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Food for thought: A Q&A with Kathy Perrotta of Ipsos Canada

Screen Shot 2020-01-16 at 3.49.27 PMKathy Perrotta is vice-president at Ipsos Canada and leads the company’s FIVE Food and Beverage tracking service, which examines the behaviour, attitudes and motivations of 20,000 Canadian consumers. Research shows that busy lifestyles, long daily work commutes and hyper-connectivity are influencing daily food and beverage choices. During the recent Star Women in Convenience Awards Event, Perrotta delivered a keynote outlining this evolution. She also spoke with Convenience Store News Canada’s Quick Bites columnist and foodservice insights professional Darren Climans about how the convenience and gas channel performs against these drivers to establish a framework for growth and future success.   

 

Screen Shot 2020-01-16 at 3.50.24 PMDC: What are the key socio-economic and macro trends shaping consumers’ current consumption choices? 

 Screen Shot 2020-01-16 at 3.49.46 PMKP: We’re definitely in a period of flux in terms of the Canadians’ food and beverage choices. Compared to even five years ago, when we started the FIVE Food and Beverage tracking service, the changes are significant. The biggest single factor is the shift in Canadian demographics, which includes an aging population, shrinking household sizes, urbanization, growth in representation of specific minority groups, and the rising influence of the aging millennial cohort.

These are manifested in the so-called trends that we see at the consumer level. Increased attention given to health and wellness is creating new food priorities. It is a function of both aging boomers and better-informed younger consumers. Similarly, consumers’ growing focus on convenience and personal/customized food and beverage solutions is another example of a trend that is being driven by a number of factors across demographic groups.

 

Screen Shot 2020-01-16 at 3.50.24 PMDC: How has technology been a driver of change for consumers?

 

Screen Shot 2020-01-16 at 3.49.46 PMKP: The false promise of technology was that it was supposed to save us time. While the advent of technology and social media in our everyday lives certainly provides a plethora of benefits, it also makes us mindfully aware of and contributes actively to the reality of daily time constraints.  Bottom line is that we have become very time challenged.

As a result, time is, in many ways, the new currency. This isn’t going away—it will continue to be the focus of retailers, manufacturers and foodservice operators alike. 

 

Screen Shot 2020-01-16 at 3.50.24 PMDC: What are some examples of how these changes are being expressed in Canadians’ daily food and beverage choices?

Screen Shot 2020-01-16 at 3.49.46 PMKP: The long-term trend over the last half-century has been a slow movement of consumer eating occasions from at-home to away-from-home options. The data shows that this gradual shift continues to express itself in the decisions of younger consumers.

The rise of ‘snacking culture’ and its prominence in our daily routines has ultimately reformed the traditional meal regime, which is now simpler, with fewer components than in the past, consumed alone and requires less time to prepare.

This dovetails with trending in HMR (home meal replacement), meal kits and home delivery. Though still very small, our FIVE data shows increases in sourcing from both HMR and home delivery services to meet convenience-oriented needs. The emergence of meal kits is driven by more than convenience. It helps consumers satisfy their need for fresh, less processed foods while enjoying ‘no fail’ culinary exploration.

 

Screen Shot 2020-01-16 at 3.50.24 PMDC: You say in your keynote that ‘Canadians want convenience without compromise’—what are the recommendations that you have for the convenience and gas channel to build a framework for growth and future success? 

Screen Shot 2020-01-16 at 3.49.46 PMKP: There’s no doubt that overall growth and future success in retailing will be fueled by convenience. That’s a good foundational fit for the C&G channel to emerge as a food-forward destination. But consumers’ ideas of what convenience means have evolved and matured. With time being the new retailing currency, there are many more options. Consequently, consumers’ desire for quick and easy is increasingly matched by their unwillingness to sacrifice needs for healthy, fresh, less processed, high quality products and unique experiences.

 

Screen Shot 2020-01-16 at 3.50.24 PMDC: Are there any competitors or disruptors on the horizon that C&G operators should keep an eye on?

 

Screen Shot 2020-01-16 at 3.49.46 PMKP: One emerging concept is the micro-market, which combines the convenience of a vending machine with healthy, daily stocked options more typical of a grocery store or quick-service restaurant. These micro-markets don’t have any staff. They leverage cashier-less vending technologies—automation, firmware and payment systems—with the core elements of convenience retailing.

Micro-markets present a potential disruption threat to all immediate consumption channels given their relatively low-cost set-up; ability to locate in the buildings where people live and work; and high margin—zero labour cost—appeal.  In absolute terms, this segment is still very small but it has grown over the past three years and could evolve to become a future competition to the C&G channel.

This article appeared in the November/December issue of Convenience Store News Canada. 


