A national ban on the most harmful single-use plastics will very likely force foodservice operators, restaurants and fast-food outlets to find non-plastic materials for takeout and delivery containers but plastic bottles for water and soda are more likely to be improved rather than phased out.
Prime Minister Justin Trudeau said last week his government is starting the regulatory work to ban toxic single-use plastics because the garbage infiltrating the world’s waterways is out of hand.
“As parents, we’re at a point where we take our kids to the beach and we have to search out a patch of sand that isn’t littered with straws, Styrofoam or bottles,” he said. “That’s a problem, one that we have to do something about.”
Nothing is going to be banned overnight, with the process to implement a federal ban or limitations on a product under the Canadian Environmental Protection Act usually taking two to four years. The goal is to make decisions on everything on the list by 2021.
“It’s going to take a little bit of time to make sure we get it absolutely right because this is a big step but we know that we can do this by 2021,” Trudeau said.
The process includes an assessment of each product, a proposed regulation, a public comment period, and then the final decision by cabinet.
Trudeau said Canada’s plan will “closely mirror” that of Europe. In March, the European Parliament agreed that by 2021 the European Union will ban almost a dozen single-use products including plastic plates, cutlery, cups, straws, plastic sticks in cotton swabs, balloon sticks and stir sticks, and Styrofoam cups and take-out food containers. Oxo-degradeable plastics including plastic grocery bags, which break down into tiny pieces with exposure to air but never fully disappear, are also to be banned.
Plastic beverage bottles won’t be banned in Europe but the EU will require them to contain a minimum of 30% recycled material by 2030, and a collection rate for recycling or reuse of 90% by 2029. Europe is putting new onus on producers of plastics to ensure they are recycled or reused, including the makers of fishing nets, which are among the most prevalent plastics trapping fish and polluting water bodies.
An official at Environment Canada, speaking anonymously because he wasn’t authorized to speak publicly, said Canada’s focus will be on banning things that are the most harmful, or the hardest to recycle. Everything will be run through a full scientific assessment as well as a socio-economic-impact review before any proposals for bans or regulations of materials are made, he said. There may be some exceptions to bans if certain uses of products are critical or irreplaceable, he said.
Styrofoam take-out containers are among the products most likely to be banned in Canada. While restaurants favour them because they’re cheap, lightweight and good for hot or cold food, there are already a number of alternatives. Styrofoam containers are also among the worst for the environment; they break down into tiny little pieces that are easily ingested by fish, animals and ultimately humans.
Plastic straws are already on their way out by restaurants’ choice, but will almost certainly be covered by the Canadian ban nonetheless. A high-profile campaign against plastic straws last year drove numerous multi-national food and beverage companies, including A&W and Starbucks, to replace plastic straws with paper versions, and many restaurants just stopped automatically putting straws in drinks as a first step.
Plastic bottles, however, are unlikely to make the list of banned products. The official said bottles are an area where Canada could require a greater amount of recycled material, and set national targets so 90 to 100% of them are collected for recycling. All of that would trigger provincial and municipal governments to up their recycling games.
Canada currently throws out 12 times the plastic it recycles, and there are only about a dozen domestic recycling plants. Requiring more recycled content in bottles or other plastic products would create a larger market for recycled plastic material that would in turn, spur economic activity in the sector and an explosion in the number of sorting and recycling plants.
A recent report done by Deloitte and ChemInfo Services for Environment and Climate Change Canada found a 90% plastics recycling rate in Canada could create 42,000 jobs.
Environment groups were cautiously optimistic about the announcement Monday, saying they want to see the follow-through but noting the best way to reduce plastic garbage is to reduce the plastic we produce and use to begin with.
“I think we are generally satisfied,” said Vito Buonsante, plastics program manager for Environmental Defence.
Sarah King, head of the oceans and plastics campaign at Greenpeace Canada, called it a good first step.
NDP MP Gord Johns, whose motion calling for a national strategy to combat plastic pollution passed with unanimous support in December, said the Liberals’ move is a good beginning but it is not a full strategy to get to zero plastic waste.
