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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. 

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.

Tyson enters plant based meat market

The fast-growing market for meat alternatives has a surprising new player: Tyson Foods.

Screen Shot 2019-06-13 at 2.31.15 PMTyson, one of the world’s largest meat producers, will begin selling nuggets made from pea protein at grocery stores this summer. A blended burger made from beef and pea protein will follow this fall. Both will be sold under a new brand, Raised and Rooted, which will continue to develop plant-based and blended products for both groceries and restaurants.

Tyson is responding to a growing global trend toward plant-based eating, fueled by health and environmental concerns. U.S. sales of meat substitutes are expected to jump 78% to $2.5 billion between 2018 and 2023, according to Euromonitor. Global sales could reach $23 billion in that same timeframe.

Startups like Beyond Meat, which makes burgers and sausages from pea protein, and Impossible Foods, which has a soy-based formula, have also raised consumers’ interest with products that mimic meat so closely in taste and texture that they’re being sold at Burger King.

But the entry of Springdale, Arkansas-based Tyson could upend the alternative protein market because of its sheer size and distribution capacity. Tyson Foods reported $40 billion in sales in its 2018 fiscal year; Beyond Meat, which held its IPO last month, forecasts $210 million in sales this year. Tyson has 50 facilities just for processing chicken; Impossible Foods has one factory in Silicon Valley.

Tyson has been watching the alternative protein market for a while. Its investment arm, Tyson Ventures, acquired a 5% stake in Beyond Meat in 2016. It sold that stake before Beyond Meat’s IPO, but it continues to hold investments in other startups, including Memphis Meats and Future Meat Technologies _ which grow meat from cells _ and mushroom-based protein startup MycoTechnology.

“These things work together and help us have a broad view of what the world of food looks like,” said Justin Whitmore, who leads Tyson’s alternative protein business.

Whitmore said the company noticed a significant upswing in the number of consumers who eat meat but want alternative sources of protein. About a year ago, Tyson’s chefs and consumer specialists began developing its own alternative protein products. The nuggets it came up with look like fried chicken, but they’re made with pea protein, egg whites, flaxseed and bamboo fiber and other ingredients.

“It became apparent we had the capability not only to compete but to lead in this space,” Whitmore said.

Whitmore said Tyson will develop more Raised and Rooted products and also spread plant-based alternatives through its other brands. For example, Tyson’s existing Aidells brand is getting sausage and meatballs that contain 50-60% chicken and 40-50% plants like chickpeas, quinoa and lentils.

The products will be sold at grocery stores and restaurants, but Tyson isn’t yet saying which ones. One Tyson customer, McDonald’s, has yet to say whether it will add a plant-based burger to its U.S. menu. It sells one made by Nestle in Germany.

Nestle is among the companies that could challenge Tyson. Last week, the Swiss food giant said it plans to launch its Sweet Earth brand Awesome Burger in the U.S. this fall. And earlier this week, Maryland-based chicken company Perdue Farms said it will soon start selling nuggets, tenders and patties made from a blend of chicken and vegetables.

Canada’s Maple Leaf Foods also sells plant-based alternatives under its Lightlife brand, which it acquired in 2017.

But Whitmore didn’t express concern about competitors, saying Tyson’s speed, scale and distribution expertise (as well as its 84-year history) puts it ahead of companies who have been in the plant-based market for longer.

Whitmore said groceries will be able to decide where to put Tyson’s plant-based products. Beyond Meat has seen success partly because its burgers are sold in the meat aisle and not in the freezer section with traditional bean- or corn-based veggie patties.

Tyson is also being careful to describe its products as “alternative proteins” and not “meat,” a label used by some plant-based companies that has riled the meat industry, including farmers in Quebec.

Whitmore said Tyson continues to invest hundreds of millions of dollars in its traditional meat business, and it’s confident consumers eating its plant-based products will keep eating its meats. He wouldn’t say what per cent of its sales Tyson expects to come from plant-based products in 2020.