CSN - May 2016 by ensembleiq

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VIEWPOINT By Don Longo, Editorial Director

The Sweet Spot in Consumers’ On-the-Go Dining Options Food mavens recognize c-stores are becoming more relevant in the foodservice world

oday’s shoppers are impatient. Connected to the Internet via their smartphones, but disconnected from personal contact with other human beings. They have literally hundreds of dining choices in the palm of their hands, and with all those choices, there’s no reason for them to compromise on food quality. Even nontraditional locations like train stations, museums and city parks now feature highquality, innovative fare. Paraphrasing the words of famed New York Citybased restaurateur Danny Meyer, there’s no such thing as “captive dining” anymore. People expect a quality food experience whether they are at an airport, stadium, hospital or gas station. “If I’m eating excelFor comments, please contact lent food in every other Don Longo, Editorial Director, channel of my life, why wouldn’t at (201) 855-7606 or dlongo@stagnitomail.com. I want that quality at every place I eat?” he asked the dozen convenience foodservice executives who participated in an interactive discussion at the 2016 Convenience Store News Foodservice Summit, held March 15-16 in partnership with Tyson Convenience (see coverage starting on page 24).

To the group of retailers, Meyer said, “You guys are on the right track with foodservice, and people are not going to go back to accepting lower-quality food at a gas station.” Meyer’s respect for the strides convenience stores have made in foodservice is echoed by celebrity chef Rick Bayless, known for winning Bravo’s “Top Chef Masters.” He expressed his enthusiasm for c-stores last year when he led a group of convenience foodservice executives on a tour of his favorite eateries in Chicago. Bayless will sit down with food trends expert and Supermarket Guru Phil Lempert in September for an entertaining and wide-ranging discussion about how convenience store operators can utilize learnings from the restaurant and grocery channels to win a larger share of all grazing and meal occasions. This “fireside chat” between Bayless and Lempert will be just one of many highlights at the new Convenience Foodservice Exchange, an exclusive, live event aimed at foodservice in convenience stores. Hosted by CSNews, the Convenience Foodservice Exchange (Sept. 15-16 in Chicago) will provide a forum for retailers and their supplier and distributor partners to exchange insights and data that will lead to increased sales and shopper engagement. For more information or to request an invitation, contact me at dlongo@stagnitomail.com. CSN

CSNews has been recognized with more editorial awards, including the prestigious Jesse H. Neal Award for business journalism, in the past six years than any other industry publication. 2013 Jesse H. Neal National Business Journalism Award Best Single Issue, October 2012 2013 Jesse H. Neal National Business Journalism Award Finalist, Best Profile, August 2012 2008 Jesse H. Neal National Business Journalism Award Best Single Issue, October 2007 2010 Trade Association Business Publications Intl. Tabbie Awards Honorable Mention, Front Cover Illustration, October 2009 2009 Trade Association Business Publications Intl. Tabbie Awards Gold, Front Cover Illustration, February 2008 Honorable Mention, Best Single Issue, October 2008

2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014 2014 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2013 2014 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2013 2013 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2012 2011 Silver Eddie Award, Folio: magazine Business to Business, Retail, Full Issue, October 2010 2011 Silver Eddie Award, Folio: magazine Business to Business, Retail, Best Single Article, October 2010 2009 Gold Ozzie Award, Folio: magazine Best Use of Illustration, October 2008 2009 Silver Eddie Award, Folio: magazine Business to Business, Retail, Full Issue, October 2008 2009 Bronze Eddie Award, Folio: magazine Business to Business, Retail, Website

4 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

2015 American Society of Business Publication Editors, National Silver Azbee Award Best Profile (long form), February 2014 2015 American Society of Business Publication Editors, Midwest Regional Gold Azbee Award Best Special Supplement, November 2014 2015 American Society of Business Publication Editors, Midwest Regional Silver Azbee Award Best Profile (long form), February 2014 2013 American Society of Business Publication Editors, Midwest Regional Bronze Azbee Award Best Editorial/Commentary, July 2012 2010 American Society of Business Publication Editors, Northeast Regional Silver Azbee Award Feature Article Design, November 2010

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CONTENTS MAY 2016

VOLUME 52/NUMBER 5

24 | COVER STORY Inside the Mind of Food Visionary Danny Meyer Shake Shack founder says people want good food, not fancy décor.

FEATURES THE FOODSERVICE ISSUE

34 | Honing In Now well-established in fresh food, leading convenience retailers refine their strategies. 44 | A Bite of the Big Apple C-store foodservice execs go inside some of Manhattan’s most innovative eateries.

48 | Finding the Right Foodservice Formula Some c-store operators believe it’s not an either-or scenario between proprietary and branded.

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by Stagnito Business Information, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright © 2016 by Stagnito Business Information. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

6 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

DRIVING CATEGORY GROWTH

Trusted iconic brands and expert category management delivering sustainable growth.

hersheysconvenience.com

CONTENTS 570 Lake Cook Road, Ste. 310, Deerfield, IL. 60015 (224) 632-8200 Fax: (224) 632-8266 www.csnews.com

CATEGORY MANAGEMENT MOTOR FUELS

54 | Fuel Delivery: Fad or Fortune? New on-demand services continue to emerge, offering convenience to time-starved consumers. TECHNOLOGY

57 | Why Strategy Must Come First in Digital Marketing Only one in five c-store retailers have a sound, strategic framework in place. FOODSERVICE

62 | A Smell-Binding Proposition Nothing says “fresh” quite like the aroma of just-made bakery items in your store.

BRAND MANAGEMENT Group Brand Director (330) 840-9557

Ron Lowy rlowy@stagnitomail.com

EDITORIAL Editorial Director (201) 855-7606 Editor-in-Chief (201) 855-7608 Managing Editor (201) 855-7614 Senior Editor (201) 855-7618 Associate Editor (201) 855-7619 Assistant Editor (201) 855-7604 Contributing Editor (303) 741-3377 Contributing Editor (201) 280-2614 Art Director (224) 632-8245

Don Longo dlongo@stagnitomail.com Linda Lisanti llisanti@stagnitomail.com Brian Berk bberk@stagnitomail.com Melissa Kress mkress@stagnitomail.com Angela Hanson ahanson@stagnitomail.com Danielle Romano dromano@stagnitomail.com Renée M. Covino reneek@aol.com Tammy Mastroberte tmastroberte@gmail.com Michael Escobedo mescobedo@stagnitomail.com

FOODSERVICE

70 | Enter the Grocerant Grocery stores heat up the foodservice competitive set.

DEPARTMENTS VIEWPOINT

4 | The Sweet Spot in Consumers’ On-the-Go Dining Options Food mavens recognize c-stores are becoming more relevant in the foodservice world. 12 | CSNews Online 22 | New Products EXPERT’S VIEW

EVENTS • MARKETING • DIGITAL • RESEARCH • CIRCULATION Vice President/Custom Media Division Pierce Hollingsworth (224) 632-8229 phollingsworth@stagnitomail.com Production Manager Anngail Norris Strategic Marketing Director Bruce Hendrickson (224) 632-8214 bhendrickson@stagnitomail.com Director of Events Pat Benkar (973) 607-1330 pbenkar@edgellmail.com Director of Market Research Debra Chanil (201) 855-7605 dchanil@stagnitomail.com Audience Development Manager Shelly Patton (646) 217-1045 spatton@stagnitomail.com List Rental The Information Refinery (800) 529-9020 Brian Clotworthy Reprints and Licensing Wright’s Media (877) 652-5295 sales@wrightsmedia.com Subscriber Services/Single-Copy Purchases (978) 671-0449 Stagnito@e-circ.net

CORPORATE OFFICERS President & CEO Chief Financial Officer

74 | Time Is Ripe for Refreshing Your Strategic Plan Change in the industry means organizations must be agile and flexible.

Chief Revenue Officer

EXPERT’S VIEW

Chief Integration Officer

77 | An Updated Outlook for 2016 M&A Marketplace Recently announced transactions have various market implications.

Chief Human Resources Officer

Chief Brand Officer Chief Digital Officer

Kollin Stagnito kollinstagnito@stagnitomail.com Chris Stark cstark@stagnitomail.com Ned Bardic nbardic@stagnitomail.com Korry Stagnito korrystagnito@stagnitomail.com Joel Hughes jhughes@stagnitomail.com Kyle Stagnito kylestagnito@stagnitomail.com Greg Flores gflores@stagnitomail.com

CONVENIENCE STORE NEWS AFFILIATIONS

Premier Trade Press Exhibitor

OUT & ABOUT

82 | Candy With Integrity NCA State of the Industry Conference addresses the need for transparency. 98 | Getting to the Core

8 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

EDITORIAL ADVISORY BOARD Brett L. Atherton Bolla Management Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Ray Johnson Speedee Mart

Jack Lewis Village Pantry LLC

Jonathan Polonsky Plaid Pantries Inc.

Kyle McKeen Alon Brands Inc.

Roy Strasburger Convenience Management Services Inc.

Richard Mione GPM Southeast Matt Paduano Nice N Easy Grocery Shoppes

Jon Urbanik CST Brands Inc.

The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

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tobacco. Nicotine is an addictive chemical. smoking age. Underage sale prohibited.

CSNEWS.COM ONLINE EXCLUSIVE

TOP 5 Daily News Headlines The most viewed articles online.

Ensuring the ‘Health’ of Your Cold Vault Sales

1 | Wawa Day 2016 Features Free Coffee & Digital Tributes In honor of Wawa Inc.’s 52nd anniversary in retail, the convenience store chain celebrated this year’s Wawa Day on April 14, during the week of its 1964 founding. Throughout the day, Wawa expected to give away more than 1.7 million free cups of any-size coffee at its 720-plus stores. 2 | Will CST Follow Same Path as The Pantry? Could CST Brands Inc. be destined to follow the same fate as The Pantry Inc., which came under shareholder pressure, added new members to its board of directors, and then put itself up for sale? There are certainly several similarities between what’s currently happening at CST and what transpired with The Pantry, making it possible that CST could eventually be sold to another large convenience store operator, à la when Alimentation Couche-Tard Inc. purchased The Pantry in 2015.

So many options, so little time to grab and go. The row of cold vault doors is long and consumers don’t have all day to read every label on every soft drink, juice box and bottled water offering. For retailers in the convenience channel, navigating through all the healthy options in beverages is not an easy task either. Where do you start? You start with the trends, as evidenced by three cool products that were winners in last year’s Convenience Store News Best New Products Awards competition. For more exclusive stories, visit the Special Features section of www.csnews.com.

PRODUCT HIGHLIGHT The most viewed New Product online.

Verifone Carbon POS

3 | Nine Things You Should Do When Skimming Strikes “Skimming the Surface,” an educational session held March 24 at Midwest regional trade show M-PACT 2016, highlighted the impact of skimmers, devices criminals use in an attempt to steal customer card information at the pump. C-stores located near interstate highways are most vulnerable to skimming crime rings, according to the presenter. 4 | RaceTrac Offers Free Drinks With New Rewards App Atlanta-based convenience store retailer RaceTrac Petroleum Inc. gave away free beverages to customers who downloaded its new RaceTrac Rewards app in April. Participants received seven in-app coupons for free drinks, redeemable for two weeks.

POLL

5 | Schnucks Sells Fuel Business to Wallis Oil The Schnucks supermarket chain sold off its Schnucks Express convenience stores in Champaign, Urbana and Savoy, Ill., in a move away from the convenience store business. Cuba, Mo.-based Wallis Oil Co. was slated to take over the stores as of May 2.

What is the foremost reason more people don’t buy fresh food at a convenience store?

70% “Gas station food” perception

12 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

Verifone Carbon is a flexible and integrated point-of-sale (POS) system that is engineered to make the most of the interactions between operators and customers at the POS. Features include: an integrated design with dual screens; processor and operating systems powered by Intel and the Verifone Engage platform; a portable and countertop detach and reattach system; ergonomic handle for mobile POS (mPOS) activities; six-hour battery life for uninterrupted mPOS activity; connectivity with USB, ethernet, WiFi and Bluetooth; and enhanced scratch- and impact-resistant surfaces with optimal screen clarity using Corning Gorilla Glass. Verifone Carbon accepts all forms of payment (swipe, tap or dip, with the chip slot positioned for both portable and countertop). The solution comes loaded with Verifone’s Commerce Platform — an open, cloud-based and secure engagement platform where businesses can quickly customize applications and services, according to the supplier. Verifone Systems Inc. San Jose, Calif. (800) 837-4366 www.verifone.com

12% Lack of awareness

10%

Too many other competing choices

8% Only come to store to buy fuel

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INDUSTRYROUNDUP FAST FACT

Only one in five convenience store retailers (22 percent) have a sound, strategic framework guiding what the company and team members are doing in digital marketing.

Kwik Trip Charts Long-Term Plan for New Express Model

Source: Digital Marketing Initiative (page 57)

Conversion of its Tobacco Outlet Plus sites is just the first step

QUOTABLES

By Renée M. Covino

“Lately, we’ve been challenging our teams to think about what it would be like if we had no prices for the food on the menu and the guest gets a check for how much they enjoyed the entire experience. That’s not to diminish the importance of food innovation, but if we take food out of the equation, how did we make the guest feel?” — Danny Meyer, Shake Shack founder (page 24)

wik Trip Inc.’s conversion of all its Tobacco Outlet Plus (TOP) adultonly stores to new “express” versions of its 450-plus traditional Kwik Trip and Kwik Star convenience stores is not the only major initiative the retailer has on its drawing board for completion in the next five years. Also within that span, the La Crosse, Wis.-based convenience store operator expects to expand the new express venture — dubbed Kwik Trip Express in Wisconsin and Kwik Star Express in Iowa — beyond just the conversion of its 39 TOP stores, Terry Schmitz, zone leader for TOP and the new Kwik Trip/Kwik Star Express stores, told Convenience Store News in an exclusive interview. More specifically, the company plans to have a total of 100 Kwik Trip Express and Kwik Star Express stores in operation, according to Schmitz. In March, Kwik Trip completed the transition of its first five TOP stores and officially debuted the Kwik Trip Express and Kwik Star Express banners. These former

14 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

TOP stores, four of which are in Wisconsin and one in Iowa, were chosen to be part of the first conversion phase because they were already equipped with gas operations and therefore made for the smoothest transition and evaluation. The majority of TOP stores do not sell gas. As the express name suggests, the instore footprint of the express stores is much smaller than the retailer’s traditional Kwik Trip and Kwik Star convenience stores — approximately 2,500 square feet of selling space vs. approximately 5,500 square feet, respectively. One area the express stores have not borrowed thus far from the larger c-stores is hot food. Instead, Kwik Trip Express and Kwik Star Express currently carry fresh grab-andgo meal items. Express gas operations feature about six fuel dispensers vs. the typical 18. With the first phase of conversions completed, the plan is to move all remaining TOP stores out of strip malls and relocate them to sites with gas operations, or build fueling stations on existing TOP properties that will allow for that.

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INDUSTRYROUNDUP

California & New York to Phase in $15 Minimum Wage “Fight for $15” efforts shift to other liberal states

he national push to hike the minimum wage to $15 an hour has some heavy hitters behind it. California Gov. Jerry Brown signed into law a new minimum-wage bill in early April. Across the country, New York Gov. Andrew Cuomo reached a deal with top state lawmakers to raise the Empire State’s base wage as part of the 2016-2017 state budget. “California takes a massive leap forward today in the fight to rebalance our nation’s economy,” said Art Pulaski, executive secretary-treasurer of the California Labor Federation. President Barack Obama, who first proposed an increase of the $7.25 federal minimum wage in 2013, applauded the states’ actions and called on the Republican-controlled U.S. Congress to “keep up with the rest of the country.”

Activists have now shifted their “Fight for $15” efforts to other more liberal, Democratic-led states including Illinois, Massachusetts, Michigan, New Jersey, Oregon, Rhode Island and Washington. Under California’s plan, the Golden State’s minimum wage will rise to $10.50 per hour on Jan. 1 for businesses with 25 or more employees, and then rise each year until reaching $15 per hour in 2022. Small businesses with fewer than 25 employees will have

16 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

additional time to phase in the increases. Gov. Brown can act by Sept. 1 of each year to pause the next year’s wage increase for one year if there is a forecasted budget deficit (of more than 1 percent of annual revenue) or poor economic conditions (negative job growth and retail sales). In New York State, the change will be phased in regionally. In New York City, the wage will increase to $15 by the end of 2018, although businesses with fewer than 10 employees would get an extra year to comply. In the suburbs of Long Island and Westchester County, the minimum wage will rise to $15 by the end of 2022. The increases are even more drawn out upstate, where the wage will hit $12.50 in 2021, then increase to $15 based on an undetermined schedule. Following these moves in California and New York, activists have now shifted their “Fight for $15” efforts to other more liberal, Democratic-led states including Illinois, Massachusetts, Michigan, New Jersey, Oregon, Rhode Island and Washington. Such a wage increase will face more obstacles in conservative and rural states in the South and Midwest, according to experts, but activists believe the movement is picking up steam.

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r Colors

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s r e n e t e e Sw NATURE VALLEY GRANOLA BARS ARE FULL OF GOOD. You may already know that Nature Valley is the #1 bar brand in convenience stores.1 But you may not know that they contain no artiﬁcial ﬂavors, colors or sweeteners. Why is that important? Because it makes customers more likely to purchase Nature Valley. 2 So stock up today. Because when customers say no to the bad stuff, they can say yes to the good stuff in Nature Valley.