Conservative Leader Andrew Scheer shrugged it off as another empty announcement devoid of specifics and without any information on the implications for prices for consumers or for jobs in the plastics industry.
The Canadian Federation of Independent Business is also leery of the proposals, with president Dan Kelly asking for a “thorough economic impact assessment” before anything is banned.
“It would be irresponsible to put such a sweeping measure into place without fully studying the possible impacts on Canada’s small businesses first,” said Kelly. “There is no reason why sound environmental policy and economic development can’t go hand in hand.”
The operator of 7-Eleven Denmark took home the 2019 NACS International Convenience Retailer of the Year Award during an awards ceremony on June 6.
Reitan Convenience Denmark accepted the award, which recognizes an innovative and successful international convenience store that breaks new ground and sets new innovative standards for the industry, during the NACS Convenience Summit Europe in London.
The award winner is chosen by a grand jury of leading international retailers and experts and earns the accolade of “the best convenience store in the world.” Jack Link’s sponsored the award.
“Jack Link’s is extremely proud to sponsor the International Convenience Retailer of the Year Award. At Jack Link’s we ensure that the customer is at the heart of our plans, and by continually adapting and innovating with new products, we ensure we stay relevant to ever-changing shopper needs,” said David Harriman, regional sales director UK/Ireland and Nordics at Jack’s Links.
“Reitan Convenience Denmark has adopted and innovated its own offering to meet changing customer needs, standing out from its competition. The brand is a well-deserved winner of this prestigious award,” he added.
According to NACS, the Association of Convenience & Fuel Retailing, Reitan Convenience Denmark transformed its way of doing business to stay relevant in Denmark’s competitive c-store marketplace.
The digitalization movement, from online versions of newspapers and magazines to online purchases of transportation tickets, has had a huge impact on Reitan’s business.
“Categories that used to be very good for us started declining,” said Jesper Ostergaard, CEO of Reitan Convenience Denmark, which operates 7-Eleven stores. “We had to decide whether we wanted to accept that 7-Eleven was becoming less and less relevant for consumers, or whether we wanted to prosper and survive.”
The company used market research to identify areas of growth, which included beverages and foodservice, as well as healthier options. What followed was a total revamp, and to fulfill the new vision, the 7-Eleven Denmark store grew from a traditional kiosk into a modern c-store format with dedicated areas for in-store eating.
In addition, 7-Eleven Denmark is tapping into the consumer demand for fresh, healthy food options by stocking more organic products like fair-trade coffee served with organic fresh milk in 100-percent plant-based cups.
The stores now carry more than 64 SKUs of vegan and vegetarian ranges, while the packaging of all products utilizes environmentally friendly solutions whenever possible.
“Every time a customer came into our store, we wanted to surprise them with products they perhaps didn’t even know they wanted,” Ostergaard said.
As part of the revamp, more food is prepared fresh on-site, and an extensive grab-and-go section is stocked with private-label fresh salads, wraps, sandwiches, juice, smoothies, fruit and snacks. Thirty-five percent of in-store sales of food, drinks and bakery come from healthier product lines, according to the company.
The retailer also relies on its employees to showcase the store format and its offers. Through gamification, staff receive training, and with more fresh food prepared on-site they also receive extensive training in food safety, while a trained chef manages the food category.
Technology also plays an important role in helping customers navigate and choose products, with digital platforms providing nutritional information.
As NACS noted, 7-Eleven Denmark ties deals and loyalty initiatives into its app, which has led to a significant increase in the number of downloads. The c-stores accept mobile payment, and some high-traffic locations allow self-scan and pay options.
“We have become more relevant to more customers than we have ever been in the last 25 years,” Ostergaard said.
Home delivery via a third-party delivery service is also available in select markets.
“Reitan Convenience Denmark joins a prestigious group of retailers selected to receive this award, which marks the best in convenience retailing,” said Henry Armour, NACS president and CEO. “An aggressive growth strategy with a focus on critical areas — healthy foodservice, technology and its employees — has allowed it to prosper. Reitan Convenience Denmark continues to enhance the customer shopping experience through its innovative strategies.”
