Keeping Customers Onsite for Foodservice

he lines are blurring in the foodservice industry, as restaurants face an increasing threat from gas station convenience stores to take over their market shares. Foodservice sales are adding more to the convenience channel, and gas stations have become the hottest dining destinations, as per a panel of industry experts at the 2018 NACS Show.

Lay of the Land

Giants of this industry have spent the past few years evolving their food offerings beyond the stereotypical traditional offers of hours-old hot dogs on a roller grill, into high-end made to order and Grab-and-Go selections.

Convenience is an American priority, and convenience stores now offer everything from fuel to ice to upgraded food offerings. It would seem to present a perfect storm of opportunity for convenience chains to win QSR market share and more customers.  But the biggest question is that how will QSRs respond to the C-Store threat?

Consumer tastes are changing, and they are seeking healthy or premium options.  Convenience store shoppers continue to expect speed, ease, and value.  According to a report by the National Association of Convenience Stores, foodservice sales make up 23% of sales at convenience stores in the U.S., which is a 3% increase in the last five years.

Further, a press release by GasBuddy shows that people choose convenience stores over fast-food chains because of the straightforward utility of an all-in-one stop for fuel and food, followed by a preference for the taste and new found quality of the food at c-stores.

“Convenience retailers with compelling foodservice programs are a growing threat to quick-service restaurants,” Frank Beard, convenience store trends analyst at GasBuddy, said in a press release.

“With regards to variety, convenience stores provide incredible advantages over quick-service restaurants (QSRs) with the variety of fountain, hot beverages, and canned/bottled options,” Tristano said. “In addition, the convenience of picking up other snacks and consumer items makes convenience stores competitive destinations for shoppers.”

Convenience stores versus Fast Food Chains

There are good reasons why convenience stores can potentially rule over the market shares of QSRs:

• Shoppers with busy schedules want one-stop shopping, and c-stores are successfully facing off against QRS by offering upgraded food services.
• More than three-quarters of consumers who visit c-stores for foodservice items do so once a week or more, according to Technomic’s Convenience Store Consumer Market Brief for Summer 2016. This statistic demonstrates the strong position of the c-store against traditional fast-food restaurants.
• The growth of c-store foods is proof that the industry is evolving every day by giving tough competition to traditional restaurants. Today, the majority of the consumers believe that c-stores now have the same ability to provide fresh, healthy foods as stand-alone fast-food restaurants and chains.
• In August 2015, 30% of consumers claimed that c-store food items did not look or taste fresh. But by August 2016, that number had dropped to 16%, according to Technomic. Similarly, 25% of consumers said c-stores had poor food quality in August 2015. Just 12% of respondents said the same thing the following year.
• “Convenience stores compete with QSRs on value and variety,” said Darren Tristano, the president of Technomic. “Most stores offer bundled value on meals that include center plate, side, and beverage.”
• C-stores would be well-served to increase their marketing material. For example, breakfast bundles at c-stores costs an average of $3, but similar QSR meals charge a dollar or two higher.
• Another crucial advantage that c-stores offer is beverages; in fact, QSRs are simply not competitive with C-Stores in the beverage category.  “With regards to variety, convenience stores provide incredible advantages over quick-service restaurants with the variety of fountain, hot beverages, and canned/bottled options,” Tristano said. “In addition, the convenience of picking up other snacks and consumer items makes convenience stores competitive destinations for shoppers.”
• And there is always room for improvement in the food service area. Currently, just 7% of c-stores offer premium programs with limited on-site offerings, and 3% of stores provide super-premium food programs with an overall focus on menu items, according to Technomic data presented at NACS.
• While implementing a more robust prepared-foods lineup, it is crucial to emphasize food freshness, quality, and value. Most consumers tend to buy food items by the inclusion of a brand-name, Technomic found.
• “Quality represents the biggest opportunity for foodservice growth, as the majority of consumers see convenience stores as having the ability to provide fresh foods,” Tristano said. “As many of these outlets invest in the staff knowledge and expertise, Technomic expects higher growth from premium and super-premium foodservice and increasing usage from Gen Z and millennial consumers.”

Will convenience stores replace fast food?

“Convenience retailers with compelling foodservice programs are a growing threat to quick-service restaurants,” Frank Beard, convenience store trends analyst at GasBuddy, said in a press release. “Data show that people choose convenience stores over fast food locations because of the convenience of an all-in-one stop for fuel and food, followed by a preference for the taste of the food at c-stores.”

The c-stores have a competitive edge of all in one-stop over the fast-food chains. So, the shoppers save their time by buying all goods here. Frequent visits of the busy consumers to purchase meals at convenience stores result in increased dollar spend. The study unveiled that 1 out of 4 Americans spends $6-10 per week on convenience store foodservice, with nearly 20% of Americans aged 18-29 spending $10-15 per week.