Convenience Store Decisions February 2017

Volume 28 • 19 Number 2 • FEBRUARY Volume • Number 6 • JUNE 2017 2008

Business Solutions for Retail Decision Makers

® A

HARBOR COMMUNICATIONS

P U B L I C AT I O N

Building a Better Foodservice Program

In CSD’s 2017 Foodservice Edition, we look at the latest trends and basic principles that convenience retailers are following to ensure quality offerings, modern menu options and bigger profits.

7-Eleven’s Fresh Future ……….....10 Chocolate Attracts Snackers ….…48 Cigar Market Remains Competitive ..52

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Let’s take 2017 to the next level.

Our People | Our Brands | Your Success Our People | Our Brands | Our Customers’ Success

Getting your tobacco categories to the next level begins with setting goals for the future. Let’s work together to develop a plan to enhance your store’s performance. Contact your AGDC Sales Representative today to make success a reality.

©2017 Altria Group Distribution Company | For Trade Purposes Only

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FEBRUARY 2017 • Volume 28 • Issue 2

DEPARTMENTS 8 Editor’s Memo: Let Foodservice Be Your Guide 10 Company Profile: 7-Eleven’s Fresh Future 14 Front End: CSD’s Quick Bites 16 Front End: Industry News 18 Foodservice Column: Foodservice...A

Brand in Hand?

20 Convenience Store Solutions: Discipline

Is a Necessary Tool

24 Front-runners in Foodservice: Vespole

Directs QC’s Foodservice Future

26 Front-runners in Foodservice: Turner

Making Waves at RaceTrac

40 Foodservice: Equipped For the Future 44 Foodservice: Reheating Coffee Sales

InsidethisIssue

56 Category Management: E-Tobacco: What’s Next?

28 Cover Story: Building a Better Foodservice Program In CSD’s 2017 Foodservice Edition, we look at the latest trends and basic principles that convenience retailers are following to ensure quality offerings, modern menu options and bigger profits.

60 Technology: Pairing Menus and

Automation

64 Operations Column: Store Data Deserves

Protection Too

48 Chocolate Attracts Snackers

70 Operations: Solar-Powered Store Design

While overall chocolate volume saw a slight dip in 2016, convenience stores helped buoy category chocolate sales.

74 New Stuff!

79 Quick Stop

52 Cigar Market Remains Competitive

81 Ad Index

Despite a full-court press from regulators, cigar sales are still on the rebound.

82 Industry Perspectives: Managing

48

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Grab and Go

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INTENSELY COLD. UNMISTAKABLY COOL. Ultra Menthol The addition to the Djarum Black line combines the unmistakable taste and aroma of a premium aged tobacco with an intensely cold blast of menthol.

No wonder more smokers than ever are asking for Djarum by name.

www.djarumcigar.com Ask your Kretek representative for details at salesinfo@kretek.com

WARNING: Smoking cigars causes lung cancer, heart disease, and emphysema, and may complicate pregnancy. This product contains chemicals known to the State of California to cause cancer and birth defects and other reproductive harm.

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Convenience Store Decisions

A H A R B O R C O M M U N I C AT I O N S L L C C O .

EDITORIAL

CONTRIBUTING EDITORS

Editor-in-Chief,Vice President John Lofstock jlofstock@csdecisions.com Senior Editor David Bennett dbennett@csdecisions.com Senior Editor/News & Online Erin Rigik Del Conte edelconte@csdecisions.com Associate Editor Howard Riell hriell@csdecisions.com

President, Harbor Communications Dan Ramella dramella@csdecisions.com (440) 250-1583

COLUMNISTS

Group Publisher Tom McIntyre tmcintyre@csdecisions.com (440) 250-1583

Jim Callahan Ed Collupy Fran Duskiewicz Steve Sandman

PRODUCTION

Associate Editor Marilyn Odesser-Torpey mot@csdecisions.com

Production Manager Barbra Martin bmartin@csdecisions.com

ART

Webmaster Dave Miyares dmiyares@csdecisions.com

Creative Director Erin Canetta ecanetta@csdecisions.com

EDITORIAL ADVISORY BOARD

NATIONAL ADVISORY GROUP BOARD

Robert Buhler, President and CEO Open Pantry Food Marts • Pleasant Prairie, Wis.

Peter Tamburro, Board Chairman Clifford Fuel Co. • Utica, N.Y.

Jim Callahan, Director of Marketing (Retired) Geo. H. Green Oil Inc. • Fairburn, Ga.

Tony Harris, Past Board Chairman Louisville, Ky.

Brad Call, Executive Vice President Maverik Inc. • Salt Lake City

Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo.

Greg Lorance, Dispensed Category Manager Cumberland Farms • Framingham, Mass.

Joe Hamza Nouria Energy Corp • Worcester, Mass.

Kyle McKeen, President and CEO Alon Brands • Dallas

Brent Mouton Hit-n-Run Food Stores • Lafayette, La.

Billy Milam, President RaceTrac Petroleum Inc. • Atlanta

Robert O’Connor O’Connor Petroleum Co. • Hales Corners, Wis.

John Kelly, Chief Operating Officer and Vice President, Operations Mountain Empire Oil Co. • Greenville, Tenn.

John Schaninger QuickChek • Whitehouse Station, N.J.

Scott Zaremba, President and CEO Zarco 66 • Lawrence, Kan.

Convenience Store Decisions is a three-time winner of the Neal Award, the American Business Press’s highest recognition of editorial excellence.

SUBSCRIPTION INQUIRIES To enter, change or cancel a subscription: Web (fastest service): www.ezsub.com/csd Phone: (844) 862-9286 (U.S. only, toll-free) Fax: (440) 333-1892 Mail: Convenience Store Decisions P.O. Box 986, Levittown, PA 19058 Copyright 2017, Harbor Communications, LLC 6 Convenience Store Decisions

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ADVERTISING

Anne Baye Ericksen Brad Perkins Jeff Steele Lisa White

Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.

Publisher John Petersen jpetersen@csdecisions.com (440) 250-1583 Vice President, Sales Tony Bolla tbolla@csdecisions.com (773) 267-1897

YEO BOARD OF DIRECTORS Jared Sturtevant, Board Chairman CST Brands, Director of Marketing

Alex Olympidis, Board Vice Chairman Family Express Corp., Director of Operations Alli Bixler, Assistant to the President The Kent Cos. Sharif Jamal, Corporate Training Manager Chestnut Petroleum Distributors Lindsay Lyden, Vice President, Development Truenorth Energy Dana Moloney, Food Service Director Warrenton Oil Co. Jeremie Myhren, Vice President, IT Road Ranger Bart Stransky, Executive Director, Merchandising RaceTrac Petroleum Inc.

OFFICE LOCATIONS

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Convenience Store Decisions (ISSN 1054-7797) is published monthly by Harbor Communications, LLC., 19111 Detroit Rd., Suite 201, Rocky River, OH 44116, for petroleum company and convenience store operators, owners, managers. Qualified U.S. subscribers receive Convenience Store Decisions at no charge. For others, the cost is $80 a year in the U.S. and Possessions, $95 in Canada, and $150 in all other countries. Single copies are available at $9 each in the U.S. and Possessions, $10 each in Canada and $13 in all other countries. The annual Sales Trend Handbook can be purchased for $75. Periodicals postage paid at Cleveland, OH, and additional mailing offices. POSTMASTER: Send address changes to Convenience Store Decisions, P.O. Box 986, Levittown, PA 19058. GST #R126431964, Canadian Publication Sales Agreement No: #40026880.

Materials in this publication must not be reproduced in any form without written permission of the publisher. Direct requests to: Editorial Department, 1420 Queen Ann Rd., Teaneck, Suite 4, NJ 07666. Phone: (917) 601-9623. Copyright 2016, Harbor Communications LLC. All rights reserved. Circulation audited by Business Publications Audit of Circulation, Inc.