To view Reitan’s winning store concept, click here.
Originally published at Convenience Store News.
Canadian newsstand & convenience retailer International News (INS) was dramatically affected by the consumer shift from analogue to digital. By 2014, sharp declines of sales of newspapers and magazines, combined with a protracted trend away from tobacco consumption, had led to a run of double-digit year-over-year declines in system revenue. A bold shift was necessary to shift focus and allocate more space to food and beverages – healthier fare like seaweed snacks, gluten-free items, and fresh & prepared foods.
The same strategic shift has been mirrored by other similar convenience operators, including Gateway Newstands and Hudson Ltd.
International News has cut “readables” to less than 5% of sales. The transition hasn’t been painless, leading to increased franchisee turnover, but, after five years, revenues have recovered, and margins are way up.
Invest in food & foodservice
Market research provider Euromonitor International (www.euromonitor.com) estimates that between 2016 and 2021, total Canadian convenience store retail sales will decline – 0.8% per year in real terms.
Canadian convenience foodservice sales over the same period are projected to grow by +1% per annum, net of price inflation.
There are plenty of tactics and strategies that convenience operators can explore and implement to grow retail sales. However, as with newsstand operators, logic dictates pursuing growth via foodservice offerings.
Fish where the fish are
Real growth after inflation in foodservice is forecast to be at or above 1% per year until 2022.
Quick Serve Restaurants (QSR) represent about 45% of total commercial foodservice sales in Canada, just over $30B in 2018 . The lion’s share of QSR sales are by large chain operators like Tim Hortons, McDonald’s, Subway, Starbucks, and the like.
Eight of the top 10 chains in Canada by sales are QSR operators. Together, the Top 10 operators represent over one-third of total commercial foodservice sales.
For convenience operators to be successful in capturing customers and share in the foodservice sphere, it’s important to take a page from the QSR playbook.
The leading edge
One go-to hack that has taken hold in the ‘post-growth’ world is to look and learn from players who are growing rapidly in foodservice by taking share. Exhibit 4 sketches the approach of a number of QSR and fast casual operators worth considering.
These are some of the fastest growing/emerging chains from the U.S. Each of these operators had revenue growth of more than 25% in 2017. Some are growing exponentially.
It’s not magic – it comes down to their core value offerings and strategic approach. They’ve tapped into a recipe of food trends, tastes/preferences, social causes, marketing, and tech innovations that have led to consumer engagement – reinforcing the old adage that if you build it right, they will come.
Commit to tech
Tip: Next time you visit your favourite QSR outlet, pay attention to the number of patrons using their phones, in some way, in the transaction. Everything from pre-ordering, cashless payment, in-store rewards, and sourcing information. After the purchase, there’s a better-than-not likelihood that their phones will be at the ready on the table to surf, text, and entertain.
Tip: Ordering online for carryout or delivery is growing, though it still represents a limited number of QSR eater occasions. However, it is very worth noting that nearly one-third of consumers are using their smartphones for loyalty rewards or special deals.
The 2018 Restarurants Canada Foodservice Facts graphic (Exhibit 3, below) tells the tale of the ways in which consumers are plugging in. Technology accessibility and functionality will increasingly be key influencers for consumers when it comes to restaurant choice decision-making.
Divine your future
In his article “The rise of Japan: How the car industry was won,” The Globe & Mail’s automotive writer Peter Cheney pointed out, “Japan systematically borrowed the best ideas from (Britain, USA, and Germany)… Japan studied Germany’s superb mechanical designs and installed them in cars that the average consumer could afford.”
When it comes to growing your business by taking foodservice share from your big QSR competitiors, it would serve you well to remember that imitation is the sincerest form of flattery.
As convenience store operators invest more money, time and square footage in foodservice operations, many are turning to technology for faster service, automation and an improved bottom line.
Whether it’s online or mobile ordering, in-store kiosks, food safety technology or robots cooking in the kitchen, the latest advancements are allowing c-stores to keep up with the restaurant industry and better satisfy customers.
