The Building Blocks of Foodservice

Experts have long espoused the theory that breakfast is the most important meal of the day. It’s a supposition that foodservice purveyors across the retail spectrum are clinging to as they revamp their foodservice programs focused on upscale coffee programs and product portability.

NACS’ 2007 State of the industry numbers show the food category is growing, but it’s also getting more competitive. Convenience retailers must exceed consumers’ expectations to capture their "fare share."

Food sales soared 5% to $19 billion, accounting for 12.1% of overall in-stores sales. 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 (QSRs) and supermarkets.

For example, Chains like McDonald’s, Starbucks and Dunkin’ Donuts are overhauling their foodservice programs to capitalize on the increased demand for breakfast items, described by foodservice experts as the fastest-growing daypart segment. They are doing so with increased variety, value-priced items that do not sacrifice quality utilizing strong locations, three drivers typically reserved for convenience stores.

"For the longest time, convenience stores were way ahead of the game in morning and afternoon meal occasions, but what has happened over time is that other parts of the quick-service channel caught up," said Warren Solochek, vice president of client development for NPD Foodworld, a division of The NPD Group, which has been tracking consumer behavior across many vertical markets for more than 35 years. "People 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 traditional restaurants getting involved in morning sales and offering a superior product, they are drawing more traffic and it is coming at the expense of the convenience industry."

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

Convenience chains like 7-Eleven, are well ahead of the curve already owning a popular line of breakfast items that continues to expand. 7-Eleven stores in the lower Midwest, for example, introduced Exclusive Bold coffee, the strongest brew ever sold in its stores. In addition, the convenience giant has added breakfast on the grill, with breakfast variety Go-Go Taquitos and Hot Pockets to complement its current hot breakfast menu of heat-and-eat breakfast sandwiches.

On the breakfast front, 7-Eleven has added three new grill items for an on-the-go breakfast–sausage, egg and cheese Go-Go Taquito, chorizo and egg Hot Pocket and the meat-n-egg Hot Pocket. At a suggested retail price of $1.09, the grill items are one of 7-Eleven’s best breakfast values and available during the morning rush.

"The number of people eating breakfast out or on the go has more than doubled in the past decade," said Kathy Humphries, 7-Eleven category manager for grill. "Taquitos and Hot Pockets are hot, a great value, and especially easy for commuters to eat on the run."

While the breakfast grill items are only offered in the morning, breakfast sandwiches on croissants, biscuits and English muffins, fresh fruit, and fresh-baked pastries, muffins and donuts are available at participating 7-Eleven stores throughout the day. Since the stores order all fresh foods daily, some items may be unavailable until the next day’s early hours to capture the first early-risers on their way to work or shift-workers on their way home.

"Many of our morning customers are planning beyond breakfast and the day’s commute," said Steve Keane, sales and merchandising director for 7-Eleven’s central division. "They purchase snacks and lunch items, ice for a cooler at an outdoor job site, get cash at our on-site ATMs, forgotten school supplies, a fantasy football magazine for an evening meeting and lottery tickets. Bottled water, batteries, sunglasses, headache medicine, gift cards and tobacco–our goal is to have what customers need and get them on their way quickly."

7-Eleven is not alone. Chains like QuikTrip, Wawa and Sheetz all have programs that can compete with any national chain and small- and mid-sized operators are following suit, but there is still work to be done.

"I do believe convenience store owners have gotten the message, but right now the retailers that can compete with Starbucks and Dunkin’ Donuts are more the exception than the rule," Solochek said. "C-store owners must have an enhanced program that provides customers with variety. That’s what people are used to. If you don’t have that expanded offering, you’re not going to get that business.

Consider Kwik Stop in North Platte, Neb. The 20-store operator is offering a turnkey program that addresses all three dayparts through its partnership with Piccadilly Circus Pizza. One of the major considerations for the chain was Piccadilly’s ability to drive business throughout the day to help build incremental sales.

"Piccadilly has been a big boost to our foodservice business because of its quality and value, the two most important ingredients for any fast-food program," said Dan O’Neill, president of Kwik Stop Stores in North Platte, Neb. "And since they have added breakfast sandwiches to the menu, we have seen a steady stream of customers throughout the day."

As part of its foodservice plan, the company also pushes variety. Kwik Stop has co-branded Piccadilly with Taco John’s Express in a handful of c-stores and features a proprietary hot deli program anchored with meats supplied by Broaster chicken. The foodservice offering is topped off with Kwik Stop’s in-house Java Express coffee program, which was developed with a roaster in San Francisco.

"Having multiple brands in one unit satisfies different appetites," O’Neill said. "This gives us an opportunity to attract a wide range of customers into the store and then sell them other items like gasoline and tobacco."

Menu items include personal pan and full-sized pizzas, hot wings, appetizers, breadsticks, biscuits and croissant breakfast sandwiches. Pizzas are offered in four varieties: cheese, pepperoni, sausage and combo, and range in price from $6.99 to $10.99, prices O’Neill said helps build recurring traffic several times a week.

"The struggle is not to get customers to come in once, but to keep coming back and staying away from our competitors," he said. "The only way to do that effectively is to give the service, variety, quality and value they desire. If you can do that, the sales will come."


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