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EDITOR'SMEMO

Let Foodservice Be Your Guide

T

JOHN LOFSTOCK Editor-in-Chief (201) 837-2177 jlofstock@ csdecisions.com Follow me on Twitter @CSDEditor

HANKS TO AN INCREASINGLY busy lifestyle, GOOD TO GREAT today’s convenience store customers Convenience retailers must do everything regard food prepared away from home as possible to entice customers to try new products a necessity, and the industry’s top-quartile retail- and return for more, without negatively impacters have benefited handsomely from meeting ing why the stores exist: to provide convenience. the growing demand for fresh foods.

Whatever level of food you feel comfortable For the past decade, the convenience delivering—the simplest or the most complistore industry has consistently posted yearly cated—just deal with fresh, quality and value. foodservice sales gains. Retailers are to be But the ultimate piece is consistency. You have commended for the work they have done to be able to deliver great food consistently. cultivating the demand for foodservice by What’s more, this doesn’t necessarily need enhancing their focus on quality, consistency, to be elegant upscale menu items. It’s whatfreshness and value. ever you feel you can do consistently. If you are While the industry has made wide strides, comfortable selling sandwiches, sell the best this isn’t to suggest that 2017 and beyond will sandwiches you can. If it’s fried chicken, have be easier as foodservice is a very complex and the best fried chicken in the market. It is a rigcompetitive business. As part of CSD's 2017 orous endeavor, but this is where our industry Foodservice Issue, we spoke to a wide-range of is going. retailers who indicated that foodservice continFor several years, surveys have reported that ues to offer the greatest opportunity for increased customers want healthier fast foods. This trend sales and profits over the next 12 months. continues according to CSD's 2017 Foodservice The key, however, remains the industry's ability Report. Research from The National Restaurant to meet customers' demands on their sched- Association (NRA) 2017 Restaurant Industry ule with healthy options, affordable prices and Forecast and What's Hot report confirms that outstanding service. Even as I write this, I real- healthful options lead culinary trends—for conize I must sound like a broken record. Among sumers and restaurants. the convenience store industry's greatest comRestaurant operators are taking notice, with petitive advantages over the past two decades more than eight in 10 saying their guests pay has been its ability to provide great service more attention to the nutrition content of food and meet customers' immediate demands, so now than they did two years ago. Strong majorimuch so that it has become instinctive to top- ties of consumers have noticed that restaurants quartile chains. feature more nutritious options on menus now But the stakes are changing. Going omnichan- compared to two years ago. Convenience nel is that latest buzz, and this trend is going to stick stores will need to follow suit. around for quite a while. Every retailer is investing Healthier food options can be simple like more and more in new technology to gain cus- expanding the salad menu, adding wheat and tomer loyalty. Additionally, the foodservice space grain breads for sandwiches and putting fresh sees increasing impacts and competition from fruits and yogurt in the grab-and-go section. online (i.e Amazon and Walmart).

Visit any convenience store chain with a thrivSome have created new niches to benefit ing foodservice business and you will see these all organizations. For example, Grubhub and simple additions are the rule, not the exception.

Favor enable even the most basic restaurants Whatever you decide, the key is to get your to deliver good offerings—and some of those customers' approval. No matter how commitrestaurants have captured market share from ted you are to foodservice, they will ultimately bigger, well-established businesses. Hello Fresh decide whether or not you’re doing it right. and Blue Apron help consumers eliminate a trip to the grocery store by shipping all you need for a home-cooked meal to your door.

This translates to this: If you’re not tracking the trends, you’re likely falling behind.

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YOUR KEY BUSINESS DRIVERS JUST A CLICK AWAY

The McLane Link online portal allows you to access key information, such as order activity and operational metric data, all from the comfort of your computer or tablet. Quickly access the exact information you are looking for, customize reports and resolve issues without ever calling your sales rep! This fast, simple and easy tool improves efficiencies, saves time and drives your business forward.

Visit mclaneco.com/goto/link for more information.

Š 2017 McLane Company, Inc. All rights reserved.

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FRONTEND PROFILE

7-Eleven’s Fresh Future The industry’s biggest player is expanding its selection of healthy and regional food offerings to meet shopper demand.

By David Bennett, Senior Editor

M

ANY PATRONS QUICKLY REALIZE that this isn’t their father’s 7-Eleven as they enter into certain store locations in Florida.

Not unless their father prefers pandebono.

A Colombian cheese bread usually served for breakfast or a snack, pandebono is a cultural food offering that 7-Eleven has developed in some Florida regions. In other parts of the country, the c-store chain is tailoring food choices based on particular customer preferences: fresh fruit blends in southern California; gluten-free foods in New York; kolaches in parts of Texas.

Today, more 7-Eleven franchisees are being given the flexibility to broaden their product selections. It’s one more step in the convenience retailer’s effort to improve its core product quality as it relates to food platforms.

No U.S. c-store chains boast a legacy as steeped in expediency and innovation as 7-Eleven. The retail giant touts itself as the first c-store to advertise on television, provide fresh-brewed coffee in to-go cups, boast self-serve soda fountain drinks and offer roller grill food.

Over that time, however, the expansive chain has also earned a reputation for standardized store formats and stripped-down food options. The perception isn’t lost on 7-Eleven, which has been working the last few years to make it easier for patrons to grab a quick bite from balanced fresh-food offerings that are cost-efficient. These items are available in many stores, and include salads and sandwiches as well as snacks such as fresh cut fruit, veggie packs, boiled eggs and yogurt parfaits.

Anne Readhimer, 7-Eleven’s senior director of fresh food innovation in Irving, Texas, said the decisions behind such additions are based on consumer trends that have become prevalent in the U.S. marketplace that is punctuated by the growing presence and influence of grocery chains like Whole Foods and Wegmans that have whetted the nation’s appetite for fresher food options.

“What we are finding is that a lot of our consumers are becoming more demanding, more discerning,” 10 Convenience Store Decisions

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Leveraging customer feedback, 7-Eleven is distinguishing itself from most competing chains by jumping into the better-for-you arena, devising new offerings including snacking and meal options.

In 2015, the company launched its proprietary program with two premium lines—7-Select GO!Yum and 7-Select GO!Smart—part of its 7-Select brand.

Readhimer said. “They’re looking for higher quality items, freshness, differentiated products—not products you see everywhere else—as well as value. Value is very important.

And we know within the 7-Eleven context, the products we offer need to be convenient as well as suitable for eating on the go.”

The company has engaged and responded to customers by adding new products and customizing stores via its “Retailer Initiative” program. As Millennials continue to influence snacking and dining tendencies, Readhimer said,the chain, which now operates about 8,900 7-Eleven stores in the U.S. and Canada, is responding in kind.

THE FRONT LINES Leveraging customer feedback, 7-Eleven set about distinguishing itself from most competing chains by jumping into the better-for-you (BFY) arena, devising new offerings including snacking and meal options. In 2015, the company launched its proprietary program with two premium lines—7-Select GO!Yum and 7-Select GO!Smart—part of its 7-Select brand.

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FRONTEND PROFILE 7-Select GO!Smart was developed for consumers seeking BFY options while on the go and includes snacks such as gourmet light popcorn, sprouted tortilla chips in exotic flavors and yogurt bars. 7-Select GO!Smart products, • President and CEO: Joe DePinto which continue to add different offerings, are designed • 61,000 worldwide locations with nutritional balance as a priority, Readhimer said.

• 8,900 total U.S. locations Currently, the 7-Select private brand lineup includes • 7-Eleven expanded to Japan with Seven-Eleven Japan Co., some 400 items cutting across all categories. which became the parent company in November 2005.

• The first 7-Eleven store in Vietnam is expected to open in Other 7-Select GO!Smart options include breakfast sandSpring 2017, expanding the company's operations to 18 wiches under 400 calories, including sausage biscuit and countries.

English muffin breakfast sandwiches and lunch varieties.

“One of our top-selling products is a turkey sandwich which has whole wheat bread with rolled oats in the crust, garlic, peppercorn turkey breast, with lettuce and tomatoes,” said Readhimer said.“So all the favors our cus- MORE FOOD OPTIONS Through fresh innovations, competitive pricing, faster tomers are looking for along with all of the health benefits.”

