C-Store Foodservice Shines

But growth could be tempered if retail gas prices continue upward, Technomic says

Published in CSP Daily News

By  Steve Dwyer, CSP Reporter

CHICAGO -- Convenience store foodservice programs are in the midst of a solid growth period—outpacing both full-service and limited-service restaurants in 2007. But further sales growth might be short-lived due to a cold, hard reality: rising retail gasoline prices. In its U.S. Foodservice Industry Forecast, which was revised in May from its January report, food industry consulting firm Technomic Inc. indicated that while the U.S. foodservice industry growth forecast fell from 3.6% to 2.2%, c-store foodservice grew 5.2% as consumers “traded down to more economical foodservice alternatives,&[image-nocss] rdquo; said Ron Paul, president of the Chicago-based consultancy.

In comments delivered to its Foodservice Planning Program clients in a special Industry update meeting early last week, Technomic said that “retail hosts, including supermarket foodservice and c-stores, are one bright spot” in the overall retail and commercial foodservice tapestry. ( Click here to view the Foodservice Planning Program webpage.)

This performance in 2007 and into early 2008 will need to take one other factor into consideration that other foodservice channels do not have to bear: c-stores sell fuel, and consumers are becoming more indignant about continually rising gas prices.

Bob Goldin, executive vice president of Technomic, told CSP Daily News that "fuel prices are becoming a big nuisance for consumers and could affect the positive growth for c-stores, particularly with lower-income customers. These people are being pinched hard after spending $65 at the pump.”

Goldin credited c-stores with “offering value—they provide a lot for your money with the types of food offered. That 's meaningful today with a consumer base that is frugal and cautious about their spending.” Goldin particularly cited dispensed beverages—both cold and hot—as the foodservice offering that is propping up c-store performance.

In the Technomic survey, total foodservice sales for 2007 were $532.7 billion. That was broken down within two categories: Restaurants & Bars, which accounted for $341.9 billion, and Beyond Restaurants & Bars, which registered $190.7 billion in sales.

In the former category, limited-service restaurant growth has slowed substantially while full-service restaurants are facing even greater challenges, said Paul.

In the latter segment—Retail Hosts, including c-stores and supermarkets—generated $45.8 billion in sales last year, a 5.2% increase from the year before.

Other categories within Beyond Restaurants & Bars were Travel & Leisure ($41 billion), Education ($27.5 billion), Business & Industry ($21.6 billion) and Healthcare ($20.3 billion).

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