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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.


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What will the plastics ban mean for foodservice?

recycling-takeout-containersA 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.”

 


Denmark C-Store earns top international honour

Screen Shot 2019-06-13 at 2.18.21 PMThe 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.”

FOOD REFRESH

Screen Shot 2019-06-13 at 2.17.20 PMThe 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.

Screen Shot 2019-06-13 at 2.17.05 PMThe 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.

TECHNOLOGY & CORPORATE OPS

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. 


Imitating food-first operations for strategic advantage

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

Screen Shot 2019-06-13 at 12.57.40 PMReal 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.

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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

Screen Shot 2019-06-13 at 1.01.55 PMOne 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.

Screen Shot 2019-06-13 at 12.57.28 PM

 

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.

 


Technology on the menu for c-store foodservice leaders

Screen Shot 2019-06-13 at 12.37.56 PMAs 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.

Originally published at Convenience Store News. 


Retail foodservice is the fastest-growing foodservice segment in Canada

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:

  • 79% of Gen-Z consumers and 71% of Millennials order food or beverages from a restaurant at least once a week or more.
  • Consumers under 30 years old spend 44% of their food dollar on food and alcohol from restaurants, compared to 35% for those between the ages of 30 and 39, and just 27% for those 65 and older.

Chris Elliott_Headshot“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.”

 A taste for sustainability

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.

Currently:

  • 98% recycle.
  • 93% use energy or water-saving equipment.
  • 77% track, compost, or donate leftover food.

Shanna Munro_Headshot“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.

Demand for convenience

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:

  • Quick-service restaurant delivery sales increased by 49%.
  • Full-service restaurant delivery sales increased by 54%.

“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.

Foodservice challenges

Despite industry growth, foodservice operators are struggling in some areas:

  • Labour costs, as well as recruiting and retaining employees, are the top two challenges currently facing foodservice operators.
  • Higher minimum wages, food costs and increasing labour shortages have resulted in higher operating costs, contributing to a 4.2% increase in menu prices at restaurants across the country.
  • A slowdown in average annual foodservice sales growth is expected, given rising household debt and slower job creation.
  • Commercial foodservice sales in Canada are predicted to decelerate to an average of 4% growth per year between 2020 and 2023.

Overall, Canada’s foodservice industry is forecast to surpass $100 billion in annual sales in 2021, presenting exciting opportunities.