Another healthy food group that continues to grow in service and strong marketing, modern-day retailers are popularity are salads, which include a high-selling Kale luring more U.S. consumers. 7-Eleven is using the same formula at its convenience stores to diversify its offerings and Quinoa salad—part of the 7-Select GO!Smart line. well beyond Big Bite hot dogs.

7-Eleven recently launched a new program featuring WHAT’S GOING ON 7-Eleven has been adapting its store layouts to accen- a breakfast pizza loaded with smoked bacon, breakfast tuate its fresh food offerings, which is an ongoing process. sausage, hickory-smoked ham, scrambled eggs, cheese “At 7-Eleven, we’re growing our fresh food department and peppered cream gravy on top of a biscuit crust.

The retailer also teamed up with Jones Soda last year to meet the changing needs of our customers and as we are seeing that higher demand as customers continue to launch a line of premium bottled soft drinks sold under to crave these offerings, we’re going to expand the space its 7-Select private-brand label. The beverages are made needed to support those products,” Readhimer said. “As with natural flavors and lightly sweetened with cane sugar.

Though the beverage imitative marks a new partnerwe’re building and designing our new store layouts for the future, you’ll see the new builds will have more space and ship for the c-store giant, it’s also reflective of the retailer’s as we go back and retrofit other stores, you’ll also see that plan to grab more market share through its private-brand offerings. Acting on the well-documented data that expansion in the fresh foods space allocated.”

Perhaps the biggest work ahead isn’t tied to more dis- Millennials understand premium products come with a premium price, 7-Eleven is answering that bell, too. play space but the identity of the brand itself.

The 7-Select GO!Yum and 7-Select GO!Smart products “Currently, I think one of the biggest challenges is just spreading the word to the consumer that 7-Eleven offers a offer a host of BFY items or an indulgent assortment of wide variety of fresh food,” Readhimer said.“There’s still the per- savory and sweet snack foods such as ice cream. ception that 7-Eleven only has Slurpees, Big Bites and taquitos.”

FUTURE ENDEAVORS In 2006, 75% of 7-Eleven locations were owned by franchisees, and today that number has jumped to 90%.

Recently, this earned the company kudos as Entrepreneur magazine named 7-Eleven the No. 1 Franchise in the U.S. The parent of the convenience retailer, Seven & I Holdings Co., Ltd—a Japanese diversified retail group headquartered in Tokyo—projects that the chain will increase its c-store count in North America to 10,000 by fiscal year 2019.

Just like it committed to roller grill technology in the past, the company is integrating modern platforms including its collaboration with Postmates, an on-demand logistics 7-Eleven has been working the last few years to make it easier for company that offers delivery from any participating store. patrons to grab a quick bite from balanced fresh-food offerings that Readhimer said that as its fresh food initiative goes forare cost-efficient. These items are available in many stores and ward, food site delivery is a feasible vehicle to serve its include salads and sandwiches as well as snacks such as fresh cut customers. fruit, veggie packs, boiled eggs and yogurt parfaits.

7-ELEVEN At a Glance

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HELP POWER YOUR MORNING SALES

This Snacking Moment Provides a Bridge to the Next Occasion • 37% of Protein Seekers eat something with protein in the morning1 • The perfect balance of delicious taste and texture with 10g of high quality protein – an excellent source!

• 27% of c-store consumers indicate protein as a primary or secondary health concern2

© Mondelēz International group Sources: 1NPD SnackTrack 2016. 2 NMI/NACS Health & Wellness trends & strategies for the convenience store sector, 2015.

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FRONTEND

CSD’S QUICK BITES Will Foodservice Functional Foods, Beverages Set to Grow Global functional foods and beverages market to grow at a CAGR of nearly 8% Struggle? from 2017-2021.

2017 will bring little to no traffic growth for the total U.S. foodservice market.

pq NPD Group expects quickservice restaurants to increase 1%

While full-service restaurants decline 2% in 2017.

Product innovations

Health benefits

Source Technavio, 2016

44%

of Millennials have incorporated a customized eating approach—such as paleo, gluten-free or vegan in the past year. Millennials are more likely than other generations to use a customized diet.

Emergence of nontraditional fitness activities from yoga to marathons.

associated with functional foods and beverages

Coffee Consumption Keeps Soaring

Source: International Dairy Deli Bakery Association (IDDBA) “What’s in Store 2017?”

The U.S. market for packaged and readyto-drink coffee sold at retail was estimated at $13.5 billion in 2015, up almost 10%.

By 2020, Packaged Facts expects sales of packaged and ready-to-drink coffee in the U.S. to close in on $18 billion.

CSD/NAG Idea of the Month: Employee Contests

Consider running a contest with your associates to see who can upsell the most lighters, rolling papers or e-liquids/cartridges to ensure they’re letting customers know these accessories are available every time they buy a tobacco product.

Set a timeframe for the contest and offer a small prize for the winner.

Finally, see how many more accessories your stores sell that month.

Driving Factors

Source: Packaged Facts,“Coffee and Ready-to-Drink Coffee: U.S. Retail Market, 9th Edition.”

2017 Expectations More retailers will adopt self-service kiosks for the first time.

Fragmentation will slow mobile pay adoption.

Buy-online-pick up-in-store (BOPIS) adoption will really take off.

Source: Doug Baldasare, CEO and founder of ChargeItSpot

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INDUSTRYNEWS Gulf Oil Expands Footprint With Falcon Partnership

QuickChek Celebrates Quarter Century of Ballooning

Gulf Oil has increased its reach in Pennsylvania through an expanded relationship with Falcon Oil. Gulf will provide branded wet barrel supply to several of the Blakely, Pa.-based company’s stations throughout the region. Three of Falcon Oil’s retail gas stations have recently converted to Gulf from another major oil brand, and it is anticipated that two more of the company’s stations in the Scranton, Pa. area will convert to Gulf in early 2017.

QuickChek is celebrating its 25th year as the title sponsorship of the New Jersey Festival of Ballooning in Association with PNC Bank.

It marks the longest running sponsorship of any festival in the U.S.“The balloon festival has proven to be a highly effective way to introduce consumers to our brand,” said QuickChek CEO Dean Durling, whose family-owned company now operates 147 fresh convenience market locations throughout New Jersey and New York. “It is a showcase event for us. It allows us to deliver our message of providing restaurant-quality food at a great value, of having the best cup of coffee in the market and demonstrating our dedication to customer service.”

CSD’s 2016 Convenience Store Chain of the Year, QuickChek has utilized the Festival to introduce new products and services to Festival-goers such as its in-store Q Cafés which offer 60 varieties of handcrafted hot and iced cold drinks; as well as testing menu boards, graphics, cash registers and computer systems over the years.

Pilot Flying J Brings Food Innovation VP on Board Pilot Flying J has named Shannon Johnson as vice president of food innovation. Pilot Flying J is embarking on a $485 million five-year modernization and expansion plan, and a big part of the strategy includes revamping its food offerings. Johnson is a new senior leadership team member responsible for the continuous development of the PJ Fresh Marketplace brand, as well as a variety of new and innovative food and beverage options for guests. Johnson’s experience includes serving as chief food innovation offi cer for KFC, and product innovation director at McDonald’s U.S.A. Most recently he served as director of the Michael P. Hennen Hospitality & Culinary Center at Chattanooga State Community College.

Kroger Co. Moves C-Store Business to McLane M c L a n e C o. I n c . , a supply chain services company, providing grocery and foodservice supply chain solutions, has signed an agreement to ser ve Cincinnati, Ohio-based The Kroger Co. and its 787 c-stores located across 18 states. Under the agreement, McLane will supply Loaf ‘N Jug, Turkey Hill Minit Market, Tom Thumb, Kwik Shop and Quik Stop.

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Target To Launch Mobile Payment Target Corp. plans to introduce its own mobile payment service in Target stores, allowing shoppers to pay via an app on their mobile phones. According to a report

by Reuters, while the launch is expected to be this year the exact timing was not specified. Reuters first reported Target was building its own mobile payment service in December 2015.Target follows Wal-Mart Stores Inc., which launched Wal-Mart Pay in December 2015.

