grabandgo dollars

From small operators with space and labor limitations to larger chains with food at the forefront, the grab-and-go segment has these retailers turning tasty profits.

Food has always been a cornerstone of the overall offering at Casey’s General Stores. The made-fromscratch pizza program has become the calling card across its 1,423 stores, which has evolved into a bevy of sandwiches and fresh baked goods.

The chain has never sacrificed quality—it uses a more expensive grade of hamburger and offers whole breast muscle chicken tenders—and has a dedicated labor force to have items out and ready for its busy customers.

“People’s lives are still so rushed. If food is ready and waiting for them, it’s better. If food isn’t ready, most people won’t wait,” said Darryl Bacon, vice president of foodservice for the Ankeny, Iowa-based chain. “That’s how we built our program.”

Casey’s continues to see growth in foodservice sales, but it credits this success to never resting on its laurels. Pizza represents the lion’s share of its foodservice sales—nearly half comes from slices and that jumps to almost 65% when one factors in sales of whole pies—but the chain is constantly searching for new, innovative items.

“Our sales have continued to grow each year for five years. This year prepared foods are up more than 15% over last year,” said Bacon. “The reason is we continue to switch product up and give customers something new to try.”

Among the chain’s hottest introductions came four years ago with popcorn chicken. “We put it in 12-oz. to-go cups that fit in car cup holders,” Bacon recalled. “Since then we’ve introduced mini pizza bites and potato cheese bites the same way.”

Tonawanda, N.Y.-based NOCO Express is also no stranger to food innovation.After partnering with Charlie the Butcher almost four years ago, it recentlylaunched a ready-made concept called Nickel City Market Cafè in one ofits stores. NOCO has begun using that location as a commissary for nearby storesto offer subs, salads and wraps in cold cases.

“With the Nickel City, 25% of the sales are out of the cold case in that location, while 75% are made ready,” said Terry Messmer, merchandise manager for the 30-store chain. “The cold case gives our customers an option to try our different varieties of wraps, salads and sandwiches that are made fresh in our stores. Grab-and-go is a great complement for customers buying for later or when the cafè is closed.”

The only con for a grab-and-go program in Messmer’s eyes is that the company doesn’t make as high a margin on the cold case as it does with ready-made. But as long as the offering is perceived as fresh, health-conscious, time-starved consumers will remain loyal. NOCO plans to continue to use the cold case’s flexibility to try new items and constantly revamp its offer.

“Our grab-and-go program has been a great success and that success should continue as long as we monitor our waste and product selection so we don’t cut into our margins,” Messmer added.

Getting a Handle on Waste
Both NOCO and Casey’s have offered Deli Express( prepackaged sandwiches in their stores for some time,but as their foodservice offers continue to expand, the companies are seeinga shift in sales. One of the strongest aspects of Deli Express’s offering inboth chains is that it is a cost efficient program.

“Deli Express has been a great complement to the c-store industry as a quicksolution, but as we’ve introduced our own grab-and-go items, we’re seeing salesmove away from prepackaged sandwiches to the wraps and salads we’re packagingfor customers,” said Messmer. “As consumers become more health-conscious thoseitems aren’t perceived as ‘as good for you.’ They feel like they’re eating healthierwhen items are made fresh, and that’s what’s selling.”

Casey’s abandoned its Deli Express offer at one time when it opened its own commissary to produce and deliver sandwiches. When the commissary was closed, it brought back the Deli Express items in 1999.

“We use Deli Express to supplement our food offerings,” said Bacon. “Mainly because of the 30-day shelf life for those products. We don’t have the stale factor with Deli Express. With our grab-andgo items, our stales run higher, but they also create a higher profit. With Deli Express they’re only 3% to 5%.

“All of our grab-and-go is fresh—if it sits for an hour it gets pitched,” Bacon continued. “Our kitchen isn’t always open and that’s when Deli Express sandwiches sell really well. We carry about 10 to 12 items to give our customers variety.”