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INDUSTRYROUNDUP

eye on growth n Croton Holding Co. purchased Par Mar Oil Co. The

deal included 52 convenience stores, 16 quick-service restaurants and several car washes. n Global Partners LP added 22 sites in Massachusetts

from O’Connell Oil Associates Inc. The stores are branded under the Convenience Plus banner.

n Rogers Petroleum Inc. sealed its deal for the western

division of BV Oil Co. Inc., which includes a commercial fuels and lubricants business. n CEFCO Convenience Stores’ newest

prototype store features a Sonic restaurant, a first for the chain. The store marked CEFCO’s 23rd 5,500-square-foot prototype.

n Love’s Travel Stops & Country Stores

Inc. completed its purchase of Trillium CNG. Love’s customers now have access to an additional 37 compressed natural gas stations.

n Maverik Inc. plans to invest up to $50 mil-

lion in Idaho’s Treasure Valley region during the next few years. So far, the chain has tapped four area locations to build new stores.

n Empire Petroleum Partners LLC acquired

the wholesale distribution rights of Triple A Fuels Inc. Triple A supplies branded fuel to gas stations primarily in Texas’ Dallas-Fort Worth Metroplex.

n Nouria Energy Corp. acquired the assets of J&S Oil

Inc. The transaction included eight Xpress Stop convenience stores with fuel, two Express Lube auto service stations, and three car wash locations.

retailer tidbits n 7-Eleven Inc. combined two of its

most popular products into the Wild Cherry Slurpee doughnut, which launched in March to help 7-Eleven celebrate the Slurpee turning 50.

n The Spinx Co. is upgrading to Level

3 electric vehicle (EV) charging stations at seven of its South Carolina stores. Spinx first installed Level 1 and Level 2 EV charging stations at five locations in 2011.

n Wawa Inc. is adding

food and beverage managers and supervisors to every location. The move is part of the retailer’s plan to hire 5,000 new associates.

n TravelCenters of America LLC is unifying its TA Truck

Service, Petro:Lube, RoadSquad, RoadSquad Connect, RoadSquad OnSite and eShop services under the TA Truck Service name. n Bazzi Oil & Gas Co.

n Thorntons Inc. began offering E15 fuel

at 43 Chicago-area locations in March. The renewable fuel is sold at the pump under its trademarked “Unleaded15” brand name. n Family Express Corp. filed a complaint for declaratory

judgment in U.S. District Court asking that it be allowed to continue to call its four-sided doughnuts “Square Donuts.” The filing is an attempt to resolve a years-long conflict with the Square Donuts bakery chain.

18 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

joined the Detroit Police Department’s Project Green Light Detroit. The pilot effort blends a mix of real-time crime fighting and community policing to improve neighborhood safety. n Pilot Flying J selected Cree Inc.

to retrofit parking lot canopies, downlights and area luminaires at select locations. The project will use high-performance LED lighting with SmartCast Technology.

TECATE LIGHT IS OUTPERFORMING THE BEER CATEGORY AND MEXICAN IMPORT SEGMENT +46% VS. YAGO1

MEXICAN IMPORTS DROVE 88% OF IMPORT SEGMENT GROWTH 1

SCORE WITH

TECATE CONSUMERS ARE

47% MORE LIKELY TO WATCH

SOCCER TECATE IS

VS. OTHER DOMESTIC LIGHT BRANDS2

■

TECATE will target the almost 5MM CHIVAS FC FANS IN THE U.S., the most-viewed club soccer team in the U.S. on any network, regardless of language, with media support in core markets4

■

Eye-catching POS and mass displays will DRIVE AWARENESS AND IMPULSE PURCHASE

■

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CONTACT YOUR SALES REPRESENTATIVE Enjoy Tecate® and Tecate® Light Responsibly.

THE OFFICIAL

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INCREMENTAL OF TOTAL

1. Source: Nielsen FDCM+: 2015 2. Source: Nielsen Spectra National Behaviors Report - L52 w/e 1/19/16 3. Source: Nielsen Assortment Tool, Oct. 2015

TECATE

INDUSTRYROUNDUP

competitive watch n Dollar General Corp.

plans to add approximately 2,000 stores over the next two years. This expansion includes 900 new stores and 875 relocated or remodeled stores during the current fiscal year.

n Dunkin’ Donuts is testing

Ready-to-Go Choices kiosks. These grab-and-go kiosks are placed in front of the store’s ordering line and offer sub and sandwich items.

n Multichannel retailer The Kroger

Co. forged a strategic partnership with specialty grocer Lucky’s Market. The hybrid deal is expected to accelerate the growth of the 17-store Lucky’s banner in new and existing markets.

n Wal-Mart Stores Inc. is expanding its free Walmart

Pickup Grocery curbside service into eight new cities this month. The service will now be available at nearly 200 stores.

n Subway added calorie counts to its menu boards

nationwide in April. Despite a delay in the requirement date mandated by the Food and Drug Administration, the new menu boards were rolled out at 27,000 U.S. Subway locations.

n McDonald’s Corp. is piloting self-

serve coffee kiosks at two locations in Chicago. Each kiosk features a beverage dispenser, cups and a touchscreen tablet.

supplier tidbits n Anheuser-Busch acquired its eighth

craft brewery. Devils Backbone Brewing Co. of Virginia will join the diverse portfolio of craft breweries within its The High End unit.

their products that contain genetically modified organisms (GMOs). GMOs are living organisms whose genetic material has been artificially manipulated in a laboratory through genetic engineering. n Hunt Brothers Pizza awarded the grand

n Vapor products brand blu launched a

new global brand and marketing campaign entitled “Just You & blu.” The campaign will include TV and cinema commercials, print ads, billboards, as well as digital and social content.

prize in its fourth annual Hunt to Win sweepstakes. The winner, Becky Harrell of Elizabethtown, Ky., received a Bad Boy Recoil iS Crew UTV, valued at $14,500, plus two VIP tickets to an Easton Corbin concert. n King Juice’s Calypso Lemonades brand

n Diageo launched a revised

website featuring enhanced nutrition, calorie and alcohol content information for all its alcohol brands. The site also includes new tools such as the drinks calculator.

was awarded the Guinness World Record for the largest glass of lemonade ever made. The event was held in August in Las Vegas as part of its National Lemonade Day celebration. n Enjoy Life Foods, a division of Mondelez

n Numerous convenience store suppliers, including

General Mills, Mars Co. and Campbell Soup Co., are taking steps to become more transparent by labeling

20 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

International Inc., will open an allergyfriendly manufacturing facility in Jeffersonville, Ind. The site will begin operations later this year.

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1893 Premium Cola

Convenience store operators can free up floor space and grow sales with the Drystacker Merchandiser, according to its maker InterMarket Technology Inc. The sturdy, freestanding solution elevates products to eye level and allows the retailer to capitalize on key areas of the store’s property to sell items such as car care products, beverages, firewood, charcoal and more. Perfect for the storefront or between the fuel pumps, Drystacker Merchandisers are made of high-quality wood, with extreme coatings for weather durability. UV fade-resistant roofs can be color-matched and custom printed.

Adding to its extensive portfolio of beverage offerings, PepsiCo introduces 1893, a blend of premium kola nut extract, real sugar and sparkling water. The premium cola is available in two flavors: Original and Ginger Cola. It is packaged in sleek, 12-ounce cans for a suggested retail price of $1.79 each. A national TV spot for 1893 will debut this month in English and Spanish and feature a soda sommelier played by actor Jeff Galfer.

InterMarket Technology Inc. Wayne, N.J. (800) 859-0803 cs@intmarktech.com intmarktech.com

Schwan’s Minh Asian Appetizers Schwan’s Food Service refined the recipe of its Minh Chicken Egg Rolls, which are also available in Pork & Vegetable, Vegetable, Shrimp, and Southwest Chicken in 1.5-ounce or 3-ounce offerings. Schwan’s Minh Asian Appetizer portfolio now includes Minh Spring Rolls as well, which combine meat, fresh vegetables and seasonings in a delicate, light and crispy wrapper. Spring roll varieties include chicken or vegetable in 1-ounce sizes. In addition, the company’s line of Minh Potstickers expanded to include two new options: Pork & Vegetable and Chicken & Vegetable. The 0.9-ounce, precooked potstickers feature meat, vegetables and a spice blend in a traditional dumpling-style wrapper. Schwan’s Food Service Inc. Marshall, Minn. (877) 302-7426 schwansfoodservice.com

PepsiCo Inc. Purchase, N.Y. (800) 433-2652 pepsico.com

Chef’s Cut Real Bacon Jerky Answering the call of bacon lovers, Chef’s Cut Real Jerky introduces a line of premium, chef-crafted Real Bacon Jerky. Three varieties are available: Maple, Applewood and Sriracha. Each piece of smoked bacon is thin and crispy, and provides the right chewy crunch, according to the company. Whether a consumer likes their bacon sweet, smoky or spicy, there’s a variety to please their palate. The new bacon jerky line joins existing Chef’s Cut Real Jerky products including its Real Steak Jerky Original Recipe that is slowly marinated in a horseradish, Worcestershire and proprietary soy sauce; and Real Chicken Jerky Buffalo Style, which features the same kick and taste found in a buffalo wing at a restaurant, but without the fat or mess. Chef’s Cut Real Jerky New York (877) 210-2575 chefscutrealjerky.com

Swisher Little Cigars New Varieties Swisher International expanded its line of little cigars with two new additions: Swisher Sweets Caramel Little Cigars and Swisher Diamonds Little Cigars. Both are made with high-quality tobacco that packs a big taste at a sweet price, the company stated. Swisher Sweets Caramel Little Cigars have a sticky-sweet caramel taste fused with juicy peach. For those who prefer a natural tobacco taste, Swisher Diamonds Little Cigars — the unsweet Swisher — have a smooth, rich taste created by master tobacco blenders. Both new varieties of little cigars are filtered and come in 100mm 20-count soft packs. Swisher International Inc. Jacksonville, Fla. (800) 874-9720 swisher.com

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Inside the Mind of

Food Visionary

Danny Meyer

Shake Shack founder says people want good food, not fancy décor

“

By Don Longo

eople still want the highest quality food, but they don’t want the fancy experience anymore,” said Danny Meyer, CEO of Union Square Hospitality Group and founder of Shake Shack. “We don’t need to eat at fancy places. We like our food better when it’s at a hole in the wall,” continued Meyer, whose company’s restaurant portfolio runs the gamut from tony New York City eateries like the Gramercy Tavern and The Modern at the Museum of Modern Art (MoMA), to classy-casual barbecue joint Blue Smoke, to the fastgrowing Shake Shack, which started as a hot dog stand in Madison Square Park and has grown to more than 80 locations worldwide with the opening last month of its first location in Los Angeles. Meyer was a special guest at the 2016 Convenience Store News Foodservice Summit, held March 15-16 in partnership with Tyson Convenience, where he participated in an interactive roundtable discussion with a dozen leading convenience store foodservice executives. The trailblazing restauranteur noted that in his many travels around the world, the best croissant he’s ever tasted was at a gas station in Uruguay. “People like to be surprised by high/low experiences like that. It’s a wonderful trend for you all,” he said, gesturing to the convenience foodservice retail executives and chefs gathered around the table.

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Meyer, whose restaurants and chefs have earned an unprecedented 25 James Beard Awards, had breakfast with the c-store retailers after they spent the previous day visiting unique food concepts throughout the Big Apple on CSNews’ Taste of Manhattan Tour (see coverage on page 44), which included a stop at Shake Shack, Meyer’s uber-successful hamburger chain. “We started Shake Shack as a hot dog cart in Madison Square Park in 2000,” Meyer recounted, relating how the creation of the fast-casual chain was “a great experiment in combining capitalism with philanthropy.” Meyer, then spearheading the rehabilitation of Madison Square Park, which had fallen into disrepair, was asked to supervise operation of a hot dog cart inside an art exhibit that was part of the park’s renewal effort. Already operating several upscale restaurants near the park and elsewhere in New York City, Meyer used the hot dog stand to examine “the meaning of hospitality and what that means outside of a fancy restaurant.” Selling Chicago-style hot dogs, the stand became extremely successful, drawing lines numbering more than 100 people at a time. Four years later, the city asked Meyer to operate a permanent 20-foot by 20-foot kiosk in the park. That original Shake Shack focused on shakes, not hamburgers. “I had no idea it would become so famous for its burgers,” said Meyer. “Every year, we had to renovate the kitchens to increase space for burgers.”

Meyer’s second Shake Shack, on Manhattan’s Upper West Side, was the first stop on this year’s CSNews Foodservice Summit taste tour.

In addition to burgers, the restaurant’s menu included its eponymous milkshakes and French fries, and even a ‘Shroom Burger. Since the beginning, Meyer has wanted “everything at Shake Shack to be craveable.” He eventually donated the original building, which cost $1 million to build, to the park and continues to operate the Shake Shack unit as a tenant. The Madison Square Park location’s sales continue to grow today. During the summertime, the line typically reaches to outside the park and the wait time for service can be an hour or more. A webcam on the Shack’s homepage shows the length of the current line in real time. Meyer waited five years before opening a second Shake Shack, this time on Manhattan’s Upper West Side. “Shake Shack is the first time we did anything for the second time,” commented Meyer, whose other restaurants are mainly singleunit locations. Although he eventually expanded Danny Meyer is CEO of New York-based Union Square Hospitality Group, which includes Shake Shack to additional locaUnion Square Café, Gramercy Tavern, Blue Smoke, Jazz Standard, Shake Shack, The tions in New York, as well as in Modern, Maialino, Untitled, North End Grill, Marta, Union Square Events, Connecticut, Washington, D.C., and Hospitality Quotient, a learning and consulting business. Florida, Georgia, Illinois, Meyer was born and raised in St. Louis, worked for his father as a Maryland, Massachusetts, tour guide in Rome during college, and then returned to Rome to study New Jersey, Nevada, international politics. After graduating from Trinity College in Hartford, Pennsylvania and Texas, Conn., in 1980 with a degree in political science, he worked in Meyer felt it was important to Chicago for John Anderson’s 1980 independent presidential campaign. make every location unique. He later gained his first restaurant experience in 1984 as an assistant “We’re proud to be a chain, manager at an Italian seafood restaurant in New York City, before returnbut who wrote the rule that every ing to Europe to study cooking in both Italy and France. link in the chain has to be the He opened his first restaurant, Union Square Café, in 1985 at the age of 27. same?” he asked. An active national leader in the fight against hunger, Meyer has long served on the boards Twenty percent of the menu at of Share Our Strength and City Harvest. He is equally active in civic affairs, serving on the every Shake Shack is localized and boards of NYC & Co., Union Square Partnership, and the Madison Square Park Conservancy. architecturally, none of them look

Who Is Danny Meyer?

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the same, he noted, pointing to the seats at the New Haven, Conn., Shake Shack that look like the seats at the city’s historic Yale Bowl football stadium. Each Shack also carries a wide selection of craft beers local to that particular area. At this year’s CSNews Foodservice Summit, Meyer had just returned from the grand opening of the first California Shake Shack in West Hollywood in Los Angeles. With international partners, Shake Shack also operates in Tokyo, London, Istanbul, Moscow, Beirut, Dubai, Abu Dhabi, Doha, Kuwait City, Riyadh and Jeddah. Twenty percent of the menu at every Shake Shack is localized.

CHICK’N SHACK HATCHED

As Shake Shack has expanded, so too has its menu, leading to the recent introduction of the restaurant’s first chicken sandwich, the Chick’n Shack — a skinless, marinated chicken breast that arrives vacuumpacked to the store and is then freshly battered and fried, and served with bib lettuce, pickles and a buttermilk herb mayo. The Chick’n Shack has been an immediate hit. “In Los Angeles, we had our busiest opening day in our history,” said Meyer, “and the chicken sandwich sold at 80 percent of the beef burger.” Meyer asked the c-store retailers to share what they saw and experienced during the Taste of Manhattan tour. He agreed with them that the eateries on the tour illustrated many of the key trends in foodservice, such as the popularity of local, fresh ingredients; the importance of being authentic; and the opportunity to “make food be theater.” Several of the retailer attendees told Meyer they were impressed with the upbeat spirit shown by the young people working at many of the restaurants featured on the tour.

The Hospitality Quotient

When interviewing potential new hires, managers at all of Danny Meyer’s restaurants are trained to look for six “emotional skills.” These skills, according to Meyer, add up to what he calls having a high “hospitality quotient.” The six skills are: Kindness & Optimism Curiosity Work Ethic

Empathy Self-Awareness Integrity

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“Even though we call it ‘work,’ hospitality is a team sport,” remarked Meyer, whose first business book, “Setting the Table” (Harper Collins, 2006), is a New York Times bestseller and examines the power of hospitality in restaurants, business and life. “If you think about what sports has in common with hospitality, you notice that ballplayers don’t say they’re going to work today. They say they’re going to play to win. That’s all part of our approach to servant leadership. It’s the belief that the power flows from the bottom up, not the top down,” he said. “Lately, we’ve been challenging our teams to think about what it would be like if we had no prices for the food on the menu and the guest gets a check for how much they enjoyed the entire experience,” Meyer continued. “That’s not to diminish the importance of food innovation, but if we take food out of the equation, how did we make the guest feel?” HOSPITALITY INCLUDED

Meyer made headlines last year with the institution of a “no tipping” policy at his restaurant The Modern at MoMA, with plans to expand the policy to all his eateries by the end of this year. A number of observations and personal experiences over the past 20 years led Meyer to launch the paradigm-changing policy on Nov. 15, 2015. “I travel around the world to learn about food, and the U.S. culture of tipping is unusual,” Meyer relayed to the group. “There’s no tipping in Asia, and much less in Europe. Tipping came about in the U.S. because we wanted to be more like Europe — 150 years ago, when really rich people tipped the help. It was a power thing.” The adjusted minimum wage for tipped employees

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in New York City is $7.50 per hour. The National Restaurant Association fights to make sure no legislation changes that. Meyer, by the way, pays his wait staff $9 per hour, $1.50 above the city minimum. “It’s troubled me for the past 20 years. And now, the last two years, we are in the midst of the greatest labor crisis in New York City history,” he said. “The disparity between the wages of tipped employees and non-tipped employees is huge. The average tip in New York City is about 21 percent, which is great for tipped employees, but we can’t find enough skilled cooks to staff our kitchens.” Meyer reached his own tipping point, so to speak, about a year ago when he found out he had more Culinary Institute of America-trained chefs working for him as servers than working in his kitchens because they couldn’t make enough money as cooks. “Because of that, and the fact that I never liked the master/servant relationship that tipping implies, I decided someone has to take a stand and do something about it,” he said.