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Dépanneur Jules keeps customers coming back for more with a vast beer selection and ready-to-eat meals

Screen Shot 2019-12-13 at 9.25.39 AMA social nerve centre in the heart of his hometown: That’s how Jules Forget sees the food and convenience store that bears his name in Mont-Laurier, a forestry town and outdoors tourism destination in Quebec’s Upper Laurentians region, a three-hour drive northwest of Montreal

“It’s a real meeting place in the downtown core,” says Forget, owner of Dépanneur Jules, a Boni-Soir-affiliated business that carries everything from c-store standards like lottery tickets and tobacco to charcuterie, prepared foods and beer. “Everybody knows everyone who comes through the door.  The vibe here is always welcoming and friendly.”

Being part of people’s daily lives was a big reason why Forget decided to quit his job as regional manager for Labatt Brewery and buy the business in 1993.  

“I knew a promotion was coming and that I’d have to move to Montreal,” he recalls.  “But I didn’t want to go. I’m from here and my wife was pregnant, so I started looking for a business opportunity here instead.”

Forget’s attention quickly focused on a 6,000-sq.-ft. grocery store close to the courthouse, a health clinic and Rivière du Lièvre, a tributary of the Ottawa River that flows through Mont-Laurier.  

“The owner was a client of mine and he told me he was retiring so I thought, ‘Why not?’” says Forget. “I liked working with the public and thought I could make a decent living running a store.” 

From the get go, Forget started a years-long, million-dollar makeover of the store, including new fridges, freezers, compressors, air conditioning, cash register and counters.

“I changed everything, even the store entrance,” says Forget.  “But I figured I had to if I wanted to attract customers. It was the cost of doing business.”

Screen Shot 2019-12-13 at 9.32.00 AMIn addition to extending opening hours from 6 a.m. to 11:30 p.m. every day of the year, Forget also focused on becoming a major beer retailer.  “I know the brewing business so I moved quickly to organize and increase our offering,” says Forget. “We soon became and remain one of the biggest beer retailers in the region.”

Screen Shot 2019-12-13 at 9.22.08 AMAnother big winner is the ready-to-eat meals that Forget introduced.  “When I was with Labatt I saw how popular those items were in some of the stores I visited so I did the same here,” he says.  “It was a game changer.”  

From a few initial items, notably homemade spaghetti sauce, the store now sells some 200 hot and cold items—everything from sandwiches, soups and salads to desserts and snack foods.

Screen Shot 2019-12-13 at 9.22.55 AMMade fresh daily in the store’s kitchen by eight full-time employees who work from 5:30 a.m. to 3 p.m., the prepared food are sold at two dedicated counters.

 “It’s all take out, we have no places to sit and eat,” says Forget, who also runs a local catering service from the store.  “We’re busiest during lunch hours, when workers from downtown businesses drop by. It’s a real hub of activity here.”

Forget credits the attitudes and efforts of the store’s 26 employees, including six students, for helping to make the business a success.

“We have a great team,” says Forget, who also runs a local insurance and financial planning business with his wife and a son.  “People like working here. We treat them well.”

 Screen Shot 2019-12-13 at 9.22.26 AMA year ago, Forget sold a 50% stake in the business to Emile Lauzon, a 24-year-old bookkeeper from Mont-Laurier who has worked in the store since age 18. 

Lauzon notably led another major makeover in the store, including changes to the checkout and tobacco counters, the coffee and muffin area, as well as new lighting and new fridges for the prepared foods section.

“It’s a big investment,” says Lauzon about the most recent renovations.  “But like Jules always says, there’s more to running a store than taking profits.  You have to reinvest to make it nice for your customers.”

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The way to consumers’ hearts is through their stomachs

With convenience at their core, c-stores take a bite out of the foodservice market

Screen Shot 2019-12-13 at 9.01.40 AMMilk. Bread. Tobacco. These are the traditional staples that drew customers to convenience stores. Tradition is changing. More and more it’s foodservice selections—everything from authentic shawarma to vegan pizza to gourmet burgers—that are attracting customers and keeping them coming back.

C-stores are offering more diverse food options and emphasizing high quality, hoping to reduce the stigma of “gas station food,” says Julia Taylor, c-store segment leader with Cargill Foodservice in Gibsonia, PA. “They are focusing on having desirable and distinct products that build their brand reputation to create loyal customers and build their food business by becoming a foodservice destination.” 

The efforts are paying off. U.S. convenience stores experienced a 16th straight year of record in-store sales in 2018, according to the National Association of Convenience Stores’ (NACS) most recent state of the industry report. There, foodservice sales accounted for 22.6% of in-store sales, while in Canada it’s estimated to be about 13%. This category continues to be a key focus for the convenience store channel, according to NACS, which defines foodservice as a broad category that primarily encompasses prepared food, as well as commissary foods and hot, cold and frozen dispensed beverages.

Evolving to accommodate foodservice

The growth in foodservice also has led to an increase in store size. Overall, the average convenience store is 3,230 sq. ft. However, as newer stores feature touchscreen food-ordering kiosks, add space for in-store seating and waiting areas and incorporate an open-kitchen design, the size of new stores has increased to 4,991 sq. ft. in rural locations, and 4,603 sq. ft. in urban locations.

Investing in food is time and money well spent, says Taylor. “Operations looking to offer broad mix solutions will be rewarded by their customers. Shoppers are seeking a place that gives them a break in the action of a hectic daily routine—a place that bails them out and always has their back.”