Mobile Offers Set to Grow A new report from Koupon Media shows how mobile offers are aiding retailers. More customers are using mobile offers than ever before, and studies continue to reveal that shoppers not only want more mobile offers, but become better customers when they use them. For example, 58% of customers visit a store after receiving a mobile offer.

Ninety percent of Millennials actively look for mobile offers while shopping. Also, 77% of customers spend more when redeeming a mobile offer. In addition, 44% percent of customers want to see offers included in mobile wallets.

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COLUMN FOODSERVICE

Foodservice…

A Brand in Hand?

Most convenience stores that have embraced the foodservice category and have invested heavily in the operational side of the business, have also attempted branding.

By Steve Sandman

D

URING THE LAST 15 years or so we’ve heard the

drum beat that the key to a successful c-store operation is foodservice.

There’s proof in the numbers. For example, foodservice in convenience stores accounted for 33.7% of gross profit dollars in 2015, according to the National Association of Convenience Stores (NACS). Essentially, there are a lot of customers buying prepared food within the c-store channel.

There’s also certainly been dramatic improvement in the quality of c-store food and service, and I have been thoroughly impressed by the innovations such as ordering at the pump, apps to order and actual preparation of fast food right in the c-store.

But where’s the branding already?

If I think of the thousands and thousands of c-stores I’ve walked into both as a supplier and as a consumer, I can only easily recall two brands: Big Gulp and Polar Pops, and they aren’t even food.

Where’s the Fast Fries, the Fresh Fries or the Free Fries?

your employees’ attire and your receipts are all avenues to increasing the branding impressions your consumer sees in and out of your store.

Branding helps distinguish you from your competition, but it can be tough to do within a convenience setting. It takes much trial-and-error and sometimes a significant capital investment.

For instance, Pilot Flying J in 2015 launched a fresh brand identity campaign as part of its commitment to improving life on the road for its truck-driving patrons. The initiative included offering a variety of healthy food selections, a high-quality collection of hot beverages and a $100-million investment in building upgrades.

The campaign included promotion of the company’s PJ Fresh Marketplace program, which offers fresh, healthy and high-quality meal choices such as home-style meatloaf and roasted chicken.

Of course, you don’t have to commit to that level of expense to distinguish your foodservice program. But there has to be a certain level of commitment to realize a certain level of success.

RELATING TO A BRAND Most convenience stores that have embraced the foodservice category and have invested heavily in the oper- EQUITY, LOYALTY AND IDENTITY ational side of the business, have also attempted branding.

You’ve probably already taken the time and effort to Consumers relate to a brand as part of their identity, and make your foodservice a focal point of your stores, you’ve as such, brands are sought-after commodities when a cus- invested the money it takes to produce a good product tomer decides to open their wallet. and train your staff, so doesn’t it make sense to brand your So why the struggle to be successful within our industry products and own it? This prevents your competitor from to capture the loyalty of the foodservice customer? A cus- copying your idea and profiting off your efforts. Brands tomer that would like nothing more than to ask for their build ELI: equity, loyalty and identity. product by name?

The last concept—identity—can differentiate your foodBuilding a brand, particularly in food, is not an easy service program. If your foodservice is marked by your thing to do. c-store’s identity and vice-versa, and is compelling, it can Food is considered a commodity until it’s branded. A attract a profitable number of devoted consumers. tomato is a tomato until it’s called Red Gold Tomatoes.

For this consumer, I can’t say I know every single item Keen packaging that stands out, which implies the prod- my local Circle K sells inside the store, but I sure know uct you’re selling is a better choice, is also critical to success. where to go for a Polar Pop. Training your staff to refer to your brands, and advertising them at every possible opportunity provides Steve Sandman has worked in the tobacco and convenience store impressions to the consumer that translates into brand rec- industry for more than 30 years, most recently as the president of Republic Tobacco. His extensive experience includes product ognition and long-term success for a product. Your pumps, management. He can be reached at (812) 569-1388.

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Noisy Other hand dryers can be loud, unhygienic1 and bulky.

Quiet Hygienic, fast and compact.

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Convenience Store Solutions

Discipline Is a Necessary Tool When dealing with employees, store managers and operators must be upfront with employees about the types of discipline that may be meted out in response to performance deficiencies and misconduct.

By Jim Callahan

L

ET ME ADVISE YOU that no matter how good or how important an employee is to your operation, the fastest way to lose control of your store, office or entire business is to delay meting out discipline when it’s most needed.

Even if there’s a temptation to provide your best employees more latitude and allow them to slide a bit when it comes to enforcing company policy, I can tell you from my own personal, painful experience that when attempting to establish rules for all, too much leeway for a few is the wrong way to go.

COMPANY HEALTH Discipline is essential for a healthy working atmosphere. For managers or supervisors who must maintain order in a store, they shouldn’t be indecisive about correcting employees.

When I worked in upstate New York, I had a great boss, Paul, who had a unique way of conveying a message that stuck with the individual.

Once when I was in the wrong, when I thought Paul was going to threaten to fire me, he instead said: “If you ever talk to me that way again, I’ll sell the business.” If you don’t think I got the message loud and clear—and appreciated the respect he granted me—I did.

The message that I got was that my future and the company’s future were joined at the hip, and that a factor such as my individual attitude had a bearing on the company’s success.

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Approaching an employee who is wrong often begins with a speech, similar to one I had to give a former shining-star employee, Billy, when I ran the show for the first time.

Exasperated with how far he had slipped from an elite level, here’s the message I delivered: “Billy, there was a time when I lived in fear of losing you and your great skills but, your performance has slipped so badly that your leaving would no longer make the same kind of impact on the company.”

I have never forgotten the occasion or the disappointment I felt at the time.

I went on to tell him what he had to do to keep his job, acknowledged my responsibility and Billy improved.

However, he never recaptured the magic or the spirit of the past performance that separated him from most of his coworkers.

SHIP-SHAPE Running a business is like operating a boat in deep waters. The person in charge has to be the one to steer the wheel of the ship, maneuver the rudder, calm the seas when necessary and know when to drop anchor.

All of us need praise. It is a critical part of the human condition. It behooves anyone holding a management position to add this tool to his or her management toolbox. Providing praise when employees deserve it balances the equation, making it more tolerable to hand out discipline when that too is deserved.

Often, the individuals being corrected aren’t aware of their shortcomings and count on management to guide them. It’s also a hallmark of good leadership to help your employees go from good to great.

As part of the process, you must be up-front from the beginning about the types of discipline that may be meted out in response to performance deficiencies and misconduct. Also, discipline and possible punishment must be consistent.

This information can’t be a surprise after an adverse incident happens.

There must be a mutual understanding from the beginning—even as early as in the interview process.

Of course, the hiring process is the first opportunity to assess that future employee. It’s the chance for a company to be thorough in its evaluation because eliminating potential problem workers is easier before they’re hired.

This old saying might sound trite but, there is a genesis to most all old sayings and those truths are well worth heeding. In this case, this maxim applies: “Hire hard and manage easy.”

The best employers take this adage to heart.

Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on CSDecisions. com. He can be reached at (678) 485-4773 or via e-mail at jfcallahan1160@gmail.com.

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FOODSERVICE FRONT-RUNNER

Vespole Directs QC’s

Foodservice Future After climbing the ranks from a part-time employee to director of food service, Jennifer Vespole knows what it takes to make a food program a success.

Jennifer Vespole

By Erin Rigik Del Conte, Senior Editor

I

N DECEMBER 2016, JENNIFER Vespole, director of food service, celebrated her 29th anniversary with Whitehouse Station, N.J.-based QuickChek (QC), which operates 148 c-stores in New Jersey and New York.

“I have been involved in some capacity in all food and drink initiatives at QC since the early 90s,” she explained.

During her tenure at QC, Vespole gained a front seat as the company developed its foodservice program, and later, the expertise to head the foodservice department, spearheading initiatives such as the launch of Q Café hand crafted drinks in 2013.

Now, CSD recognizes Vespole as a 2017 Front-runner in Foodservice for her contributions to convenience store foodservice.

GROWING WITH THE TIMES In her current role as director of food service, Vespole leads a team of five employees responsible for creating the food-and-drink offering at QC, as well as managing the sales and profits for all fresh food and dispensed beverages.

