At a time when many convenience stores were reeling amid the emergence of the COVID-19 pandemic, Chicago-based c-store chain Foxtrot watched its revenues double from January to May.
Key to that success was Foxtrot’s ability to elevate its existing digital platform — which has been evolving since the company began as an e-commerce app seven years ago — as social distancing rules sent customers online for essentials.
Now, Foxtrot is aggressively pursuing national expansion, far beyond its Second City roots, while transforming its brick-and-mortar c-store business to include a heightened digital experience via e-commerce.
In February 2020, the chain received $17 million in funding powered by a number of its existing investors and joined by venture capital firm Imaginary. This round of investment is expected to drive the chain’s expansion, in terms of increasing its footprint as well as building its capabilities on the e-commerce end.
In early July, Foxtrot debuted its eighth Chicago c-store, opening on the first floor of a high-rise apartment building in the city’s Streeterville neighborhood. It’s also slated to open two new locations in Washington, D.C., in the Georgetown and Mount Vernon Triangle neighborhoods. Originally planned for this fall, due to the pandemic, the Washington, D.C., sites will now open in Spring 2021 and will bring Foxtrot’s store count to a dozen locations. But the chain’s growth trajectory is only beginning. Foxtrot has big plans to introduce more c-stores across the U.S. in 2021.
Foxtrot ventured outside of Chicago for the first time in 2019, opening two c-stores in Dallas.
“Next year, we are looking at several more openings in Chicago, several more openings in Washington, D.C., hopefully another opening or two in Dallas, and then we’re doing the work this year to figure out the next markets beyond that,” said Foxtrot Co-Founder and CEO Mike LaVitrola, who began the company with Co-Founder and Chief Technology Officer Taylor Bloom in 2013. “We don’t have any specific markets pegged, but we’re doing a lot of the background work on the most obvious targets there.”
Among the target cities under consideration are hot spots like Austin, Boston and New York City.
From App to Market
When Foxtrot debuted in 2013, it began as an e-commerce app that delivered beer as well as essentials to students at the University of Chicago. From there, Foxtrot expanded its core customer base to include young professionals and families — aged 25 to 45 — living in walkable urban areas.
“We were trying to reimagine what the corner store could be, curating that online and delivering it in under an hour,” LaVitrola explained.
Then, in 2015, the company introduced its first brick-and-mortar location in Chicago. Despite its move into physical retail, the company never stopped expanding its digital expertise.
Today, Foxtrot’s modern corner stores measure 2,500-3,000 square feet and offer a hybrid brick-and-mortar/e-commerce model, complete with a fresh prepared foods menu, which it has been refining since it began its retail journey.
“If you look at the business now, roughly half of the revenue is retail, and half of the revenue is through our online platform,” LaVitrola said. “But it’s broadly the same customer shopping across both. They might come in and get their morning coffee in the store, and then get their wine delivered at night.”
Pivoting in a Pandemic
When COVID-19 reared its head in March, Foxtrot found itself perfectly positioned to double down on e-commerce as shelter-in-place rules began.
“When the pandemic hit, because we hold grocery licenses, we — like most people in the industry — were classified as an essential business,” LaVitrola said. “So, while we had to dramatically alter what that retail experience looked like, we were able to keep operating and serving the neighborhood.”
Foxtrot instituted major changes to operate safely during COVID-19. Among the usual safety precautions like plexiglass and social distancing decals, it removed indoor seating and closed the self-serve coffee bar as well as its café. While customers continued to shop the stores for grocery items, the chain saw slight dips in in-store sales in the spring due to the pandemic. Meanwhile, its e-commerce business soared.
“E-commerce was always roughly half of the business. That business quadrupled in the couple months since COVID-19 started,” LaVitrola said. “This massive, massive shift of our customers towards online is what allowed that growth to happen.”