 Catering to consumers’ tastes

Indeed, selection and quality is such that many customers are turning to c-stores instead of fast food outlets. “Convenience retailers with compelling foodservice programs are a growing threat to quick service restaurants,” says Frank Beard, convenience store trends analyst at GasBuddy, an app company based in Boston. “Data show that people choose convenience stores over fast food locations because of the convenience of an all-in-one stop for fuel and food, followed by a preference for the taste of the food at c-stores.”

Diversity is a cornerstone. Today’s foodservice options go well beyond pre-wrapped sandwiches, muffins and soup. “Convenience brands are well-positioned to cater to consumers’ tastes because they aren’t pigeon-holed into one type of cuisine,” Beard notes, adding that younger consumers prefer more variety, particularly with newer menu items like burritos and pizzas.

7-Eleven Canada, for example, has added Beyond Meat Pizza to its existing Hot to Go menu. Made with 100% plant-based Italian sausage crumbles, the new slice plays a dual role for many Canadians: it satisfies their craving for pizza and their desire to eat more healthily.  “By expanding the fresh food assortment offered to our customers, we hope to provide options for every preference,” says Doug Rosencrans, VP and general manager of 7-Eleven Canada in Vancouver. “Beyond Meat has created excitement around plant-based protein alternatives and with the introduction of the Beyond Sausage and Roasted Veggie Pizza, we are providing our customers with what they want.”

Quality items that appeal to a broad customer base at the right price point are important for convenience stores, stresses Taylor. “Creating and offering signature, desirable items elevates c-stores from a convenience stop to a portable dining destination. Give customers options that go beyond the current selection and utilize promotions to encourage consumers to change up their habits.” 

Tyson Foods, Inc., for instance, has launched Pact, a new line of functional refrigerated protein snacks created to help people harness the natural benefits of food. Pact Snack Bites are literally packed with nutrition. Made with real fruits and nuts, they have 10-plus wholesome ingredients per serving and contain ingredients like kombucha, matcha and turmeric. “Consumers are looking for delicious, convenient foods to deliver essential protein and other functional benefits,” says Noelle O’Mara, group president of prepared foods for Tyson Foods in Springdale, Ark. 

Saving space

Such offerings are also space savers. Operating in the contemporary foodservice environment does not require a large investment in equipment or significant and additional space to serve up delicious meals. Combi ovens, for instance, are growing in popularity. These ovens, which enable pressureless steam, convected heat, and a combination of both in a single piece of equipment, are more expensive upfront, but save owners from buying and servicing two ovens, while also taking up much less space. 

Screen Shot 2019-12-13 at 9.02.24 AMToronto-based PizzaForno is making it even easier for stores squeezed for interior space to feed hungry customers. There are five 58-sq.-ft. PizzaForno kiosks located outside of convenience stores in Canada, providing 24-7 access to artisan pizzas cooked in an automated oven in just three minutes.

“The PizzaForno kiosks located in front of c-stores have been very effective in not only generating pizza sales, but also increasing in-store sales on items such as beverages, snacks and cigarettes,” says president and co–founder Les Tomlin, adding a turnkey PizzaForno license, including all equipment and set-up, is $150,000. “Operators are required to keep the machine stocked, which can be a daily or every other day task. PizzaForno handles everything else—all the maintenance and service, credit and debit reconciliation, as well as all marketing programs.” 

 Foodservice 101

Screen Shot 2019-12-13 at 9.02.06 AMThe concept speaks to the critical components for foodservice areas, which include bright, visible signage and food that is easily accessible. Research also indicates speed is a relative issue: customers are willing to wait five minutes for their meal.

What is essential is portability, says Taylor, highlighting the company’s Supreme Egg Bites in the U.S. “C-stores should explore ways to facilitate on-the-go eating through bite-sized offerings and packaging that supports dashboard dining.”

In Canada, for instance, Cheesewich is tapping into this trend with Bacon N Eggs to go, as well as its award-winning Cheesewich egg and salami sandwich without the bread.

Cargill also works with c-store owners to enhance their foodservice offerings. “We hold innovation sessions to build relationships and find trends in the market,” says Taylor. “And, we can work with our research and development team to create proprietary SKUs for c-stores that meet the unique needs of the segment.”

 That segment is changing as more and more customers turn to c-stores for lunches, snacks and on-the-go meals. Oh yes, they might pick up a carton of milk and some bread while they’re there.  

Originally published in the November/December issue of Convenience Store News Canada. 


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Leslieville Pumps’ co-owners share tips for foodservice success

Brothers build original foodservice program in downtown Toronto.

Screen Shot 2019-11-14 at 9.16.50 PMWhat do you get when you combine the enthusiasm of a young entrepreneur, the food savvy of an established local chef, and a unique concept never tried before in Canada?

To find the answer, you need look no further than downtown Toronto, where Greg and Judson Flom are establishing Leslieville Pumps General Store & Kitchen as an undeniable force in the c-gas community, and a formidable fixture in the foodservice domain.