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So, Meyer enacted the following steps at The Modern, and shortly thereafter at Maialino, a Roman trattoria at the Meyer-owned Gramercy Park Hotel: • He gave all cooks a $2-per-hour raise and built a career ladder for them. • Menu prices were adjusted upwards by about 20 percent and the policy was branded as “Hospitality Included.” Guest receipts no longer have a tipping line. • He announced the restaurant would share 13.5 percent of its top-line revenues with all employees — tipped and non-tipped workers. • He unfurled the most comprehensive communications program in company history, getting input and feedback from all employees, holding town hall meetings, and conducting one-onones with affected employees. He shared with the employees what they would have made under the old tipping system and what they are making under the new no-tipping policy. The bottom line: Cooks are happier with the wage

increase and tipped employees were “kept whole,” according to Meyer. Guests pay about the same. But what about investors? “If I could answer that question conclusively right now, we would have rolled the policy out chainwide. I’ve got to believe that extended tenure, lower turnover and having the employees work as a cohesive team is going to result in improved sales.” Since Meyer introduced “Hospitality Included” at The Modern, at least eight other top chefs and restaurants in New York City have followed suit with similar no-tipping policies. WORLD-CLASS SERVICE

Even before the no-tipping experiment, Union Square Hospitality Group was renowned for its world-class customer service. The c-store retailers who participated in the roundtable were interested in learning how Meyer’s restaurants are able to achieve such a superior level of service from its employees; and perhaps, more importantly, how practical is it to think convenience

At all his restaurants, Meyer has been challenging the employees to act as if the guest only gets a check for how much they enjoyed the entire experience.

stores could achieve a superior level of customer service with many of its employees making minimum wage or just slightly higher? In response, Meyer shared his hiring philosophy, which is to hire people based on emotional skills, or

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having what he calls a high “hospitality quotient.” “We don’t view high labor costs as something happening to us,” he said. “It’s something we are choosing to do. We feel that it actually drives higher sales volume.” Managers at Meyer’s restaurants are trained to look for six “emotional skills” when interviewing potential new hires. These skills, with Meyer’s commentary, are: • Kindness & Optimism: “Skeptics don’t tend to thrive in the hospitality business.” • Curiosity: “Every day is an opportunity to learn something new.” • Work Ethic: “I can’t teach you to care about doing things right.” • Empathy: “What kind of wake do you leave in your path as you go through life?” • Self-Awareness: “Do you know your own personal weather report?” • Integrity: “The judgement to do the right thing even if it’s not in your self-interest.” In addition, Meyer offered some final words of wisdom and encouragement to the convenience

Tipping Point — and Counterpoint Although the number of restaurants in New York City that have followed Danny Meyer’s lead with a no-tipping policy is still relatively low, momentum is clearly growing. However, one restaurant critic who originally supported a “service included” policy is now having second thoughts. New York Post’s Steve Cuozzo, a food writer who has long called for the end of tipping, acknowledges it’s far too early to judge results, but he has some concerns. “Owners say customers will pay the same amount as before because slightly higher prices to reimburse staff will work out to the same amount as tips,” Cuozzo wrote last month. “But not so fast. Diners will surely pay more because tax will now be based on the higher amount.” Cuozzo also points out potential legal issues related to transparency for those restaurants who pledge to share revenues with employees, in lieu of tips. And he even sees problems for restaurant owners whose lease arrangements require them to pay rent based on an agreed-upon percentage of revenue over a certain point. “None of this means we should give up on getting rid of tipping,” concluded Cuozzo. “It’s a rotten practice of which Americans are irrationally fond. But every restaurant should take a long, hard look before they dive into a pool that might not have a bottom.”

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C-store retailers enjoyed the ShackBurger, the new Chick’n Shack sandwich, French fries and shakes at Meyer’s uber-successful chain.

foodservice executives. “The smartphone has given people so many choices today. With just the touch of their phone, they can communicate, get car service, get directions and order food,” he said. “About the only thing it doesn’t do is cook food for you or fill your tank with gas.” The restauranteur acknowledged what he calls “captive dining” is a thing of the past. “There is a huge number of places to eat. … Today, if I’m eating excellent food in every other channel of my life, why wouldn’t I want that quality at every place I eat?” He recalled one of his first experiences with restaurant-quality food at a convenience store. “I was traveling to Penn State University and had read that Sheetz actually cared about the food experience,” he said. “They didn’t disappoint. It was clear they didn’t view food as a captive audience experience.” To the group of retailers, Meyer said, “I’ve probably done business with most of your companies before just traveling around the country and I really admire what you are doing and how your industry is changing, and all of our industries are changing. Whether it’s because people are buying fewer cigarettes, there’s more and more interest in food and how you make your place so much more than what it once was. I think it is a fascinating thing to grapple with.” Based on what he’s seen of convenience stores’ improved foodservice around the country, he concluded: “You guys are on the right track with foodservice, and people are not going to go back to accepting lower quality food at a gas station.” CSN

THE FOODSERVICE ISSUE

Honing In

Now well-established in fresh food, leading convenience retailers refine their strategies By Angela Hanson & Linda Lisanti

onvenience stores are no longer newbies in the foodservice universe. Fresh food and beverages are now commonplace at c-stores across the nation — 100 percent of convenience chains sell prepared food and hot dispensed beverages, while 94 percent sell cold or frozen dispensed beverages, according to the latest Convenience Store News Foodservice Study.

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C-stores have earned a place as a serious contender to other foodservice establishments: quick-service restaurants, fast-casual eateries, coffee shops, grocery stores, and more. But that doesn’t mean c-store retailers can rest on their laurels. The best-in-class in convenience foodservice are committed to continual reinvestment and refinement of their offer. “The expectation customers have today is faster service and better quality. The customer is coming to us because they know they can find that value in what they’re buying,” said Guy Strayer, director of foodservice for Erie, Pa.-based Country Fair Inc., a chain of 72 convenience stores. “I push for us to continually exceed the expectations of the customer.” Strayer was one of a dozen convenience foodservice leaders in attendance at the recent 2016 Convenience Store News Foodservice Summit, held in partnership with Tyson Convenience. During the event’s share sessions, one of the common themes heard from the retailers around the table was the concept of honing in — doing fewer things, but doing them better. “Our opportunity is to be more focused. Less golden retriever,” noted one attendee whose chain of nearly 600 c-stores is five years into a chainwide store remodeling effort that puts fresh food front and center. “Gas will continue to be a driver. Cigarettes will be a driver. But food is where our money is going to come from. Right now, food is a store within a store and we compete against other [product] categories, but I know food will win out.” This chain is just one example of how the best-in-class in

THE FOODSERVICE ISSUE

convenience foodservice are likewise applying this concept of honing in to having a store design that gives the brand “the permission” to sell fresh food and beverages to today’s savvy consumers. By the end of this year, Thorntons Inc. will have opened 47 of its new food-focused format stores in southern Indiana, Louisville, Ky., and the greater Chicago area, shared Samantha Couch, senior brand manager of fresh foods. The new format is meant to position Thorntons as a food and beverage destination. The stores feature a grab-and-go kitchen; hot prepared food including breakfast, lunch and snack selections; a full bakery case; and an ice cream bar with toppings. “We are constantly evolving our menu to meet the needs and wants of our guests,” said Couch. West Des Moines, Iowa-based Kum & Go LC also recently debuted a new store design, dubbed “Marketplace,” which puts an emphasis on the brand’s foodservice offerings. When customers walk through the doors, they are greeted by a fresh pizza and madeto-order sandwich station — something new to Kum & Go. The retailer also launched a new pizza recipe. “Our goal is to act like a restaurant instead of a convenience store. Our new store model is one step on a long journey,” said Ben Boulden, foodservice category manager. HONING IN ON CONSISTENCY & FRESHNESS

While there has never been a better time to be in the convenience foodservice business — one summit

New Convenience vs. Old Convenience

“Old convenience is about time. New convenience is about maximizing time and maximizing experience,” Mikel Cirkus, global director of conceptual design for Firmenich’s flavors division, told attendees of the fifth-annual Convenience Store News Foodservice Summit. Cirkus provided the following “must-have” list for new convenience: • Hydration • Energy • Lightweight • Small (occupies little space) • Meal replacement • Filling and satisfying • Durable and refillable

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Christopher Wolf of Tyson Foods discussed “Tools for a Foodservice Revolution” with foodservice directors from leading c-store chains.

attendee said he believes “we’re in the golden age of convenience stores right now” with the sky as the limit — operators face their fair share of challenges. “What isn’t a challenge? More than ever, we’re doing more with less,” said one retailer. Even the largest, most successful c-store chains have limited resources and cannot necessarily do everything well. Still, customers expect consistency. For chains that have multiple store sizes under their banner, there is an extra degree of difficulty in achieving this, as their smaller stores are asked to do disproportionately more relative to their square footage. Additionally, chains with footprints in multiple areas of the nation must address the issue of regionalism and how, or whether to, keep the same roster of products in very different parts of the country. Consistency also means delivering consistently “fresh” product, whether it’s made to order or grab and go. Retailers are rethinking how their stores define fresh and whether it is necessarily the same as “healthy.” While the c-store industry has made great strides in this area, summit attendees acknowledged that in certain regions, people just don’t yet associate freshness with c-stores. To combat this, one chain seeks to create the association with fresh by making as many of its foodservice items as possible in in-store kitchens that are viewable to customers. Other chains take similar measures to promote freshness by leading with fresh — when customers walk in, fresh items are immediately obvious and

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THE FOODSERVICE ISSUE

The Competitive Landscape

A typical convenience store battles for share of stomach against many players

Average distance to the nearest...

accessible. For those that want to add healthy options but worry about alienating longtime, traditional c-store customers who aren’t especially interested in healthy items, the good news is that adding a fresh and healthy angle doesn’t have to mean wholly displacing existing items. Adding some options and simply creat-

“Our goal is to act like a restaurant instead of a convenience store. Our new store model [dubbed Marketplace] is one step on a long journey.” — Ben Boulden, Kum & Go LC

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ing the perception that fresh and healthy products are available will capture the attention of customers who would otherwise never have walked inside specifically to buy fresh food. The retailers pointed to several signifiers of freshness that stores can utilize: the display of fresh fruit; availability of freshly prepared sandwiches; clear packaging that lets customers easily see the product inside; a green color scheme; and the use of “better for you” over “healthy.” Overall, summit attendees agreed they are increasingly looking at the long-term rather than going from problem to problem. Now that more consumers trust c-stores for their foodservice needs, the goal is to have a plan to always live up to that trust and build a solid future. HONING IN ON TRENDS

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THE FOODSERVICE ISSUE

foodservice revolution happening in America, according to Christopher Wolf, who leads the development of new innovation capabilities for Tyson. “America is obsessed with food today, and this means consumers are interested in learning more and spending more,” Wolf said in a presentation during the Foodservice Summit. He discussed multiple trends fueling the foodservice revolution. Among them: • Experiential Eating: Food procurement has become a fun hobby vs. a chore. • Procurement Promiscuity: Consumers visit at least five channels to buy their food. • Farm to Landfill: The importance of waste reduction is growing. • Food Tech Connect: How we find food items and share experiences is changing. • Eating De-Ritualization: Almost half of eating occasions are alone. • Value Paradox: Value lies in differentiation, not just price point. Wolf told the c-store retailers that while these trends will continue to evolve, America’s obsession with food is not going to dissipate anytime soon. “If there’s a solution you’ve tried and it didn’t work, that

doesn’t mean the trend is going away. This is here to stay,” he explained. “It’s just a matter of you figuring out what is the right solution for you.” If c-stores give consumers a reason, they will spend more, he concluded. Case in point: During the recession, millennials traded down in number of visits, but traded up in where they went, choosing fast-casual establishments over quick-service restaurants. CSN

Convenience Store News 2016 Foodservice Summit The fifth-annual Convenience Store News Foodservice Summit, presented in partnership with Tyson Convenience, was held March 15-16 at New York’s Gramercy Park Hotel. Through a mix of guided tours, interactive presentations by foodservice industry visionaries, roundtable discussions and more, retailer attendees examined the opportunities, challenges, best practices and consumer trends shaping the growth of prepared food at convenience stores.

AtteNdeeS Keith Boston, Cumberland Farms Inc. Ben Boulden, Kum & Go LC Kelly Buckley, 7-Eleven Inc. Samantha Couch, Thorntons Inc. Bob Derian, RaceTrac Petroleum Inc. Lynn Hochberg, Wawa Inc. Ryan Krebs, Rutter’s Farm Stores Carl Orsbourn, BP ampm Paul Servais, Kwik Trip Inc. Bonnie Sheridan, Holiday Stationstores Inc. Guy Strayer, Country Fair Inc. Jennifer Vespole, QuickChek Corp.

PreSeNterS Joe Bastianich, Restaurateur Mikel Cirkus, Firmenich Don Longo, Convenience Store News Danny Meyer, Union Square Hospitality Group Chef Mario Valdovinos, Tyson Foods Christopher Wolf, Tyson Foods

SPoNSor

42 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

A Big Apple

THE FOODSERVICE ISSUE

Bite of the

C-store foodservice execs go inside some of Manhattan’s most innovative eateries

At Shake Shack’s Upper West Side location, c-store execs learned about how the chain strives to make every experience unique.

By Linda Lisanti

n the past, the “convenience” business was all about helping consumers maximize their time. Today, it is about both maximizing their time and maximizing their experience. A group of leading convenience store foodservice retailers got the opportunity to literally take a bite out of the Big Apple and find inspiration by visiting unique food concepts throughout New York City during the 2016 Convenience Store News Foodservice Summit, held March 15-16 in

partnership with Tyson Convenience. Guided by Chef Mario Valdovinos, Tyson Foods’ director of culinary innovations and corporate executive chef, and trends expert Mikel Cirkus, global director of conceptual design for Firmenich’s flavors division, the Taste of Manhattan Tour featured stops at four New York food destinations. Each spot highlighted different of-the-moment trends — local, authentic, artisan, farm to table, socially responsible, digitally connected, etc. — meant

At Hudson Eats in downtown Manhattan, attendees experienced a variety of delicacies from various eateries, including Dos Toros.

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Duane reade’s Wall Street store showed retailers what is possible when a leading drugstore chain gets into the food-to-go business.

to inspire the c-store foodservice executives to rethink their foodservice programs and how they could go back and use the ideas seen to elevate their own offer. The four destinations on the tour included:

entering, the c-store retailers observed the prominent positioning of the store’s “upmarket” section that includes a juice bar, chef-prepared sushi stations, graband-go sandwiches, salads, pastries and more.

SHAkE SHACk, UppEr WEST SiDE

GrAnD CEnTrAL TErMinAL, MiDToWn

This chain sprouted from a hot dog cart in Manhattan’s Madison Square Park and now has 80-plus locations. Foodservice Summit attendees got a taste of the chain’s best-selling ShackBurger and the new Chick’n Shack fried chicken sandwich, plus some shakes to wash it all down. “They’re taking back the basics and elevating them,” observed Valdovinos.

The world’s largest train terminal sees more than 700,000 people travel through each day and at least 10,000 of them dine while there. There are 35 options to suit every palette. “This is a fascinating place to see innovative foods for people going from Point A to Point B,” Valdovinos remarked. EATALy, fLATiron DiSTriCT

HUDSon EATS, BATTEry pArk

This large, modern food court encompasses a variety of popular fast-casual eateries — 14 in total. Foodservice Summit attendees sampled a Cambodianinfluenced sandwich from Num Pang; carnitas tacos and guacamole from Dos Toros; and farm-fresh sides from Dig Inn. “Lots of cultures come through this area,” Cirkus told the group. DUAnE rEADE, LoWEr MAnHATTAn

This flagship store on Wall Street features expanded fresh food and grocery offerings. Immediately upon

Following the Taste of Manhattan Tour, the c-store retailers were also treated to a one-of-a-kind dinner experience at Eataly with founder and acclaimed restauranteur Joe Bastianich. Along with partners Lidia Bastianich and Mario Batali, they own 30 successful restaurants worldwide. Eataly is billed as the world’s largest artisanal food and wine market. Since opening its debut location in New York in 2010, a second Eataly followed in Chicago. While at Eataly, the c-store foodservice execs got a personal tour from Bastianich, including an olive oil tasting. CSN

Grand Central Terminal provided a look at hot eateries (such as Magnolia Bakery), as well as an indoor food market that serves busy commuters.

46 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

THE FOODSERVICE ISSUE

Finding the Right

Foodservice Formula Some c-store operators believe it’s not an either-or scenario between proprietary and branded By Melissa Kress

he days of gas-and-smokes convenience stores are not completely a thing of the past, but retailers are putting more and more distance between themselves and the traditional image of the convenience channel through a sharpened focus on foodservice. A retailer’s approach to foodservice differs, however. Some operators take the proprietary route — Wawa Inc., Sheetz Inc. and Sunoco LP’s Stripes come to mind. Others take the branded route, partnering with quick-service restaurant (QSR) chains or other food franchises. These days, there’s also a growing number of c-store operators who believe the right foodservice formula is not one or the other, but rather both proprietary and branded. Temple, Texasbased CEFCO Convenience Stores is one of them. The retailer operates 227 c-stores and 19 QSRs in Alabama, Arkansas, Florida, Louisiana, Mississippi, Oklahoma and Texas. CEFCO also likes variety in its QSR partnerships. In its mix of 19 QSR units is Subway, Which Wich, Huddle House and Sonic. Its newest partner, Sonic, just joined the lineup with the opening of CEFCO’s latest prototype store in Panhandle, Texas,

48 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

in March. Which Wich is also fairly new to the retailer’s customers. CEFCO opened its first Which Wich sandwich shop inside its store at 608 Highway 80 E. in White Oak, Texas, late last year. When looking for the right QSR to partner with, CEFCO “first and foremost” considers whether that branded offer will satisfy a consumer need at that particular store above and beyond its regular offerings, explained Brett Giesick, chief retail officer for CEFCO. “We also consider how much more return we can extract with the incremental buildout. Lastly, similar to choosing real estate for the store site, we analyze traffic counts, patterns, demographics and competition for the particular market,” he said. And like dating, there are no set rules about who asks who out, so to speak. According to Giesick, it works both ways — though no decision is ever made lightly. “Ultimately, CEFCO conducts an awful lot of diligence on who we choose to partner with, and similarly the franchisor does the same on us to ensure it will be a good business relationship,” he said. “We are strategic in identifying enough franchise options so that we can operate in any markets we play in. By having multiple

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THE FOODSERVICE ISSUE

options available, we can overcome proximity issues that might preclude us from opening a QSR in a protected radius.” At the same time, CEFCO offers a proprietary food program at several stores. It has approximately 50 Fresh Eats Café locations that provide meal-centric offerings. Additionally, CEFCO offers various daypart food options out of open air coolers and hot cases in all its locations. “This is not an either-or option Italian fast-casual chain Fazoli’s typical convenience store setup is a drive-thru endcap. as our QSRs are typically in an endcap position and adjoined to the c-store; therefore, we carry our full line of convenience Love’s Travel Stops & Country Stores Inc. continue to store products,” Giesick noted. expand their relationship. In January, Love’s opened The benefits of branded partnerships include creits third Sonic Drive-In at the Love’s Travel Stop in ating an additional destination driver for the site, as Holcomb, Kan., at the intersection of U.S. Highway well as the incremental financial benefits, he cited. On 400/50 and North Big Lowe Road. the other side of the coin, there are some challenges. Unlike the first two Love’s Sonic units, however, Selecting QSR and casual-dining partners is often a the Holcomb restaurant is its first “flexible format” long courting process as both parties have conditions location. Flexible format is a line of new drive-in forthey want taken into consideration, he explained. mats that allow diners to experience Sonic seated at a “We believe to be successful, we need a separate table rather than only in their cars. Sonic offers varioperating structure (district and regional levels) to ous flexible formats — from the traditional drive-in participate in required franchisor training and cascade model with up to 29 dining stalls and a drive-thru, to this knowledge and foodie passion to the restaurants customizable indoor spaces, allowing guests to pick up we operate,” Giesick said. “Our food operations team meals in their vehicles or dine in. is laser-focused on providing great food and service to “Love’s Travel Stops has been a great partner, the consumer, as well as executing both CEFCO’s and and we have been able to communicate our brand’s the franchise partner’s processes.” needs while maximizing the benefit the drive-in has to the travel stop location and its customers,” a Sonic spokesperson told Convenience Store News. Sonic Boon Sonic wants to keep growing its footprint in the conWhile CEFCO just opened its first Sonic location, this is not the first time the brand that traces its roots back venience channel. The company is looking for partnership opportunities with c-store retailers that are brandto a root beer stand has partnered with a convenience ed, established in the industry, and have well-run operachannel player. tions. In a nod to its commitment to the channel, Sonic and Oklahoma City-based Sonic recently became a member of NACS, the Sonic’s convenience channel partners Association for Convenience & Fuel Retailing. include Love’s and CEFCO.