Foxtrot was quick to transform digital opportunities amid changing customer demands. For example, a couple weeks into the pandemic, Foxtrot instituted curbside pickup and began offering its coffee and café menu both online and in-app for the first time.
“Previously, customers could either just walk in and shop the store or hop on the app and get (their order minus food and coffee) delivered in under an hour,” LaVitrola explained.
Because the stores are in cities, curbside pickup looks a bit more like ‘door-side pickup,’ with customers walking up and employees running the order to the sidewalk.
The chain also rethought its product mix. With parties on the backburner during the pandemic, Foxtrot saw customers switch from stocking up on cold beer to loading up on frozen veggies, bread and the basics.
“We’ve been adjusting our merchandising mix — really, on a week-by-week basis — to adapt to what we’re seeing sales trends come in at, and making sure we’re as relevant as we can be to our customers,” LaVitrola said.
Now that Foxtrot offers its full coffee menu — from cold brew to lattes — and its prepared food menu online, customers have grown accustomed to ordering via the app and swinging by the store to grab their beverage.
“It’s a super quick, usually contactless experience,” he said.
Moving its café menu, which features items like spicy chicken, avocado toast and grain bowls, to a pickup and delivery format took extra consideration. The Foxtrot team tested various types of packaging for each food product to ensure it would travel well during delivery.
“We ultimately posted a menu online, which is up there now, of items that we feel really confident can stand up to delivery,” LaVitrola said. “It’s not the complete full expression of what our café menu looked like in-store, but it approximates about 75%. Customers have been able to find most of their favorites on there. It’s been going pretty well.”
The approach was clearly successful. By July, Foxtrot’s retail business re-stabilized, but the huge uptick in online customers has continued. LaVitrola attributes part of the retail resurgence to the chain’s ability to pivot to meet customers’ needs for a different set of products during COVID-19.
As COVID-19 numbers dropped in Chicago in time for the July Fourth holiday weekend, Foxtrot was able to open its patio seating.
“Obviously, there’s a lot less seating in order to maintain social distancing guidelines, but the patios are definitely being well used, which is really great to see,” he said. “That helps both our coffee business, our café business, and really just brings some life back to the stores.”
“Seating in-store is going to be a lot slower to come back,” LaVitrola added. “Chicago, and also Dallas, to a certain extent, have really relaxed guidelines on (the amount of seating capacity you can now include in the dining area) within stores.”
The Modern Corner Store
For Foxtrot, the pandemic has reemphasized the strategy its leadership team has been building over the past six years.
“We always had this notion of an omnichannel customer,” LaVitrola said. “Retail isn’t dead. It’s not dying. Crummy retail is. But people still want to get out of their house. They still want to walk in and experience things.”
That consumer drive for an experience-based shopping trip has informed Foxtrot’s model. The chain has re-envisioned the corner store as an inviting hospitality-driven site where customers can get in and out quickly, but might prefer to spend time — complete with locally roasted coffees, a high-quality prepared-food menu and interesting wines.
“Really it’s a place where you can see yourself morning, noon and night,” he said.
It’s a vision he calls the “anti-Amazon approach.”
Simultaneously, e-commerce is also accelerating.
“While we think that there’s going to be a robust market for retail, e-commerce needs to play a key part in any retailer strategy, if it’s going to be successful,” he advised.
Through its proprietary Foxtrot app, customers can conduct transactions both in-store and online.
“We are agnostic as to whether a customer’s shopping in-store or getting products delivered,” LaVitrola said. “What we’re seeing, in our data and in our customer-shopping patterns, is that most customers are actually shopping across platforms, but just at different times.”
Some customers stop in for morning coffee and in the evening get wine and dinner delivered. Others might stop for a salad and beer on their way home but order bagels on Saturday mornings.
“Customers expect retailers and brands that they support to be equally native both in-store and online,” LaVitrola said. “The model we’ve built really is designed for that.”