The brothers took over the site in October of 2011, when Judson found the ideal Toronto location to build a southern barbecue into a convenience store and gas station, modelled after an American site he’d researched online.

Foodservice can be a challenging category, especially if you’re starting a program for the first time. Here are some of their top tips for getting foodservice right.

SHOWCASE YOUR PASSION:

009_Gray_YCM-May-2014_Leslieville-Pumps-480x480“I recommend that whatever food you choose to do in your foodservice program, it’s something you love, and that you put your love into the food,” says Judson. “Because that’s where the value comes out when you’re selling it.”

When you top this passion off with fresh, local ingredients, your customers will certainly take note. “We believe people can taste the love in our food,” adds Judson.

PAY ATTENTION TO DEMOGRAPHICS:

Go for a walk through your neighbourhood to learn more about the people who live there, so you can give them what they want.

“Obviously that also entails keeping on top of new things in the city, making sure we keep our menu exciting and bring in new products,” explains Greg.

QUALITY, QUALITY, QUALITY:

When you’re always producing top-quality food, your customers will have the incentive they need to keep coming back.

“It’s got to be a quality product, because you want the repeat customer – that’s so important in the c-gas business and foodservice,” says Judson.

 

When is comes to establishing a successful c-gas site, the brothers have this advice:

  1. Get the word out. Use Facebook and Twitter to communicate your message and stay in touch with customers.
  2. Create a vision. Look at the big picture before renovating and build something larger than the sum of its parts.
  3. Incorporate foodservice. Try a new foodservice program that customers will rush to your store to experience.
  4. Support local. Source as much product as you can from neighbouring businesses so your customers can feel good about supporting their local community.
  5. Put your customers first. Take customer opinions into account and give them service they’ll keep coming back for.

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Wake up to how coffee can drive revenue

Turn your c-store into a hot (beverage) destination

Screen Shot 2019-10-15 at 12.56.03 PMPouring effort into creating a positive coffee experience for customers has some serious perks, as both convenience store owners and their java partners can attest. Based on the sheer size of the potential market, opportunities to capitalize on it are abundant. Hands down, coffee is the most consumed beverage among Canadian adults, even more than tap water. It’s a $6.2 billion industry, including $4.8 million in foodservice sales, according to the Coffee Association of Canada. 

While Tim Hortons dominates the domestic coffee biz, there’s room for others to muscle in and grab some market share for themselves. And here’s another important number to ponder: 67% of Canadians visit a convenience store at least once a month, according to a Technomic study, which represents an opportunity to create a coffee following with a strong product.

Debbie RIx, owner of Lucky Penny

Debbie Rix, owner of The Lucky Penny

Debbie Rix, owner of The Lucky Penny, has attracted a steady drip of coffee drinkers to her location near Trinity Bellwoods Park in Toronto. She has focused on offering locally sourced products, like coffee from the city’s own Propeller Coffee Co., and fresh milk and cream from Kawartha Dairy. Her convenience/general store has also adopted green practices and cut down on waste by foregoing plastic stir sticks in favour of metal spoons and introducing a loaner mug program, which allows customers to fill up the mug and return it when they visit next. 

“It has been very successful,” notes Rix. “Most definitely, coffee sales have been important drivers for the business. About half of our customers come for grab ’n go items and half of that is coffee. The remainder come to pick up groceries and other items, from a mix of retro candy to romaine lettuce and Frisbees.”

Since opening five years ago, Lucky Penny strives to be responsive to the wants its clientele. That definitely applies to coffee preferences. “We’re not coffee snobs,” says Rix. “Our staff are trained to make a customer’s coffee just how they like it. We’ll try to make it happen.”

The store’s aim-to-please philosophy helps build loyalty, as does a points program that rewards customers for using reusable coffee mugs and for every dollar they spend. A downloadable mobile app helps track customer spending and point tallies. Fifty points gets you a free coffee and 100 earns $5 off an order. 

Coffee sales drive food sales

Coffee sales drive food sales

To encourage food sales, fresh baked goods are delivered daily, while yogurt parfaits are made on-site. As customers wait for their coffee order, they stand next to an enticing display of pastries. And before transactions are finished, they are offered a special deal of half a loaf to go along with their coffee. When prepping their coffee, clients can add soy/oat/almond/non-fat/full fat milk and sweeten with raw sugar, Stevia, simple or agave syrup, honey, plus a dash of cinnamon. It’s further evidence of the “have it your way” philosophy and reflective of consumers’ increased desire for healthier eating options. 

Coffee partners can play an important role in getting strong sales brewing, says Dave McQuillin, senior director of food services, Club Coffee L.P., based in Toronto. “We can provide support with branding of coffee in the stores with clear, modern visuals and clean, well maintained equipment. As well, we can provide graphic design for in-store merchandising and loyalty programs. It can elevate your store and make yours the destination over other retailers.”

