Convenience Stores Focus on Food

NACSOnline
Aug 7, 2012

CEDAR RAPIDS, IA – The Gazette provided a detailed feature on the convenience store industry’s burgeoning foodservice programs.

Citing NACS figures that show foodservice sales comprised 16.9% of $195 billion of in-store sales at convenience stores in 2011, the Gazette said, “[D]on’t think of them as gas stations. Instead, think of them as the place for pizza, doughnuts and maybe even some banana bread.”

“Food is the future of our industry,” said Jeff Lenard, NACS vice president of industry advocacy. “Our stores will become food stores that happen to sell gas rather than gas stations that happen to sell food, as they are perceived today. It will be a slow evolution, but it is happening for two important reasons.

“From the retail perspective, the product is there, the distribution is there, the competency is there, the revenue is there and, from the consumer side, the demand is there. People want fresh food on the go and they want food that has value,” he said.

According to market research firm Technomic in its 2011 “Consumer C-Store Brand Metrics Shopper Insights Report,” a significant number of QSR customers view convenience stores in the same category as fast-food eateries, with 82% saying they purchase prepared foods or beverages from convenience stores once a month.

West Des Moines, Iowa-based Kum and Go emphasize fresh food prepared onsite, a major component of its drive to increase sales and market share.

“We’re proud of the quality of our food service, but we are always looking at it from the standpoint of ‘How can we get better,’” said Roman Stone, Kum and Go vice president of foodservice. “We have some competitive advantages over the QSRs. You get the breadth of food at QSRs, but you don’t get the breadth of beverages.

“When you go into a QSR, you might get a soft drink fountain and bottles of juice or water, but with us you have the whole of our vault. We offer a variety of everything from energy drinks to flavored tea and water that you can’t get in a QSR.”

Casey’s General Stores is one of the nation’s top five pizza retailers, and the chain reported a 16.8% increase in same-store sales during the fourth quarter and 14.3% increase in the fiscal year for its prepared food and fountain drinks. Bill Walljasper, senior vice president and CFO, said prepared foods represent roughly 30% of the company’s gross profit.

“Convenience is a very big factor in peoples’ everyday lives,” Walljasper told the newspaper. “If you can provide a quality product at a reasonable price, people will purchase those products.” He noted that Casey’s has a goal of increasing same-store prepared food and fountain sales by 11% in fiscal 2013 with an average margin of 61%.

The Gazette also cited Kwik Trip (rebranded as Kwik Star in its Iowa locations to reduce confusion with QuikTrip) as offering a sophisticated foodservice program. Dave Ring, Kwik Trip community relations coordinator, said the company maintains total control over a number of products by operating its own bakery, food commissary, dairy, food safety laboratory, ice plant, LP gas facility and distribution center.

“By not relying on third-party suppliers, we can squeeze out costs and pass the savings along to our customers,” Ring said. “We also can maintain the quality that our guests expect when they visit our stores.”’