Foodservice Becoming C-Stores' Most Profitable Category

CHICAGO -- As revenues from gasoline and tobacco products fall, foodservice sales are increasingly becoming convenience stores' most profitable category, said consulting firm Technomic in its new Market Intelligence Report: Convenience Stores.

C-store foodservice is an $11 billion industry and the second-largest retail host foodservice category behind supermarkets. The c-store segment comprises about 29% of retail foodservice and almost 2% of the total foodservice industry. Technomic projects that c-store foodservice will grow nominally by 2.5% over each of the next two years.

"Convenience stores have shifted their focus to provide a wider variety of fresh, high-quality food offerings to help gain a greater share of stomach and compete with restaurants," said Tim Powell, director of research and consulting services . "At the same time, there seems to be significant room for convenience-store operators to generate increased foodservice sales by translating existing traffic into purchases."

C-store chains are looking to better position themselves for continued growth in foodservice. Some chains are upgrading their facilities by integrating technology to enhance their offerings and the consumer experience. Differentiating themselves from the c-store crowd could better position them to compete with limited-service restaurants.

Findings include:

• More than half of today's consumers (52%) pick up snacks from prepared-food sections of convenience stores or mini-marts, compared to 37% in 2010.
• Almost one in four consumers (22%) occasionally has breakfast from a c-store during the week, compared to only 12% three years ago. Furthermore, 13% purchase breakfast from c-stores on the weekends vs. 7% previously.
• While c-stores score well with consumers in terms of convenience, portability and speed of food preparation and service, their Achilles' heel seems to be the healthfulness of the food, which gets satisfactory marks from only 28% of those surveyed.
• During the week, just one in five consumers surveyed indicated that they purchase lunch from retail foodservice locations such as grocery stores (20%) and convenience stores (17%), while 56% purchase lunch from a fast-food restaurant.

Chicago-based Technomic provides clients with the facts, insights and consulting support they need to enhance their business strategies, decisions and results. Its services include numerous publications and digital products, as well as proprietary studies and ongoing research on all aspects of the food industry.