But even the best branding won’t work without good coffee. While consumers want convenience and quality, the coffee itself cannot disappoint. “The coffee market has shifted and consumers are knowledgeable and able to recognize good coffee versus bad,” explains McQuillin. “A poor experience will absolutely turn them off.” That underscores the need for keeping coffee fresh and equipment pristine, up-to-date and in good working order. 

To sweeten the deal, promotions help drive sales. “The most successful ones have been ‘any size for a $1’ and bundle discounts, like coffee and a muffin or a breakfast sandwich. They do very well, especially in the breakfast space,” he says. 

Convenience store owners may also want to borrow a tactic out of the fast food playbook. In March 2019, Burger King introduced a coffee subscription program stateside for its BK Café. Through the company’s app, users can enjoy a small daily 12 oz. coffee for US $5 a month, which can whittle down the price paid to 17 cents per cup. For hardcore caffeine enthusiasts, it’s a potentially attractive perk, sure to keep the java flowing.

 

Hip sips: Coffee sales by the numbers

  • 16% of past-day coffee drinkers used a loyalty card, while 7% used a mobile app, when ordering coffee in the past week, according to the Coffee Association of Canada.
  • 3.2: average cups per day consumed by coffee drinkers.
  • 42% of consumers say they purchased hot brewed coffee/lattes/etc. at a convenience store in the last three months, making coffee the second highest ranking items in terms of sales, second only to fountain beverages, according to one U.S. study. 
  • 38% of convenience store customers who ordered coffee said they were interested in single origin and flavored coffee roasts, according to research firm Mintel. 
  • 56% of Americans who have visited a convenience store in the past three months feel that it makes coffee drinks as good as coffeehouses, according to Minitel data. It also discovered many consumers associate convenience stores with coffee. IIf a coffee program is done well, it is likely to boost overall foodservice sales.

Side bar: 7 ways to perk up coffee sales

  1. Channel your inner barista. Sophisticated coffee fans want to be able to customize their drinks with flavoured creamers and syrups.
  2. Stock healthier options. Mix up your selection of grab ’n go food-friendly items by offering things like vegan donuts, whole wheat or flax muffins, and fresh fruit.
  3. Upgrade your equipment. New self-serve Schaerer machines grind the beans and make pressure-brewed cups similar to French press versions. 
  4. Offer high-octane options. While sales of some coffee types have been flat, espresso sales have experienced a big leap recently.
  5. Go green. Consumers like to feel good about the coffee they purchase. Consider organic, fair-trade sourced beans, unbleached paper coffee pods, wood or bamboo stir sticks instead of plastic ones, and recyclable cups and lids.
  6. Just chill. Expand your coffee selection to include cold brewed coffee beverages, which experienced a whopping 80% jump in sales, according to one Bloomberg report. Frozen cappuccinos or smoothies spark coffee consumption during warm weather.
  7.  Celebrate! Build a promotion around International Coffee Day on October 1. That could include special pricing, new products, contests, social media blasts, or pairings with a food item.

This article originally appeared in the September/October issue of Convenience Store News Canada.


7-Eleven Canada Lands at YYC Calgary International Airport (CNW Group/7-Eleven Canada)

New 7-Eleven stores expand foodservice offering at Calgary airport

7-Eleven Canada Lands at YYC Calgary International Airport (CNW Group/7-Eleven Canada)

7-Eleven Canada Lands at YYC Calgary International Airport (CNW Group/7-Eleven Canada)

7-Eleven Canada is opening two new convenience stores at YYC Calgary International Airport. Open 24/7 and located in the Domestic Terminal, Concourses A & C, both stores will serve travelers and airport employees, as well as those waiting to pick up.

“Whether you are a domestic traveler, an airport employee or are awaiting the arrival of a loved one, we are excited to be adding a convenience factor to the YYC community with these two new locations,” says VP and general manager of 7-Eleven Canada, Norman Hower. “We want to provide travelers and employees with an easy, 24/7 solution for last minute meals, souvenirs, flowers or travel items.”

The newly open stores are conveniently located and offer a wide variety of “hot from the oven in minutes” pizza, wings and hot snacks, fresh to go sandwiches and meals, and beverages, as well as 7-Eleven’s coffee bar and classic Slurpee stations. Freshly cut flowers from fellow airport retailer, A Touch of Petals, are also available in store.

“We are so happy to celebrate the arrival of 7-Eleven Canada at YYC. The brand is globally recognized and has close community ties to Calgary – being home to a Slurpee’s first pour in Canada 50 years ago,” says Rob Palmer, CFO and VP finance, The Calgary Airport Authority. “Our guests asked for changes to our Eat and Shop options and one of the ways we’re delivering is with this partnership with 7-Eleven.”

Based in Irving, Texas, 7-Eleven operates, franchises and/or licenses more than 69,000 in 17 countries, including 11,800 in North America.


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Couche-Tard’s new initiatives designed to meet rising customer expectations

Screen Shot 2019-09-10 at 11.04.38 AMAs Alimentation Couche-Tard Inc. has built up its Circle K footprint through a series of global acquisitions, the company has begun rolling out several in-store initiatives to meet its customers’ rising expectations.

