Turning a Foodservice Profit

The stagnant economy and hefty cigarette taxes have more c-store chains adding extra roller grill items to provide a greater array of hot food options at a value price.

By Howard Riell, Associate Editor.

Yes, the number of food items that can be prepared on roller grills—hot dogs, corn dogs, taquitos, stuffed breadsticks, kielbasa, grilled wraps, breakfast sausages, tornados, egg rolls and much, much more—is growing. But customers won’t know that unless operators tell them.

“That’s one of the things I’ve been trying to work on with our roller grill program—the marketing aspect,” said Ada Mendoza, a foodservice manager for Green Valley Grocery, a 48-store chain in Henderson, Nev. Green Valley uses signage on the roller grills themselves to trumpet them to shoppers.

Green Valley’s roller grill program includes hot dogs, taquitos, and corn dogs. “For the time being, the greatest seller is the hot dogs,” Mendoza said. “We put them on the grill very, very low at six in the morning and they begin selling right away,” Mendoza said. “We try and keep them available fresh throughout the day. People actually come in to buy hot dogs for breakfast. Once our sales start diminishing around three p.m., when people stop buying lunch, we just keep a couple up. At six p.m., I just kind of write them off if they haven’t sold.”

The roller grills are located directly in front of the checkout area so customers can see them as they enter the stores. The company is looking into new items that stores can prepare on their roller grills to keep the profitable foodservice segment expanding. “Hot dogs are great, but who wants to eat a hot dog five days a week? With corn dogs and some other new products, we can have that variety that keeps customers coming back day after day,” Mendoza said.

The newest part of Green Valley’s food offering is pizza made fresh daily, served in both personal-size pies and single slices.

“We’re trying to roll it out and see if it makes out. So far the sales have been pretty good,” Mendoza said.

Competing Indirectly

The best strategy when faced with a first-class competitor, said one major operator, is not to compete–directly, that is.“I took my roller grills out a year and a half ago because I said to myself, ‘I can’t compete with QuikTrip in roller grill,” said Scott Zaremba, president and CEO of Zarco 66 Earth Friendly Fuels in Lawrence, Kan. “They put in 12 feet of them, dual-sided, and sell them two for $2—and so they’re doing huge volumes in them. I said to myself, that’s like competing with Wal-Mart on $4 drugs. There’s no use going down a path that they’re going down and beating you on volume. You need to create a different path.”

Indeed, QuikTrip has been hailed for its roller grill offerings, which has ranged from hotdogs, taquitos and egg rolls to cheeseburger rollers and buffalo chicken bites.

“There is no reason for me to try and compete,” Zaremba said of his eight store chain, “and so I changed my whole dynamic for what we do. We went to fresh made-to-order, which is a whole different ballgame.”

Zaremba said that when he considers the various approaches he might take to marketing a roller grill program—at least in his part of the country—one approach seems to make the most sense. “Cheap. Because you’re not going to be able to make much money off a roller grill if you’re going to be doing the normal foodservice markup,” he said.

“You’re not going to do enough volume to make up the difference, and your waste is going to exceed your income.”
The key to his competitor’s success with the roller grill, Zaremba noted, has been its volume. “QuikTrip has extremely high volumes of throughput. Anybody could do it anywhere; you just have to see who your competitors are and who’s the best in your competitive area.”

Product variety is important, he agreed, but perhaps not as much as some believe. “You look at the amount of products that are available on the roller grill, but the No. 1 thing is hot dogs,” Zaremba pointed out. “I mean, look at how many people consume hot dogs; it’s huge.”

In fact, according to the numbers quoted by the National Hot Dog and Sausage Council, Americans consume 20 billion hot dogs a year, or roughly 70 per person. “When I saw the stats I thought, ‘You know, everybody talks about the hot dog, ‘Oh, I don’t eat that, they’re not healthy,’ but when you look at the numbers everyone is standing at the grill wanting one,” Zaremba said. “So for us it’s just a matter of having the right products that our
consumers are looking for in our area, and one of them is hot dogs.”

Zarco’s hotdogs are made-to-order. “We stepped up what we’re doing for our hot dog program,” Zaremba said. “Now we have a full-blown hot dog program, and we put all the condiments on it for you. We also have a half-pound hot dog, and so our hot dogs are nothing like the five-to-ones or eight-to-ones that everybody else has.”

In other words, Zarco is competing with QuikTrip, just not directly. “I’m not competing with them on the same level that they’re on. We can’t beat them head-to-head,” he noted. “I’m looking for the other avenue that I can go down that they’re not going to do. That way I can pull that percentage of customers away who want something that’s going to be better for what we’re doing.”

Commitment is Key
Convenience store operators need to make the necessary commitment to a roller grill program or face the consequences. “If your mindset is, ‘I’m not going to bother with foodservice’ you are going to end up being out of the business in the next five years. I think it’s something that you have to do,” said Scott Zaremba president and CEO of Zarco 66.

In the Midwest, Zaremba explained, it is especially important to know what the customer wants and who is already giving it to them so you can provide it, too, but differently. “If somebody is doing something and there is no way to compete with them, then look at it in another avenue. It might be the same product, but packaged differently, with different sizing. Instead of competing head-to-head, create another sub-category in order to still have a presence in the marketplace.”

Success with a roller grill program, Zaremba suggested, is all about volume. “If you can keep the product from being on there more than an hour, and you’re turning it over, you’ve got good throughput. The problem is 99% of the roller grill programs I see out there are from people who say they just want to do a roller grill and never put any effort into it. They make ordinary hot dogs and stick buns under them and then say, ‘Hey, why don’t they sell?’”

Roller grill or not, if it’s food, it takes commitment and a niche to drive sales, Zaremba stressed. “You have to give them a product that is either going to be superior to anything being sold by your competition or be at a cost point where the volume can outpace any other issues.”

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