Sales of prepared foods in retail segments are expected to grow, and c-stores are angling to maintain a piece of a growing pie.

By Tim Powell

As retail professionals, many of us realize the historic stigma of c-store food. In 1980, Clark W. Griswold in Vacation set back the evolution of the segment with the phrase “I’m so hungry I could eat a sandwich at a gas station.”

Fortunately, over the past 20 years, leaders in the segment, such as Sheetz, Wawa, Rutter’s and select others have created the c-store as a destination for consistently high quality, fast and fresh food.

As these retailing leaders will acknowledge, it hasn’t been easy to develop the “restaurant” image in shoppers’ minds. Consumers who were not around to observe the foodservice “revolution” in the channel (those born after 1995) are actually more likely to refer to convenience stores by name (for example Wawa or Casey’s), which is the pinnacle of any c-store brand looking to become a meal destination.

Prepared foods also have grown in variety, sales and profits in several other retail channels over the same period, including mainstream supermarkets, drug stores, club stores and mass merchandisers (e.g., Walmart, Target). As shown in the chart, cross-channel success has actually helped bolster the c-store prepared-food reputation.

FOOD OPPORTUNITIES
Q1 Consulting recently completed a study, called “2018 Opportunities in Convenience Store Prepared Foods,” on the expansion of “Grocerants” or retailers that are offering prepared foods as basket builders, banner differentiators, traffic drivers and a way to increase profitability. The explosive growth of offsite commissaries has made it possible for retailers without kitchens to take advantage of the high patron demand for prepared food.

In April 2018, consumers who had purchased prepared food in the past year in one of the retail segments (shown in the table) rated their experience on four factors: food freshness, food quality, pricing and trustworthiness.

From a high-level perspective, supermarkets reigned supreme on all four factors, followed by mass merchandisers. Convenience stores rated higher than drug stores on most attributes.

The expansion of prepared foods in the retail segments will continue to be a growth opportunity as it meets the demands of the time-starved consumer.
Convenience stores that continue to do the right things—top quality food, excellent service and clean surroundings—will continue to help move the segment forward. It is then that trends such as meal kit solutions, delivery and other mobile demands can be sufficiently addressed on a store-by-store basis.

And finally, to achieve optimal success in prepared foods, retailers must think and behave like fast-casual restaurants. This means clearly showing when the food was made (not when it will expire); transparent, premium packaging, made-to-order options and disposing of food when its fresh appearance has passed.