Her team is responsible for sourcing all ingredients and packaging, as well as developing the processes and job aides necessary to execute the programs. They are also involved in training the operations team on these programs and taking photo shoots for menu and advertising materials.

“We also maintain the content for 24 Convenience Store Decisions

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the computer touchscreens and oven. “This has been tremendous in kitchen monitors, as well as the host further developing our menu and files with all of the product informa- giving us the ability to incorporate tion that produces the data that help great limited time offers,” she said.

Over the years, QC worked tireus manage the business,” she said.

In her almost 30 years at the com- lessly to expand and improve its pany, Vespole has been involved in a food offering.“In 2006, we introduced number of foodservice initiatives from our customer touchscreens, which experimenting with branded quick- helped build sales by double digits a service restaurants in the late 1980s couple of years in a row,” Vespole said. and early 1990s—“we learned a lot and decided branded foodservice MOVING FORWARD Vespole worked for QC part-time was our best option”—to introducing mobile ordering for the full food and doing data processing while in college. After graduation she planned drink menu in 2016.

“We know how important all digi- to go into advertising in New York tal and mobile engagement is to the City, but as she was interviewing for growth of our business,” Vespole said positions a job opened in marketing of mobile ordering. QC did extensive at QC. “I interviewed and found the internal testing and first offered a lim- opportunity intriguing,” Vespole said.

In 2011, she was promoted to ited menu on the app before rolling director of food service, a newly-creout the rest of the program.

QC’s entire made-to-order menu ated job function in the organization.

Out of all of her responsibilities is now available via the mobile app.

The average basket is slightly higher as director of foodservice, Vespole on mobile orders than on QC’s enjoys menu development the most. in-store touchscreens. “Our IT depart- “I love the creativity involved in the ment and our digital manager were process. We approach this very colon point and really made this pro- laboratively amongst the team, as well as involving our key vendor partgram launch a success,” she said.

Today, QC is renowned for its fresh ners,” she said.

However, it is her connections with foodservice program, which features custom-made oven-toasted subs, colleagues that Vespole finds most wraps and salads and fresh baked valuable.

“I am most proud of the team goods from an in-store bakery and of individuals that work with me,” award-winning, fresh-brewed coffee.

Vespole was involved in the initial Vespole said. “Choosing the right launch of QC’s Toasted Subs using people is essential to the success of impinger ovens in 1996. The chain any business and, I believe, I have the later incorporated the Turbo Chef best of the best.”

February 2017

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FOODSERVICE FRONT-RUNNER

Turner Making Waves

at RaceTrac

Because of his body of work at RaceTrac, CSD recognizes Steven Turner as a Front-runner in Foodservice for 2017.

Steven Turner

By David Bennett, Senior Editor

D

U R I N G H I S T E N U R E AT who is responsible for foodservice, McDonald’s, Steven Turner dispensed beverages, quality assursaw waves of food trends ance and food safety at RaceTrac.

RaceTrac operates more than 600 shake the industry. Some rolled in like tsunamis and some stores nationwide, some of which are under the RaceWay brand, in 12 states. quickly sunk below the surface.

During Turner’s tenure, RaceTrac “I was at McDonald’s for a long time—just over 11 years,” Turner said. integrated its new store prototype “Back then, the conversation was featuring Swirl World frozen treats, about Wendy’s and Burger King. Five an expanded coffee bar, salads, years into my time at McDonald’s, the sandwiches, fruits and bakery items new discussions were about Dunkin’ delivered fresh daily.

(Donuts) and Starbucks, the battle over breakfast and all these other things. CHANGES IN STORE Under Turner’s guidance, the And, at the end of my time—and what gave me greater awareness—the c-store chain is zeroing in on its strondiscussion was about the emerg- gest offerings to drive differentiation. ing threat of c-stores. The name of One of the programs that RaceTrac sees great promise in is its evolving RaceTrac would come up a lot.”

It was in 2012 the opportunity made-to-order (MTO) platform, with to move up within McDonald’s a focus on take-out offerings that also meant an expected move emphasize fresh, quality ingredients to Chicago. Looking to stay in the set at a budget-friendly price point.

T h e c h a i n ’s fi r s t M TO c o n Atlanta area, Turner again scouted RaceTrac Petroleum Inc., which was cept called The Speedy Avocado making its own foodservice ripples in Southwest Grill was a good testing ground for RaceTrac’s broader MTO the industry.

Now the director of food & bever- program that is being expanded, said age for the Atlanta-based c-store chain, Turner, who has a MBA from Georgia Turner explained that RaceTrac’s grow- Tech.The Speedy Avocado, launched ing reputation for quality programs three years ago, is being replaced and strong customer engagement is with RaceTrac’s large-scale rollout of its MTO program, which started what intrigued him.

“The more I learned about it and last May, when RaceTrac began the became exposed to the senior launch of a deli program comprising leadership and seeing the plans for customizable sandwiches.

A select number of RaceTrac stores growth and development with the business, it became a real easy deci- currently provide the new made-tosion to let go of McDonald’s and order offering, which allows patrons join the team over here,” said Turner, to create their own sandwiches, piz26 Convenience Store Decisions

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zas and specialty beverages, which include everything from milkshakes made with real, hand-scooped ice cream to espresso-based lattes, mochas and cappuccinos.

Patrons can build custom-made creations or choose from a list of options that include ham, egg and cheese croissants, meatball subs and pepper jack chicken wraps.

RaceTrac is working towards offering made to order at approximately 200 stores by the end of 2017.

MEETING DEMAND Like other successful c-store operations, RaceTrac is leveraging its brand to build customer loyalty. To this end, it’s adapting its foodservice programs to meet customer preferences.

Breakfast is a good example.

After studying store purchasing patterns, RaceTrac found its top sellers from 5 a.m-10 a.m. aren’t typical breakfast items. In fact, patrons purchase a wide range of items during the early morning including energy drinks and hot dogs. In fact, three of five RaceTrac customers prefer hot dogs over doughnuts for breakfast.

As Turner has refined the growing foodservice programs for RaceTrac, he also stresses that every foodservice venture begins with some basic fundamentals.

“If it doesn’t taste good and we’re not using quality ingredients and those basic things, we’re not going to be able to grow to the level that we want to, and expect to,” Turner said.

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COVER STORY

Building a Better F In CSD’s 2017 Foodservice Edition, we look at the latest trends and basic principles that convenience retailers are following to ensure quality offerings, modern menu options and bigger profits.

By Erin Rigik Del Conte, Senior Editor

T

HE FOODSERVICE LANDSCAPE CONTINUES to shift.

Customers want transparency, clean labels and better-for-you foods, but quality and variety are also top drivers in food purchases. What’s more, automation is poised to become an increasing player in the food arena.

Chicago-based research firm Mintel International, recently pointed to four trends that are expected to impact foodservice in 2017: 1. Technological innovations are expected to add convenience but disrupt traditional service models amid rising labor costs. 2. Food waste is a growing issue and operators are finding new ways to repurpose existing foods, streamlining menus and offering simplified choices to reduce food waste and consumer decision fatigue. 3. As global cuisines emerge, so too are fundamental preparation techniques.

Pickled and fermented items are popping up on menus as

fast o a t t n a we t for d of a you n f a r I u Q: tea re resta t we l ins food or mea ore, wha k st snac nience e ons? v con ain reas s: the m ason e R e Thre ety Top vari d o od fo ty fo i ore l M a 45% etter qu e better portunitiel,”s B e r Op 37% Prices a es, “CapturFinogods Chann c d i e Ser v epar ing 24% e Pr nsult Stor 1 Co nce ce: Q nvenie So ur e Co

in th 2016.

June

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are fire-grilled or smoked items. 4. Americans want exciting experiences when it comes to food.

Q1 Consulting LLC’s recent study, “Capturing Opportunities in the Convenience Store Prepared Foods Channel, June 2016,” polled 250 retailers via phone and 1,000 customers online to determine the opportunities in foodservice.

