Fresh Foods Give Convenience Stores a Competitive Edge

Consumers’ growing expectations and a competitive landscape are leading many convenience stores to innovate their fresh foods offerings.

“All forms of retail are trying to become more convenient at serving consumers to the point that being convenient is not only expected, but the cost of entry for any retail format,” says Joseph Bona, president of consultancy Bona Design Lab.

Because c-stores are no longer the only retail businesses delivering on people’s demand for convenience, focusing on ways to meet expectations for high-quality, diverse food can pay off big: 36 percent of consumers frequently buy prepared foods when they visit c-stores, and 35 percent do so occasionally, according to Datassential. In addition, a recent study by Convenience Store News found 77 percent of c-store retailers said they expect their average per-store foodservice volume to grow this year.

“To be successful in the food category, convenience stores must listen to the needs and wants of their customers,” says Shannon Johnson, vice president of food innovation at travel center operator Pilot Flying J. “In today’s age, a big part of this is ensuring your offerings include healthy, fresh items, especially as so many customers are on the go.”

And success in the food category is more important than ever, as more traditional sources of revenue are seeing slimmer returns. “Some of the profit centers that convenience stores have relied on have experienced challenges: The margins on fuel are thin, cigarette sales are down and consumer snacking trends have changed,” says Frank Beard, a c-store trends analyst at GasBuddy, an app that helps users locate gas stations.

Evolving Eating Habits Encourage C-Store Food Innovation

To address those decreasing margins and changing consumer behavior, c-stores are turning to new products, says Anne Mills, senior manager of consumer insights at Technomic. Part of that means making the most of the snacking trend. Eighty-three percent of consumers reported snacking every day in 2016, compared with 76 percent in 2014, according to Technomic research.

But it’s not just the frequency of snacking that’s changing—their snack choices are evolving too.

“Approximately half of the consumers say they are looking for something healthier,” Beard says.

C-stores are responding with wholesome offerings. For example, Pilot Flying J added steel-cut whole grain oatmeal and hard-boiled eggs to its breakfast lineup, and Wawa on the East Coast recently introduced a kale and quinoa salad.

While health is a growing priority for consumers, many still want special treats. “Even those who prefer something indulgent still want a quality product,” Beard says.

69 percent of consumers rated fresh/warm bakery sweets among their top picks for prepared food items at c-stores.

And consumers associate quality with attributes like artisanal, gourmet and fresh. National chain 7-Eleven, known for its Slurpees and hotdogs, recently started selling locally made items in select markets, including chipotle chicken bowls, chicken parmesan and macaroni and cheese.

Similarly, Casey’s General Store, which has locations throughout the Midwest, sells scratch-made pizza, as well as cookies and donuts made in-house.

And Casey’s isn’t alone when it comes to donuts and similar offerings; fresh baked goods are popping up more often alongside savory snacks and meal items. Twenty-seven of the leading 40 c-stores offered baked goods in Q4 2016, and that number rose to 31 in Q4 the following year, Mills says.

In fact, c-store operators rate breakfast as their fastest-growing daypart, according to Datassential. And 69 and 70 percent of consumers rated fresh/warm bakery sweets and fresh bakery breakfast items, respectively, among their top pick for prepared food items at c-stores, suggesting the opportunities for baked goods will only continue growing.

C-store baked goods

 

Adding Fresh Offering to the C-Store Selection

While fresh foods offer opportunity for c-stores, they also come with challenges, namely cooking technologies. Most locations don’t have the necessary space for entire kitchens, nor the staff needed to cook made-to-order meals and snacks.

Some tackle this by focusing on one specialty, says Elie Katz, an independent c-store specialist and CEO and president of National Retail Solutions in New Jersey. “A lot more of the franchises are getting an entire fried chicken system,” Katz says. “Others are getting sandwich systems or pizza makers.”

For baked goods, many c-stores have vendors bring in fresh products daily, Katz says. Big sellers include loafs and sweets like croissants, pastries and chilandrinas (Mexican sweetbread with a hardened brown sugar crust), Katz says.

C-stores can also use premade dessert offerings to cost-effectively offer brownies, cookies and other treats and present these products in bakery cases to emphasize their freshness.

In addition, pairing bakery offerings with coffee can prove particularly successful: A 2016 report from Technomic found 65 percent of consumers who had coffee in the last month bought it outside their home at least once, and 41 percent would combine that coffee order with food if a combination deal were available.

“What goes with a great cup of coffee is a great breakfast offer, including fresh bakery items, either made in-store or brought in fresh daily from a local commissary,” Bona says. “Along with pastry-type products, breakfast sandwiches are also an integral part of a core breakfast program, and a unique muffin, biscuit or bread can turn an average egg sandwich into something unique and ownable.”

It’s a tricky balance to strike—offering efficiency, reliability and innovation—in the push for convenience and quality. But with the right approach, c-stores can stand out from the competition.