In 2021, c-stores are looking to recoup fresh bakery sales after the COVID-19 pandemic sent 2020 bakery sales plummeting.
Nouria Energy, which has 127 convenience stores in Massachusetts, Maine, New Hampshire and Rhode Island, had big plans to expand its two-year-old fresh bakery segment last year, but the pandemic brought those plans to a sudden halt. Joshua Clark, the company’s category manager, fresh foods, explained that “like everyone else,” Nouria’s bakery 2020 sales finished flat year over year.
Hardest hit were morning meal replacement items such as muffins, doughnuts, danishes and croissants. But Clark is optimistic, a mindset fueled by watching a steady increase this year. “We got derailed, but the trend is up, and sales are growing,” he said.
This year, Clark expects the expansion plans to rev up again, adding in-store bakeries to 16 more locations, more than doubling the present number. Another priority is to increase sales beyond the breakfast daypart into lunch and afternoon snack time. Nouria recently launched a loyalty app, which it will use to promote all-day bakery.
At the onset of the pandemic, bakery sales dropped nearly 60% at The Hub c-stores, which has six locations in North Dakota, said Jared Scheeler, CEO of The Hub.
Because customers were no longer receptive to the unwrapped self-serve bakery merchandising that had served the stores well for many years, The Hub turned to packaging each individual item starting in March. Sales rebounded slightly, but the company felt that prepackaging items might subconsciously conflict with its “made fresh daily” message.
As soon as COVID-19 cases significantly declined in its market areas, the stores returned to selling unwrapped products including made-in-store doughnuts, which Scheeler described as the bakery’s “anchor,” and its ever-popular fresh cinnamon and caramel rolls. This move helped shore up sales, but they have not yet returned to pre-pandemic levels.
“I imagine the bakery category will continue to rebound in 2021; however, I do have concerns that the category in our stores may be forever changed,” he said. “Some customers may demand packaged items, while others may think the package diminishes the image of a fresh offering, even though it extends the product’s shelf life.”
He noted it is critical to watch the category closely “to make nimble decisions on how to proceed in the future.”
In its “Consumer Foodservice 2020/Fresh Food 2021” report, research firm Euromonitor International forecasted that U.S. retail sales of bakery products in limited-service restaurants and bakery shops offering dough-based items for immediate consumption will grow 2.6% between 2019 and 2024 at a compound annual growth rate of 0.5%.