The study found c-store foodservice sales were driven by prepared sandwiches (34%), in-store bakery (27%), roller grill (22%) and all other prepared foods (17%).

To compete in the foodservice arena, 48% of c-stores respondents hired dedicated foodservice employees. Of c-store respondents, 15% allowed customers to pre-order prepared foods or made-to-order items via an app, while 6% offered a kiosk option.

BETTERING THE COMPETITION C-store respondents told Q1 that other c-stores are their biggest competition for foodservice dollars. But quick-service restaurants (QSR) and grocery stores were close behind.

From the customer standpoint, food variety and quality were the top concerns when deciding where to purchase a meal. When not visiting a c-store, 58% visited a QSR for a meal and 40% for snacks. Why? The QSRs were seen as offering broader food variety (45%) and better food quality (37%).

“C-stores are well poised to take on QSRs more aggressively in 2017. One of the major drivers of change will be the customer base,” said Tim Powell, vice president of consulting for Q1 Consulting LLC. The younger generation coming of age didn’t see c-stores in their foodservice infancy when they struggled with food quality, appeal, handling and atmosphere.

Moreover, QSRs will be challenged to compete with the variety of fresh items c-stores are offering from grab-and-go cases, Powell said.

ON THE GO Grab-and-go foods are in high demand and many c-stores today offer an array of fresh cold and hot prepared options.

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COVER STORY

er Foodservice Program Powell noted that a variety fresh foods and beverages customers can customize to their needs and still exit the store in three minutes signals quality to the customer.

“Traditional QSRs have fried foods and a limited menu.

Only the fast casual channel has these (fresh) options, but customers pay a hefty price for the food,” Powell said. This gives c-stores a leg up on the grab-and-go competition.

C-stores can further signal “quality” to customers through taste, appearance and packaging. One of the biggest things that can hurt quality perception is expired food.

“Convenience stores have gotten better at discarding food to improve their image and position, but the segment still has a way to go,” Powell said.

Savvy retailers know spoilage is a necessary part of the foodservice equation, and one to be included in P&L level plans.

Q1 found the heaviest users of c-stores, males aged 18-34 and groups earning $75,000-$99,000 annually, used prepared foods more in the first half of 2016 compared to 2015.

Some 23% of customer respondents visited a c-store for prepared foods and 16% for bakery items. Of grab-and-go/ prepared food respondents, 61% knew what they planned to purchase before entering the store.

“The drivers of c-store patronage have long been tobacco, alcohol and fuel. It is very encouraging that prepared food (not just dispensed beverages) is becoming one of the major influences,” Powell said.

transparency are all tied into this movement.

“This movement is in part due to the generational demands, but also driven by the quickness in which society can learn about ingredients and food production,” said Powell. “If we can take the ‘yellow’ out of Kraft Mac and Cheese—pure Americana—then I think it’s time to acknowledge that consumption patterns and needs have changed.”

HEALTHY EVOLUTION The International Dairy Deli-Bakery Association’s “What’s in Store 2017,” report found 68% of consumers would like to see more healthy claims on menus; 76% of 18–34 year olds would eat more prepared meals if they were less processed.

Finding better-for-you (BFY) products at a c-store is important to 57% of customers, Q1’s study found. And finding BFY options was more important to males ages 18-34—the most frequent c-store patrons—than the average consumer.

But just what does BFY mean in 2017? According to the Q1 study, among males aged 18-24 who are regular c-store users, the top BFY features include low calorie (38%), low fat (33%), fresh (33%) high protein (33%), prepared fresh onsite (31%), clean label (31%) and all-natural (27%).

FOODSERVICE MATTERS The Q1 study showed almost 30% of c-store customers visited between 5 a.m.-11 a.m.—prime breakfast time.

Customers aren’t only buying pastries and bagels with their morning coffee. Atlanta-based RaceTrac, which has LIVING LOCAL A trend toward local and sustainable foods, which has more than 600 RaceTrac and RaceWay stores 12 southern been more prominent on the both coasts, is expected to con- states, recently revealed three out of five RaceTrac breaktinue in 2017, migrating inward to middle America over the fast customers buy hot dogs over doughnuts in the morning.

In the pages ahead, c-store retailers and industry experts next few years.

“This social consciousness movement is not a fad,” share their perspectives on healthy food options, on-the-go said Powell. Cage-free eggs, real sugar, no processed offerings, breakfast, profit and loss planning and local/susingredients, locally-sourced produce, clean labels, environ- tainable ingredients—all of which are expected to play even mentally-friendly packaging and sustainable sourcing and bigger roles in the industry, going forward.

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COVER STORY>Grab and Go

Grab and Go Is Hot As dayparts blur and snacking soars, Rutter’s appeals to customers with quality and variety.

By CSD Staff

RUTTER’S FARM STORES’ 66 locations offer a complete graband-go experience with 83 hot grab-and-go offerings. Items span many flavors and sizes of burgers, fried & grilled chicken sandwiches, subs and wraps, tornados, pork egg rolls and stromboli. The York, Pa.-based retailer’s grab-n-go pizza program offers both breakfast and lunch/dinner varieties. And that’s just hot offerings. Rutter’s also boasts more than 120 grab-and-go options in its cold case. CSD caught up with Ryan Krebs, Rutter’s director of food service, to see what’s heating up for grab-and-go in 2017. (For another take on grab-and-go, see this month’s Industry Perspectives column on page 82.)

Ryan Krebs

CSD: What grab-and-go trends do you foresee in 2017?

Ryan Krebs (RK): Snacking items are the big trend, specifically those that are hot, quality, smaller portions and offer variety. Variety, snacking and choice are in demand.

Our customers seek the same quality as the made-to-order (MTO) offerings, simply without the wait. Diversity of offering has not been a high expectation throughout this segment per se, but ‘convenience’ led the charge. However, that is changing. Higher demand will continue for additional flavor profiles, such as Latin and Asian flavors. Highly-sought items, such as chicken wings, mozzarella sticks and French fries will be requested. The grab-n-go customer, similar to the MTO customer, will want ‘more and more.’ We’ll no longer be able to offer 2-3 sandwiches in the hot hold and satisfy the demand. As dayparts cease to exist, diversity of offering around the clock—including on the hot hold—will be the expectation.

CSD: On Jan. 17, Rutter’s debuted a hot grab-and-go pouch bringing kiosk items to the grab-and-go section at 53 of its 66 locations. Tell us about the new offering.

RK: We added 13 top-selling kiosk offerings to the grab-n-go program: mozzarella sticks, BBQ beef short ribs, chicken wings, French fries, hashbrowns, chicken tenders, fried sweet bologna, macaroni & cheese bites, onion rings, jalapeño & cheese bites, boneless chicken chunks, sweet corn bites and fried pickles. Customers can choose a variety of grab-n-go sauces as well—marinara, buffalo sauce, bleu cheese and ranch dressing—at no additional cost. We’ll continue to add a variety of offerings as the program develops.

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Q: Whe n purcha making a de se a pr cision ep to go mea l item ared food/g rab an store, h at a co d n o the fol w influentia venience l are e lowing a c (% ind to you icating r decis h of importa ion? nt/ver y impo rtant) 73% Fo o d bra nd I b 65% G uy reg rab-nularly go/sel access f ser ve ibility 65% Fo o d bra n 64% H ow fo o d I recogni ze d/beve d ispla rage is y e d 58% H o w it is pack age d So urce : Q1 Co nsu

lting,

2016 C -Store

Consu mer Su rvey

CSD: Rutter’s partnered with Robbie Flexibles, headquartered in Lenexa, Kan., to offer state-of-the-art hot pouch packaging for the new grab-and-go items. What is unique about the hot pouch?

RK: The uniqueness of this pouch allows for the integrity of the products to remain, while providing extended shelf life and holding optimal temperature. It’s been created with a thin, durable film that provides constant heat around the entire product. Vented holes allow breathability, so steam releases and keeps the product crisp rather than soggy. It’s microwavable, re-sealable and has a handle for easy transport. A clear window easily displays each item and all bags are Rutter’s-branded.

CSD: A recent Q1 Consulting survey found customers are most concerned with variety and quality when it comes to grab-andgo foods. How is Rutter’s checking these boxes?