Taking a Slice

Like Sonic, Italian fast-casual restaurant chain Fazoli’s has set its sights on convenience stores. The channel has a key role in the Lexington, Ky.-based company’s expansion plans. Fazoli’s, now owned by

50 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

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THE FOODSERVICE ISSUE

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units operated by Rainbo Oil Co., headquartered in Dubuque, Iowa. Overall, Fazoli’s c-store presence now includes the states of Colorado, Indiana, West Virginia, Tennessee and Indiana. At convenience stores, the Fazoli’s offering usually takes the form of a drive-thru endcap where the restaurant chain’s line of freshly-made, premium pasta dishes, subs and salads are sold. Fazoli’s President Carl Howard explained that between 2008 and 2015, the company has been in a transformative period — from a struggling quickservice restaurant brand in a sea of QSRs, to what he now describes as a “fast-casual innovator.” The transformation has focused on improving the quality of both its food and service, he noted. Later this year, technology upgrades, including new point-of-sale, back-of-house and manager systems, will roll out. A freestanding restaurant prototype was also recently unveiled. “We’ve also increased our focus on innovation and hired new talent, such as a vice president of strategy and continuous improvement; a new senior director of franchise sales; and additional field marketing personnel,” Howard reported. Along with Fazoli’s, other QSR players making news in the convenience channel are: • Fuddruckers inked a franchise agreement with Westlake, Ohio-based TravelCenters of America LLC. A new Fuddruckers restaurant at the TA Travel Center at 30732 Highway 441 South in Commerce, Ga., near the Tanger Outlet Center and Atlanta Dragway, offers table and lounge seating for 101 guests. • Pilot Flying J, operator of more than 650 Pilot Travel Centers and Flying J Travel Plazas across North America, opened its first Auntie Anne’s Pretzels inside its new Pilot Travel Center in Schulenburg, Texas. The facility has a Taco Bell and Cinnabon, too. • Stewart’s All American Corp. and On the Move Corp. (OTM) signed an exclusive agreement that calls for the development of 250 Stewart’s Express locations exclusive to On the Move convenience stores. These locations will be throughout Florida and Georgia. OTM said it plans to include a Stewart’s Express in as many of its c-stores as possible, offering a full menu of hamburgers, hot dogs, cheese steaks, French fries, Stewart’s Root Beer and unique-flavored ice cream floats, shakes, cones and sundaes 24 hours a day. cSn

464

MOTOR FUELS Gasoline + Diesel + Ethanol + LNG/CNG + Electric

On-demand fuel delivery services, like Filld, replace the need to visit a gas station.

Fuel Delivery: Fad or Fortune? New on-demand services continue to emerge, offering convenience to time-starved consumers By Tammy Mastroberte

ith on-demand car service from Uber, on-demand food delivery from companies like DoorDash and Postmates, and even Amazon Prime Now, which delivers products in one hour, the concept of fuel delivery and on-demand fuel is not as far-fetched as it might have seemed a couple of years ago. “There is definitely a rise in the on-demand economy, and the sector is growing very fast,” Bruno Uzzan, co-founder and CEO of Purple, an on-demand gas delivery company in California, told Convenience Store News. “Over the past two years, technology improved and we can locate the exact location of where someone is. Plus, most people are trained to want to save time. With our service, we can save someone 10 to 15 minutes by not having to go to a gas station.” As of today, most of the fuel delivery services are popping up in California, while others are only covering small regions in their respective states. Purple, which started in Los Angeles, is now in San Diego and Orange County, Calif., and most recently

54 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

expanded to Seattle. The company, which reports close to 15,000 users, plans to be available in 15 cities by the end of this year, according to Uzzan. Another service, Mobile Fuelz Inc., offers fuel delivery in the Nashville, Tenn., area, with less than 100 clients so far. Then, there’s both Filld and WeFuel Inc., which operate primarily in California’s Silicon Valley and Bay area. However, WeFuel plans to expand nationwide within three years, according to CEO Ale Donzis, and Filld raised $3 million in seed funding for its plans to expand nationwide as well. Do convenience stores, which sell more than 80 percent of the gasoline purchased in the United States, need to worry about these companies becoming major competitors? John Eichberger, executive director of the Fuels Institute, believes “it could potentially be a threat to c-stores, but the market potential and share will remain small in the near future.” The Fuels Institute, a nonprofit research-oriented think tank, is a division of NACS, the Association for Convenience & Fuel Retailing.

Some believe the on-demand/fuel delivery customer is not the same as the typical c-store customer. Chris Aubuchon, CEO of Filld, initially thought area gas stations would be upset by the competition presented by such new companies, but after talking to different groups, he found that was not the case in his area. “A lot of owners find the c-store products are more their bread and butter, and the people who use our service are not the user who spends any time going into the store to buy chips, etc.,” Aubuchon pointed out. Still, some fuel delivery companies, such as WeFuel, are planning to add c-store product delivery to their service. WeFuel already has the technology in place to add c-store products in the future, Donzis reported. The company launched this January and in its first two weeks, had more than 700 customers signed up and 100 deliveries completed. “It opens up a discussion where c-stores can look at how they can capture that home delivery market,” Eichberger explained. “If you are looking at how to enhance the customer experience, this is a model worth evaluating. If you want to be a cutting-edge, leading retailer in the industry, you need to pay attention to all these models. Why is it successful? What elements appeal to customers? Are they our customers or not? And if not, how can we improve our services to make them so?” Making ThE DELivERy

The majority of fuel delivery services are app based, with customers downloading the app and creating an account. Purple asks for vehicle information, type of fuel, phone number, email address and credit card information from consumers. When the app starts, geolocation software can tell them exactly where the vehicle is and customers can choose delivery in less than an hour or less than three hours, Uzzan explained. “Customers can order either 10 or 15 gallons of gas, and a driver shows up. They can leave the gas cap unlocked, and it’s a five- to six-minute process,” he said. “We close the gas cap before we leave and send push notifications when the driver is en route, servicing the car and finished.” There is a $1 charge for those choosing 1-hour delivery. The three-hour delivery is free to customers at the moment, although the company plans to change that in the near future. Purple’s gas is supplied through partnerships with local gas stations, where the fuel delivery

“

If you are looking at how to enhance the customer experience, this is a model worth evaluating. If you want to be a cutting-edge, leading retailer in the industry, you need to pay attention to all these models.

”

— John Eichberger, Fuels Institute

company purchases it at wholesale prices. Also, anyone who places an order by 10:30 p.m. is guaranteed overnight delivery. “We have close to 15,000 users and are growing by 10 percent to 15 percent every week,” Uzzan shared. “Once someone starts using the app, there is a 60 percent chance they will come back and use it again, so the repeat sector is very high.” To keep growing, Purple plans to add some additional car services to its menu. The company is looking at options for electric cars in the future as well. At Filld, which delivered its first fuel order on April 27, 2015, the company also utilizes an app. Customers place a pin for the exact location of their vehicle and choose a time slot for delivery. They can see the current price per gallon and the delivery fee, which is $5 per fillup. After filling, the company locks the gas cap and washes the car windows as part of the service. Filld even has its own delivery trucks to transport the fuel.

The Players in Fuel Delivery NAME

AREA OF SERVICE

WEBSITE

Booster Fuels

Seattle

www.boosterfuels.com

Purple

Los Angeles, San Diego, www.purpledelivery.com Orange County, Seattle

Mobile Fuelz

Nashville, Tenn.

www.mobilefuelz.com

Filld

California

www.filld.co

WeFuel

California

www.wefuel.com

Yoshi

Nashville, Tenn.

www.startyoshi.com

WWW.CSNEWS.COM | MAY 2016 | Convenience Store News 55

MOTOR FUELS Gasoline + Diesel + Ethanol + LNG/CNG + Electric

“We fill to the click, so our nozzle on the truck is fully regulated and measured,” Aubuchon explained. “Our trucks have a meter and safety equipment on board.” Taking on-demand gas delivery up a notch, WeFuel guarantees delivery within a half hour. The average time is 16 minutes, said Donzis. The company uses its own fueling trucks, and plans on launching We Fuel Driveo technology this year that will make the process even more convenient and sophisticated, the CEO noted. “We are launching an Internet-enabled device that will transmit fuel tank level, identify a car’s location and automatically open the fuel latch of the car,” he said, explaining that people will sign up to receive the device by mail and then can plug it into their vehicle. “Customers won’t have to use the app anymore because our system will understand your consumption patterns and fuel tank level to service the car.” As more companies enter the space and this concept grows in popularity, regulatory issues may arise, Eichberger predicted. Those who have their own tanker trucks for delivery and can do commercial refueling

Founded in California, Filld plans to expand nationwide.

will likely be more sustainable than those who don’t. All companies need to make sure their dispenser nozzle meets vapor recovery requirements, the Fuels Institute head pointed out. “My guess is if they start gaining more traction, which is possible, the regulator will start taking interest in what they are doing,” Eichberger noted. CSn

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56 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

TECHNOLOGY Enterprise + POS + Digital + Payment Systems + Business Intelligence

Why Strategy Must Come First in Digital Marketing Only one in five c-store retailers have a sound, strategic framework in place By Don Longo

n effective digital marketing program starts with a sound, customer-based strategy. That’s one of the key findings of the Digital Marketing Initiative, a multipart research collaboration between Convenience Store News, sales and marketing firm Balvor LLC and industry consulting firm Brick Meets Click, which aims to better understand convenience store retailers’ views on and usage of marketing technologies, such as text messaging, mobile apps, geofencing, loyalty programs and other tools that enable more targeted communications than traditional television, radio, print and billboard advertising. “While this sounds straightforward, many retailers have employed digital media without truly understanding its impact on the customer and company,” said David Bishop, managing partner of Barrington, Ill.-based Balvor. The importance of having a sound strategy was highlighted in the initial Digital Marketing Initiative summary, published in

CSNews’ February 2016 issue. Only one in five c-store retailers surveyed (22 percent) have a sound, strategic framework guiding what the company and team members are doing. However, retailers have significantly stronger organizational alignment with category managers and vendor partners when a sound framework is present because it fosters collaboration, improves coordination and clarifies choices (see Fig. 1). Establishing lines of authority and assigning accountability are other foundational components of a framework. Our research reveals that retailers who have a sound framework are dramatically more likely to have well-developed roles and responsibilities (73 percent vs. 33 percent), as well as planning and budgeting processes (68 percent vs. 21 percent). These specific aspects help to minimize conflict and ensure the appropriate allocation of resources. Based on this work, Balvor developed the three C’s framework related to marketing communications (see Fig. 2). According to Bishop, it involves:

WWW.CSNEWS.COM | MAY 2016 | Convenience Store News 57

TECHNOLOGY

Enterprise + POS + Digital + Payment Systems + Business Intelligence

Digital Strategy

Fig. 1 Average Effectiveness Score

Source: Convenience Store News/Balvor/Brick Meets Click, 2015

Fig. 2

Marketing Communications Three C’s Framework

Situation ANALYSIS

Category PLANNING

Company

Products

Customers

Placement

Competition

Price Promotion

Source: Balvor’s Three C’s Marketing Communications Framework

Fig. 3

Digital Experience

Source: Convenience Store News/Balvor/Brick Meets Click, 2015

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• Learning about your customer, how they want to engage with you, and ways in which digital can enhance the overall experience; • Determining which capabilities to develop and/or strengthen based on their potential impact; and • Executing compelling content that delivers against the brand’s promise in ways that are valued by your customers. Where strategy is present, retailers are more likely to have stronger processes and/or a culture of leveraging and integrating customer insights (see Fig. 3). In addition, strategy enables retailers to focus on creating a stronger fit among various marketing activities and gives them better coordination across the organization (see Fig. 4). “Best-in-class retailers are integrating digital media activities more effectively into their broader marketing plan,” Bishop explained. One convenience store retailer acknowledged for being a leader in digital marketing is York, Pa.-based Rutter’s Farm Stores, which operates more than 60 stores. The framework for its digital marketing strategy started with the customer, according to Chief Customer Officer Derek Gaskins. “We identified key customer segments that drive the business, then looked at key product categories they buy, and then looked at how these customers preferred to receive information. Over time, we allowed them to select their own preferences — they can opt to receive texts or emails, etc.,” Gaskins told CSNews, emphasizing that it all starts with aligning product categories with the right customer segments. “One of the things I’m passionate about is clearing up the misperception that digital marketing should be treated differently than ‘marketing.’ Digital marketing is just the new media that reflects the times we are living in. It’s not limited to just young people,” Gaskins added. C-store retailers realize there’s a new media model that is different from traditional media. Whereas traditional media pushes one-way messages during steps along the path to purchase — awareness, interest, desire and buy — the digital media model involves a circular, two-way interaction — elevate, evaluate, expend and engage, according Bishop, who developed the terms for the digital communications model (see Fig. 5). “Retailers need to focus on the first two elements, elevate and evaluate, if they want to generate stronger results,” advised Bishop (see Fig. 6). Pump N Pantry, a 17-store chain based in Montrose,

TECHNOLOGY Enterprise + POS + Digital + Payment Systems + Business Intelligence

Fig. 4

Strategic Fit

Source: Convenience Store News/Balvor/Brick Meets Click, 2015

Fig. 5

Path to Purchase

Source: Convenience Store News/Balvor/Brick Meets Click, 2015

Fig. 6

Content Elements

Pa., is also relatively advanced for its size in using digital media. It utilizes text messaging, maintains a Facebook page and has a new mobile app. Wade Robinson, a 17-year veteran of Pump N Pantry who started as a store manager and now supervises both foodservice and marketing, talks glowingly of the support to grow digital media efforts from both his immediate supervisor and the chain’s owner. But he acknowledges that having a strategy framework in place was key to getting its initiatives off the ground. “Our corporate structure is very flat,” Robinson told CSNews. “Our vice president is very tech savvy and enjoys learning about technology. But to convince our owner to make the commitment to spend on digital marketing, we had to show him we have a plan in place.” A strong strategy also addresses how storelevel people will support the new digital programs. Robinson admits that “getting team members on board is one of our biggest challenges.” Similarly, Gaskins said Rutter’s is cognizant that these digital marketing initiatives can’t be solely owned by the marketing department. “We need cross-functional buy-in,” he noted. “The operations team may be more important than the marketing team.” Store personnel should be considered internal customers. Both Gaskins and Robinson agreed team members should be given the chance to test new technology offerings before they are introduced to shoppers. The most important thing to remember, according to Gaskins, is that marketing technology is always evolving. “The course changes along the way. Take mobile payment technology, for example. Three years ago, many of us thought it was going in a very different direction than where it is today. It’s all a journey.” CSN

BONUS CONTENT

Findings from the Digital Marketing Initiative, a multipart research collaboration between Convenience Store News, sales and marketing firm Balvor LLC and industry consulting firm Brick Meets Click, were recently presented at The University of Texas at Tyler’s Center for Retail Enterprises’ 2016 Retail Summit. David Bishop, managing partner of Balvor, was the featured speaker at the Feb. 23 event. A video of his presentation can be viewed on the Center for Retail Enterprises website at http://www.uttyler.edu/cbt/cre/retailsummit.php.

Source: Convenience Store News/Balvor/Brick Meets Click, 2015

60 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

FOODSERVICE Prepared Food + Hot, Cold, Frozen Dispensed Beverages

A Smell-Binding Proposition Nothing says “fresh” quite like the aroma of just-made bakery items in your store By Bob Phillips

akery items, whether fresh-baked or prepackaged, have long been a staple at convenience stores. Paired with coffee, they make for a quick, grab-and-go breakfast to eat in the car while driving to work or school, or perhaps a late-afternoon treat on the way home. Per store, fresh bakery (not prepackaged) accounted for nearly $10,000 in sales in 2014 ($9,690), according to the latest Convenience Store News Foodservice Study. This represented a 6.4-percent increase over 2013 figures. Overall for the total industry, the bakery category grew a healthy 8 percent in the convenience channel in 2014, to $1.45 billion in sales. Nielsen data also shows the strength of bakery at convenience stores. Bakery growth in the channel (UPC-coded items only) continued to outpace growth in all outlets combined over the 52-week period ended Feb. 20, 2016, as well as over the last four years. Snack cakes and fresh desserts (which account for nearly 90 percent of dollar share in

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the category) are driving this growth, with desserts up more than 12 percent in dollar share and 8 percent in unit share, cited Sarah Schmansky, director of Nielsen’s Perishables Group. “As the consumer landscape continues to evolve, the need for quick, on-the-go options are becoming more popular than ever before,” she said. “This is evident as convenient, snack-type items show significant growth over the last four years within the convenience channel: muffins are up 25 percent in volume, while pastries are up nearly 10 percent in volume over this four-year span.” And even though baked bread sales have fallen off (no volume growth over the same four-year period), soft breadsticks are resonating with consumers — often accompanying soup or salad purchases. “They are up 80 percent in volume over the last four years,” noted Schmansky. TO BakE OR NOT TO BakE?

