Partnering with an established brand can help your chain leap into the foodservice business with a widely-recognized and trusted menu offering.
By Erin Rigik, Associate Editor.
Foodservice demand is on the rise and competition is fierce for share of stomach sales not only from QSRs, but from grocery stores, other c-stores and even Walgreens. As competition toughens, the stakes get even higher.
The 2013 CSD/Balvor Foodservice Survey found that foodservice sales for 2012 averaged $24,765 a month per c-store. But top quartile retailers are selling $54,834 a month in foodservice products per store, some 2.2 times higher than the survey average.
Retailers large and small are wise to vie for a piece of the foodservice pie if they want their business to grow amid changing margins in core areas of business from fuel to tobacco. But running a successful food program can be a daunting task, especially if your expertise does not reside in the foodservice arena. That’s why many chains are turning to co-branded options, partnering with a program they run inside their stores using their own employees, but backed by larger national or regional advertising programs and first rate training and market research. CSD sat down with three small chain retailers that added branded concepts to their stores to learn how the programs are helping them compete more effectively.
Bolstering the Bottom Line
Danny Dutta, president of American Petro Inc., has seen profits increase since adding Krispy Krunchy chicken programs to both of his Georgia convenience stores. He embarked on the program a little more than two years ago after he redesigned his Chevron Food Mart in Ball Ground, Ga.
“In the c-store business, I don’t think you have any other way to improve your head count, bottom line and total sales than to provide foodservice,” he said. “Once I was convinced of the right brand to partner with, and we learned to execute the program correctly, it began paying off for us.”
Dutta keeps the grab-and-go food items close to the cashier, where customers are sure to notice them. In order to accommodate the program, he added two new employees, new shelving, food counters and the food warmer recommended by Krispy Krunchy.
“You can get a food cabinet from anywhere, but we preferred Krispy Krunchy’s cabinet. It was the best-looking cabinet and came with a warranty,” Dutta noted.
Recently, Dutta also added the program to his newly acquired Chevron store in Woodstock, Ga. “In about six months our business has doubled what the previous owner had been doing, and a lot of that is because of the food offering,” he said.
Best of all, Dutta found that Krispy Krunchy was willing to support him through the launch. “In the beginning, I wanted to have their trainers on site, and they stayed with me for a week,” he said. “Proper execution is crucial when dealing with raw food being cooked on site. They train your staff and help them understand what is expected.”
What attracted Dutta to Krispy Krunchy was the way the company was willing to go the extra mile to help him grow his business, from food management, marketing and training to helping to install equipment and staying on site through the program launch—all for no extra charge. Finding a company with a background in convenience stores also gave him confidence because they understood the need to deliver quality, convenience and speed.
Since adding the program Dutta has seen his business improve by 15%. “I would never do any c-store business without the food again,” he said. “My revenue went up $25,000-$30,000 dollars. At the end of the day, my mortgage did not go up but my profitability did, and that’s a recipe for success.”
Service is Key
Charles Walker, owner of Tally’s One Stop in Grenada Miss., and Bridges Quick Way in Winona, Miss., added a Krispy Krunchy to his Grenada store in October 2012. “I was just trying to get with some type of franchise program that would increase sales and customer count and stir more people into the store,” he said.
Unlike, Dutta, Walker didn’t have to do any remodeling to accommodate the program. He simply added the Krispy Krunchy food warmer and upgraded a few kitchen appliances, including adding a convection oven for biscuits. Walker also added several new employees as the program’s popularity grew to ensure there was no drop off in service.
Before he brought Krispy Krunchy onboard, Walker had been selling “run of the mill” chicken and some corndogs. The difference in adding a “full-blown chicken program” has been huge. First, the product is of higher quality. “It has a little bit of a spice to it, but it’s pretty marinated and it stays moist, so you don’t have any dried out food,” Walker said. “Plus, you also have the support of a company behind you. They come and check on us any time we need something. It’s better when you have an experienced brand behind you—we’ve never had that luxury before.”
In addition to service support, the program has provided Walker with research on cooking time, developing a quality presentation and local advertising.
“It’s more of an involved system than just buying a little something to cook in a convenience store. They are involved and they want you to succeed because it helps them as well,” Walker said. “Everyone is on the same page and they stand behind you.”
Since adding the program, Walker has already seen his deli sales grow about four times what they were before. He advised other chains interested in adding a co-branded program of any type to spend time doing the necessary due diligence on all of their options.
“Find a company that will back you,” Walker said. “And make sure you choose a company that will stand with you at all times, especially in a time of need.”
Jeremy Guilbeau, a Chevron dealer in New Orleans, added a Hunt Brothers pizza program in 2004. Guilbeau’s foray into foodservice began with a small deli business behind the register that consisted mainly of cold cuts, before adding a pizza program in 2001. “It worked well, but I had to do all the ordering, planning, advertising and everything else,” he said.
Then he switched to Hunt Brothers. “They offered a turnkey program that made it much easier on me,” Guilbeau said. “They kept track of everything so there were fewer mistakes made in ordering and we were able to get a better handle on how things were going with much less effort.”
One of the features that attracted him to the Hunt Brothers program was its simplicity, which made it easy for employees to adapt to. “Anyone could look at the pictures and figure out how the pizza is made,” he said.
Guilbeau advised other chains that it helps to partner with a national brand like Hunt Brothers due to their advertising reach—from posters and pump toppers to NASCAR sponsorships.
“If you’re trying to execute a foodservice program on your own you will need a lot of money to reach the kind of advertising the national brands offer,” he said. “But with a program like Hunt Brothers, you are really starting to see them everywhere, so people know it’s going to be a good consistent product just about anywhere they go.”
Dutta agreed and urged other retailers to get on top of the foodservice trend. “C-store retailers have to adapt because our customers’ needs are changing,” he said. “You have to do what customers want to give you an edge over much larger chains. Our business has grown over the years, and now I would never do a store without hot food.”