C-store operators burning the midnight oil thinking of ways to increase their business may have inadvertently stumbled upon their answer.
While late night has grown into an identifiable daypart on its own, too many retailers either haven’t yet recognized it as such or simply don’t have the traffic to warrant promoting it. But for those who do, the opportunities are real—and increasing.
According to The NPD Group, the Port Washington, N.Y.-based global market research firm, savvy food retailers “know there’s money to be made by staying open late,” said NPD analyst Bonnie Riggs. “The hours between 10 p.m. and 5 a.m. are turning into a lucrative daypart.”
For years, NPD found, “convenience stores such as 7-Eleven have catered to the late-night customer by offering late operating hours or 24-hour service,” Riggs said. “Now consumers have even more options, as an increasing number of quick-service chains expand their hours of operation by opening earlier or closing later.”
Menu Matters
Late-night customers are mostly young (males 18-49, females 18-34), and half of them are coming from home; another 25% are coming from work. More than 40% of the late-night business during NPD’s study came between 10 p.m. and 11 p.m.
“The reason [late night] is growing simply is increased availability,” Riggs said.
For the year ending March 2009, the trend has not been a pretty one for the restaurant industry. Between 9 p.m. and 4 a.m., NPD reported, visits are down 2%. At burger concepts they’re down 3%. For c-stores, however, visits are up 4%. The industry currently holds a 20.9% share of the daypart, with about 368 million visits during these hours.
“C-stores have a smaller piece of the pie, but it’s growing the most between 1 a.m. and 4 a.m.,” Riggs said.
Consumers are less prone to buying salty snacks and ice cream and more likely to buy regular menu items, such as burgers, chicken sandwiches and pizza, if not an entire meal.
The most popular menu items purchased during the late-night period are pizza, burgers and French fries, followed by salty snacks, ice cream, chicken nuggets or strips, breaded chicken sandwiches, doughnuts, tacos and breakfast sandwiches, NPD found.
The top beverages are regular carbonated soft drinks, diet carbonated soft drinks and regular or decaffeinated coffee, followed by bottled water, noncarbonated soft drinks, specialty coffee, tap water, iced tea, juice and milk shakes.
Missing Hours
Jerry Weiner, vice president of foodservice for Rutter’s, believes the industry as a whole could do better from late afternoon through late night. “It has become a piece of the business that we generally, as a group, don’t go after,” he said. “There is not a lot of competition for good, fresh-baked food at that time of the night, so that puts you at the top of the list, and that’s really what it’s all about.”
York, Pa.-based Rutter’s Farm Stores, which operates 56 convenience stores across Pennsylvania, introduced a dinner program, as well as kids’ meals, in mid-June. “We don’t have a late night menu per se because our entire menu is available 24 hours a day,” Weiner said. “But that is our strategy and customers know it.”
Launching a dinner menu was an integral part of Rutter’s prototype concept, which opened earlier this year. Rutter’s new units, the first of which debuted in February, include design features like open ceilings, an abundance of floor and wall tiles, upscale bathrooms with floating ceilings, music and colorful accents.
The menu includes custom stir fry; fajitas; fresh-baked breads; oriental bowls with chicken, beef and pork; fried rice, white rice, noodles and veggies; and a variety of toppings and dressings. Customers are also able to mix and match meal items.
Thus far, 12 stores are offering dinner, as will all new stores in the future. The chain has also rolled out a breakfast bowl using the same principles and means of packaging. “From there came the development of many other items,” Weiner said.
Owning Late Night
With its strong locations and fast service, the convenience store industry is positioned to garner huge sales during the overnight.
“Convenience stores have an opportunity to own the late-night daypart as a foodservice solution and become truly meaningful to a specific audience,” said veteran foodservice consultant Arlene Spiegel, president of Arlene Spiegel & Associates in New York City. “However, this can only be achieved by having a credible and compelling food program.”
A so-called store-within-a-store strategy works best in building credibility, Spiegel suggested. “Customers will not trust the food offerings if they are jammed between your paper towel and magazine displays,” she said. “The fresh food area needs to be articulated, and be naturally path-linked to other shelf-stable food items.”
What she called “believable and relevant” items to offer for late-night can range from traditional and trendy salads, sandwiches and wraps to cheese and fruit platters and deli-style platters for sharing. If wines are offered, she stressed, “they would be great to bundle together for subtle suggestive selling. Do not try to offer items that the customer can’t believe are fresh or of high quality, such as steaks or grilled fish.”
Packaging is another component that provides credibility for fresh food. Key here are features, such as great shelf presence, clear windows to showcase the actual product, proper nutrition labeling, timely dates and cooking/serving directions, which Spiegel said, “will help overcome any obstacle to the purchase decision.”
In many towns, restaurants of all types close their doors early and the local convenience store is literally the only place in town to satisfy a late night craving. “If your program is outstanding, it will not only drive traffic for the meal, but bring these customers back for your other offerings,” Spiegel said.
Location Rules
Linda Snetsinger, foodservice district manager for 17-unit Olson Oil in Sioux Falls, S.D., maintains that location alone decides how much business she will get late at night, and so sees little if any gain from marketing against the daypart.
Five of the chain’s units feature a Hot Stuff Pizza program, and three of those are open 24 hours a day. The menu includes pizza, breadsticks, egg rolls, hot wings, cheesy bread, small cinnamon rolls, cookies and dessert pizzas. One of those three stores does particularly well at night, drawing on what she described as an all-night “bar and industrial” crowd.
“At that location,” Snetsinger said, “we just have the product in the warmer, and it works. We’ve done it for a while and the customers have come to expect it from us.”
At the same time, another of the three units does well with the Hot Stuff offering during the day, but not at night because, according to Snetsinger, “it doesn’t have the traffic. The late-night crowd is distinctively different in that it tends to be more of a transient crowd. The repeat customers have their core items, but the others have a wide range of interests.”
Snetsinger conceded that she has “never really thought about” marketing the late-night daypart. “I still think it is a concept that needs to be developed on a location-by-location basis,” she said. “At one of our stores we used to do really well during the overnight shift. Then we had a 24-hour McDonald’s come and that kind of did that store in.” CSD
