Whether it’s a branded food program or a proprietary deli offering, focusing on quality ingredients, outstanding service and consumer needs has helped boost industry sales.
By Heather Henstock, Contributing Editor.
Consumers are looking for fast service, fresh ingredients and value pricing when choosing a foodservice solution and convenience stores are answering the call with innovative programs that meet niche demands and represent the latest food trends.
Typically, c-stores have three strategies for diving into foodservice: partnering with a branded QSR company, such as Subway or Taco Bell; developing a commissary program to prepare, package and deliver fresh grab-and-go foods to each location; or preparing sandwiches, salads and other meals at the store level. Some c-stores with major foodservice components, such as Sheetz, Quick Chek, Nice N Easy and Rutter’s offer both grab-and-go and made-to-order sandwiches. Others, like Tedeschi Food Shops in Rockland, Mass. take fresh foods a step further by selling cold cuts, bulk meats and cheeses.
“Bulk sales are unique to us, and it is what we are known for,” said Joe Hamza, vice president, sales and marketing at Tedeschi’s.
Branded foodservice programs can differentiate a c-store chain, but competition is fierce in the sandwich arena. To achieve maximum profitability, c-stores need to specialize in something to stand out and build a loyal following. The key advantage of developing your own food banner is the flexibility and freedom to create unique selling points.
“You’re competing with so many fast feeders, specialty delis and the Panera Breads of the world,” Hamza said. “If you don’t provide something different, you’re not going to create a base of loyal customers.”
Following behind hot dogs and pizza, sandwiches are the next most popular fresh food choice for c-store customers. Of consumers who purchase food from c-stores, 28% opt for made-to-order sandwiches, according to a recent study by Mintel market research firm. The firm forecasts foodservice sales in convenience stores will reach $22.8 billion, a 4.1% growth in 2011.
Deli programs can generate higher gross margins than the average c-store profit line, said John Matthews, president of Gray Cat Enterprises, a consulting firm for the convenience and restaurant retail industries. Profitability is the goal with a deli or any other foodservice program, but too many c-stores fall short in the execution.
“The execution of the program to ensure food safety, freshness and quality; managing food and paper costs; and providing good customer service will test the mettle of any operator. It is a completely different ballgame than simply pricing Snickers on the shelf,” said Matthews, who has extensive foodservice experience as the former vice president of marketing for the Clark convenience store chain in Chicago and a past president of Jimmy John’s Subs.
Wawa is among the c-store chains winning the game on foodservice execution. The Pennsylvania-based company has long been know for its stellar deli program, which features built-to-order hoagies and sandwiches, toasted wraps and flatbreads, soups and salads. Wawa’s deli program stands out among c-stores, and so does its elaborate Hoagiefest marketing campaign.
“In addition to celebrating our company’s great hoagie tradition, Hoagiefest is about bringing our customers their favorite hoagies and products at a value at a time when prices matter the most,” said Wawa President and CEO Howard Stoeckel.
The 1960s-themed Hoagiefest marketing campaign invites customers to “HoagieMan” themselves by uploading a personal digital photo and morphing it with Wawa’s curly haired, mustached HoagieMan character. A supporting Website also offers Hoagiefest music downloads and ring tones as well as a contest for the best photo taken with the HoagieMan. Highlighting the campaign is a Hoagie Day celebration, which is part of the Wawa Welcome America! Independence Day festivities in Philadelphia.
Wawa’s Hoagiefest creates a specialty with its deli and demonstrates a fun, festive attitude through thoughtful marketing. When developing new deli products, successful marketers keep niches in mind. Tedeschi Food Shops target underserved niches, such as moms, healthy eaters and vegetarians. “We look to cater to niches, but are careful not to alienate regular customers,” Hamza said.
Focusing on Trends
Like Tedeschi, many c-store operators are experiencing greater consumer demand for more healthful options. Better ingredients and greener packaging are among the top trends in all foodservice segments. Other trends include :
• Healthier options. A bag of chips and a fountain drink are the norm for c-store side dishes. But, some c-store foodservice managers suggest more healthful options that are just as easy to bundle with a sandwich, such as an apple, banana or granola bar (see sidebar.)
