Flipping over Burgers
Gourmet burger joints capitalize on a need for indulgence.
Lessons for Retailers
What’s the moral of this story and the overarching lesson that even the Golden Arches is heeding?
“Giving customers the option to upgrade to better quality—not size—provides strong incentive for trial and continued use of higher-priced and higher-margin items,” says Tristano toTechnomic.
“The real lesson for anyone in retail to learn is that if you give quality, there’s a perceived value there that will allow you to charge exponentially more,” says Romeo. “Invest a dime more in quality and you can charge a quarter more for it.”
And antithetical to the grab-and-go c-store philosophy of short lines and fast service, “customers are willing to wait for quality. It can be a lot slower to get your food at a better burger place, but customers are more forgiving,” Romeo says.
And while foodservice continues to grow in the c-store channel, take note: Sixty-seven percent of consumers chose a QSR for a meal in 2011, compared to 7% percent who opted for a meal at a c-store, according to Technomic.
Hume of BurgerBusiness.com says research continually shows that consumers rate c-stores high on convenience but not as high on food quality and value. “I can name a dozen better burger joints that tell me the ranch where their beef comes from,” says Hume. “Could I find one c-store that did that?
“C-stores are masterful at merchandisingn on-perishables, but there’s an art to merchandising foodservice,” Romeo says.“Convenience operators could learn a lot by secret shopping these better burger places.”
Risks and Rewards
Can better burgers possibly boom in an environment in which sales of Slurpees, roller grill and breakfast burritos dominate? NPD’s Riggs will insist that c-stores and better burgers are strange bedfellows that aren’t meant to mate.
“The gourmet-burger customer is not the c-store customer, who is all about breakfast and snacks. There’s very limited traffic at lunch and less so at the dinner day-part (in a c-store),” says Riggs.“And when I look at data and see who the heaviest convenience-store users are, they’re not women or families with kids—they’re blue-collar, lower-income males ages 24 to 49.”
And although c-stores have made strides to provide higher-quality food products and greater variety in recent years, offering an upscale made-to-order burger menu may not work, Riggs says.
“It’s fine to offer more customizable foodservice choices—not necessarily burgers,” she says. “I’d recommend sticking to your core business, which is the morning meal and snacks, and knowing where your greatest opportunities are within those segments.”
Hume is more open to the idea of bringing finer foodservice choices into a convenience retail setting.
“C-stores are pretty good at grab-and go meal options. But I think they’re less conducive to sit-and-chat meals,” Hume says. “Upscale burgers fare better in an upscale environment. If c-stores want to sell better, pricier burgers, I say go for it, but there is a limit on what they can do.”
Gillette says implementing a “fresh, never frozen” concept, followed by many BBRs that don’t use freezers and often buy fresh beef from local/regional suppliers, would be an uphill climb for convenience stores, where prepackaged goods and long-shelf-life foods reign supreme.
Yet offering higher-quality meal replacements within c-stores can be done effectively. Case in point: Sheetz is one prominent c-store chain that has gotten attention for adding burgers to its made on-site food menu. And hundreds of Stripes stores in the Southwest exclusively offer Laredo Taco Company hand-rolled tacos, which feature tortillas made from scratch and fresh ingredients.
Romeo cites the success of the tasty Kirkland signature all-beef jumbo hot dog($1.50 with 20-ounce drink included),offered at the food court within Costco stores, as a winning example of a fancier quick-service food product that shoppers don’t mind standing in line for.
“The public is willing to entertain the possibility of a gourmet burger coming from a convenience store,” Romeo says.“It’s just a matter of c-stores being willing to take the risk.”
On the Burger Bandwagon
C-store owners who are entertaining the possibility of beefing up their foodservice menu need to engage in healthy due diligence first, says Tristano.
“Consumers may not be ready for gourmet quality at a c-store, so [convenience retailers] would have to build image and credibility in advance,” Tristano says.
That means changing consumer perception, says Gillette. “Consumers perceive c-stores as quick, inexpensive and on the go. (BBRs) are perceived as convenient and easier and less expensive than casual dining, but offering a comparable experience to standard casual dining,” she says.
To attempt to mimic that experience without offering sit-down dining in ac-store could be a risky proposition, “as gourmet burgers are meant to be enjoyed sitting down,” she says. “So if you’re going to consider [offering upscale burgers],take a close look at portability. How easy it is to actually eat the food?”
“Likely, a c-store will have to create a physical and mental separation of its retail store with a foodservice concept in order to take advantage of the better burger trend,” says Tristano. “The success of the better burger market has been predicated on dine-in occasions.”
As a last resort, if you can’t bring it inhouse, you can try to bring it next door: In other words, co-brand and share space with or operate adjacently to a BBR.
For example, Back Yard Burgers, known throughout Tennessee and other Southern states, has teamed up with several c-stores and gas stations. Elevation Burger is in negotiations to partner with c-store/gas stations at two public rest-stop areas on major highways. And Subway restaurants have successfully partnered with many c-stores throughout the country for years.
“There’s no reason why an upscale burger partnership with a c-store couldn’t work,” says Hume, although he cautions that co-branding doesn’t always succeed, as evidenced a few years ago when Jack in the Box sold off its Quick Stuff c-store/gas stations it had opened next to dozens of its fast-food restaurants.
“Anytime you put two different concepts together and co-brand, you run the risk of there being more confusion than fusion and bastardizing both concepts,” Romeo says. “A smarter approach may be to share a pad rather than a common site.”