Why It’s Time to Get in the Foodservice Game

Terry Lambert
CSNews

Foodservice continues to make great strides in the convenience store world, and consumer acceptance of food in c-stores has never been better. The range of concepts is broader than ever before, with some operators rolling out the red carpet for foodservice. It is no longer a category that can be ignored.

Looking at the statistics from the most recent NACS State of the Industry Report, prepared food enjoyed a double-digit gain — 13.8 percent — in gross profits in 2011. Cold dispensed beverages also soared with a 14.9-percent change vs. a year ago.

Stores that have already invested in food upped their gross profits as well. NACS’ same-firm sample showed that foodservice gross profits rose 7.5 percent to reach an average of $11,854 per store per month. These are attractive stats, and the experts predict that foodservice will continue to prove favorable for the convenience store industry.

In fact, consumer market research firm Packaged Facts’ recent study, “Convenience Store Foodservice Trends in the U.S.,” stated that the convenience store industry “continues to aggressively build out increasingly sophisticated foodservice platforms designed to go head to head with established restaurant players.” The study went so far as to suggest that c-store foodservice sales growth would even outperform the retail foodservice category on the whole.

Sounds like a sure thing, right?

MINDSET FOR SUCCESS
The allure of foodservice sales and the category’s promise of high margins are tantalizing, but those most familiar with foodservice know that it comes with a lot of hard work. It is both an opportunity and one of the biggest challenges out there. Understanding what you are getting into is the biggest battle.

Running foodservice is like adding another business entirely; it is a lot different than just adding another category to your store. You have to be an above-average c-store operator to even consider adding foodservice in your store.

Not sure how you rank? Answer these questions:

Is your store spotless?
Are you rotating your products? (first in, first out)
Do you dust your shelves and packaged products daily?
Are your employees friendly, helpful and knowledgeable?
Are you successfully running quality coffee and fountain programs?
If you can answer a firm “yes” to all of the above, congratulations! You can now consider adding food to the mix. If you stumbled on any of the above, my strong advice is to remedy those items first. Ensure your store is at the peak operating level before stepping into the foodservice mix. It will ensure success down the road.

As more independent operators tune in, expect foodservice to continue to blossom in c-stores. Experts agree that one of the drivers pushing c-store owners to open the door wider on food is the fact that two other key business segments continue to falter: gasoline margins and cigarette sales. As gasoline and cigarette profits have diminished, foodservice has all the makings of something that can grow a store’s business.

There is now a growing confidence that food can be a successful venture. As larger chains have found success with food, smaller operators are becoming more certain of their own potential.

Terry Lambert is an instructor for the CBC Learning Center and a c-store owner.

Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.