Exclusive: Just a Little Patience
Part 2 of Fare's State of the Industries: C-Store Foodservice
OAK BROOK, Ill. -- Patient optimism is how we define the state of foodservice at retail. Sales figures, food quality, traffic and overall concept evolution are all more or less on an upward trajectory. But its penetration continues to be a small piece of the total foodservice pie, and sluggish economic recovery keeps consumer spending at a very gradual incline.
In an increasingly competitive industry, finding bright spots is crucial to gaining an edge. As part of Fare's annual State of the Industries, we share what's up, what's down and what's next for foodservice at retail. Following are insights on the state of c-store foodservice. (Click here for Part 1 on the foodservice-at-retail shopper.)
The drumbeat for c-store foodservice persists in 2012, as retailers continue to hunt for a bigger piece of the foodservice pie. Compared to other foodservice-at-retail channels, c-stores fared best in terms of traffic last year. Traffic increased 3% in the year ending December 2011, according to The NPD Group, following a 2% increase in 2010 and a 1% increase in 2009. Meanwhile, grocery/drug/mass traffic was flat in 2011.
C-stores also outperformed QSRs in growth of total visits in 2011, growing their share for the past four years. C-store share of total QSR visits increased by 9.3% last year, according to The NPD Group.
But preliminary figures from the NACS State of the Industry Report of 2011 Data beamed a spotlight on a glaring disparity within the channel itself.
When it comes to foodservice, top-quartile c-store players generate two to four times the sales as that of the remaining 75% of operators. Industry folks therefore suggest that the top performers are raising the numbers for the rest of the industry.
For the majority of retailers, it's OK to be optimistic about foodservice, but it’s paramount they also be patient.
Joe Pawlak, vice president of Technomic Inc., Chicago, echoes that patient optimism. "There are few players that do a really good job outside of offering a QSR [option], so there's still a lot of room for improvement on the c-store side," he says. These retailers should get a lift as more Americans, especially blue-collar Americans, return to work, he adds.
"We've been saying for years c-stores is the hidden gem," says Pawlak. "Some people do it really well … but there are still opportunities."
Among those opportunities is breakfast, a continued bright spot for the industry with breakfast foods taking a 13-point increase in terms of percent of meals including a breakfast item, according to The NPD Group. Morning-meal traffic increased 7% in 2011 to command 34% of all c-store foodservice traffic.
Other key findings from the Fare State of the Industries include:
- In 2011 the top meal item ordered at c-stores was beverages, with 80.5% of all meals/snacks including a beverage, followed by sides/appetizers (29.3%) and desserts/snacks (22.4%), according to The NPD Group/CREST.
- In 2011 the top beverage ordered at c-stores was regular carbonated soft drinks (included in 19.9% of all meals/snacks) followed by traditional coffee (10.6%) and diet carbonated soft drinks (9.4%)
- C-stores operators participating in the Fare State of Foodservice at Retail study reported that sandwiches have the highest sales growth potential in the next year, followed by pizza and specialty coffee.
- The average c-store food/beverage check size rose by 1% last year to $3.29, according to The NPD Group.
- According to a study by Technomic, the most important experience attributes for a c-store foodservice shopper is the quality, taste and flavor of the food as well as a convenient location. Beverage quality and pleasant/friendly service also ranked high.
Stay tuned for the next installment of the State of the Industries in the August 15 issue of Fare Digest, focusing on the grocery/drug/mass channels.