For some, it may make sense to bake products fresh in-store. For others, the commissary route is more efficient. In order to decide which is right for your operation, there are some important considerations a convenience store operator must make. “The pros of using a commissary or outside vendors generally include reduced product consistency issues and lower labor and training expenses,” said Chuck Moyer, foodservice category supervisor at York, Pa.-based Rutter’s Farm Stores, operator of more than 60 c-stores. “The pros of in-store production include the ability to better manage production levels, the ability to restock when needed, and the perception of freshness from the aromas.” Margins are generally

FOODSERVICE Prepared Food + Hot, Cold, Frozen Dispensed Beverages

higher with in-store production as well, he added. be the best option for many retailers. According Holly Veale, foodservice product director for conveto Skeens, frozen bakery items are, in many cases, nience distributor McLane Co. Inc., called commissaries “fresher than fresh product” delivered from a commis“the assembly line of food.” The efficiencies inherent in sary. “That is because the frozen bakery products are the process often result in huge savings for the c-store baked, flash-frozen and as long as they remain frozen retailer, “and there is also more control over food qualthrough the distribution system, are less than an hour ity and safety because you have fewer people involved old when they are thawed at store level,” he noted. with the production of the products,” she said. “As much as we would all like our bakery However, she agreed with Moyer that one important thing a store will lose by going the cases and displays to be a destination area, commissary route is the fresh-baked aroma a large percentage of these purchases are advantage. “I think everyone in the industry will tell you there’s nothing like baking fresh still impulse buys. Thus, you must display cookies in the store to give you that feeling these offerings where every customer can of ‘fresh’ from a consumer perspective,” said Veale. “Baking a product there gives a store a encounter them.” ‘fresh’ halo.” — Chuck Moyer, Rutter’s Farm Stores Another important factor to consider: improved shelf life. “The majority of fresh bakery products have a one-day shelf “Commissary or ‘fresh’ delivered products are often life,” Veale pointed out. “You’re able to made 12 to 18 hours before they arrive at the store.” offer it to the consumer as soon as you Lynn Hochberg, director of product development bake it off rather than losing precious for Wawa Inc., operator of more than 700 convenience time in the distribution process.” stores, believes the decision to bake products on-premBesides the aforementioned labor ise or partner with a commissary depends on what you and training costs, there’s also the can execute the best. in-house production expenses to “It’s always about determining your best options,” consider — primarily the purshe explained. “Do you need variety? Do you just need chase or leasing of equipment, as to do one thing really well? And does it fit with the well as the maintenance costs of rest of your vision?” that equipment. “It represents a huge WhaT TO CaRRy? financial commitAnother important consideration is what to include in ment,” said Bill your bakery mix. After all, there’s cookies, brownies, Skeens, president muffins, doughnuts, pastries, pies, cupcakes, and the and CEO of list goes on and on. Vernon Hills, How does one develop and execute the proper Ill.-based Prairie menu strategy? City Bakery, a “A lot of it is a function of sales [combo deals] and supplier of bulk and holidays,” said Wawa’s Hochberg. “I don’t think we individually wrapped keep our ‘rotationals’ in for more than six weeks. The baked goods. “Very few foundation is based on the items that sell the most, retailers have the volso of course you’re not going to discontinue them. ume to make this propThere’s plenty of research and benchmarking available osition pay off. Even that can help you determine what is right for you. It in a large retail bakery, usually depends on how much space you have, what most of the product is fro- region you’re in, and what you do well.” zen, thaw-and-sell items.” Data supplied by market research firm IRI shows Rather than going the comthat while the overall bakery category (defined as fresh missary route, frozen bakery might bread and rolls) in the convenience channel was flat

64 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

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FOODSERVICE Prepared Food + Hot, Cold, Frozen Dispensed Beverages

in unit sales and down slightly (-0.3 percent) in dollar sales for the 52-week period ended March 20, 2016, certain segments posted healthy growth. Standouts included: doughnuts (up 12.2 percent in dollars and 8.1 percent in units), muffins (up 20.6 percent in dollars, 15.2 percent in units), and coffee cakes (up 20.6 percent in dollars, 7.5 percent in units). On the other end of the spectrum, bagels and bialys proved to be a drag on the category, down 17.4 percent in dollars and 15.9 percent in units. In today’s retail environment, many convenience store customers are looking for something beyond basic doughnuts and muffins. Prudent c-store operators are answering their call by offering more options on the upper end of the price-point spectrum. “While we continue to see demand for basic doughnuts — glazed and chocolate covered, particularly — because of the ‘Starbucks effect,’ we see our retailers looking for more premium bakery goods to pair with their coffee programs,” noted McLane’s Veale. McLane offers JCX by Java City, a turnkey, premium coffee program that provides c-stores with everything they need from soup to nuts — equipment to point-of-purchase materials. “It increases coffee sales for our retailers and by extension, they look for programs to increase their register rings,” Veale said. “So, premium muffins are a really hot item. So are the premium cake slices that you see at Starbucks — lemon loaf, banana nut bread, things like that.” Rutter’s Moyer echoes the continued popularity of doughnuts, going so far as to remark: “Doughnuts remain king in most c-stores.” However, he reported that Rutter’s has had great success with fresh cookies and

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muffins that are baked in-store every day. At RaceTrac Petroleum Inc., an Atlanta-based chain with more than 600 units throughout the South and Southeast, the goal is to generate excitement in the bakery case. “RaceTrac has focused on promoting high-quality LTOs [limitedtime offers], such as specialty doughnut flavors like pumpkin spice during the fall or apple crumb during the winter,” shared Hannah Griffith, RaceTrac’s category manager of bakery. “We also have a strong focus on the in-store execution of presentation and cleanliness to create a welcoming display.” TO BRaND OR NOT TO BRaND?

Yet another important consideration is whether to brand bakery items with your own private label or co-brand with entities that have established consumer equity, such as Krispy Kreme. At Wawa, the policy is not to co-brand, but according to Hochberg, there may be value in co-branding, particularly for retailers just dipping their toes into the bakery waters. “I think [co-branding] is a great way to get into the business, if that’s the route you want to take, because that puts the onus on someone who is already an expert,” she said. McLane’s Veale agrees that the decision to brand or co-brand your bakery products often depends on how far along the store/chain is in the foodservice continuum. “If an operator is just getting into foodservice and doesn’t have the consumers’ confidence in his or her foodservice abilities and programs, then that operator is better off co-branding — either through a franchisee or a national brand such as Krispy Kreme,” said Veale. On the other end of the spectrum are the folks who run well-established foodservice programs and have built up a recognized foodservice brand that resonates confidence with area consumers. “Wawa is an excellent example,” continued Veale, tipping her hat to the Pennsylvania-based chain. “It doesn’t matter what Wawa comes out with, the consumer

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is going to think ‘quality’ and ‘fresh,’ and they’re going to think ‘Wow, I can’t wait to try that.’” Ultimately, the decision to store brand or co-brand really depends on how much of a commitment a retailer is willing to make to his or her foodservice operation, including bakery. “The higher the level of commitment to the fresh foodservice business, the greater the likelihood that a retailer will have a successful line of private label branded products,” said Maurice P. Minno, board director of Maverik Inc. and principal of MPM Group, a consultancy. “That includes fresh foodservice private label branded products, fresh bakery products.” LOCaTION, LOCaTION, LOCaTION

Once you decide what to offer and whether or not the brand the product, a critical factor in maximizing the profitability of the bakery category is making sure it receives as much visibility as possible. An effective communication strategy should include signage in the store window, messaging at the pump and, perhaps most importantly, a well-thought-out and designed floor plan that gives customers easy access to the bakery products. “It’s definitely an impulse category, so making them highly visible is so important,” explained Hochberg, who recommends positioning bakery products adjacent to highvolume items or close to items that might make for ideal complementary purchases. But, she cautioned, that bakery products need their own autonomous space. “You need to devote time and energy to making sure the case looks good, so it might be a little more expensive,” she said. Indeed, it may be difficult to merge your fresh bakery with your

prepackaged bakery/snack items to create one large bakery area — even if that was a retailer’s intent — because the various cases and displays that are involved might not be compatible with each other. “As much as we would all like our bakery cases and displays to be a destination area, a large percentage of these purchases are still impulse buys,” acknowledged Rutter’s Moyer. “Thus, you must display these offerings where every customer can encounter them.” At RaceTrac, the bakery case is typically located in a space that is clearly visible to customers as soon as they walk through the door. “That’s so our guests are able to take advantage of the fresh product as soon as it arrives each day,” Griffith said. The idea is to make sure the bakery items are placed where there is a large amount of foot traffic. One strategy might be to place them near the coffee bar. “It encourages our guests to pair their daily coffee with a fresh-baked pastry,” continued Griffith. But placement doesn’t necessarily have to be next to the coffee counter, advised McLane’s Veale. “It should be strategically placed close to the checkout register,” she said. “Since bakery can be an impulse item, this enables suggestive selling by the cashier or clerk.” And c-store retailers must not forget to keep the product fresh in the evening. Especially if you’re pushing to increase bakery sales in the evening, you don’t want that case to look empty. “Nobody buys the last salad, nobody buys the last sandwich, and nobody is going to buy the last doughnut at 7 at night because of the perception that it’s not fresh,” said Veale. CSN

FOODSERVICE Category Trends + Insights from

TRENDSIGHTS

Enter the Grocerant Grocery stores heat up the foodservice competitive set

rocery stores compete in every food category, have a great reputation for variety and freshness, and are a frequent destination for nearly everyone. With all this to offer, supermarkets are raising the bar on their foodservice offerings. In-store dining and takeout of prepared foods from grocers has grown nearly 30 percent since 2008, and accounted for 2.4 billion foodservice visits and $10 billion of consumer spending in 2015, based on NPD’s ongoing foodservice market research.

By Bonnie Riggs Restaurant Industry Analyst, The NPD Group www.npd.com

GROCERy aTTRaCTS KEy RESTauRanT COnSumERS

More than 40 percent of the U.S. population purchases prepared foods from grocery stores. From a potential purchaser perspective, grocery is more than half the size of quick-service restaurants’ (QSRs) reach. The purchase rate at grocery lags traditional QSRs’ frequency by nearly 10 visits in a four-week period, yet the purchase rate is impressive given that grocery has far fewer units than QSRs.

heavy QSR buyers who visit grocery stores more than seven times a month. While only 9 percent of overall buyers, they account for 30 percent of the grocery visits for a ready-to-eat meal. IS GROCERy a TROjan HORSE?

Those who buy prepared foods at grocery are also above-average users of QSRs. In all cases, grocery prepared food buyers are among the heaviest QSR users.

Grocery vs. QSR Penetration & Frequency

The penetration of purchasing prepared food at a grocery store is three-fourths the size of QSRs, with a frequency that is one-third as often.

76.9%

% Penetration

44.3%

14.2

5.0 QSR

IT’S WHaT’S FOR DInnER

Grocery prepared foods peak at dinnertime. This meal occasion is tied to the types of prepared foods offered by grocers, and the convenience of doing other (stock up) shopping at the same time. The greatest vulnerability for traditional QSRs in competing with grocery stores is the evening meal and, to a lesser extent, lunch. As prepared foods gain acceptance and more grocers offer more alternatives to fast food, grocers’ competitive edge will improve. LOyaLTy: THE nExT STEp FOR GROCERy STORES

Prepared foods purchased at grocery stores are purchased less frequently than foods ordered from a QSR. The majority of buyers who make a prepared foods purchase at grocery do so only once or twice in a month. However, watch out for that solid core of

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Visits per Person

Grocery

10 months ending December 2015 Source: The NPD Group; QSR Plus Retail Market Monitor

Grocery vs. QSR Penetration by Daypart

Dinner is most important for grocery stores. The average person is using QSRs for more dayparts compared to grocery. Breakfast/A.M. Meal

Lunch

Dinner

Average Number of Dayparts per Person QSR = 2.5 Grocery = 1.7

61% 60% 44%

30% QSR

P.M. Snack

12%

24% 29% Grocery

10 months ending December 2015 Source: The NPD Group; QSR Plus Retail Market Monitor

11%

FOODSERVICE Category Trends + Insights from Grocery outlets are building their business on the most important and valuable QSR customers.

Grocery — Heavy/Light Buyer Importance

Most purchasers of prepared food at grocery are lighter buyers, purchasing once or twice in a month.

VaRIETy & HEaLTHy OpTIOnS

Visits when prepared foods are purchased from grocery stores are rated higher than traditional QSRs on variety and healthy options. These attributes are among the most important motivators of purchase and customer satisfaction. Grocery prepared foods are also rated higher on freshness and quality. Convenience store operators and restaurant operators have to meet their customers’ expectations of the food they offer in order to compete effectively. The advantages for convenience stores and traditional QSRs tend to be operational or price-oriented, with consumers citing speed of service, value/affordability, and convenient location. WHaT’S nExT

Grocers are aiming to cater to all dining needs, including hot, custom-prepared grilled meat, food bars, soups and sushi. A growing number of grocery stores

25.6%

Light Grocery Buyer (1 to 2 visits) Medium Grocery Buyer (3 to 6 visits) Heavy Grocery Buyer (7-plus visits)

57% 34.3% 8.7%

44.6% 29.8%

Grocery Buyers

Grocery Visits

10 months ending December 2015 Source: The NPD Group; QSR Plus Retail Market Monitor

provide comfortable, casual seating for in-store dining. Convenience stores and traditional QSRs are in a battle for market share. Increasingly, convenience stores and traditional QSRs need to include grocers as competition and monitor these competitors locally in order to track their inroads and market against the features that appeal to their customers. CSn

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EXPERT’SVIEW

Time Is Ripe for Refreshing Your Strategic Plan Change in the industry means organizations must be agile and flexible

ooking at the results over the past two years, our industry’s financial performance looks strong, with a bright future. We are seeing many organizations expand their offerings and services, work with additional customer analytics, and focus on improving the overall experience in the convenience channel. By Van Tarver, They are facing ever-changing The Tarver Group customer behaviors, demographics and generational movement, including significant changes in the workforce of the future. Manufacturers, distributors, equipment suppliers and service organizations continue to respond to the changing needs of the industry, including the redefining of the fresh category. All this change means it may be an excellent time to develop or refresh your strategic plan. This is the time for organizations to demonstrate their agility and flexibility. Here are some thoughts on how to develop or update your strategic plan. DEVELOPMENT PHASE

You start by answering two questions: What are the major disruptive market forces you will face in the coming years and how is your team prepared to address the challenges? Where does your current strategic plan take your company or store in the coming years vs. where the changing customer and workforce will be? The consumer is changing with demographic and generational shifts, wants and needs. Product and

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service offerings and new technology will provide the consumer more convenience options, even to the point of redefining the meaning of “convenience.” Effective organizations and individuals, regardless of their size (be it a single-store operator or a chain of 10,000 stores), need a set of goals and a footprint to reach those goals. This should be the groundwork for annual performance and improvement, as well as a long look and plan into the future. The strategic plan can be your vehicle to develop new pieces of your business model; to sustain and create new competitive advantages for the future. You should engage your associates and management team in the plan. Create the environment that it is everyone’s plan, and everyone’s responsibility to meet or exceed the goals. Then, communicate the goals for the company and how each associate’s role supports the plan. The most effective organizations work as one, regardless of their size, number of divisions or people. The strategic plan will set the vision, strategy, focus and priorities. In fact, companies with multiple divisions can prepare a building-block-type strategic plan that all works up to and supports the overall goals of the entire company. TIMING & QUESTIONS TO CONSIDER

This could be the ideal time of year to establish a schedule to create a refresh of your existing strategic plan. It is an opportunity to reevaluate your previous process and select the various planning team members to ensure you have key team members and

departments represented in this new process. You must create an environment within the planning committee that it is OK/safe to disagree with other members and leaders on various points, but you must also instill a spirit of “If I don’t agree, here’s what I would do,” with a very professional approach. It is the leadership’s role to develop and nurture the team; it is their opportunity to work on the business, not in the business. Do not allow the thinking, “We’re all too busy.” A very healthy engagement tool for the entire company and all associates would be to title the plan: “Strategic Plan 2016-2020: It’s Not My Responsibility. It’s Not Your Responsibility. It’s Everybody’s Responsibility.” The higher level of engagement you have with the team across all positions, regardless of the size of the organization, will improve the potential for success in meeting your goals and objectives. You cannot over-communicate plans for the future, opportunities for associates to be a part of a winning team, and saying thank you for their input, help, effort and support. As you establish dates, meetings and begin your process, it is important to be clear with the Planning Team what the goal is; what you want to accomplish. Clearly, with the ever-changing retail environment, accelerating successful speed of change will be critical to be an effective competitor in future years. Here are some questions to consider that may guide you through the strategy development/refresh process:

What are your strategic directives? Financial goals and metrics — Establish EBITDA, identical units, free cash flow and ROIC goals with benchmarks during the planning years. Sales and marketing plan — How will you grow your customer base and build existing customer loyalty, merchandise sales and gross profit dollars faster with an effective sales and marketing plan? Operating model — Does the best customer experience win? What are specifics of your experience plan? How valuable is curb appeal? How are you measuring customer satisfaction? How do you operate more efficiently and take cost out of your business model? What’s your organizational structure? Cost of goods? Technology improvements and changes? And who is reviewing this process? People plan — Execution of any plan is dependent on excellent people, well trained and engaged in the

plan. I think this is a great quote about the impact of our associates: “The customer experience will never exceed the associate experience,” said Greg Creed, CEO of Yum Brands. The key areas of the people plan are: shopping experience; training and education; associate engagement, including a development plan for everyone/every year; succession plans; personal growth opportunities; diversity; and communication. You also set people priorities and ask yourself, “What does success look like?” Identify the role each person plays, while ensuring that success or failure is everyone’s responsibility. Leadership sets the tone and environment; it all starts with the leader.

