Retail Dining Revelations
How to decode the foodservice-at-retail consumer.
QSRs: the bane of c-store foodservice. Like Wile E. Coyote against the elusive, unconcerned Road Runner, retailers chase burger joints and chicken chains to steal a slice of that foodservice pie, only to get a little nibble.
But what about your other competitors, specifically other retail channels? Turns out they have share to steal, too.
CSP was allowed an exclusive examination of the findings from Packaged Facts’ Prepared Foods and Ready-to-Eat Foods at Retail study, released in July. The firm then created unique cross-sections of the data that can be found only in CSP and its sister publication Fare.
The study reveals supermarkets dominate retail-foodservice consumers’ minds, but c-stores earn important marks for specific need states and loyalty.
While supermarkets saw the greatest number of prepared foods leave their stores, c-store foodservice users buy prepared foods there just as often as supermarket users, “underscoring the importance of small-basket trips made largely on the basis of immediate need and/or convenience of purchase,” says David Morris, managing consultant of Kaleidoscope Research Consulting, and author of Packaged Facts’ syndicated foodservice studies.
Because supermarkets and c-stores still satisfy largely different needs, the real competition for supermarket prepared foods is supercenters and wholesale clubs, especially as they begin infiltrating city centers with smaller, more convenient concepts, Morris says.
Meanwhile, comparing consumer perceptions with other retail-foodservice channels as well as QSRs reveals that supermarkets are more likely to be seen as an alternative to c-stores than the other way around. They are also perceived to be slightly better priced, with slightly better tasting food and healthier offerings than QSRs.
Other key findings:
- For both c-store and supermarket foodservice users, about half of prepared-meal purchases were planned in advance of entering the store.
- For only about a quarter of c-store users (22%), buying the food was the No. 1 reason for the visit. That number dropped to 15% for supermarket users.
- Very few consumers used special promotions for their purchase—perhaps indicating an opportunity to induce trial with infrequent users.
- Supermarket users are more likely to buy food for more than one person.
- C-stores have supermarkets beat in terms of ease of eating on the go.
- C-store users who bought prepared foods six or more times in the past three months are 21% more likely to cite the food as the primary reason for visiting the store.
- Those same users are 31% more likely to use a promotion tied into a nonfood purchase. That number drops quite significantly for one- to two-time users.
Just a Little Patience
The drumbeat for c-store foodservice persisted in 2011 and into 2012, as retailers continue to hunt for a bigger piece of the foodservice pie. But preliminary figures from the NACS State of the Industry Report of 2011 Data beamed a spotlight on a glaring disparity.
When it comes to foodservice, top-quartile 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., 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.
Meanwhile, a study from Technomic finds consumer perception of c-store foodservice strong in some places—but not so strong in others. Regardless, those chains with strong service and consistent execution often receive positive marks on food quality, too.
The C-Store Experience
If you’re looking for a retailer to model your foodservice program after, consider two venerable operators with radically different approaches: Wawa and QuikTrip.
It’s not the price that beats all for these retail leaders. Rather, it’s their remarkable consistency of execution and customer service, their high-quality value and atmosphere, and their attention to increasingly important side issues such as portion size and healthy options that had consumers rating their foodservice offerings best in class in a recent, groundbreaking study on c-store foodservice.
In one of the most comprehensive consumer-driven studies conducted in the channel, Technomic Inc. surveyed consumers to identify the most important attributes they consider when buying food at c-stores, and then rank how well 20 of the leading regional and national c-store brands delivered on these attributes.
Technomic gave Fare and sister magazine CSP an exclusive look at the 2012 Consumer C-store Brand Metrics Study to peel back consumer motives and perceptions, and find out how the industry is doing in the race for share of stomach.
Of the 20 chains, Wawa and QuikTrip ranked highest in nearly all the 10 food and beverage attributes—including food taste and flavor, visual appeal and variety—and appeared in the top three nearly every time.
Mike Sherlock, director of foodservice for Wawa Inc., Wawa, Pa., is pleased with not only his company’s ratings, but also those of the other top scorers.
“Had you done this study 5, 10 years ago, you probably would have seen very different scores,” he says. “The industry as a whole is going in the right direction, and Wawa as well.”
Others represent the next tier of strong foodservice players, including Midwestern stalwarts Casey’s General Stores and Kum & Go, the Stripes concept from Susser Petroleum, travel-center behemoth Pilot Flying J, and Atlanta-based RaceTrac.
Despite the accolades for the leaders, the overall ratings for the c-store industry and performance of some of the nation’s largest chains also revealed room for improvement. While the c-store channel is delivering on some important attributes, it is barely passing on too many—especially when compared against the QSR competition.
That said, among the study’s most interesting findings is that there is a heavy halo effect emanating from certain chains that transcends the food itself. This discovery proves a successful program must be about the experience—service, cleanliness, consistency from visit to visit—just as much as the food.
The following pages dive into specific foodservice attributes and how c-stores performed in the eyes of their customers.