RK: Rutter’s now offers 83 pre-made options in the hot grab-n-go case. The variety is endless and offers customer choice. Since many customers prefer the convenience of grab-n-go, the number of items available allows them to always find new and different options. The quality piece resonates via the product itself as well as the Rutter’s process in providing it. A majority of our grab-n-go items are made in-house, including baking our own sub rolls, building our breakfast sandwiches and creating our own stromboli from scratch. These freshly-made items are the same quality as those on our MTO kiosk.

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COVER STORY>Healthy Food

QuickChek Wins With Fresh Sales From simple ingredients to label transparency and merchandising to showcase ‘fresh,’ QuickChek is meeting consumer requests for better-for-you food.

By CSD Staff

CSD: When it comes to ‘healthy foods’ nience channel have changed with time, the concept of fresh what trends are you seeing heading into is now naturally positioned at the forefront of the customer 2017? Have you noticed an increased experience. Consumers’ demand has grown for better- interest in better for you foods?

JV: The big trend we are seeing is for-you foods, but the definition of healthy has evolved to include fresh options, clean and transparent labels, all- transparency. Customers want to know natural and even high protein offerings. CSD spoke with what they are eating from the ingredients fresh food expert Jennifer Vespole, director of foodservice at to the nutritional content. Based on all Whitehouse Station, N.J.-based QuickChek, which operates the advertising Panera is doing, I think Jennifer Vespole 148 locations in New Jersey and New York, to learn what clean menus are the wave of the future. the industry can expect next.

CSD: It seems the definition of ‘healthy’ is evolving. What are your customers seeking when they look for ‘healthy’? How are CSD: What are some of the fresh and healthy foods QuickChek you catering to that need? offers customers?

JV: Currently, we have parts of our menu where we Jennifer Vespole (JV): QuickChek has a robust madeto-order business that focuses on great tasting breakfast have focused on clean ingredients. It is a work in progress. and lunch options. Our menu is highly customizable. We Many of our items have short, simple ingredient lists and have breakfast options on English muffins, biscuits, tor- can be classified as all natural. Some examples include alltillas, Kaiser rolls, Portuguese rolls, croissants and bowls. natural turkey and grilled chicken, white or wheat sub rolls, Our lunch offer spans from subs, wraps, sandwiches, bur- baguettes, Vermont Cheddar and Cilantro Pesto. Our soup ritos and bowls to fresh-made salads, soups and snacks. We offering has similar simple food ingredients. Where possioffer the ability to customize an order based on the nutri- ble, we are eliminating artificial flavors and preservatives. tional value of what you are creating. Every touchscreen shows the customer the final nutritional content of their CSD: Simply conveying the idea of ‘fresh’ can be a major way order. We also offer an under 400-calorie section so custom- to also convey healthy to customers. What are some ways QuickChek showcases a sense of ‘fresh’ to foodservice customers? ers can head there if they are looking for direction.

JV: We do a good job of presenting great looking products via our food photography, which is used in various How important is it to you that you can find formats from store menu boards to billboards to digital ‘better for you’ products in a convenience store? advertising. We are also continuously working on how we merchandise the store to be food first and really show off 24% Extremely the freshness of our offer. All of the sandwiches, wraps and 33% salads in our grab-and-go case are made in store daily and 44% have a 24-hour shelf life. We merchandise these items on the Very 37% side of our case with the highest foot traffic.

We make sure our labels take up the least amount of 20% Somewhat 20% space as possible so the customer sees fresh, great-looking product and not packaging. We use similar tactics with our 11% Not Very bakery products so we present more product than packag6% 18-24 years old ing. We have bakery tables placed in the front of the store 25-34 years old 2% where we display fresh, take-home bakery items. These Not at All 3% freshness cues exist in high traffic areas of the store to emphasize what we call “fresh in your face.”

Source: Q1 Consulting, 2016 C-Store Consumer Survey JUST AS FOODSERVICE AND food offerings in the conve-

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1/27/17 1:15 PM

COVER STORY>Breakfast

Breakfast Is Driving C-Store Traffic A well thought-out breakfast plan, tying all foodservice elements together, will lead to a well-executed roll out, fetch foot traffic and increase sales.

By CSD Staff

Chad Dewberry

MORE AND MORE, CONSUMERS are looking at convenience stores as morning destinations. This includes the growing demand for bakery products. In fact, studies show that about 29% of c-store traffic by occasion occurs during the breakfast/brunch rush. For pointers on how to build a breakfast/bakery combo, Chad Dewberry, merchandising manager, foodservice for McLane Co. shared with CSD some industry insights.

CSD: For convenience stores, how important is understanding the mindset of foodservice competitors, including limited-service restaurants and quick-service restaurants, when developing a breakfast program?

Chad Dewberry (CD): Understanding the mindset sage of foodservice competitors gory U e t a C re In-Sto es should be a focus of any 16 Chang sits 20 i V convenience store operator. y r e year re Bak (half In-Sto e d to 2015 For a store to be competiar Co mp tive and gain an edge on . s) tion or projec tore f s c the competition the opere th ses isited 5 ator needs to do their purcha 1 y 0 23% v r 2 e k to ed re ba ompar in-sto homework to determine 2016 c re for o t in s e r c ss e mo h t d ses le a te h i what is already being s c i r v ry pu 25% e bake ed to 2015 rvey done; what niches are r o t s in er Su par onsum 6 com tore C being filled, where are in 201 onsulting, 2016 C-S C Q1 Source: there gaps in offerings and what price points are the consumers expecting? Overall, they must know what will and will not work in their area before they ever start a foodservice journey.

CSD: What is the biggest mistake some convenience stores make when developing a breakfast program?

CD: Understanding the commitment required to roll out a new daypart in your foodservice offering is a mistake for some convenience stores. Additional dayparts require additional labor, typically at least a few additional SKUs and new recipes to be executed. Ensuring training for quality and consistency are imperative to the success of a breakfast program.

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Breakfa st Daypa rt Purch ases 15%

of resp ondents a c-s to visite d re to p urchase during fo o d the bre akfas t (5 a.m.daypar 8:59 a.m t .)

14% of respond ents vis a c-s to ite d re to p urchase during fo o d the late mornin meal/s g nack d aypart (9a.m.10:5

CSD: What issues 9 a.m.)

Source: should convenience Q1 Cons ulting, 20 16 C-Stor e Consum operators consider when er Survey developing a breakfast menu in their stores?

CD: When developing a breakfast menu, convenience operators need to understand where they are in their foodservice journey. By that I mean what can be executed perfectly in their current footprint, with the current labor and level of execution. If a store does not have prep areas the menu could not include made-to-order items without a large capital investment. Convenience operators need to consider their store employees when developing a menu. Is additional training required? Is there adequate labor allocated? If the labor required by your breakfast program results in a reduced focus on cleanliness or customer service, it can be detrimental to the store as a whole.

CSD: Quality, service, cleanliness and value [QSCV] are common objectives in a good foodservice program. Are these becoming even more important as more c-stores are expanding their own programs?

CD: Absolutely. We all know that Millennials look for products and places that provide a special experience. The environment in and around a convenience store is just as important as the products being served. For foodservice, this mindset goes even further regarding cleanliness. Not only the Millennials, but most consumers, won’t eat where they don’t have a comfort level with the environment’s sanitary practices.

CSD: More c-stores are expanding their bakery offerings. For those retailers looking to launch a bakery program, what are some factors they should consider beforehand?

CD: Bakery offerings have been a long time staple in the convenience industry, but the new focus on foodservice allows convenience stores to enter a ‘premium’ environment. Avoiding cannibalization of packaged bakery is important to the overall success of the bakery program.

Their item mix should complement the community and provide a more indulgent/premium selection than the packaged bakery endcap that may already be in the store.

There are great thaw-and-serve bulk programs out there to help increase register ring with limited labor.

CStoreDecisions ecisions .com

1/29/17 9:53 PM

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1/27/17 1:24 PM

COVER STORY>Local

One C-Store Goes Local Spinx incorporates local fruits into its Fresh on the Go program to appeal to shopper demand for more locally-sourced produce.

