C-Store Food Service: What’s Next?
June 23, 2021
|
Fuel Services,
Food & Beverage
- Keywords:
- farm to market
June 23, 2021
|
Fuel Services,
Food & Beverage
C-store operators have had an enhanced focus on investing and building out food service programs in recent years. BMO Commercial’ Fuel Service team has seen operators acquire for food service capabilities (such as Murphy USA’s acquisition of QuickCheck earlier this year1) and continue to refine and improve legacy programs (such as Wawa). Chains with good food service also target chains without food service, viewing this as an opportunity to enhance the offering.
This year’s BMO Global Farm to Market Conference recognized the growing strength of c-stores’ food service programs, from innovative tech to employee training programs. Sean O’Donnell, BMO Capital Markets Director Food & Retail, hosted the first c-store-focused panel discussing the successes and lessons learned when implementing a food program. The panel of c-store food service leaders included Steve Turner, VP of Food at Refuel Operating Co; Chris Faneuf, Director of Food Service at Spinx Company; and Kevin Smartt, CEO of TXB Stores. Below are a few key takeaways from their conversation. We encourage you to watch the full replay in the BMO conference app
(event code: 2021F2M), if you missed it during the live conference.
Build a platform
Companies that build out a platform and commit to their food service brand tend to be more successful. Establishing a brand is not something you can create haphazardly or overnight. Successful operators largely run their food service platforms as independent business units. Also, food service operations are run differently than your traditional c-store functions. For example, there are different regulations and safety standards if you are preparing fresh food versus prepackaged goods, and you need a team that understands those regulations.
Become a destination
Larger operators should consider becoming a destination by establishing their brand as a consistent, quality offering—a trend we saw throughout COVID-19. The panelists discussed how, quality, as opposed to convenience, tends to be the highest driver of traffic. That’s why creating a welcoming experience, such as clean stores and seating options, keeps customers coming in regularly.
“In our new stores, we are not doing indoor seating,” Smartt said. “And we’ve done that mainly as a result of COVID-19. Being in the South with more favorable weather throughout the year allows us to do so. We also think it gives us the ability, if something like [COVID-19] happens again in the future, we will be able to continue to serve our customers.”
Historically, c-stores have captured the breakfast crowd but struggle to maintain that volume throughout the day. The panelists recommend making your c-store a destination throughout the day by offering affordable family meals-to-go for lunch and, more importantly, dinner for your clientele. As a result of COVID-19, Faneuf discussed how his team at Spinx put together a couple of grab-and-go programs for the third shift of the day when food sales are the lowest. Spinx saw such great success that they are looking to expand and evolve these meal replacements.
Consider a frictionless environment
Reducing friction at the checkout or behind the scenes are potential strategies to boost volume and profitability. Creating a frictionless environment can help increase efficiencies throughout the entire food service process. For example, touch screen kiosks can improve the average order speed and boost the average check size. This technology can also improve cost efficiencies behind the counter by freeing up employees to focus on other tasks.
“For us, kiosk ordering and self-checkout are two ways we can speed up interactions,” Turner said. “We’ve seen success with it and continue to invest in it. The guest interaction is [also] important, though.” So think through how to include the technology while not losing the guest interactions that make visits memorable.
Kiosks aren’t for everyone, though, and there are other ways to remove friction in your operation. You can track data to optimize purchasing patterns and predict customer orders. And carrying less inventory, while maintaining volume, reduces the cash burden of the business.
Third-party delivery needs to improve
Third-party delivery apps such as Grubhub and UberEats have revolutionized the restaurant industry, and it’s essential for c-stores to engage with the technology. They have an easy-to-use POS, but they lack consistency in last-mile deliveries, which can create quality issues for your product when it reaches the customer. A good quality product is the main driver of volume. Finding a solution to maintain quality with delivery would be a game-changer (Domino’s Pizza is a case in point). If a third party does not deliver a quality product, then your brand could be tarnished.
“I’ve had a lot of conversations with retail operators, and there’s a general concern that we’re training our consumer today to go to somebody else’s website, primarily, to order food, and they’re getting our customer data,” Smartt said. “There has to be some sort of balance going forward.”
Partnering with a company that can help consolidate the third-party ordering process is also important. “I was in a restaurant recently and they had five tablets,” Turner said. “There was a [third-party] delivery person there and they couldn’t get their order while trying to figure out which tablet it was on. That’s what we’re trying to avoid.”
Food service will continue to play a significant role in profitability and strategy of c-store operators. As the industry trends away from the traditional “roller dog” offerings, operators are finding new ways to bring volume inside the store. Food service can go hand-in-hand with other evolutions within the industry, too, including electric vehicle adoption, as customers may need a place where they’d feel comfortable coming for 15 to 30 minutes while they charge up. When done right, food service can offer a high-margin business that helps boost your brand and the overall value of the firm.
Read more
C-store operators have had an enhanced focus on investing and building out food service programs in recent years. BMO Commercial’ Fuel Service team has seen operators acquire for food service capabilities (such as Murphy USA’s acquisition of QuickCheck earlier this year1) and continue to refine and improve legacy programs (such as Wawa). Chains with good food service also target chains without food service, viewing this as an opportunity to enhance the offering.
