Thanks to an increasingly busy lifestyle, today’s convenience store customers regard food prepared away from home as a necessity, and the industry’s top-quartile retailers have benefited handsomely from meeting the growing demand for fresh foods.
For the past decade, the convenience store industry has consistently posted yearly sales gains in foodservice. Retailers are to be commended for the work they have done cultivating the demand for foodservice by enhancing their focus on quality, consistency, freshness and value.
While the industry has made strides, this isn’t to suggest that 2023 and beyond will be easier, as foodservice is a very complex and competitive business. As the country wrestles with a sinking economy and surging inflation, costs are going up, and that is starting to present concerns for convenience stores. This is just one of the topics we will tackle at the 2023 National Advisory Group Conference in Austin, Texas, March 26-29.
M. David May, director of food services for Kwik Stop in Nebraska, reminded us this month that the industry’s most prosperous category, while a vital part of consumers’ daily lives, is still very much tied to the economy.
“The price of fuel has a tremendous impact on our foot traffic in the stores,” May said. “Customers weren’t coming in as much or buying as much when gas was approaching $5 per gallon, but now that gas prices are retreating, we’re seeing our store sales go up.”
To attract cost-conscious consumers, May always tries to have some type of meal deal combining chicken and a small side for a value price of between $5 and $8. This bundling has proven effective.
Retailers are going to have to be innovative and be quick on their feet to maintain their foodservice business as customer discretionary spending dwindles. The key to maintaining sales is remembering to excel at the basics. Customers are busy, hungry and increasingly price sensitive. Retailers must focus on meeting customers’ demands on their schedule with healthy options, affordable prices and outstanding service. I realize this is no secret, but in tough times like this, growth isn’t always the best course. Basic blocking and tackling to maintaining existing sales is an effective solution.
Among the convenience store industry’s greatest competitive advantages over the past two decades has been its ability to provide great service and meet customers’ immediate demands, so much so that it’s become instinctive to top-quartile chains.
But the stakes are changing. The foodservice space sees increasing impacts and competition from online. Third-party delivery services have created unprecedented options for foodservice, and not just for the food itself, but on price. Customers simply have more options and many different price points to choose from. These are some difficult waters to navigate.
All of this means if you are not tracking the trends and your customers’ other options, you will fall behind.
Good to Great
Convenience store retailers must do everything possible to entice customers to try new products and return for more, without negatively impacting why the stores exist: to provide convenience.
Whatever level of food you feel comfortable delivering — the simplest or the most complicated — you must focus on freshness, quality and value. But the ultimate piece is consistency. You have to be able to deliver great food consistently.
What’s more, these don’t necessarily need to be elegant upscale menu items. It’s whatever you feel you can do great. If you are comfortable selling sandwiches, sell the best sandwiches you can. If it’s fried chicken, have the best fried chicken in the market. It is a rigorous endeavor, but this is where market leaders excel.
Again, this doesn’t mean venturing out into uncharted waters if you are not ready. Visit any chain with a thriving foodservice business and you will see that, across the board, great execution is the rule, not the exception. Whatever your strategy, your customers will let you know how you are doing. Listen to them, react to their needs and execute.
