More and more operators are embracing bakery production and merchandising challenges to create fresh-baked opportunities.
By Heather Henstock, Contributing Editor.
With tobacco sales in decline and gasoline prices volatile, convenience stores are looking to other categories to draw more customers and improve profitability. Foodservice in its varied forms—from simply hot coffee and frozen beverages to full-scale restaurant and bakery menus—offers retailers a prime opportunity to differentiate their brand.
Among the c-store industry’s broad foodservice offerings, fresh bakery programs stand out as a way to maximize sales during the breakfast daypart and boost retailers’ fresh appeal.
Eighty percent of c-stores have some sort of fresh bakery program, estimated Jeff Hoffman, vice president and general manager for Baxter Manufacturing. Most are direct store delivery (DSD) programs where bakery production and distribution is outsourced to another baking company.
Large chains typically operate their own commissary bakeries, and a much smaller percentage of convenience stores have in-store bakeries. The key advantages to being your own baking company, whether at the store level or through a commissary, are quality control and the freedom to adjust bakery product lines to regional and seasonal tastes.
QuikTrip, in Tulsa, Okla., which operates three commissary bakeries, sees a bright future in baking. Its latest Gen III store design is large (averaging 5,700 square feet) to accommodate more space for fresh food and bakery product merchandising. “Bakery is another piece of the arsenal for us, and it gives you a chance to try a lot of seasonal things,” said Mike Thornbrugh, public relations manager for QuikTrip.
Designing a fresh bakery program is not for the squeamish. Getting it right takes considerable planning and heavy investment in equipment for both production and merchandising bakery products.
Unique Challenges
“When you get into baking, you start adding complexity,” said Jeff Lenard, vice president of communications for NACS. “It is manageable, and the pay-off is often there. But fewer c-stores get into it because of the difficulty.”
Bakery equipment can be complex, and the nuances of a typical convenience store layout further complicate matters. But investing in equipment for a fresh bakery program can draw new customers, generate repeat business and set your c-store apart from the competition.
Convenience stores have specific challenges when considering bakery equipment. With the average store footprint about 2,800 square feet, equipment size matters and merchandising space for bakery products is tight. At the store level, equipment needs to be easy to use for a foodservice staff that is often already stretched thin with food prep. The high price of specialized bakery equipment can also be a barrier to investing in a fresh bakery program. Above all challenges, however, equipment versatility ranks as the top priority for c-store companies looking to add fresh baking.
At store level, c-stores want ovens that bake and cook, Hoffman said. The “rapid cook” ovens popular among c-stores for their size and speed are geared toward cooking and baking some raw doughs. But they are limited if a retailer wants to expand into a broader variety of bakery products. In addition, the convenience store industry’s top-selling bakery product—doughnuts—are typically fried, not baked.
Commercial convection ovens are larger than rapid cook ovens, and their baking capacity and versatility are much greater. Some have steam injection, which is necessary for achieving the crispy crusts of European-style breads or chewy bagels.
Once products are baked, storage that maintains the integrity of the product becomes another equipment need. Hoffman said many c-stores chains he spoke with at the NACS Show in October were looking for warming cabinets that would maintain moisture in bakery products, which tend to dry out under heat lamps or in open-air storage.
Equipment Versatility Key
Equipment that can execute a variety of tasks is a priority for c-store commissary bakeries as well. Sheetz, in Altoona, Pa., has operated its 140,000-square-foot commissary since 2008. When outfitting its bakery initially, the company purchased some equipment that could only be used for one product. Its cookie depositor, for example, can only be used for cookies in a certain size range. Another machine deposits batters only for muffins. Going forward, Sheetz and other c-store commissary operators are looking for equipment that can adjust to changing product lines.
“We want equipment that gives flexibility to create a wide range of new products,” said Jarrod Sharpe, commissary manager for Sheetz Bros. Kitchen. “We’re also looking to automate the process more, while still maintaining quality.”
About 60% of the production space in the commissary is dedicated to producing bakery products, including sub rolls, burger buns, cookies, doughnuts, muffins and cinnamon rolls. Major bakery equipment includes seven mixers (three spiral mixers, three planetary mixers and one horizontal), 14 rack ovens and two doughnut lines. Each doughnut line can produce about 600 dozen units an hour, Sharpe said. Sheetz Bros. Kitchen produces and delivers about 65,000 doughnuts a day to its more than 390 stores.
“Our glazed, yeast ring doughnut is our best selling bakery product,” Sharpe said. Weighing in at three ounces, Sheetz’s signature glazed doughnuts are larger than all its local competitors’, he added.
Find Your Niche
Whether c-stores have a commissary or bake in-store, most successful bakery programs have a specialty. Hruska’s, a two-store chain based in Ellinger, Texas, produces kolaches as its signature item. The chain’s Ellinger store produces 12 kolache varieties from scratch daily. About 600 square feet of the store is dedicated to bakery production where the staff begins mixing doughs at 2 a.m. for that day’s sales. The fruit-filled Czech pastry, similar to a Danish, is traditionally topped with poppy seed filling, but Hruska’s offers a range of sweet and savory fillings. It also uses the same kolache dough to wrap sausages for 12 varieties of Pigs in a Blanket.
“We don’t use a mix, we bake from scratch,” said Teresa James, president of Hruska’s. “It’s original, produced the old fashioned way.”
The fresh bakery products bring in regular local customers and have become something of a roadside attraction for drivers needing sustenance along Highway 71.
The pleasing aroma of fresh baking is a clear advantage for Hruska’s and others with in-store bakeries. Another growing trend among c-stores is open food production.
“Customers like to see food prepared. It gets rid of the mystery behind the ingredients,” said NACS’ Lenard. “If a convenience store invests in the equipment and labor required to bake at store level, why not show off efforts to customers?”
Baking in view of customers imparts a sense of theatre that can boost sales. “If you can make your store the place where people have to go to get your product, you win,” Lenard said. “You have to be famous for something and convenience store customers love to try something new.”
Hruska’s has certainly done this with its kolaches as has Sheetz with its doughnuts. Opportunities to differentiate through fresh baked products abound if c-stores can overcome bakery equipment challenges.
Is There an App for That?
A trucker from Texas makes his way through Ohio at 2 a.m. when his stomach begins to rumble. He could settle for the next exit, hoping a convenience store is open to serve him. But he has a hankering for a doughnut, so he hops on his iPhone and searches his trucker app looking for a good deal in an unfamiliar area. The GPS on his phone maps his exact location and provides a list of doughnut vendors with directions to the stores. One enterprising convenience store pops to the top of the list with a special offer of a free small coffee with doughnut purchase for truckers from Texas.
This scenario is real…nearly. An app called TruckerNet provides similar instant information for truckers needing service to their rigs while on the road. A number of restaurant apps (Urbanspoon, Open Table and Menu Pages) are already in the marketplace.
Sheetz and QuikTrip are among many convenience store chains that post foodservice menus online. Fewer go so far to offer online ordering, but more are using Facebook, Twitter and other social media networks to promote their brands and build community among customers.
More importantly, customers are catching on. QuikTrip has half a million Facebook followers, and it regularly promotes its foodservice offerings to its fans, according to Mike Thornbrugh, public relations manager for QuikTrip. “For us it has been successful,” he said. “You have to listen though and put it all together. They definitely tell us what they want.”
With the social media phenomenon raging and new apps giving consumers foodservice recommendations at their fingertips, convenience stores are taking strides to be part of the game. Staying offline is the easiest way to go, but is it the smartest? Not if your company wants its foodservice programs to remain competitive.