“Technology in foodservice is not a new concept, but we are starting to see more innovation. Because of the low unemployment rate and higher labor costs, there is a lot of automation technology being developed,” says Amanda Topper, associate director of foodservice research at Mintel, based in Chicago.“Also, mobile ordering and delivery is coming about because we are seeing a shift of more consumers wanting to have off-location dining.”
In fact, 57% of consumers said they planned to use mobile ordering and pickup in 2019, according to Mintel’s Dining Out in 2019 report.
In terms of online ordering and delivery at c-stores, Mintel’s March 2019 C-Store Foodservice Report showed 23% of c-store foodservice customers want to see online ordering from a c-store and 21% want delivery options offered.
“We are seeing operators invest more in mobile and online ordering, and shifting to a store concept that meets the needs of consumers placing orders online,” Topper explained.
Technology for training is another area ripe with innovation. Many operators are using iPads or other tablets in the kitchen to feature recipes and provide training videos for kitchen staff on how to prepare meals, according to Jessica Williams, founder and CEO of the consulting firm Food Forward Thinking LLC.
“With training, it’s critical to replicate in-person training as much as possible, so video training through iPads or filming recipes in those quick clips people see on Instagram is something that is helping right now,” Williams explained. “The digital training will also be key to offering consistent and accurate products across a chain.”
Technology advances are leading to improvements in the food safety arena as well.
One area in particular that’s gaining traction in food safety technology is blockchain food traceability, which enables a customer to track the entire lifecycle of a food product by scanning its QR code.
Blockchain covers every link of the supply chain, from raw materials to production to the final product on the shelf, according to Francine Shaw, president and CEO of Savvy Food Safety Inc., based in Hagerstown, Md. Blockchain also enables companies to track their own supply chain in a secure and paperless way. Data that used to take seven days to collect can now be obtained in mere seconds.
“Blockchain will make tracking shipments much less complicated. Every logistical step of a product’s journey will have instantaneous information on who handled it, where and when, resulting in fewer stolen, lost or damaged goods. Suppliers could even trace the temperature and humidity throughout the shipping process,” Shaw said. “This will be extremely useful in locating unsafe products or the source of foodborne illnesses, thus preventing costly mass recalls.”
Blockchain technology can also help prevent massive amounts of unnecessary food waste and all of the related costs that go along with it, including labor, storage, disposal of contaminated or mislabeled product, and more, she added.
Canadians under 40 are taking the biggest bite out of the country’s restaurant business, while showing an appetite for environmentally sustainable operations and menu options. Plant-based protein, sustainable seafood and locally sourced food are in demand, while plastic straws continue to disappear, according to the 2019 Foodservice Facts report just released by Restaurants Canada.
This information is also valuable to the convenience sector, which is increasingly diversifying its offerings to include foodservice for busy customers on the go. The report found that retail foodservice (prepared meals in department stores, convenience stores and grocery stores) remains the fastest-growing foodservice segment in Canada, with projected annual sales increasing by 6.2% to $2.9 billion in 2019.
The report credits Millennials (27-42 years old) and generation Z (19-26 years old) for helping to grow overall foodservice sales by 5.1% in 2018, driving sales to nearly $90 billion. This marks five consecutive years of growth exceeding 5%, which, according to Restaurants Canada, makes Canada’s foodservice industry the fastest-growing sector in the country during the past decade.
The report reveals:
“The days when targeting a baby boomer was a can’t miss strategy is over. Those under 40 are now driving the industry,” Chris Elliott, senior economist at Restaurants Canada, said in a statement. “Whether they are looking for environmentally sustainable alternatives, tech friendly options or more diverse menu offerings, it’s vital for restaurant operators to adapt to their changing customer base in order to appeal to new guests and maintain brand loyalty.”
Millennials are leading the increasing focus on sustainability in the foodservice industry. According to the report: “Their preference to do business with companies that prioritize environmental stewardship and social responsibility extends to their dining habits — and restaurants are responding to this demand.