What are the key trends in the industry and how do you make them an advantage for growing your company? • Digital marketing — Mobile payments, social media and customer marketing. • Fuel — Is the last 24 months the new norm? Where’s the tipping point on volume and when will it take place? • Consolidation — Will the merger and acquisition activity of late continue? • Channel blurring — New convenience services • Health and healthy eating — Are artificial ingredients going away? What about the importance of regional/local sourcing? • Consumer trends — Analytics • Operating expenses — Labor market, wages and health care costs • Tobacco • Generational and demographic changes • Government regulations

How does the team sustain existing competitive advantages and build new ones that will grow the company and the value of the company? • What should the model be? • How do you chase the customer, meet their new and changing expectations? Invest in the things that matter to customers, change their behaviors and avoid emotional decisions on investments. • How can we take advantage

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EXPERT’SVIEW

of emerging convenience service opportunities? Examples: home delivery, multicultural demographic changes, click-and-collect, customized offerings, small basket, alcohol in fast food/change existing restrictive laws, food trucks, mobile online shopping, and logistics models.

What changes do you have to make to meet your financial goals? How committed are you and your management team to making these changes? • Serve the communities where you operate. • Live your values. • Be a responsible retailer of age-restricted products. • Share your value story. • Be a leader in sustainable practices. If it’s good for the environment, then it’s good for your bottom line.

ACTION PLAN DEVELOPMENT

Once the team has decided on goals, then the various departments should develop action plans to bridge gaps with current trends. Responsible associates should develop timelines/benchmarks and drive the business to meeting and attaining the objectives. Develop a go-and-see environment within the organization at all levels; it is the best way to understand the current status and opportunities to improve your business. Ask associates at all levels what your organization can do to improve your business, products, value, customer experience, and experience for the associate. You cannot over-ask questions of associates, nor share your appreciation for attainment of results. I think each organization will need to determine the most effective approach to developing the planning process to build or refresh their strategic plan. I have found a third-party coordinator is a very effective tool to support the team, prepare for the meeting, coordinate updates, and benchmark reviews with an objective eye.

• Review benchmarks, progress and results. The management team evaluates the progress on the plan and determines adjustments to the action plans that need to be made to reach the goals and timelines in the plan. • Monitor customer analytics, behaviors, customer and associate surveys, industry trends and new business opportunities during the planning cycle and update the action plans accordingly. • Communicate the progress, accomplishments and plan revisions during the planning cycle with the management team and associates at all levels. Continue to ask your team for input on the plan and performance of the company. • Ensure that leaders, directors and managers continue the process of capability-building for every team member during the entire process. Build that culture into your organization. It’s an investment that will have exceptionally high ROIC. Kirby Martzall, president of KL Martzall in Lancaster, Pa., worked with me for years to develop this process. • Celebrate the success along the journey with your team. It is an important opportunity to say thank you in a small, simple way that will pay huge dividends. • Schedule annual planning meetings. OUTCOME

Lastly, do an objective review of management’s current perspective and thought process. Ask: Does it deliver the results and meet our financial goals, and improve the value of the company? Is it the groundwork for building a strong future for the company? Does it bring everyone together to work as one? CSN

EXECUTION OF THE PLAN

This phase of the strategic plan is critical to attaining your goals and objectives. First, communicate the goals and plans throughout the organization. It is important for the team at all levels to understand what the goals and plans are for the company, as well as their role and responsibilities in the plan. Next, here are six steps to implementing your action plans:

76 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

Van Tarver is president of The Tarver Group and serves as a consultant, advisor and keynote speaker for the convenience store, retail gasoline and fuel industry, as well as manufacturing, wholesale and consumer product goods companies. For 17 years, he served The Kroger Co. as corporate vice president/division president over all five divisions of Kroger’s convenience stores (approximately 800 stores, 725 with fuel), including company-operated and franchised divisions, the Turkey Hill Dairy and Kroger’s Supermarket Petroleum Group. Prior to that, he was franchise manager over 350 ARCO retail units. Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.

EXPERT’SVIEW

An Updated Outlook for 2016 M&A Marketplace Recently announced transactions have various market implications

s 2015 came to a close, the merger and acquisition (M&A) marketplace within the convenience and gas station (C&G) industry didn’t show any real signs By John C. Flippen Jr. & John Sartory, of slowing down. As Petroleum Capital and Real Estate LLC expected by most market watchers, the first quarter of 2016 began with the disclosure that numerous new acquisitions have already been completed or are in the pipeline. Listed below is an overview of some of the recently announced transactions and the various market implications associated with these acquisitions: • Petroleum Marketing Group Inc., a large and privately held petroleum distributor, acquired 223 Gulf, Exxon and Mobil branded dealer-operated gasoline service station and convenience store sites formerly owned by Gulf Oil LP. The 223 retail sites are located in the Northeast and MidAtlantic sections of the United States, extending from Pennsylvania to Maine. Most of the locations are situated in the greater metropolitan

areas of Boston and New York City/Long Island. Petroleum Marketing Group is a Shell, Exxon, BP, Mobil, Sunoco, Gulf, Crown and CITGO branded distributor that is primarily located in the Mid-Atlantic and Northeast regions of the U.S. and sells more than 1 billion gallons of motor fuel products on an annual basis. • An affiliated company of Brookwood Financial Partners LLC, a private-equity (PE) investment firm founded in 1993 with more than $2.2 billion in assets under management, announced it reached an agreement to purchase 24 convenience store sites in Iowa and Nebraska from Kum & Go LC. The acquisition by an affiliated entity, BW Gas and Convenience Holdings LLC, was the firm’s second acquisition in the Midwest section of the U.S. in less than a year. The private-equity firm has publicly announced plans to acquire between 600 and 1,000 convenience stores over the next several years after studying various investment opportunities in the industry for well over a year. Brookwood Financial Partners is adding its name to the list of PE companies to recently decide that the C&G industry is fertile ground to acquire retail assets as the industry goes through this period of rapid consolidation.

WWW.CSNEWS.COM | MAY 2016 | Convenience Store News 77

EXPERT’SVIEW • GPM Investments LLC, a Richmond, Va.-based retailer with more than 750 company- or dealeroperated convenience stores under management, announced it reached an agreement to purchase 21 convenience stores in the Midwest from GasMart USA as part of a court-ordered auction, and 42 Apple Market convenience stores and 25 dealer-operated sites from Durham, N.C.-based Fuel USA LLC. GPM Investments is also one of the larger privately owned companies in the C&G industry. • TravelCenters of America LLC continued its buying spree. On March 30, the company purchased 17 convenience stores in Wisconsin from Quality State Oil Co. Inc. The sites were quickly added to its Minit Mart network. Prior to closing on this acquisition, TravelCenters of America acquired an additional nine sites in two smaller transactions. The company’s aggressive acquisition activities since 2013 have allowed it to quickly acquire 200-plus locations that are situated principally in 11 Midwest states. Shortly before closing on this latest acquisition, TravelCenters of America’s CEO Thomas O’Brien mentioned during the company’s 2015 fourth-quarter earnings conference call that while the firm was reviewing many acquisition opportunities, the multiples sought by sellers were “out of whack” in some instances and the company would not overpay for future acquisitions. This is certainly a theme that has been echoed more recently by many CEOs when asked to comment on the current state of the M&A marketplace. Whether or not this “jawboning” by some of the more active buyers will have any real impact on marketplace multiples is yet to be determined. Seller expectations remain robust, to say the least. • Imperial Oil Ltd. announced in March it reached an agreement to sell 279 retail service station and convenience store sites in Ontario and Quebec to Alimentation Couche-Tard Inc. for approximately $1.7 billion. The remaining portion of Imperial

78 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

Oil’s Canadian network of 497 Esso branded sites was split between four other bidders: 7-Eleven Inc., Parkland Fuel Corp., Harnois Groupe Petrolier, and Wilson Fuel Co. Ltd. This latest mega deal in North America by Couche-Tard only reinforced a recent comment by the company’s CEO Brian Hannasch that stressed the role M&A will play in Couche-Tard’s long-term global growth plans. He noted during the same earnings conference call that consolidation in the industry was here to stay due to the never-ending market pressures, created not only by nontraditional retailers such as Kroger and Costco, but also from larger retailers such as Couche-Tard that are building bigger-format stores that have the ability to generate much higher monthly sale volumes than traditional sites. Since Couche-Tard’s stock price has doubled over the past five years, this is certainly an indication that the capital markets continue to be bullish on the company’s long-term growth plans and economic future. While the first quarter of 2016 started where 2015 ended, there are certainly signs the growth in acquisition multiples may have peaked last year, as we mentioned in our last article. If the first quarter of 2016 is a leading indicator, the mix or makeup of the most active consolidators going forward may also be changing and getting smaller. So far in 2016, the largest master limited partnerships (MLPs) have not been as active in the M&A marketplace. Global Partners LP actually announced in February the company planned to raise approximately $100 million by selling 125 retail sites by the end of this year. There are several economic forces we believe will continue to reshape the M&A marketplace in the year ahead and have the biggest impact on the mix of potential bidders going forward. Despite the recent uptick in crude oil prices, the downturn in the exploration and production segment of the petroleum industry continues. As a result, 45 U.S. oil and gas companies have already filed for bankruptcy since the beginning of 2015. The less-thanpositive and uncertain sentiment about the financial health of the overall petroleum industry has negatively impacted the unit prices of midstream and downstream master limited partnerships such as CrossAmerica Partners LP, Global Partners LP, Sunoco LP, Delek Logistics Partners LP and MPLX LP (units are the MLP equivalent of stock shares). The unit prices for

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EXPERT’SVIEW all of these MLPs are off their peak values by approximately 30 percent to 60 percent. Most importantly, MLPs have been some of the most active and aggressive bidders and acquirers of C&G assets over the past several years. This negative outlook was only further reinforced when Global Partners announced in January that the company would cut its distribution to unitholders for the first time since its 2005 IPO filing. This announcement seemed to shatter the assumption that most of the midstream and downstream MLPs may be somewhat immune from the financial carnage that has occurred in the upstream portion of the industry. The overall reduction in MLP unit prices across this segment of the industry has increased the overall cost of capital for the entire group and created a much more challenging environment for raising new capital. Since MLPs pay out a majority of their cash flow in

Since most experts in the industry believe MLPs will be less active and aggressive in the M&A marketplace in 2016, this should provide a golden opportunity for additional privately held petroleum distributors with superior financial resources and flexibility to once again compete for many of the more attractive acquisition opportunities. the form of distributions to unitholders, the increased cost of equity will certainly make it harder for them to grow. This situation should cause this group of bidders to be more strategic or discriminating in the type and geographic location of assets they will pursue in the future and, most likely, conservative in the multiples and transactional terms the companies are willing to offer to sellers. In addition, the recent rumors reported by Bloomberg News that Energy Transfer Equity LP has held private conversations concerning the possibility of selling its general partnership interest in Sunoco LP, and the ongoing activist shareholder interest in shaking up the management and/or possibly taking control of CST Brands Inc. and CrossAmerica Partners LP has only further muddied the waters for this group of previously

80 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

active consolidators. Since most experts in the industry believe MLPs will be less active and aggressive in the M&A marketplace in 2016, this should provide a golden opportunity for additional privately held petroleum distributors with superior financial resources and flexibility to once again compete for many of the more attractive acquisition opportunities. Over the past several years, many of these potential bidders have watched from the sidelines as MLPs, 7-Eleven, Couche-Tard, TravelCenters of America and private equity firms have dominated the M&A market. Based on our firm’s involvement in Petroleum Marketing Group’s acquisition of Gulf Oil LP’s dealer network, and other ongoing acquisition opportunities, privately held companies are certainly in a better position to compete in the M&A arena than they have been in several years. In today’s world of hyperactive central bankers, no article on M&A could end without mentioning the latest comments from the U.S. Federal Reserve and the implications for market interest rates in the United States. Historically low interest rates continue to be a major market catalyst that helps to fuel the M&A activity in the C&G industry. Federal Reserve Chairwoman Janet Yellen continues to state risks posed by global economic and financial uncertainty are too great to justify a quicker movement toward normalizing market interest rates in the United States. The Fed simply has no appetite to materially raise market rates and in their March meeting, the Federal Open Market Committee indicated they now plan to dial back their previously projected number of rate increases in 2016. This was certainly music to the ears of the major consolidators in the industry. CSN John C. Flippen Jr. and John Sartory are managing directors of Petroleum Capital and Real Estate LLC (www.PetroCapRE.com). The firm provides buy-side acquisition, refinancing, capital restructuring and select sell-side advisory services in the convenience and gas station industry. PetroCapRE has assisted clients in completing transactions valued at more than $2 billion. They can be reached at jflippen@PetroCapRE.com and jsartory@ PetroCapRE.com. Editor’s note: The opinions expressed in this column are the authors’ and do not necessarily reflect the views of Convenience Store News.

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OUTABOUT &

Spotlighting major industry events

Candy With Integrity NCA State of the Industry Conference addresses the need for transparency By Angela Hanson

ransparency and straightforward information are more important than ever to U.S. consumers, and the candy products they purchase and consume are no exception. The most popular candy brands may have built themselves on decades of sentimentality, but the market is changing along with the nation’s demographics. “The bigger group will consume the most confectionery products,” Ken Gronbach, a futurist and demographic expert, told attendees of the National Confectioners Association’s (NCA) 2016 State of the National Industry Conference, which Confectioners brings together retailers, supAssociation State pliers and members of the trade of the Industry organization annually. Evolving Conference demographics will affect things Feb. 28-March 2, 2016 like popular flavors, as well as Miami change how suppliers advertise their brands to consumers. Members of Generation Y, or millennials, hold green, humanitarian values and they believe in fairness, transparency and integrity, Gronbach explained. This generation’s mothers are very sugar-conscious and care about health. However, they aren’t against treats. In coming years, Latinos also will have a significant influence on the country. The influence of AfricanAmericans will likewise increase as they advance socioeconomically. Currently, 37 percent of the U.S. market is minorities — something marketers cannot overlook. The major candy suppliers have begun increasing their level of transparency through actions such as “Treat Right,” the NCA’s voluntary system for front-of-pack labeling that clearly displays

82 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

calorie counts. The initiative first launched in 2013. But this is just the beginning for the category; numerous suppliers are now taking steps to more easily provide consumers with the nutrition and ingredient information they seek. The NCA itself even launched a “Your Candy, Your Questions” portal on its website, candyusa.com, where consumers can learn about the ingredients used in candy, such as sugar and coloring. Transparency is no longer an option; it’s a basic consumer expectation, pointed out John Downs, president and CEO of the NCA, which represents the $35-billion confectionery industry. “Candy is an honest, affordable, transparent treat. We are providing consumers with the information, options and support they need to make the choices that are right for them,” added Christopher Gindlesperger, vice president of public affairs and communications for the NCA. “Our front-of-pack labeling program puts calorie information right at consumers’ fingertips. We make a wide variety of options — available in packages ranging from fun size to share size — that can add a little fun or enjoyment to any occasion.” NCA research shows the average U.S. consumer eats confectionery items twice a week, and the category makes up less than 2 percent of their caloric intake. While obesity remains a major societal concern, rather than abolish sugar from their diet entirely, consumers recognize candy is — as the NCA positions it — always a treat, with the emphasis on treat. “There is a war on sugar, but there isn’t a war on candy,” Downs said. CSN

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HOTPRODUCTS Special Advertising Section

Snacks

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HOTPRODUCTS Special Advertising Section

Beverages

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HOTPRODUCTS Special Advertising Section

Gourmet Pet Treats

Outdoor Merchandising Services

Pizza Equipment

FOR ALL YOUR NEW PRODUCTS AND SERVICES ADVERTISE IN

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HOT PRODUCTS

CALL

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HOTPRODUCTS ATMs

Special Advertising Section

General Merchandise

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CLASSIFIED AIR VACS

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CLASSIFIED Credit Card Processing / Merchant Services

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CLASSIFIED Air Vacs

ATMs

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CLASSIFIED Help Wanted

Pre-Paid/Cellular Products

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CLASSIFIED ATMs

Sunglasses

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HOT PRODUCTS

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92 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

Frozen Drinks

CLASSIFIED Plastics

C-Store Recruiters

Scales

General Merchandise

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CLASSIFIED Financial Services

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C-Store Recruiters

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96 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

HOTPRODUCTS Special Advertising Section

ADINDEX Advance Pierre ..........................................69 ....................................www.advancepierre.com Altria Group Distribution Company ........2-3 ..................................www.insightsc3m.com Anheuser-Busch........................................100 ..................................www.anheuser-busch.com

570 Lake Cook Road, Suite 310, Deerfield IL 60015 Phone (224) 632-8200 Fax (224) 632-8266 www.stagnitobusinessinformation.com

BakeNJoy ....................................................63 ....................................www.bakenjoy.com Bazooka Candy Brands.............................47 ....................................www.crunchkinscandy.com Better4UFoods ...........................................52 ....................................alotker@better4ufoods.com Cash Depot.................................................56 ....................................www.cdlatm.com Del Monte Fresh Produce NA Inc. ...........41 ....................................www.freshdelmonte.com

Harry Stagnito President and CEO 224-632-8217 hstagnito@stagnitomail.com

Follett ..........................................................21 ....................................www.horizoneliteice.com Forte Product Solutions ............................31 ....................................www.forteproductions.com General Mills..............................................17.....................................www.generalmillsconvenience.com Heineken ....................................................19,43,73 .........................www.enjoyheinekenresponsibly.com Hershey ......................................................7 ......................................www.hersheyconvenience.com Home Market Foods ..................................38-39..............................www.rollerbites.com Hunt Brothers Pizza ..................................99 ....................................www.huntbrotherspizza.com Inline Plastics Corp. ..................................30 ....................................www.inlinesplastics.com Iowa Rotocaster.........................................33 ....................................www.irpinc.com J&J Snack Foods ........................................65 ....................................www.jjsnackfoodservice.com JTM Foods, LLC ..........................................67 ....................................www.jtmfoods@jtmfoods.net

Kollin Stagnito Chief Operating Officer 224-632-8226 kollinstagnito@stagnitomail.com Ned Bardic Senior Vice President/Partner 224-632-8244 nbardic@stagnitomail.com Korry Stagnito Chief Brand Officer 224-632-8171 kstagnito@stagnitomail.com

KraftHeinz//Crystal Light .........................37 ....................................www.kraftfoodservice.com Krispy Krunchy Chicken...........................59,71 ...............................800.290.6097 KT&G...........................................................27,29 ..............................877.580.5506 Living Essentials .......................................15 ....................................www.5hourenergy.com

Ron Lowy Group Brand Director 330-840-9557 rlowy@stagnitomail.com

Logic Technologies ...................................10-11 ..............................www.logicecig.com Mars/Wrigley .............................................23 ....................................www.TZV@wrigley.com McLane Co. ................................................15 ....................................www.mclaneco.com MTI/Autofry ...............................................68 ....................................www.mtiproducts.com

Michael Hatherill Business Development Manager 201-855-7610 mhatherhill@stagnitomail.com

Papa Johns .................................................72 ....................................www.papajohns.com Paytronix ....................................................79 ....................................www.paytronix.com R.J. Reynolds Tobacco Company ............9 ......................................www.engagetradepartners.com Save-A-Lot .................................................53 ....................................www.save-a-lot.com

Steve Lichtenstein Vice President/Southeast Regional Manager 201-855-7613 slichtenstein@stagnitomail.com

Society Insurance......................................83 Regional ...................www.societyinsurance.com Subway.......................................................49 ....................................www.subway.com Tillamook Country Smoker ......................81 ....................................www.tcsjerky.com Tyson ..........................................................35,45 ..............................www.tysonconvenience.com

Terry Kanganis Account Executive & Classified Advertising 201-855-7615 tkanganis@stagnitomail.com

U.S. Smokeless Tobacco ...........................3 Universal Merchant...................................Outsert ............................www.nynab.com Vilore ..........................................................CV1,61.............................www.cstore@vilore.com White Castle ..............................................51 ....................................ordings@whitecastle.com

Rachel McGaffigan Northeast Regional Sales Manager 508-385-2524 rmcgaffgan@stagnitomail.com

The Wonderful Company .........................5 ......................................www.wonderfulcitrus.com

Roz Gilman Ad Manager 314-403-4753 rgilman@stagnitomail.com

Stagnito Business Information U.S. brands: Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by Stagnito Business Information, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright ÂŠ 2016 by Stagnito Business Information. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

WWW.CSNEWS.COM | MAY 2016 WWW.CSNEWS.COM | JANUARY 2014 || Convenience Convenience Store Store News News 97 15

GETTINGTOTHECORE

The Intersection of Foodservice & Snacking What, when and why c-store shoppers reach for a foodservice snack

nacking is an essential factor in a convenience store’s business. However, snacking goes beyond packaged snacks, whether salty or sweet. Foodservice snacks are drawing consumers looking for something “fresh.” A recent survey by Carbonview Research, sister company of Convenience Store News, found c-store shoppers are adding foodservice snacks — from fresh-cut fruit and vegetables, to fresh bakery items, to hot appetizer-type foods — to their baskets around the clock.