This year’s BMO Global Farm to Market Conference recognized the growing strength of c-stores’ food service programs, from innovative tech to employee training programs. Sean O’Donnell, BMO Capital Markets Director Food & Retail, hosted the first c-store-focused panel discussing the successes and lessons learned when implementing a food program. The panel of c-store food service leaders included Steve Turner, VP of Food at Refuel Operating Co; Chris Faneuf, Director of Food Service at Spinx Company; and Kevin Smartt, CEO of TXB Stores. Below are a few key takeaways from their conversation. We encourage you to watch the full replay in the BMO conference app (event code: 2021F2M), if you missed it during the live conference.
Build a platform
Companies that build out a platform and commit to their food service brand tend to be more successful. Establishing a brand is not something you can create haphazardly or overnight. Successful operators largely run their food service platforms as independent business units. Also, food service operations are run differently than your traditional c-store functions. For example, there are different regulations and safety standards if you are preparing fresh food versus prepackaged goods, and you need a team that understands those regulations.
Become a destination
Larger operators should consider becoming a destination by establishing their brand as a consistent, quality offering—a trend we saw throughout COVID-19. The panelists discussed how, quality, as opposed to convenience, tends to be the highest driver of traffic. That’s why creating a welcoming experience, such as clean stores and seating options, keeps customers coming in regularly.
“In our new stores, we are not doing indoor seating,” Smartt said. “And we’ve done that mainly as a result of COVID-19. Being in the South with more favorable weather throughout the year allows us to do so. We also think it gives us the ability, if something like [COVID-19] happens again in the future, we will be able to continue to serve our customers.”
Historically, c-stores have captured the breakfast crowd but struggle to maintain that volume throughout the day. The panelists recommend making your c-store a destination throughout the day by offering affordable family meals-to-go for lunch and, more importantly, dinner for your clientele. As a result of COVID-19, Faneuf discussed how his team at Spinx put together a couple of grab-and-go programs for the third shift of the day when food sales are the lowest. Spinx saw such great success that they are looking to expand and evolve these meal replacements.
Consider a frictionless environment
Reducing friction at the checkout or behind the scenes are potential strategies to boost volume and profitability. Creating a frictionless environment can help increase efficiencies throughout the entire food service process. For example, touch screen kiosks can improve the average order speed and boost the average check size. This technology can also improve cost efficiencies behind the counter by freeing up employees to focus on other tasks.
“For us, kiosk ordering and self-checkout are two ways we can speed up interactions,” Turner said. “We’ve seen success with it and continue to invest in it. The guest interaction is [also] important, though.” So think through how to include the technology while not losing the guest interactions that make visits memorable.
Kiosks aren’t for everyone, though, and there are other ways to remove friction in your operation. You can track data to optimize purchasing patterns and predict customer orders. And carrying less inventory, while maintaining volume, reduces the cash burden of the business.
Third-party delivery needs to improve
Third-party delivery apps such as Grubhub and UberEats have revolutionized the restaurant industry, and it’s essential for c-stores to engage with the technology. They have an easy-to-use POS, but they lack consistency in last-mile deliveries, which can create quality issues for your product when it reaches the customer. A good quality product is the main driver of volume. Finding a solution to maintain quality with delivery would be a game-changer (Domino’s Pizza is a case in point). If a third party does not deliver a quality product, then your brand could be tarnished.
“I’ve had a lot of conversations with retail operators, and there’s a general concern that we’re training our consumer today to go to somebody else’s website, primarily, to order food, and they’re getting our customer data,” Smartt said. “There has to be some sort of balance going forward.”
Partnering with a company that can help consolidate the third-party ordering process is also important. “I was in a restaurant recently and they had five tablets,” Turner said. “There was a [third-party] delivery person there and they couldn’t get their order while trying to figure out which tablet it was on. That’s what we’re trying to avoid.”
Food service will continue to play a significant role in profitability and strategy of c-store operators. As the industry trends away from the traditional “roller dog” offerings, operators are finding new ways to bring volume inside the store. Food service can go hand-in-hand with other evolutions within the industry, too, including electric vehicle adoption, as customers may need a place where they’d feel comfortable coming for 15 to 30 minutes while they charge up. When done right, food service can offer a high-margin business that helps boost your brand and the overall value of the firm.
This is part 4
of a
4-part series on
Heard at the Farm to Market Conference
PART 1
Food and Ag Takeaways From the Farm to Market Conference
Dan Barclay | May 31, 2021 Food & Beverage, Agriculture
Dan Barclay, CEO, BMO Capital Markets, moderated a discussion on the takeaways from BMO’s 16th Annual Farm to Market Conference …
PART 2
ESG From Farm to Fork: Doing Well by Doing Good
June 10, 2021 Food & Beverage, Agriculture
In the food and agriculture sectors, many companies are “doing well by doing good”, and blue-chip investors believe that these corporates…
PART 3
One Year Later: Lessons Learned in The Food Supply Chain
Erica Kuhlmann | June 10, 2021 Food & Beverage, Agriculture
It’s been a turbulent 14 months for the food supply chain. And while it doesn’t appear that 2021 will be any easier, the lessons the indu…
Tell us three simple things to
customize your experience.