Chief among those have been foodservice-related programs, such as the company’s coffee platform and hot dog offer — both of which have spelled success for the Laval-based parent company of Circle K. Additionally, in the past few quarters, Couche-Tard began upping the ante with new digital and loyalty solutions, including its Lift upselling program and recently launched Easy Pay rewards program.

“I’m pleased with the work leveraging our loyalty programs, like Lift and Easy Pay, and unique promotional activity and gamification across the network — all part of our global efforts to drive more traffic to our stores and make our customers’ lives just a little bit easier every day,” Couche-Tard president and CEO Brian Hannasch said during an earnings call last week for the company’s first-quarter fiscal year 2020.

Circle K’s Easy Pay program rolled out to all of its U.S. network, with the exception of Holiday Stationstores, during the latest quarter. The retailer expects to complete the rollout at the Holiday locations in the fourth quarter.

Hannasch reported that the company is pleased with the pilot tests of the program, but it is too early to assess the national rollout. The retailer will be testing a variety of discount levels, as well as store-level incentives, to understand how to maximize traffic and penetration, he explained.

As for Lift, the in-store upsell tool, it was in almost 5,750 of the company’s U.S. convenience stores by the end of the quarter, and is beginning to hit sites in Canada.

“We think with both of these, we are just beginning to scratch the service,” Hannasch said. “With regards to Lift, we are pleased with the early results and we are seeing a very good conversion rate — averaging over 8 percent of customer transactions incorporating some sort of Lift promotion.”

To extend its reach, the retailer is piloting home delivery in Texas with service from more than 160 stores in the Houston area. Customers can order a variety of items, including snacks, beverages and age-restricted items, and receive them in less than an hour.

“We are monitoring this closely to measure customer acceptance and how it can play out in other markets,” Hannasch said, adding that the company will pilot the service in different geographies with different partners in the coming quarters.

IN-STORE INITIATIVES

Inside the store, Couche-Tard continues to grow its offerings.

On the foodservice side, the retailer’s coffee-program expansion continues, with more than 9,000 coffee machines installed in almost 4,000 locations in the United States this year.

“We continue to see strong sales and margin results, and customer feedback has been extremely positive,” Hannasch said, noting that full installation is on track to be completed by the end of calendar year 2019. “It’s a great example of when we test, we find something that works and scale it rapidly.”

Packaged beverages remain an especially strong category, with energy drinks, water and ready-to-drink-coffee contributing notably to same-store sales growth.

Couche-Tard is also seeing emerging growth in the alcohol space with alternative products such as hard seltzers, reflecting changes in consumer behavior.

“We are committed to staying ahead of the curve,” the chief executive explained.

In its North American food program, the retailer launched a $1 hot dog promo that has delivered double-digit sales increases. Premium hot dogs are driving unit growth as Circle K converts more customers to its food program, according to Hannasch.

“Our Top Dog signature hot dog program is now in nearly 570 stores and we are preparing for a launch across all U.S. business units in the coming months,” he shared.

Moving to the backbar, Couche-Tard is seeing strength in alternative tobacco segments in the U.S. and Canada, and in markets in Europe where the company is allowed to launch such items.

“We also remain committed to traditional tobacco products, and this quarter we continue our significant expansion of backbars to more locations to not only display tobacco cigarettes, but make room for the tremendous amount of innovation we are seeing in the category,” Hannasch explained.

LEARNINGS FROM EUROPE

The customer experience both inside and outside the c-store is a priority for Couche-Tard and its Circle K network on both sides of the Atlantic Ocean.

“In Europe, we now have about 135 newly redesigned Circle K stores across eight different countries,” the CEO said. “[The work] is a complete redo of the site with attractive designs and food offerings that engage our customers.”

Feedback thus far has been very strong, according to Hannasch.

Couche-Tard also has found success with direct mailers and gamification engagement tactics in driving traffic in Europe. The company recently launched these efforts in Canada and plans to bring them to the U.S. later in the year.

“We have more tools than ever in the toolbox,” Hannasch said.

As of July 21, Couche-Tard’s network comprised 9,792 convenience stores throughout North America. Its North American network consists of 19 business units, including 15 in the U.S. covering 48 states and four in Canada covering all 10 provinces. In addition, through CrossAmerica Partners LP, Couche-Tard supplies road transportation fuel under various brands to more than 1,300 locations in the United States.

In Europe, Couche-Tard operates 10 business units across Scandinavia, Ireland, Poland, the Baltics and Russia. As of July 21, Couche-Tard’s European network comprised 2,706 stores. In addition, under licensing agreements, approximately 2,250 stores are operated under the Circle K banner in 16 other countries and territories.

Originally published at Convenience Store News.


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Four steps to make your c-store a foodservice destination

IMG_2526-teaserCustomization, freshness and bold flavors — these are qualities that an increasing number of consumers, particularly younger ones who have growing buying power, say they most want in the food they buy from convenience stores and other foodservice operators.