Tom Sween, CEO and owner of Deli Express, recognizes his company provides operators with cures for their foodservice woes.

“In this industry of 140,000 stores, foodservice is being executed well inabout 20%. The other 80% are smaller with traffic and food volume, and as aresult a purely made-to-order program is not economically viable,” said Sween.”The best locations for our products feature made-to-order and we complementthat. If retailers are willing to get behind and support a program like DeliExpress, it means more dollars to their bottom lines. Retailers are making marginsa bit north of 38% depending on the depth of the offer and volume their doing.”

Plus, Sween said, extended shelf life allows greater inventory to support retailer’s concerns with being in stock. “It also takes care of food safety issues because it’s untouched. It’s laborfriendly and great tasting,” he said.

In an effort to get a handle on sales, both companies are turning to theirdata. Casey’s has been utilizing its Retailix point-of-sale system so it cangauge from store to store when people are coming in for a product so it canbe properly stocked. NOCO is also utilizing its scan data to refine its mixand work to control waste.

“With grab-and-go, controlling waste is the greatest challenge. It’s a fineline between merchandising properly so customers know you’re in the food businessand risking damaging your reputation by having spoiled product,” Messmer said.”Our scan data showed us that a vegetarian wrap wasn’t selling as well as we’dhoped. We’re working to replace that with something like turkey or ham.”

Grab-And-Go, All-In-One

When Kent Cummings was openinghis first store, he had 800 sq. ft. ofspace and he didn’t know what to do with it. Being a northern Minnesotacompany, he had considered using it for bait, but a representative fromHot Stuff Foods stopped in and convinced him he could use that space allyear-round.

“Bait can be too seasonal, but food is an all-the-time offer,” said Cummings,president of Cummings Oil (Aitkin, Minn.). “And it smells a lot betterthan bait.”

A four-store operator, Cummings does not have the resources to devoteto a fullblown made-to-order program, so Hot Stuff was a great option.He was able to fill the space in his first store with a laborfriendlygrab-and-go pizza program, and has widened the offering in subsequentstores to 1,200 to 1,400 sq. ft.

“Made-to-order is not a convenience concept. Customers want to grab somethingand get out,” said Cummings.

“Some owners can’t handle an ounce of waste. With our Hot Stuff program,waste runs from 3% to 6%. If product sits too long its taste declines,and it’s a poor representation. If you have no waste, then you don’t haveenough food in the merchandiser.”

One thing Cummings enjoys with his program is the ongoing attention hegets from Hot Stuff. A representative is in his store every three weeksfor a minimum of two hours.

“They’re constantly offering us new products and they keep the qualityhigh,” said Cummings. “When well-managed, the foodservice can be one ofthe most profitable segmen
ts with a 40% return.”

Hot Stuff Foods prides itself on providingfoodservice solutions for operatorsof all shapes, sizes and needs, according to company President and CEODes Hague. “We offer fully thought out turnkey solutions,” said Hague.”Our Mac’s Market self-service concept can take up just four feet, butwe’ll give retailers as much as they can handle.”

In 1991, Mike Barry was also looking for a turnkey solution at his three-storechain. He contacted Hot Stuff and discovered a grab-and-go solution thathis customers really responded to, and he got the much-needed attentiona fledgling foodservice operator could use from the Hot Stuff representatives.

Barry thought he could run business as usual—as a gas station thatoffered food. But once the product was in his stores, he changed his gameplan and it’s had great results.

“We were first selling gas and pizza, but realized we needed to promotethe pizza and the rest would take care of itself,” said Barry, owner ofPennington

Main in Thief River Falls, Minn. “We’ve invested in total new signagethat really plays up the Hot Stuff name— almost branding our entirelocation as Hot Stuff. It’s a profitable program that allows us to controlour portioning, waste and inventories while driving other sales.”


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