Building Breakfast Power at Convenience Stores
Barriers, opportunities unfold for retailers in morning foodservice day-part
Published in CSP Daily News
OAKBROOK TERRACE, Ill. --The helplessness of not knowing how to capitalize on the breakfast day-part could be what's crippling the convenience store channel, slowing its potential to bite into what was a $30-billion business last year for snack and beverage restaurants and c-stores, according to one foodservice consultant.
In its March issue,CSP magazine used sources such as the Rockville, Md.-based Packaged Facts, London-based Mintel Group Ltd., retailers and consultants to explore the potential of breakfast for c-store operators and the operational and competitive obstacles standing in their way.
For many retailers, the biggest issue is education. "Some have never thought of it; never thought of the potential margins," said Kevin Higar, Dallas-based foodservice consultant and contributor to CSP magazine. "They don't know how to get started. And secondly, they may feel, 'Who has time to get knowledgeable? How do I learn when I'm in the store for 14 hours?'"
Getting help from suppliers may be tough too, Higar told CSP Daily News, as many mom and pops are just too small to garner their attention.
But for those willing to investigate, options exist for a retailer to slowly and steadily build a breakfast program.
Taking a broad brush on the matter, Higar said he has observed c-store programs as currently having three, possibly four stages of complexity. Less-developed programs involve prewrapped, refrigerated options. There's less waste than more complicated programs and less labor involved. In many stores, customers use a microwave on site and heat the sandwiches themselves.
The next step up is having prewrapped sandwiches already heated and in display warmers for people to reach into, grab their choice and pay for it.
Then finally the last step, potentially a big leap, is some form of made-to-order, customized sandwich. People order off a menu from an automated kiosk or face-to-face with an employee, and then the sandwich is made "fresh."
Part of the larger question is one of investment. Higar said equipment exists that can quickly get retailers into the business. Ovens that don't need ventilation units and other entry-level devices can put retailers on a strong footing to develop breakfast offers.
Higar suggested attending trade shows like the one produced annually in New York by the National Retail Federation (NRF).
Another starting point is with hot dispensed beverages, said Catherine Porter, senior manager, customer marketing for convenience stores and in-store deli, McCain Foods USA Inc., Lisle, Ill. She told CSP Daily News that a strong coffee program "earns [retailers] the right to offer [breakfast] and gives them permission to do food. It's a building block for rest of the program."
Certainly as retailers build their programs, they'll have to invest more in equipment and labor, potentially getting into high-speed ovens and fryers. At that point, the opportunity to round out a breakfast program with options like hash browns opens up.
"Consumers are ready to spend $3 to $4 for breakfast," Porter said, noting how hash browns are a logical complement. "It's incremental to grow market-basket size into a complete meal solution and make the c-store feel like a breakfast destination, not just a place for pieces of what [a consumer] can get at a restaurant."
An even more advanced level of thought is food differentiation, Higar said. As retailers become more advanced in their offers, they can begin to think how their breakfast program makes them different, more appealing than their competition.
"Every element on the sandwich can be differentiated," Higar said. "For instance, freshly baked bread done in house is an option. In the future, you'll see more heirloom breads featuring different grains. You'll see breads with a backstory."