Customers may not always choose healthier, but they appreciate the choice and will remember they have more options at the c-stores that make the effort. For example, Tedeschi’s recently introduced a fresh mozzarella and grape tomato salad as a more healthful side dish. “People love it. It’s one of our top sellers,” Hamza said.
• Quality proteins. Not all deli meats and cheeses are created equal. Consumers can tell the difference and are exposed to higher quality proteins as supermarket delis, sandwich chains and other restaurants up the ante on quality.
C-store delis have stiff competition and somewhat of an image problem among consumers, Mintel research revealed. Thirty-three percent of consumers who have never purchased food at a convenience store said they haven’t done so because they believe the food is low quality, Mintel reported. Boosting the quality of meats and cheeses can overhaul the flavor profile of a deli sandwich and snuff out any image problems.
• Better breads. Higher quality breads need to support better sandwich proteins. Too often, deli operators become so concerned with the interior ingredients of a sandwich that they fall short in the bread department. Consumers are seeking more variety in their breads and c-stores are providing sandwiches made with whole grain breads, European-style crusty breads and flat breads. Some c-stores even bake bread fresh in-store from par-baked doughs for made-to-order sandwiches.
The bread needs to match the sandwich, Hamza said. A whole wheat roll might be more healthful, but if it doesn’t hold up to a generous portion of pastrami and Swiss, the bread isn’t appropriate for that sandwich.
• More bacon. Consumers might be seeking more healthful foods, but Americans’ love affair with bacon hasn’t fizzled. “Bacon is hot right now,” said Alan Hiebert, education information specialists, International Dairy Deli Bakery Association in Madison, Wis. “Bacon edged out turkey this year as the more popular sandwich ingredient. No. 1 is still chicken, but bacon is number two and turkey three.”
In addition to the classic BLT and club sandwiches, bacon is being added to other sandwiches as if it were a condiment. For example, more c-stores are adding bacon and egg sandwiches to menus to boost morning sales.
• Greener packaging. C-stores have much to consider in their sandwich packaging. Does the packaging maintain the integrity of the sandwich? Does it enhance or hinder the appearance of the product? How much does it add to the cost of the sandwich?
How long the sandwich container takes to decompose in a landfill may not be a top priority to c-stores, but it is becoming a greater concern to consumers and can be another way to differentiate a c-store deli.
Greener packaging made from corn-based resins is more readily available to retailers, Hiebert said. Packaging made from recycled material also has improved appearance and practicality for retail foodservice use.
If c-stores go the extra mile with greener packaging or recycling programs, they need to promote their efforts to customers.
Providing True Convenience
C-stores may fulfill the latest deli trends, but convenient service and merchandising tactics complete the package. “Long lines and shoddy service—no matter how good the food is—will be a huge deterrent for repeat business,” Matthews said.
Deli operators need to implement time-saving throughput strategies to eliminate wait times. Matthews also advised setting up customer flow, so customers pay first and wait for their food away from the make stations and ordering line.
“Assuming you have the taste and quality nailed, operational execution is paramount,” Matthews said. “Customers that may expand out to c-stores from fast food restaurants for deli are used to drive-throughs and the efficiencies of ordering. Don’t disappoint them.”
Combo Deals Boost Sales
Combo meal deals bring convenience and value to customers and higher margins to c-stores. Creating a value meal with a sandwich, bag of chips and a fountain drink makes ordering simple. Plus, customers are willing to spend more for each visit if they perceive a better value.
“Combo dishes are where you can really push profitability,” said Joe Hamza, vice president of sales and marketing for Tedeschi Food Shops. “You might take a discount on the sandwich, but you’re making 45-50% on your drink and side salad,” he added.
Tedeschi’s, like many c-store deli programs, offers a range of combo meals targeted to specific consumer niches. TD’s Kid’s Box, ideal for moms on the go, features a sandwich, cookie and juice box, and TD’s Lean Protein, for the calorie-conscious, includes half a sandwich and a half salad.
Combo deals can be creative or simple, and customers have come to expect them in most foodservice operations.
“If we can do sell a combo meal with 30% of our customers, we can increase profitability with that transaction in a very meaningful way,” Hamza said.