The bar has been raised on sandwiches—indeed, on all freshly made to-go dishes—as consumers’ expectations continue to rise and new competitors from outside the c-store universe appear on the horizon.
Convenience stores are finding themselves more and more in conflict with players from the fast-food and grocery stores seeking the same “fare” share. With that reality firmly in mind, operators continue to upgrade their food programs and logistics, aiming for greater freshness and quality.
One of the new competitors c-stores need to deal with in this era of blurred category lines are small grocery stores specializing in convenient to-go foods. Tesco’s Fresh & Easy, a 121-store chain of small-size grocery stores in Las Vegas, Phoenix and throughout California, is aggressively targeting consumers’ on-the-go meal dollars.
“We don’t really think in terms of competition,” claimed corporate spokesman Brendan Wonnacott. “We sell food; we’re a grocery store, so our competition would be anybody who sells food. For us, the focus is on the customer and what folks are really looking for in a market located right in their neighborhood. As our name indicates, we are fresh food, we’re easy to shop, and we’re in your neighborhood. We try and stick to that model.”
Tesco opened its first Fresh & Easy stores in November 2007. From the beginning, Wonnacott said, “we were really surprised at how popular these (fresh take-out) items were. Requests were coming in left and right for different types of to-go items—larger package sizes, more variety in terms of different pastas and sauces, and things like that.”
Price and Variety
The chain has added about 1,000 products during the summer, 30% of which are to-go items, Wonnacott said, including about a dozen sandwiches. Sandwich varieties include roast beef, ham, turkey, egg salad and chicken salad, available on several different breads, including wheat and sourdough. There are also breakfast bagels sandwiches. All are made without artificial colors or flavors or added preservatives or trans fats.
The price points on its prepackaged sandwiches are “in general quite cheap,” in the $3 range, said Wonnacott. A 9-inch “Big Sandwich” sells for $3.99. Together with the “Big Pizza, he added, it is one of the recent items that have been more directed at families on a budget.”
The sandwiches are produced in Fresh & Easy’s 850,000-square-foot central commissary in Riverside, Calif., part of its distribution center campus. Deliveries from the commissaries are done in the morning. Every sandwich is date coded, and will sit on cooler shelves for no more than two days before being discounted and eventually donated. That said, Wonnacott added, “We usually sell out of them. They are quite popular.”
The sandwiches are displayed toward the front of the 10,000-square-foot stores. Square-shaped sandwiches are halved and placed in cardboard containers that show what’s inside. Others, like sub sandwiches, are wrapped in cellophane.
Like all of Fresh & Easy’s grab-and-go items, the sandwiches are “there for the convenience of our customers,” said Wonnacott. “The bottom line for us is that a grocery store is for everybody. We want items that are easy to pick up and take home and eat, or to pick up for lunch. Overall, we have found that people are looking for more options for fresh food.”
Together with its sandwich line, the chain recently introduced a line of to-go family meals that serve a family of four for $8. “They have become incredibly popular of late,” said Wonnacott. “We have a ‘Big Lasagna’ with meat sauce, spaghetti with turkey meatballs and a chicken-bacon mac and cheese, all packaged to go. They are fresh, intended for people to take home and drop in the oven.”
Marketing for the prepackaged sandwiches and other take-home items consists of weekly flyers mailed to surrounding communities. “We originally started with a biweekly one,” Wonnacott said. “But we went weekly and became a little bit more price focused just over the past several months as a reflection of the changes overall in the marketplace.”
Stores, which are open daily from 8 a.m. to 10 p.m., also depend on strong word of mouth, and a lot of social media that they are very active on, like Twitter.
New competition, like new social media, point to the inevitability of change. For c-store operators, the message couldn’t be clearer.
Chevron and Phase Two
Chevron Corp., San Ramon, Calif., is in the process of rolling out the ExtraGood to Go hot food program to its more than 400 stores, with a completion date scheduled for mid-September. After the deployment is complete, work will begin on what executives are calling phase two, which will involve what U.S. foodservice category manager Don Tovar said will “hopefully be a pretty significant redesign of our fresh-food supply chain program. Obviously, that would include packaged sandwiches.”
There is a “tremendous influx of commissary programs into our competitors,” said Tovar. “Folks like the QuikTrips of the world and some others are running very successful programs by effectively building and designing their own commissaries to deliver specifically on a daily basis the fresh products that their stores need to be successful with consumers. For those of us who have not gone down that road, the former DSD [direct-store delivery] system frankly is inadequate. It puts us behind the eight ball by having a competitive program that in most cases is delivered once or twice a week.”
Chevron, Tovar explained, has made a decision “not to go down the proprietary commissary road” but instead to work with existing DSD companies “and effectively reconfiguring them to help them become much more competitive with that business, as well. They have lost and or losing a tremendous amount of business because of those proprietary commissary programs.”
The reconfiguring will include “taking a look at their business model and finding ways to help them be much more competitive and ultimately deliver us a fresher product with greater frequency of delivery that truly will meet the needs of our customers for fresh food,” Tovar said.
Though details are still in short supply, Tovar promised that Chevron’s new program will include “sandwiches that in most cases will likely be very different from what you see in a standard c-store today—much fresher product, much fresher ingredients, obviously with the capability of delivering more frequently to stores.” Management is looking at a minimum of three deliveries weekly, he adds, “and our objective is actually to get it to do daily.”
Executives plan to emulate QSR competitors by picking a very specific time of day—perhaps from 2 p.m. to 4 p.m. on Fridays—for special promotional programs. One possibility, said Tovar, could be “Food Frenzy Fridays” or things of that nature that really help break the customer’s traditional view of promotional strategies offered by c-stores.
“We would offer the customer effectively a free product or potentially, depending on how the mechanics and profit matrix work, a buy-one, get-one; something that is dramatically different in terms of value to the consumer, but for a very limited period of time,” Tovar said.
The fact that customers have become much more savvy has necessitated taking fresh food to another level to square off against competitors that the industry
has not looked at in the past such as Tesco and Trader Joe’s. “It’s important for us to keep up with them otherwise we are going to continue to fall behind,” Tovar said.
Old Favorites Still Strong
Philadelphia-based oil refiner and marketer Sunoco Inc.’s APlus convenience store underwent a strategic redesign this past May. Part of the program involved the stores’ recently upgraded foodservice areas, including ready-to-go foods. At 2,850 square feet the Aplus stores, which are located inside select Sunoco stations, offer snacks, beverages and packaged foods for all dayparts and snacking occasions.
The chain, with 4,700 branded outlets located along the East Coast from Massachusetts to Florida, as well as upstate New York and Ohio, has put an emphasis on raising the bar with its freshly prepared foods. To accomplish this, the redesign features, among other things, reworking the left side of the layout to highlight the offerings. The previous design presented consumers with such fare as bagged candy and snacks in the space.
“This store design delivers our new grab-and-go sandwich and prepared beverage programs in a cost-effective, easy to operate format,” said Jim Farrow, franchise manager and manager of store design and layout. “We believe the end result will be a higher return on capital.” CSD