Which of the following do you prefer to purchase at c-stores? I prefer fresh snacks I prefer prepackaged snacks

Frequent and fresh: 54% of c-store shoppers who purchase foodservice two to three times a week favor fresh snacks over prepackaged ones.

How often do you purcHase foodservice 2-3 times per week or more once a week or Less

totaL

51.9% 48.1

53.5% 46.5

51.0% 49.0

Base: 501 c-store shoppers

What time of day are you most likely to purchase foodservice snacks? 6 a.m.-8:59 a.m. 9 a.m.-10:59 a.m. 11 a.m.-1:59 p.m. 2 p.m.-3:59 p.m. 4 p.m.-6:59 p.m. 7 p.m.-10 p.m. After 10 p.m.

totaL

by aGe: 18-24

25-34

35-44

45-54

55-64

65+

14.6% 11.2 19.0 20.6 20.2 10.6 4.0

4.8% 4.8 14.5 25.3 20.5 25.3 4.8

11.1% 12.1 26.3 17.2 21.2 9.1 3.0

18.4% 11.2 18.4 19.4 23.5 6.1 3.1

16.7% 8.3 15.6 22.9 22.9 9.4 4.2

21.3% 13.8 13.8 22.5 15.0 7.5 6.3

15.6% 22.2 28.9 13.3 13.3 4.4 2.2

From morning to night, c-store shoppers have a hankering for foodservice snacks. However, those aged 18 to 24 tend to be your night snackers.

Base: 501 c-store shoppers

Which of the following have you purchased at a convenience store in the past month?

Want to collaborate and share expertise with your peers? The Council of Retail Experts (CORE) is an exclusive network of convenience store retail leaders who do just that. For more information on how to join CORE, please visit www.cvcoreinsights.com.

Fresh-cut fruit or vegetables Hot foodservice snacks (roller grill, soft pretzels, mozzarella sticks, etc.) Cold foodservice snacks (parfaits, cheese & meat snack packs, etc.) Fresh bakery products (doughnuts, muffins, cookies made on-site) Multiple responses accepted Base: 501 c-store shoppers

98 Convenience Store News | MAY 2016 | WWW.CSNEWS.COM

Gender femaLe

totaL

maLe

15.6%

15.5%

15.6%

43.7%

47.0%

40.1%

24.0%

23.9%

24.1%

44.3%

48.5%

39.7%

Fresh baked goods and hot foodservice snacks are most popular with both genders, but slightly stronger with male c-store shoppers.

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Editor’s Note

A New Paradigm

Snacking is not a daypart, nor is it a category — but it is a huge opportunity

onsumers’ tendency to replace regular, full meals with on-the-go snacking is nothing but good news for the convenience retail channel. Snacks, including salty snacks like potato chips and pretzels and alternative snacks like jerky and nutrition bars, are showing strong growth in the c-store industry, and appear headed to even faster sales growth this year. According to the recent Convenience Store News Retailer Forecast Study (published in our January 2016 issue), c-store operators expect the continued popularity of snacking to contribute to the growth of salty snack sales this year, with three-quarters of chain retailers saying they believe their sales in this category will increase in 2016. Meanwhile, the meat snacks segment is growing even faster, especially among healthconscious millennials.

Snacks exist outside the boundaries of meals in a more fluid space. Snacks can be anywhere and anything, and are playing an increasingly diverse role in people’s food lives and food culture. The coming year is likely to bring even more variety and innovation to snacking. Convenience store retailers know the snack business continues to change at a rapid pace, presenting them with numerous tough decisions related to new product introductions and category management. The best way for retailers to grow their snack

sales is by utilizing category management strategies, according to Steve Montgomery, president of b2b Solutions, who along with Tim Powell, vice president of consulting at Q1 Consulting Services, served as presenter for a special CSNews For comments, please contact webcast entitled “Anytime Don Longo, Editorial Director, at (201) 855-7606 or and On-the-Go: The Rise of dlongo@stagnitomail.com. Portable Snacking.” Montgomery broke it down into four easy steps: • Step 1: Retailer strategy; define the rules and principles for the way your store operates. • Step 2: Develop your category plans. • Step 3: Implement category plans at the store level. • Step 4: Review category performance, as this provides checks and balances to ensure that targets and objectives are being met. The “Anytime and On-the-Go: The Rise of Portable Snacking” webcast was sponsored by Jack Link’s and Ball Park Flame Grilled Jerky. A replay is available at http://tinyurl.com/gmm8lco. Snacking isn’t just a hot product category. It really represents a new consumer paradigm. A recent Hartman Group study attempted to define the differences between meals and snacking, and noted that snacking today reflects a more flexible approach to eating by consumers. For example, Hartman said meals have culturally defined rules and have traditionally helped structure a person’s day — around breakfast, lunch and dinner. Snacks, on the hand, exist outside the boundaries of meals in a more fluid space. Snacks can be anywhere and anything, and are playing an increasingly diverse role in people’s food lives and food culture. Snacking is not a daypart, nor is it a category — but it is a huge opportunity. CSN

WWW.CSNEWS.COM | Guide to Snacking 3

DATA

Foodservice Snacks

Which of the following have you purchased at a convenience store in the past month? Fresh bakery products (doughnuts, muffins, etc., made onsite)

44.3%

Hot foodservice snacks (roller grill, chicken strips, mozzarella sticks, etc.)

43.7%

Cold foodservice snacks (parfaits, cheese & meat snack packs, etc.)

24.0%

Fresh-cut fruit or vegetables

15.6%

Fresh bakery products made onsite clearly present an opportunity for c-stores to bring in the dough.

Multiple responses accepted Base: 501 c-store foodservice shoppers Source: Convenience Store News Market Research, 2016

How often do you purchase foodservice snacks from a convenience store? Every day 2-3 times a week Once a week 2-3 times per month Once a month Less often than once a month

Todayâ&#x20AC;&#x2122;s consumers are very open to making c-store foodservice items a regular part of their snacking routine.

total

By aGe: 18-24

25-34

35-44

45-54

55-64

65+

4.8% 32.5 25.3 16.2 10.4 10.8

2.4% 36.1 32.5 10.8 13.3 4.8

13.1% 34.3 26.3 11.1 8.1 7.1

6.1% 29.6 20.4 21.4 13.3 9.2

3.1% 34.4 27.1 10.4 10.4 14.6

0.0% 38.8 17.5 23.8 8.8 11.3

0.0% 13.3 31.1 24.4 6.7 24.4

Base: 501 c-store foodservice shoppers Source: Convenience Store News Market Research, 2016

Which of the following c-store beverages have you purchased in the past month as a snack (not as part of a meal)? total

Hot beverage (coffee, tea, hot chocolate, etc.) Cold fountain drink Frozen/slushy drink Smoothie None of the above

How often do you purcHase foodservice 2-3 times per once a By aGe: week or more week or less 18-24

59.9% 58.7% 38.9% 18.8% 7.4%

67.9% 73.3% 47.1% 24.6% 2.1%

55.1% 50.0% 34.1% 15.3% 10.5%

45.8% 54.2% 47.0% 27.7% 7.2%

25-34

35-44

45-54

55-64

65+

63.6% 62.6% 54.5% 27.3% 3.0%

63.3% 63.3% 40.8% 16.3% 6.1%

58.3% 59.4% 32.3% 17.7% 9.4%

65.0% 57.5% 30.0% 8.8% 6.3%

64.4% 48.9% 15.6% 8.9% 17.8%

Multiple responses accepted Base: 501 c-store foodservice shoppers Source: Convenience Store News Market Research, 2016

Thinking about your last foodservice snack purchase, which best describes the reason you made this purchase? total

C-store customers turn to foodservice snacks mostly to satisfy a craving or to indulge/treat themselves.

To satisfy a craving I had 37.9% To indulge or treat myself 29.3 To hold me over until my next meal 25.3 It was an impulse buy 7.4 Base: 501 c-store foodservice shoppers Source: Convenience Store News Market Research, 2016

4 Guide to Snacking | WWW.CSNEWS.COM

By Gender: male

34.1% 33.0 27.7 5.3

Fountain drinks and hot beverages make for refreshing snacks, with nearly 60 percent of c-store shoppers buying them separately from a meal.

female

42.2% 25.3 22.8 9.7

Foodservice Snacks

Making It Easy

Rutter’s want customers to be able to find what they want, as fast as they want By Angela Hanson

hen customers enter a Rutter’s Farm Stores location in search of a foodservice snack item, the York, Pa.-based convenience store chain wants to make the process easy for these busy, hungry people. To achieve this, it keeps a number of key factors in mind. One such factor is “the ease of portability, the ease of eating it,” Ryan Krebs, director of foodservice for Rutter’s, told Convenience Store News. The hot graband-go case is immediately visible when customers enter the store, reinforcing the fact that people who are in a hurry can easily take what they want and be at the cash register within seconds. Price is another key consideration. “People think of snacks as a quicker, less-expensive belly filler in between wherever they are rushing off to,” Krebs noted.

Rutter’s open kitchen allows customers to watch their snacks being prepared.

Just as evident to all customers upon walking into a Rutter’s store is the chain’s commitment to transparency and freshness. Past the cases of ready-made food are touchscreen order kiosks, which face Rutter’s open kitchen. Customers can watch their snacks being prepared and know that even cold-case products are made in-store, not brought in from a commissary. “We believe in a very open-kitchen concept,” Krebs explained. “The whole image behind Rutter’s is fresh and made to order.” Rutter’s also regularly takes time to ensure it is

6 Guide to Snacking | WWW.CSNEWS.COM

“on trend” in terms of products and flavor profiles by staying up-to-date with market research, snacking case studies and focusing on the specific needs of its own customer base. This led to the rollout of funnel cake fries, which turned out to be a “huge success” in Pennsylvania Dutch country. Still, it’s a challenge for the chain to provide as much snacking variety as possible. “You have so many different people that walk into a convenience store,” Krebs noted. One way the company has approached this is to experiment with the different ways a single ingredient can be made into various products — such as a chicken breast being used in a sandwich, quesadilla and chicken parmesan dish. Letting consumers customize their foodservice snacks is another way to offer more variety with the same ingredients. Rutter’s has experimented with limited-time offerings, but ultimately opted not to expand its snack variety by cycling items on and off the menu. “If they really like it, it’s hard to say you can’t have it anymore,” Krebs said. “I have a really hard time pulling it out from under my customer base.” The exception is its seasonal items, which tend to be fountain drinks and slushies. As c-stores increasingly compete against quick-service restaurants (QSRs) and other foodservice outlets, value has become a chief part of Rutter’s success as a foodservice snacking destination. More specifically, its focus on quality plus value, according to Krebs. “You can get quality food at a reasonable price just as quickly, or quicker, than sitting in line at a QSR,” he said, adding that consumers’ increased focus on healthier eating habits has also been a boon. “We can provide that and variety at every meal/daypart.” Ultimately, Rutter’s understands what its strengths are and what it wants to be, something Krebs advises all c-store operators to determine when developing a foodservice snack program. “What’s your brand image? Is it fresh? Is it fast? Is it a restaurant or is it a gas station?” he said. “Whatever you want that image to be, make sure that you drive that image.” CSN

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DATA

Salty Snacks

Dollar Sales Potato chips Tortilla/corn chips Nuts, seeds Puffed cheese Mixed Crackers Popcorn Pretzels Other salty snacks TOTAL

52 weeks ending 2/13/16 (in millions)

% change vs. a year ago

$1,498.3 1059.0 906.1 535.6 332.2 279.8 247.3 246.6 1032.0 $6,137.0

2.3% 3.7 9.5 8.4 -1.9 2.5 7.1 6.4 7.0 5.0%

52 weeks ending 2/14/15 (in millions)

% change vs. a year ago

$1,464.4 1020.9 827.2 493.8 338.5 273.0 231.0 231.8 964.7 $5,845.4

7.9% 9.1 10.3 5.7 2.4 -0.5 10.4 -0.5 8.3 7.3%

Source: The Nielsen Co., total U.S. convenience stores

Unit Volume Potato chips Nuts, seeds Tortilla/corn chips Puffed cheese Crackers Mixed Popcorn Pretzels Other salty snacks TOTAL

Unit volume growth did not keep pace with dollar sales growth, indicating the likelihood of price increases. 52 weeks ending 2/13/16 (in millions)

% change vs. a year ago

918.3 698.4 570.7 327.1 267.3 154.6 141.7 132.5 622.0 3,832.8

1.2% 4.3 1.7 7.0 -0.4 -3.8 4.0 3.1 3.3 2.5%

52 weeks ending 2/14/15 (in millions)

Nuts and seeds claimed the title of top grower, with dollar sales rising 9.5 percent year over year.

Segment Share Potato chips Tortilla/corn chips Nuts, seeds Puffed cheese Mixed

DOLLAR SHARE

% change vs. a year ago

907.4 669.6 560.9 305.8 268.2 160.7 136.2 128.6 601.9 3,739.4

6.4% 5.9 7.5 3.4 -1.9 4.1 8.2 -2.1 5.9 5.2%

16.8% 4.0% 4.0% 4.6% 5.4% 8.7%

Source: The Nielsen Co., total U.S. convenience stores

Leading Consumer Characteristics Purchased packaged salty snacks at a c-store in past month Male Female Average age Average income Have children in household Shop c-stores daily/weekly

44.4% 52.9% 47.1% 41 $58,010 52.8% 80.2%

Men with children are the most prominent demographic when it comes to c-store salty snack buyers.

Time most likely to shop 4 p.m.- 6:59 p.m. (61.9%) Occasion most likely to shop While running errands (72.7%) Other products purchased in past month Candy/gum (80%)

Canned/bottled soda (74%) Prepared food (72%)

Base: 667 c-store shoppers who purchased salty snacks in past month Source: Convenience Store News Realities of the Aisle Study, 2016

8 Guide to Snacking | WWW.CSNEWS.COM

Crackers Popcorn Pretzels Other salty snacks

24.4% 17.3%

14.8% UNIT SHARE

3.7% 3.5% 4.0% 7.0%

24.0%

8.5%

18.2%

14.9% 16.2%

Source: The Nielsen Co., total U.S. convenience stores

Potato chips account for nearly one in four purchases and 24 cents of every dollar.