This makes a strong case for offering made-to-order foodservice programs, but some existing c-stores don’t have the in-store space to fit a full made-to-order program, while other c-stores might not be able to support or staff one based on the local market.

C-store retailers without made-to-order foodservice programs are not doomed to fail; they can still be competitive — if they invest in and execute high-quality grab-and-go programs.

Even chains that do lean in hard on made-to-order are leaving money on the table if they do not maintain a grab-and-go offering and put effort into keeping it strong.

Here are four ways to make a grab-and-go foodservice program shine:

1. HIGHLIGHT SPEED & QUALITY

Customization gives customers the opportunity to get “what I want, how I want it” — but what many want is simply to get in and out as quickly as possible.

“I think that speed trumps customization,” said Paul Servais, retail foodservice director at Kwik Trip Inc. He noted that while the La Crosse, Wis.-based chain still offers some self-serve customization options, such as its sandwich toppings bar, the lack of full-service customization has never been a deal-breaker for its customers.

Being able to make a quick food purchase is a big part of “convenience” for busy consumers who are eating more meals and snacks on the go than ever before. At certain times of the day, customers are more willing to wait as their customized order is prepared. At other times, customers may not have a choice if they have somewhere to be or a limited break from work.

2. LISTEN TO THE DATA

Gaining customers’ trust in your grab-and-go food quality is important, but just as important is making sure product is always available to buy. That means retailers must know what customers will want, and how much of it they will want, hour by hour.

At Kwik Trip, homegrown data analytics and production plans have been developed and perfected over a period of years. By calculating what is likely to sell on a particular day and at a particular time, store employees can stock the hot and cold holding cases accordingly and avoid running out or having too much of something.

Hiring smart and skilled employees can make a difference, too, as their in-store experience will allow them to gauge what their store’s specific customers will want and when.

“We found that creating as many options as you can on the hot grab-and-go and allowing stores to decide which sellers are best for them [yields good results],” said Ryan Krebs, director of foodservice at York, Pa.-based Rutter’s, which has more than 85 items that could be stocked in the hot hold. “Stores can customize their offering for their consumer base.”

3. FOCUS ON PROMOTIONS

It’s not enough to just have a quality grab-and-go program at your stores. Retailers must get the word out and get customers to try it if they haven’t already done so.

In addition to marketing via billboards, social media, radio or TV, there’s a lot that can be done through in-store promotions and loyalty program deals.

“The largest opportunity is to take advantage of the opportunities once the guest is already on-site — inside or outside,” said Jeff Keune, senior vice president of foodservice and innovation at West Des Moines, Iowa-based Yesway. “We take a lot of time to develop the engagement points in the shopper cycle.”

Loyalty program deals and regular discount days on specific foodservice items can encourage customers to return and make repeat grab-and-go purchases.

“Loyalty is a fantastic and impactful tool to drive frequent users to visit even more often (for the food), as well as encourage new behaviors through cross-selling and innovation,” Keune said.

4. EXPERIMENT WITH LTOS

Limited-time offerings (LTO) can be used to create buzz and encourage trial, but a schedule is important. Retailers should know in advance how long a LTO will run, and have a long-term plan in mind for its rate of new ones. For example, Kwik Trip does LTOs quarterly.

By offering regular LTOs — particularly those based on seasons, events or holidays — c-store operators can prompt their customers to look forward to something new, and capitalize on the sense that they need to get it before it’s gone.

LTOs can work against a program, though, if they detract from the consistency that consumers demand, industry experts caution.

Originally published at Convenience Store News. 


How to manage foodservice profitability

profitability-TEASERFocusing on sales is extremely important in any business. After all, sales cure all ills.

This is especially relevant in a grab-and-go foodservice environment, where focusing on sales begins with your display cases. A full case conveys freshness to the consumer, which can equate to more sales. But inventory must be managed effectively to ensure incremental profits are not lost due to waste.

Implementing an inventory and production software solution customized for a grab-and-go foodservice program can minimize daily spoils by managing products with varied code dates, developing sales projections for those products, providing production schedules for staff, and even improving overall merchandising impact.

An important piece to creating foodservice profitability is ensuring that waste is within a certain tolerance.

A waste target must encompass what we call a “merchandising factor” – the amount of product needed on-shelf to ensure the item is merchandised well to the consumer.

Waste will also include overproduction, spoils and returns. Additionally, waste needs to be balanced with an in-stock position to ensure customers can find what they want, when they want it.

The solution may sound simple; however, the execution is not.

To maximize profits, it is essential to know how much to order, what to make and when to make it.  Having too much inventory creates excess waste and erodes profit margins, while having too little prevents category growth and negatively impacts customer satisfaction.

The executive team must not only be committed to the concept of putting the right product on the shelf at the right time, but also to providing the resources necessary for these efforts to be successful. This applies to groups with beverage-only programs, in-store production as simple as roller grill, complex sandwich and entrée programs, or commissary operations.

Balancing controlled waste and the need to facilitate good merchandising is necessary to maximize the success of a grab-and-go or made-to-order program.