Eight out of 10 foodservice business operators across Canada now say environmental sustainability is important to their success and 72% say they have made changes to their business operations to become more sustainable.
Nine out of 10 say they plan to continue or improve on their current level of environmentally sustainable operations over the next three years.
“Finding ways to operate more sustainably is simply part of doing business in restaurants today,” said Shanna Munro, president and CEO of Restaurants Canada. “Though changes often take some upfront investment, many are seeing the benefits not only for the planet, but for their bottom line.”
According to the 2019 Foodservice Facts report from Restaurants Canada, 70% of restaurant operators say they have made changes to their menu/selection of items. Growing appetites for plant-based dining have been a significant reason for this.
With Canadian consumers indicating shifts in protein consumption (vegan and vegetarian meat alternatives showing the highest growth), plant-based options appear here to stay as more diners make the switch to “do their part” for the environment.
With the rise in food delivery skyrocketing in 2018, consumers have no shortage of options when ordering in; everything from their favourite local restaurant to major franchise chains and even fine dining is on the table when it comes to delivery today.
The impact of the demand for delivery is mostly being felt in densely populated cities where foodservice is more economically viable. Foodservice orders made online, through websites and mobile apps, totaled more than $4.3 billion in 2018 (a 44% increase from 2017) and can be broken down into the following key categories:
“As Generation Z and Millennials look for convenience, eating out or ordering in is appealing as a time-friendly alternative to cooking,” said Elliott. “We expect to see these generations looking to order food at lower price points, and while health is important, many want to indulge a little too.”
Beyond delivery tech, Millennials and Generation Z customers prefer establishments that offer free Wi-Fi. They also like to use social media platforms, such as Instagram and Snapchat, to interact with establishments, leave reviews, follow activity and tag photos. In order to attract this key customer base, restaurants (and c-stores) should adapt their digital marketing and advertising strategies to keep customers hungry for more.
Despite industry growth, foodservice operators are struggling in some areas:
Overall, Canada’s foodservice industry is forecast to surpass $100 billion in annual sales in 2021, presenting exciting opportunities.
Convenience store retailers can rest easy when it comes to evaluating the long-term prospects of their foodservice customers. Not only is the number of c-store shoppers who don’t purchase prepared food a minority, but those who do buy it tend to make a habit of doing so.
According to the findings of the 2019 Convenience Store News Realities of the Aisle U.S.-based consumer study, 69% of c-store shoppers surveyed said they purchased prepared food within the last month, compared to just 31% who said they did not make such a purchase.
Among those who did not purchase, their chief reasons why were: they didn’t plan to do so (44%) or they prefer not to buy prepared food at c-stores (44%), which indicates that convenience store retailers can still do more to demonstrate they have an enticing offering. Millennials and members of Generation X, as well as health-conscious shoppers, are more likely to point to unappetizing food as a reason for not purchasing.
Younger generations, though, are also more likely to make multiple c-store prepared food purchases in a given month, with Generation Z leading the way with an average of 4.07 purchases per month, followed by Millennials (3.78 purchases) and Generation X (3.65 purchases). That’s compared to an average of 2.67 purchases per month made by Baby Boomers.
Shoppers are also generally happy with what they receive, as two-thirds said they were “extremely” or “very” satisfied with their most recent prepared food purchase, while only 3% were not satisfied. Additionally, 70% of those who identify themselves as health-conscious were extremely or very satisfied, compared to 60% of non-health-conscious shoppers.
Sandwiches/deli are the most popular prepared food items at c-stores (29% of surveyed shoppers purchased in the past month), followed by pizza, breakfast sandwiches and hot dogs, all at 24%, and fresh-baked goods at 20%.
Fresh-made items continue to gain ground on products held in refrigerated cases. When considering all their prepared food purchases made in the last month, 41% of surveyed shoppers said they bought only made-to-order items, 32% bought only grab-and-go products, and 28% bought a combination of both. The generation most likely to exclusively purchase made-to-order food is baby boomers, with 48% saying they did so.
