Max Convenience Stores chain, serving the southeast quadrant of the Badger State. Magestro is seeing “more healthy foods, but hamburgers and hot dogs still sell well,” he commented. “We removed roller grills from our locations. We are looking for better foods, which our customers are asking and looking for.”

Rather than trying to cater to the lunchtime snacking demographic, Mad Max is running monthly promotions on various key food items. Nor has the chain spent much time experimenting with meal kits, take-home meals or other dinner approaches.