The days of plain roller dogs and two pots of coffee are over. In the realm of food and beverages, convenience stores can no longer stick to the tried and true.
For millennials, especially, it's all about customization, says Joe Chiovera, principal at XS Foodservice & Marketing Solutions and a 19-year c-store veteran: "It's not only in the ingredients, it's when I want it and how I want it." Toasted, pressed, cold, in a bowl, in a burrito or bunless? Young customers are accustomed to having options.
Here's what convenience store companies need to know about adding customized beverage and food offerings.
1. Custom-made frozen drinks are hot, hot, hot.
Frozen drinks are delivering double-digit growth for convenience store operators this year over last, not just in sales but in profits, says Ieva Grimm, president of c-store consulting firm Synerge. They're especially popular among millennials, Grimm has observed, who consider frozen drinks "more of a snack and a treat" than a simple refreshment.
Along with made-to-order specialty coffee, smoothies hold tremendous growth opportunity, according to the 2015 State of the Foodservice Industry report from CSP magazine. Only a quarter of survey respondents offer these drinks, "yet the two hold the top spots for growth potential" for both retail and restaurant businesses. "It's time for c-store operatives to really do an audit of their beverage space," Grimm advises, and invest in frozen drink equipment if they don't already have it.
One affordable and easy way for convenience stores to capture the fast-growing segment of custom-made frozen drinks is Hamilton Beach Commercial's SmartServe ™ Mix in Cup. This self-serve commercial beverage blender, paired with a tempering cabinet and point-of-purchase display, allows customers to make their own milkshakes and smoothies. A slim 7.5 inches wide, the SmartServe™ Mix in Cup takes up minimal space and is easy to maintain.
2. It's better to have one great food offering than fifty mediocre ones.
Just outside of Cincinnati, Ohio, beside the WagsPark dog park, there's a Shell station that has won legions of loving fans. How? Two words: growlers and pretzels. This particular c-store decided it would focus on growlers, especially local brews and limited releases, and "this amazing, amazing Bavarian pretzel," Grimm says. The signature "bretzel" has a hot dog baked inside.
The lesson here? Rather than offer a broad menu, they should select one category or item that sets them apart. It could be fried chicken, Grimm says. It could be boxed Mexican lunches made in-house, as she discovered in one Chevron station in Memphis.
76 percent of convenience stores receive supplier-prepared and -packaged food, while 65 percent make their food on site, according to the CSP report. For convenience stores, "food is tough," Grimm says, and understanding regional tastes is key. To discover the one food offering that customers will love, "you have to know who you are and what you want to be."
3. C-stores should simplify before they diversify.
"We want to do Chipotle!" Chiovera's clients often tell him. They see the chain's wild success with made-to-order burritos and they want to imitate it. Instead, Chiovera asks, "How's your coffee business right now?" His point: If the majority of a c-store's traffic is in the morning, it probably shouldn't sell burritos.
"Foundation before differentiation," Chiovera likes to say. He asks clients to examine their menus and cut the bottom 20 percent or more of SKUs. Then, he says, they can excel at the top few items. Once they "get bored with simplicity," that's the time to begin customizing their best-selling offerings. It takes time to become successful as a c-store that offers fast casual food, he warns, and profitability matters more than margins. "You're not going to run your foodservice business like your retail business. Because if you do, you're going to fail."
4. Hot dogs are a natural place to begin a customized menu.
The slowly rotating hot dog is the iconic c-store food offering. Fifty-nine percent of convenience retailers offer these self-serve dogs and sausages, according to CSP data. But they're facing steeper competition from gourmet hot dog restaurants, food trucks and QSRs such as Sonic and even Dunkin' Donuts. Given this trend, "it’s no surprise that many c-stores have already stepped up their sausage platform to remain relevant and viable in an increasingly competitive market," CSP magazine reports.
Hot dogs are a great foundation for customization, Chiovera says. Move the dogs from the rollers and make them full-service, offer different varieties of rolls and "more than just your typical viscous condiments," and add a dollar to the price. "That's the natural progression that I'm talking about."
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