Do you include a merchandising “waste factor” in your foodservice management plans?

Growing profitable sales is important to the long-term prosperity of your retail business. It is impossible for any successful foodservice retailer to separate effective merchandising from efficient waste management as key factors in maximizing the profitability of a foodservice program.

Typically, “waste as a percentage of X” is used by industry executives when discussing performance. While this may be sufficient for a general program comparison, in order to perform a more comprehensive analysis, additional foodservice management principles must be evaluated. These metrics include: fresh item subcategory merchandising goals, shelf life and subcategory expected vs. actual per store, and profitability performance.

Unique to fresh-food development, category management principles must be enhanced with the creation of targeted waste numbers for each subcategory to ensure adequate merchandising and sales. Each fresh item category should measure its gross profit margin ​after waste.

​Holding warmers, coolers and bakery displays can make a significant impact on merchandising – and sales. Investing in cooking equipment to handle mass production will help staff meet demand during peak timeframes. Also, foodservice retailers should avoid offering product with a short shelf life during hours when staff is limited as this can hurt the execution.

PATTERNS & FORECASTS

It can be incredibly beneficial for retail businesses to identify the patterns that can appear in day-to-day operations. For example, if a supplier who delivers products to the store across the street is always there on the same day of the week and visits you after that, this can help to create a forecast based on this history that you should trust.

While you cannot forecast when a bus may pull in, having products with longer shelf life can ensure product availability without the need for instant production or the waste that can result.

For those products with a shorter shelf life, make less more often and commit to the forecast. Think of the forecast as guardrails on a road. Your challenge is to narrow the guardrails as much as possible while still allowing free-flowing movement.

Another key consideration is the volume of each store. If a chain has committed to making the store experience the same regardless of volume, this lack of customization will lead to insufficient product availability for higher-volume locations, and increased waste for locations with lower volume.

A high-volume store can be running 12 percent waste (as a percentage of sales) but should be at 5 percent because it is not executing to the plan, while a low-volume store could be perfectly executing the merchandising plan and have an overall waste of 20 percent. Therefore, some stores should be managed via percentages and some managed via units, depending upon their volume.

To simplify the production and ordering processes for store personnel, it is best to generate a forecast that includes a merchandising factor.

The correct target for fresh-food waste will vary by organization and the formula being used to represent it. From my experience, an acceptable percentage of waste (to sales) for shorter shelf life product is approximately 15 percent (depending on volume), while products with longer shelf life should have almost no waste – if proper stock rotation occurs.

In summary, if a store sells less of an item and meets the waste goal, one can conclude the store did not have the product out at the right time of the day. If a store sells more than the forecast and is short of the waste goal, they either were not paying attention as well as they should be, or the forecast may require adjustment. If a store sells more than the forecast and meets the waste goal, they are doing an excellent job.

Kay Segal is senior partner and managing executive for The Business Accelerator Team. Having started her career in foodservice operations and moved into convenience retail marketing, Segal shares nuanced insight from years of relevant experience in foodservice, retail, media and business development. Originally published at Convenience Store News. 


6 levers to transform your foodservice program

levers-teaserThe 2019 Convenience Store News Foodservice Summit in Austin, TX featured multiple presentations from industry experts, designed to help the retailer attendees rethink their approach to the category.

“The food business world is evolving rapidly,” Brad Barnes, director of CIA Consulting & Industry Programs at The Culinary Institute of America, said during his presentation entitled “The Evolution of the Food Transaction.”

Evolving a foodservice program, though, can be particularly tricky for larger chains; members of larger organizations tend to protect what already exists, and less than 1 percent of internally generated new business ideas ever affect the bottom line, according to Barnes. If leadership prioritizes the right initiatives and cultivates the right capabilities, however, successful innovation is more likely, he said.

“It’s not going to look like what you’re doing today or last year,” Barnes advised.

Key priorities include:

  • Building great teams, without which retailers are “lost”;
  • Selling food the way customers need, expect and want;
  • Creating experiences;
  • Anticipating future direction; and
  • Expanding one’s own view.

C-store operators who are ready to start making changes are in a good position to do so because a certain percentage of c-store visitors are aware of all the work the convenience store industry has put in to become a foodservice destination, noted Chris Wolf, senior vice president of insights at the Marlin Group. A percentage of visitors even call c-stores better than quick-service restaurants, he said during his presentation titled “Growth Strategies for Transforming Convenience.”

“I think that’s a great base to work off of,” Wolf said.

He identified a series of levers that retailers can use to transform their foodservice programs:

  1. Technology and “effortless” convenience transformers, including cashierless shopping and digital ordering;
  2. Touchpoints, such as loyalty programs and people connections;
  3. Environment and experiential cues that indicate freshness, atmosphere and more;
  4. Menus and “really good food;
  5. Dayparts and a program designed to maximize the potential of each time period; and
  6. Assortment and relevance to location, generations, multiculturals and price/value.

Ten executives from leading food-forward convenience store chains participated in the eighth-annual Foodservice Summit, held April 16-18 in partnership with Tyson Convenience.