LaVitrola felt the time was right to grow the brand because Foxtrot has a model customers are demanding today that allows them to shop across platforms — in-store, online and in-app for pickup or delivery — in order to get their shopping needs met in a variety of ways.
Foxtrot looks to offer both the essentials customers need along with luxuries and upscale surprises like local pastries or new, trendy ice cream brands.
“What we’re seeing is this bifurcation of retail, where there’s so much buying power going toward Walmart and Amazon — these big stock-up places,” he said. “When people are looking for a pick-me-up, or want to have a little fun or explore something new, there’s not a lot of retailers focused on that area. That’s where we spend a lot of time.”
In addition to upscale surprises, the chain also focuses on making price points approachable and delivering value in a bevy of ways. LaVitrola thinks of the model as hearkening back to the days of the general store as the center of the neighborhood. “If you needed something, they had it,” he explained. Meanwhile, the chain’s digital capacity provides options.
“We had the digital corner store for two years before we opened up our first physical one. That’s really at the heart of everything we do,” he said.
Customers can find the same products both online and in-store, but online merchandise shifts by time of day. Mornings focus on coffee and breakfast tacos, while at lunchtime the app showcases healthy salads, kombucha and pick-me-up snacks. In the evenings, the app features fun products like wine and ice cream for shoppers looking to relax.
LaVitrola advised that c-store retailers interested in opening an e-commerce solution will find that many off-the-shelf solutions exist. “There’s services who will deliver it. There’s services who will make your store,” he said.
The hard part is giving customers a reason to shop with your online site amid increased competition from giants such as Amazon, Walmart and Instacart.
“That reason can be your merchandising take, your private label or some sort of loyalty integration,” he said. “We spend most of our time internally making sure we’re giving customers a reason to shop with us and check in on us.”
Local relationships are also key. Foxtrot has a network of more than 200 small business vendors in each market with whom it partners.
“This has really been part and parcel to our launch,” he said. “If you’re going to start a corner store, it should really be a platform for all these great makers in the community.”
For example, in Chicago, the chain works with popular local pie maker and restaurant Bang Bang Pie & Biscuits.
“We’re able to give Bang Bang Pie a lot of shelf space in our stores and online, bringing delivery capabilities to his business without any additional overhead, because we treat it like a normal partnership,” LaVitrola said. “We do that certainly with our coffee roasters, and with all the local craft beer guys.”
The chain is constantly on the lookout for the best products.
“A lot of times, that means they’re coming from local mom-and-pop shops that don’t have the infrastructure to set these things up themselves, but they can tap into Foxtrot, and it’s a win-win,” he said.
Giving and Growing
Foxtrot is also giving back to the community amid the pandemic. Through April 19, it donated 10% of its total sales from delivery orders to the Greater Chicago Food Depository and the North Texas Food Bank up to $60,000.
“The Greater Chicago Food Depository and the North Texas Food Bank are two organizations that a lot of our team members have been working with for a long time and that I’ve been familiar with. They were really doing great work in the communities in a lot of different aspects before COVID, and then certainly their need increased during the pandemic,” LaVitrola said. “We donated 10% of our e-commerce sales over a period of time and hit that max of $60,000. It was great to be able to give there, and then really rely on them to use that money the most effective way they can through their organization. I think it allowed our customers to feel good that they are using our service to get groceries delivered during the pandemic, but they’re also helping out a great cause along the way.”
Going forward, there’s growth on Foxtrot’s horizon as far as the eye can see.
“In a concrete way, we’re lining up new store openings and new neighborhoods for the markets we’re in,” LaVitrola said. “You’ll see a lot more from us in Chicago, in Washington, D.C., and also down in Dallas. Then we’ll be continuing the expansion of our online platform — welcoming new vendors, new features and maintaining that as a central part of what we do.”
Each year Foxtrot has been in operation, it has more than doubled its store count.
“Certainly, that would be at least the goal for 2021 as well,” LaVitrola said. “As a rough target, that’s where we’re headed.”