Notably, despite the fact that only 41% report having bought made-to-order food in the last month, 54% of all c-store prepared food shoppers say they prefer made-to-order over other options, while 27% prefer grab-and-go and 19% say they have no preference.
The most important factors for shoppers when purchasing prepared food at convenience stores are price and food quality, cited by 62% and 49%, respectively. Taste (cited by 42%), freshness (38%) and convenience/on-the-go (34%) round out the top five considerations. Additionally, women are more likely to rate sanitation as being highly important compared to men (32% vs. 22%).
Originally published at Convenience Store News.
In the convenience foodservice space, some retailers are experienced veterans that have fine-tuned their programs and how they introduce new menu items. Others are starting from scratch with brand-new programs or new prepared food products to fit the top trends and meet changing consumer demand. To succeed with something new, operators must have strong knowledge of the market, a clear goal and a realistic path to reach it, according to industry experts.
“We started with the offer and what we wanted to stand for,” said Ed Burcher, vice president of foodservice at FriendShip Food Stores, which opened the doors to its first food-focused concept store in its hometown of Elyria, Ohio, in July 2018.
The convenience store chain recognized that it needed to standardize many items and offers, as well as the general look and feel of the store, to provide a consistent experience that would draw customers back on a daily basis. This meant making some changes to meet the needs and desires of FriendShip’s existing customer base.
“What did not change was our FriendShip Kitchen offer,” Burcher continued. “FriendShip has a history of food and foodservice, using other brands and programs. The goal with FriendShip Kitchen is to bring all of our offers under our name so that we have consistency with communications and expectations.”
To determine how to meet this goal, the retailer identified what the new prototype would need. This included extra square footage to accommodate the store’s new features and a redesigned kitchen plan to ensure the flow and processes necessary to serve restaurant-quality food. The project required dedication to space, equipment, process and execution, according to Burcher.
While FriendShip created a new concept, c-store operators looking to achieve improvements in their existing foodservice program can follow the same process, even if a new-build store model isn’t in the cards, according to Chef Kyle Lore of Salt Lake City-based convenience store chain Maverik Inc. A smaller-scale change may even make it easier to fill a competitive need.
“Market research in the areas near the stores is the primary driver,” Lore said. “What does your customer want that is not being made available?”
At the same time, operators should be cautious about what their foodservice program is capable of providing, and not rush to get ahead of themselves just to fill a niche.
“I am a big believer in process. While there are times that you can skip steps, an operator should understand what it will take to provide an item to a guest in every store the same way, each and every time,” added Burcher. “There is no magic formula, but operators should have a process that ensures that all areas are addressed: supply, ingredients, packaging, pricing, promotion, communication and execution.”
Testing is also an important part of the process.
At FriendShip, the company has used a rigorous testing process in the past, from idea to test market to full rollout. Burcher noted that smaller chains such as FriendShip, which operates 26 c-stores, are often more nimble than the largest players in this area because they are able to make significant changes in a shorter period of time.
“We are evolving our stores and offer at a much faster rate than larger chains can and it accelerates our ability to achieve consistency in offer, brand and execution,” he said.
At Maverik, which operates more than 300 stores, the testing process occurs in phases. A test item will typically appear at a small number of stores, often just five, and then be reviewed by the company’s quality assurance managers, who have a strong background in food safety and work directly with those employees involved in foodservice operations. Together, they evaluate factors such as production difficulties, unexpected secondary impacts on other processes, and real-time customer feedback. If the initial results are promising, Maverik makes adjustments and then moves on to a broader test at 10 to 30 stores.
Hands-on testing can reveal fatal flaws in an item that looks fine on paper.
Both Lore and Burcher agree that limited-time offers (LTOs) are a good way to test a menu item in the market and explore demand. LTOs can help operators determine whether an item has the potential to become permanent or should disappear after the promotional period.
“To become permanent, it must impact the mix in a meaningful way,” Lore said.
Click here to read CSN’s full report, “The Building Blocks of Convenience Foodservice.”