Salty Snacks

Chipping In

QuickChek uses several approaches to increase impulse buys of salty snacks By Brian Berk

mericans continue to snack more, with millennials leading the charge. One convenience store retailer capitalizing on this trend is Whitehouse Station, N.J.based QuickChek Corp. For its most recent six-month period, sales in the salty snacks category grew by a double-digit percentage year over year, according to Bill Tencza, senior category manager. While the old stalwart, potato chips, still provides plenty of register rings for QuickChek, other products are showing solid growth, including pita chips and snap peas, Tencza reported. QuickChek has also had a lot of success lately selling kettle chips. To get the most bang for its buck, the New Jersey and New York c-store operator merchandises salty snacks strategically throughout the store footprint. For instance, chips are placed across from the beverage cooler. Salty snacks are likewise placed in high-traffic aisles. “We will start with warehouse snacks in a 12-foot section, with a three-foot healthy section and three to four feet of meat snacks,” Tencza told Convenience Store News. “We don’t bury this aisle in the middle of the store. We get [the customer] as they leave the foodservice area. Also, the main aisle they use to checkout has salty snacks.” QuickChek aims to attract impulse buyers, with chips available right near where customers order its well-known subs. “We have touchscreens where customers order [made-to-order] foodservice items. The chips are right there. When a customer places an order for a sub and takes their ticket, they can’t miss the chips right there,” Tencza relayed. Another way QuickChek attracts impulse buyers is via new product introductions. “Chip companies

will come out with new flavors as fast as every four weeks,” the category manager noted. “If a customer doesn’t want to buy a traditional chip product, there are so many other options we can have at the stores. It’s a great way to break up the monotony.” And customers love to see deals, Tencza stressed. Twofers work well at QuickChek, with large bags often selling at two for $6 and smaller bags selling at $1.49 each or two for $2. “Maybe a customer only wanted to eat one $1.49 bag of chips. But by buying two, they calculate in their heads that they just saved 98 cents,” he said. “We can track all of these purchases. We aim to have 60 percent of customers pick up these twofer deals.” Looking ahead, Tencza believes the salty snacks category will continue to see strong growth. He is especially optimistic about healthy snacks. “Years ago, healthy snacks quite honestly tasted like cardboard,” he said. “Manufacturers have done a great job figuring out how to take out calories, GMOs [genetically modified organisms] and gluten, while still making sure the products taste good. I really think this [segment] will keep growing.” QuickChek prides itself on being first-to-market with many salty snack items. If a new chip was introduced at the Super Bowl, for example, customers know they will be able to find it at their local QuickChek store the next day, according to Tencza. Finally, he offered one last piece of advice: When products start dying, you need to replace them quickly with something new. Make sure to have plenty of input and work with manufacturers to ensure the best salty snack items are always stocked in your stores. CSN

WWW.CSNEWS.COM | Guide to Snacking 9

DATA

Alternative Snacks

Dollar Sales Meat snacks Health, energy, protein bars Granola, yogurt bars Other alternative snacks TOTAL

52 weeks ending 2/13/16 (in millions)

% change vs. a year ago

52 weeks ending 2/14/15 (in millions)

% change vs. a year ago

$1,406.8 698.1 110.3 171.9 $2,387.2

5.6% 11.2 4.3 6.0 7.1%

$1,332.3 627.8 105.7 162.2 $2,228.0

13.1% 7.8 10.7 12.6 11.4%

Source: The Nielsen Co., total U.S. convenience stores

Dollar sales growth in meat snacks is strong, but health, energy and protein bars takes the title of biggest grower.

Segment Share Meat snacks Health, energy, protein bars Granola, yogurt bars Other alternative snacks DOLLAR SHARE

Unit Volume Meat snacks Health, energy, protein bars Granola, yogurt bars Other alternative snacks TOTAL

Health, energy and protein bars were again the darling in terms of unit volume growth, rising 6 percent year over year. 52 weeks ending 2/13/16 (in millions)

% change vs. a year ago

525.0 380.6 125.1 63.1 1,093.8

52 weeks ending 2/14/15 (in millions)

% change vs. a year ago

520.5 359.1 121.4 60.9 1,061.9

7.1% 5.4 9.0 12.0 7.0%

0.9% 6.0 3.0 3.7 3.0%

7.2%

4.6%

58.9%

29.2%

Source: The Nielsen Co., total U.S. convenience stores

Leading Consumer Characteristics Purchased alternative snacks at a c-store in past month Male Female Average age Average income Have children in household Shop c-stores daily/weekly

27.4% 56.5% 43.5% 38.9 $60,140 56.7% 81.7%

C-store alternative snack purchasers tend to be male, young and frequent c-store visitors.

UNIT SHARE

11.4% 5.8% 34.8%

48.0%

Time most likely to shop 4 p.m.- 6:59 p.m. (60.6%)

to/from Occasion most likely to shop Traveling work or school (73.3%)

Other products purchased in past month Candy/gum (82.9%)

Prepared food (81.3%) Canned/bottled soda (72.1%)

Base: 416 c-store shoppers who purchased alternative snacks in past month Source: Convenience Store News Realities of the Aisle Study, 2016

10 Guide to Snacking | WWW.CSNEWS.COM

Source: The Nielsen Co., total U.S. convenience stores

Meat snacks dominate in segment share, with 59 percent of all alternative snack dollars and 48 percent of all units coming from these products.

Alternative Snacks

Health Kick

Health bars are driving alternative snack category growth at Maverik stores By Brian Berk

he last couple of years have been great for Maverik Inc. in terms of alternative snack sales, according to Ryan Morton, customer benefits manager at Salt Lake City-based Maverik, operator of more than 270 convenience stores in 10 western states. While meat snacks make up the majority of alternative snack sales in the convenience channel, health, energy and protein bars are starting to give them a run for their money, and Morton says he is definitely seeing this trend play out at Maverik’s locations. “Health bars have been excellent sellers,” he said. “Jerky used to be a big one for us, but sales have declined a little bit as cost has been prohibitive for some [customers].”

Morton believes there are several factors driving the increased strength in health bar sales, including the desire among consumers to be healthier, and interest in bars from the millennial crowd. But above all else, he believes bars are seeing such good growth because of a vast improvement in the taste of these products. “For years, energy bars had a ‘blah’ taste,” he said. “But there are actually bars out there now that taste great. I find myself grabbing these bars for lunch or as an afternoon snack. Before, I would have never even thought about eating them.”

12 Guide to Snacking | WWW.CSNEWS.COM

Great-tasting bars, combined with a much wider array of flavor offerings, lead to more register rings, Morton continued. “There are so many new companies coming out with new bars. It’s almost like the craft beer theme. There is always something new and creative. It is definitely not a stale category like it was a few years ago.” Although alternative snacks sell well on their own, Maverik tries to sell even more product via twofer deals, something that has been quite successful for the chain thus far. “We like to have twofer promotions. We try to get the customers to pick up that second product and introduce them to a new flavor. It’s a good way to move more units,” said Morton. One drawback of the wider variety of alternative snacks on the market now is that it makes it more difficult to pick which products will be successful in stores. Morton said sometimes he just needs to go with his gut when deciding which SKUs to sell at Maverik locations, acknowledging that “you win some and you lose some.” But he does plenty of research first, particularly regarding health, energy and protein bars, by making visits to natural grocery and health stores. “Some bars are sold at these stores before they reach c-stores, so I keep an eye on them. They have displays that are so big that when you walk in, you may see a 30-foot set of bars,” he relayed. “I like to pick the brain of the workers at these stores to find out more about these bars, without letting them know who I am of course.” CSN

DATA

Sweet Snacks

Dollar Sales Muffins, doughnuts Snacks, pastries, desserts Cookies TOTAL

52 weeks ending 2/13/16 (in millions)

% change vs. a year ago

$1,376.9 767.2 681.0 $2,825.0

9.3% 2.6 6.1 6.6%

52 weeks ending 2/14/15 (in millions)

% change vs. a year ago

$1,259.7 747.4 642.0 $2,649.1

9.6% 14.3 6.2 10.0%

Snacks, pastries and desserts only saw a 2.6-percent increase in dollar sales despite registering a 14.3-percent jump the previous year.

Source: The Nielsen Co., total U.S. convenience stores

Segment Share Unit volume across all three segments of sweet snacks saw smaller increases this past year vs. the previous 52 weeks.

Unit Volume Muffins, doughnuts Cookies Snacks, pastries, desserts TOTAL

52 weeks ending 2/13/16 (in millions)

% change vs. a year ago

912.9 603.3 533.4 2,049.6

52 weeks ending 2/14/15 (in millions)

4.8% 2.9 0.3 3.1%

% change vs. a year ago

870.7 586.2 531.9 1,988.8

6.0% 4.8 7.2 6.0%

Source: The Nielsen Co., total U.S. convenience stores

Muffins, doughnuts Snack cakes, pastries, desserts Cookies DOLLAR SHARE

24.1% 48.7% 27.2%

Leading Consumer Characteristics Purchased packaged sweet snacks at a c-store in past month Male Female Average age Average income Have children in household Shop c-stores daily/weekly

35.1% 51.4% 48.6% 39.8 $57,760 53.3% 83.1%

Sweet snack convenience store shoppers are more likely to have children at home and to shop on a more frequent basis than overall c-store shoppers.

Time most likely to shop 4 p.m.- 6:59 p.m. (60.3%) Occasion most likely to shop While running other errands (73.2%)

UNIT SHARE

29.5% 44.5% 26.0%

Other products purchased in past month Candy/gum (84.8%)

Prepared food (78.2%) Packaged salty snacks (77%)

Base: 527 c-store shoppers who purchased packaged sweet snacks in past month Source: Convenience Store News Realities of the Aisle Study, 2016

Source: The Nielsen Co., total U.S. convenience stores

Muffins and doughnuts continue to edge toward 50 percent of segment share in terms of both dollar sales and unit volume.

WWW.CSNEWS.COM | Guide to Snacking 13

Sweet Snacks

Sweet, Sweet Memories Nostalgia plays a key role in Square One Markets’ packaged sweet snacks business By Melissa Kress

any older U.S. consumers remember opening up their lunch box in elementary school to find a classic sandwich — peanut butter and jelly, perhaps, with or without the crust — and alongside it something sweet to enjoy before heading out to the playground. This nostalgic connection may be why the latest Convenience Store News Realities of the Aisle consumer research study found that the average age of those who purchased a packaged sweet snack at a convenience store in the past month was roughly 40 years old. Unlike other snack categories where it’s a challenge for c-store operators to keep up with all the new products coming to market, the tried and true still dominate in sweet snacks. “Some of these products are long-time rooted things people grew up eating,” said Lisa Dell’Alba, president and CEO of Square One Markets Inc., a Bethlehem, Pa.-based convenience store chain, who remembers growing up with Tastykakes in her elementary school lunch box. “There is a bit of nostalgia to it, so I don’t know if it needs to be as on the cutting-edge of new items because what they have works,” she added. There is an argument to be made for “If it ain’t broke, don’t fix it.” The 2016 Realities of the Aisle study also revealed that of the 527 c-store shoppers who purchased a packaged sweet snack in the past month, 83 percent shop a convenience store daily or weekly. However, the category may be slowing down these days as it confronts the push toward healthier eating in America. Square One Markets has lost “a bit of traction, especially among female customers” from a habitual shopper standpoint, Dell’Alba said. “Healthy eating is part of everyone’s everyday con-

14 Guide to Snacking | WWW.CSNEWS.COM

versation, whether you’re into it or not,” she added. “I think that has really changed the way people look for food.” The change is even more notable as the pages of the calendar flip toward the warmer months. “When spring hits, we are out of the hibernation mode, if you will, when we are craving sweet snacks,” Dell’Alba said. “There is definitely the attitude of looking for more of those fresh and healthier options than some of those sweet pastries.” That being said, Square One Markets — which has nine stores in eastern Pennsylvania, mostly in the Lehigh Valley and the Poconos, plus one store in Berks County — has a strong customer base in the traditional male convenience store consumer.

Square One Markets has a strong shopper base of traditional, male c-store customers.

Overall, the sweet snacks segment accounts for between 25 percent and 30 percent of the chain’s total snack category. For the most part, the items — like breakfast-type pastries — are merchandised around the coffee section in its stores. Though Dell’Alba noted there are a few “oddballs” in the segment, like Rice Krispie Treats, that the chain does not typically group together. “I like to merchandise by daypart. I think about

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Sweet Snacks

how I shop when I’m hungry; we follow that model,” the chief executive said. “Every store is very different in terms of what people are looking for. Our biggest store is 6,000 square feet and our smallest store is about 1,000 square feet, so it depends on the size of the store and the layout as well.” The retailer-vendor relationship is also a key factor in managing this segment, according to Dell’Alba. Similar to other retailers in the area, Square One Markets’ sweet snacks segment mostly relies on the direct-store-delivery (DSD) model, with Little Debbie and Tastykakes. The chain then backfills the segment with products from its wholesaler. “I would definitely say the DSD model is something you have to stay on top of. You’re dealing with someone who purchases the routes and manages it as their own business,” she explained. “If you get a really good person in there, life is wonderful and things are great. But if someone is not doing their job or spends

“I think moving things around seasonally, or at least once a year, is important. People get complacent and they know where things are, but if you move them around, it is helpful.” — Lisa Dell’Alba, Square One Markets Inc.

time in the grocery stores instead of our stores, then there is definitely an ongoing conversation that needs to take place. That is what we are running into now. In some stores, we have really good people. Then, in others, it’s a difficult thing to manage.” Ensuring items are fresh is of great importance in sweet snacks, and this can be challenging as different items have different shelf lives. Dell’Alba recommends rotating items. “Sometimes, it’s hard to get our team members to follow that process because some things have a seven-day shelf life, others a 14-day shelf life or 21 days,”

16 Guide to Snacking | WWW.CSNEWS.COM

For the most part, Square One merchandises sweet snacks near the coffee area.

she explained. “So, you need to manage that and have a system in place where you are checking. [The system] has to come from the top. We’re a small chain. We do allow our managers to make some decisions at store level, but it needs to be a habitual model that people are managing the category.” Still, perhaps the greatest factor in succeeding in the sweet snacks segment is communication. Many times, retailers may not be aware of new items or line extensions. This is where vendor partners and wholesalers play an important role. “That’s my biggest thing about every category: keep the conversation going. A lot of times, we go on the autopilot model and that doesn’t always work,” said Dell’Alba. “I think moving things around seasonally, or at least once a year, is important. People get complacent and they know where things are, but if you move them around, it is helpful.” CSN

DATA

Candy

Dollar Sales Bagged or repacked peg candy Chocolate bars, packs Gum Novelties, seasonal Candy rolls, mints, drops Non-chocolate bars, packs TOTAL

52 weeks ending 2/13/16 (in millions)

% change vs. a year ago

$1,901.5 1,642.5 983.5 657.3 344.7 308.9 $5,838.3

8.8% -1.8 -1.3 9.3 5.4 -9.9 2.6%

52 weeks ending 2/14/15 (in millions)

% change vs. a year ago

$1,747.9 1673.0 996.0 601.1 326.9 342.9 $5,687.9

13.4% -2.1 0.0 9.7 1.5 -2.9 4.0%

Segment Share

Source: The Nielsen Co., total U.S. convenience stores

Unit Volume Bagged or repacked peg candy Chocolate bars, packs Gum Novelties, seasonal Non-chocolate bars, packs Candy rolls, mints, drops TOTAL

Novelty/seasonal candy and bagged or repacked peg candy continue to be the category standouts.

Candy rolls, mints and drops are experiencing a bounceback, going from a 3.7-percent drop in 2015 to a 0.5-percent gain in 2016.

Bagged or repacked peg candy Chocolate bars, packs Gum Novelties, seasonal Candy rolls, mints, drops Non-chocolate bars, packs DOLLAR SHARE

52 weeks ending 2/13/16 (in millions)

1,081.0 1,028.5 721.4 547.6 290.0 217.7 3,886.3

% change vs. a year ago

2.7% -7.8 -4.4 3.6 -9.4 0.5 -2.5%

52 weeks ending 2/14/15 (in millions)

% change vs. a year ago

1,052.1 1,116.1 754.2 528.3 319.9 216.8 3,987.4

7.5% -5.9 0.0 4.7 -3.1 -3.7 0.2%

Source: The Nielsen Co., total U.S. convenience stores

5.9%

11.3%

Male Female Average age Average income Have children in household Shop c-stores daily/weekly

65.9% 54.8% 45.2% 40 $59,620 51.6% 77.1%

Male c-store shoppers are the dominant candy purchasers (54.8 percent) over females (45.2 percent).

Time most likely to shop 4 p.m.- 6:59 p.m. (54.8%) Occasion most likely to shop While traveling to/from (66.5%)

32.6%

16.8% 28.1%

Leading Consumer Characteristics Purchased candy/gum at a c-store in past month

5.3%

UNIT SHARE

7.5%

14.1% 18.6%

5.6%

27.8%

26.5%

work or school

Other products purchased in past month Prepared food (68.8%)

Canned/bottled soda (62.8%) Packaged salty snacks (54.1%)

Base: 989 c-store shoppers who purchased candy/gum in past month Source: Convenience Store News Realities of the Aisle Study, 2016

18 Guide to Snacking | WWW.CSNEWS.COM

Source: The Nielsen Co., total U.S. convenience stores

Strong gains in both dollar sales and unit volume translates to an almost 2-point gain in segment share for bagged or repacked peg candy.

Candy

A Taste of Something Sweet Speedee Mart adjusts its candy strategy to take advantage of snacking spate By Danielle Romano

andy is a “great seller” for Las Vegasbased convenience store chain Speedee Mart. In fact, it is the first thing customers see when they walk in the door of Speedee Mart’s 20 stores, Ray Johnson, operations manager, told Convenience Store News. Given the category’s strong sales, coupled with the booming popularity of snacking in America these days, Speedee Mart has adjusted its candy strategy for 2016, first and foremost by adding more footage to its candy section, which is divided into three parts — four feet dedicated to gum, eight feet to candy bars, and four feet to pegged candy and boxes. As part of the strategy adjustment, the pegged candy and boxes section expanded by just shy of three feet at the beginning of this year to accommodate new products. Among Speedee Mart’s best-selling candy items are the king-size packages from brands like Snickers, Kit Kat, M&M’S and Reese’s Peanut Butter Cups. Gum and mints also make an impressive contribution on Speedee Mart’s roster. “Gum and mints are highly impulsive and customers expect to find them. They’re the highest margin of anything on the shelf,” Johnson commented. “You can buy one or the other today and it won’t stop you from buying it tomorrow. It’s the perfect c-store item.” Speedee Mart doesn’t just merchandise candy in one section of the store, either. The chain also sells it from floor stands, a counter rack and “in-and-outs” at the drink center, where candy promotions are tied in with fountain drinks and coffee. Johnson attests that by cross-promoting candy with beverages, Speedee Mart sees sales increases and repeat customers. Demographically speaking, the retailer’s most frequent candy purchasers are adults, due to Las Vegas’ more adult-oriented market. Its candy purchasers tend

to make their buys in the morning more so than in the afternoon, and will typically purchase a beverage with their candy. To be successful in the candy category, Johnson has a few tips for his fellow c-store retailers: • Keep It In-Stock. “It’s amazing how much people are not in-stock when it comes to [our] competitors,” he noted.

• Be First to Market. “I think it’s important that with the release of a new candy item, c-stores are the first to carry it. Even if we don’t think it’s going to be successful, the customer deserves to see it and try it. It may be a desolate item — one box of candy — but it makes a difference with customers,” Johnson advised. • Promote. “We do a lot of twofer pricing and we really promote it. Some states aren’t allowed to do twofer pricing like Arizona, but in Nevada, we can put twofer pricing on whatever we want and it gives us the opportunity to sell more,” he explained. • Embrace Innovation. “If you look at every other item in our store, we are constantly innovating. Our candy rack is the same. Wrigley came out with a LED rack that I’m trying to get my hands on. … It’s a no brainer: If you shine a light on it, it will sell.” CSN