Finding Your Way with Foodservice

JohnNewGrowing up in New YORK CITY few things were as natural to me as eating out. Even now with three children, a minimum of two meals a day are eaten outside the house seven days a week. The kitchen table is more of a convenient place to store things, like takeout menus and the kids’ schoolbooks.

While putting together CSDs’ annual foodservice issue I realized I’m not alone. Chain after chain talked about the need to deliver quality food quickly and at a good price, not just to serve the customers’ needs at breakfast, lunch and dinner today, but day after day. The adage rings true: you can fool the customer with bad food and poor service, but you only get to do it once. There is too much competition for share of stomach to be afforded the opportunity to try it again.

Back in 1997 I had the opportunity to sit down in Ohio with Dave Thomas, the founder of the Wendy’s chain to interview him about his retail strategy. One of the first things he said to me was, “You know why our hamburgers are square? Because we don’t cut corners.”

Over the past decade many things have changed about the way a foodservice program is executed, but that philosophy has not. The retailers winning the battle for foodservice dollars offer good food, value and convenience and they always will.

Food for Thought
The good news for convenience store owners is that industry foodservice sales continued climbing in 2011 and the forecast for the upcoming year is just as strong, according to the 2012 CSD/Balvor Foodservice Report beginning on page 22. The bad news, however, is that other retail channels are keying in on food sales and are keenly focused on diverting your customers to their coffee bars, quick-service restaurants and supermarkets.

Predicting just how long food sales will continue to provide sustenance to an industry beleaguered by weak fuel margins and high swipe fees will depend precisely on how well marketers defend their turf against the encroaching competition.

For the longest time, c-stores were ahead of the game in morning and afternoon meal occasions, but what has happened over time is that the quick-service channel caught up. Customers thought of c-stores as the place to get a quick coffee and a bakery item, and it was a great meal. But with more restaurants getting involved in morning sales and offering an upscale product, they are drawing more traffic and it is coming at the expense of c-stores.

The real danger here is that the momentum other retail channels are gaining in the morning is spurring consumer migration across all three dayparts. C-stores must devise a defense and modify what they do in the a.m. to focus on their strengths: convenience, speed of service and a quality, value offering.

Convenience store operators have gotten the message, but right now the retailers that can compete with the likes of Starbucks, McDonald’s and Dunkin’ Donuts, such as Wawa, Rutter’s, Quick Chek, Sheetz, Thorntons and QuikTrip, are more the exception than the rule. The industry as a whole still needs to raise its game utilizing the tools it has at its disposal, such as NACS CAFÉ (see backroom story here) to learn how to transform the business from a retail culture to a foodservice culture.

When you look at how chains like McDonald’s and Dunkin’ Donuts are refining their morning offering centered on a gourmet coffee program, you’ll find that sandwiches have become the top-selling breakfast item. This is a direct attempt to take business away from convenience stores. They saw what the industry was doing, and said, “We are going to do it better, faster and cheaper,” and they are certainly having an impact. Don’t let them win the game.

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