By CSD Staff

ST: The items that are sourced locally are primarily waterclean labels, sustainable sourcing and melon—which make for delicious, juicy watermelon cups food that remains fresh along the path in the summer months—and apples, which are sold both from farm to table, the demand for local whole and also sliced and added to fruit cups. Spinx handles the preparation and production of the items in our food has grown.

In response, some restaurants have central kitchen, in Simpsonville, S.C. added their own gardens to offer “hyperlocal” or grown-in-house fare, while others CSD: What has been the customer response to the local offering? tout “locally-sourced” menu items. Many What is the benefit to c-stores in offering fresh, local food and how supermarkets, fast-food chains and even do you think it influences the perception of your food program?

Sandy Turner ST: Our offering of freshly-prepared items has been well Walmart have worked to incorporate more received since we introduced the program in 2011, as well local foods. Chipotle has a local grower support initiative.

The c-store industry has been slower to adopt the trend, as the introduction of local fruits in 2013. Customers have with many retailers still focused on getting a profitable food responded positively as we have continued to learn our customers’ likes and dislikes and make changes accordingly. program up and running in general.

Greenville, S.C.-based Spinx is one c-store that sees the demand and the benefit for incorporating local produce CSD: Your new Greenville, S.C. location includes a community garden that will serve as a way to educate the children living into its foodservice selection.

Spinx, which operates 81 c-stores across South Carolina, in the local community about healthy eating. What role does partners with a supplier that sources some of the fruits used Spinx play in the garden?

ST: The garden is a partnership between Feed & Seed in its Fresh on the Go foodservice program from local farms.

CSD spoke with Sandy Turner, director of marketing and (a non-profit organization connecting farms to markets in advertising for Spinx, about the chain’s decision to offer South Carolina) as well as Farm to Belly/Choosy Kids program. The community garden is on the Spinx property and local options to customers. the use of the land as such has been an ongoing conversation between our team and the folks at the Feed & Seed CSD: What types of items are available through the Spinx’ organization and their contacts. Feed & Seed will organize Fresh on the Go program? with Farm to Belly and handle the planting and all related Sandy Turner (ST): Our Fresh on the Go menu has grown to include things like Italian subs and wraps, sand- activities of the garden, with the idea of bringing in and educating the local community. wiches on pretzel rolls and ciabatta, as well as an everchanging variety of salads, veggie and fruit cups as well as yogurts. We are constantly evolving this menu to make Will the trend of local foods pick up steam? sure we are providing the type of items that our customThe National Restaurant Association surveyed nearly 1,300 professional ers seek out. chefs—members of the American Culinary Federation—on which AS CONSUMERS INCREASINGLY LOOK for

CSD: What inspired Spinx to incorporate produce from local farms into its Fresh on the Go program?

ST: We saw that sourcing food locally was becoming increasingly important to the customers in our markets so from a business standpoint we looked for ways that we could provide this to our customers. We reached out to our produce supplier and they were able to with some specific items. We have been providing locally-sourced produce— specifically apples and watermelon—for about three years.

CSD: Which items in the Fresh on the Go offering come from local farms? How are the items prepared?

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food, cuisines, beverages and culinary themes will be hot trends on restaurant menus in the year ahead. Here are their responses on the local/sustainable trend.

Yesterday’s Perennial Trend HOT News Favorite Hyper-local (restaurant gardens, onsite beer brewing, house-made items

80%

9%

11%

Environmental sustainability

76%

7%

24%

Locally-sourced produce

70%

6%

24%

Locally-sourced meat and seafood

68%

8%

24%

Source: National Restaurant Association,“What’s Hot 2017 Culinary Forecast” CStoreDecisions ecisions .com

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CSD - Nov.pdf

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COVER STORY>Profit and Loss

Tracking Profits and Losses A solid foodservice P&L helps c-stores determine the true cost of food items, ensuring operators are pricing their offerings competitively.

By CSD Staff

ALTHOUGH MANY PEOPLE KNOW a store profit and loss

statement is important to understanding their business’s growth, it can be challenging to know what information to include when creating one. Often it can carry everything from the price of napkins to labor costs. Sarah Prorok, director of food and beverage at Thorntons Inc. in Louisville, Ky. explains how a P&L is a necessary tool in any c-store’s foodservice arsenal.

CSD: Why is a profit and loss statement important to a company’s foodservice operation?

Sarah Prorok (SP): Profit and loss statements are important for measuring sales units, dollars, average retails, gross profit and gross margin. Being in foodservice is a big commitment and being able to measure the results of that activity is important to understanding the return you are getting from that investment.

CSD: Should P&L statements be constructed for weekly, monthly or yearly assessment? Or should a retailer use all three?

SP: Monthly statements are important to understand how the changes you are making (promotions, products, pricing, etc.) are impacting the bottom line. Being able to monitor performance month to month and year over year allows you to identify trends to forecast and budget accordingly.

CSD: What are the more common expenses c-store operators should consider in terms of a P&L? SP: Labor is a big part of the foodservice expense summary. Having a high amount of labor dedicated to fixed costs like routine cleaning and maintenance of equipment make the value proposition difficult if sales volume and profit are low.

Basically the more you sell, the lower the fixed labor costs are as a percent of sales.

Retail cost of goods (products), non-retail A P&L consists of cost of goods (assoone basic formula: ciated supplies for retail products) and Sales + expenditures = profits. waste are also common P&L expenses.

Those profits are your Waste is critically net income, or funds important but can left after accounting for taxes, employee costs and easily be mismanoperational overhead. aged. Retailers often make the assumption 38 Convenience Store Decisions

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that no waste is a good thing. Having some waste indicates that we did not sell out and that we were in business during designated operating hours. On the flip side, excessive waste could indicate poor product quality, over-production and the wrong product variety, among other things. Having visibility on waste performance is important.

Sarah Prorok

CSD: What are some related costs of a foodservice program that many c-store operators tend to overlook?

SP: At a high level, the cost of advertising and promotion can be daunting. This expense is not only an initial investment to gain and grow units but also a significant investment on an ongoing basis to keep guests aware and engaged with the foodservice program. The often difficult-to-measure benefits of advertising and promotion are organizational confidence, operational competence and ultimately, guest confidence in a foodservice program. In spite of these challenges, the returns from this expense should only compound over time.

CSD: How do you approach listing sources of income as it relates foodservice, beverage offerings, etc.?

SP: We monitor performance by subcategory for dispensed beverages including hot, cold, frozen, ice cream and the associated supply costs for each of those. Fresh food is similarly split into bakery, other fresh food (fruit, salads, snacks, etc.), roller grill, sandwiches and associated supplies.

CSD: What are some related costs that should be included in a P&L when assessing foodservice expenses?

SP: Outside of retail cost of goods or purchase costs, it is important to account for non-retail purchases such as condiments, cutlery, napkins, etc. If these expenses would not be occurring absent of foodservice sales, then they are a cost of being in the business and should be captured accordingly.

CSD: Do you have a tip for making the P&L process easier?

SP: Doing all accounting-related procedures consistently, accurately and timely makes the process and resulting outcomes more actionable and impactful. Having confidence in and understanding the numbers is the first step to reacting and implementing changes as a result.

CStoreDecisions ecisions .com

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1/27/17 1:22 PM

FOODSERVICE

Equipped for the Future

No matter the degree of foodservice expertise, pacing in the kitchen is imperative.

To speed things along, innovations in foodservice equipment are making c-stores’ work easier.

By Jeffrey Steele, Contributing Editor

N

“We have to be efficient,” said Bob Derian, corporate chef constantly impacting the convenience store sector. for Atlanta-based RaceTrac Petroleum Inc., which operates Equipment quality continues to improve, based on more than 600 stores under the RaceTrac and RaceWay banadvances in technology that affect how products ners in 12 southern states. “We have to be sure we can cook are heated, how they are held at proper temperature and in foods consistently and sell food quickly while maintaining the analytics of forecasting foodservice demand and sched- food safety practices. Keep in mind too that a smart foodservice designer will develop the menu first and then purchase uling food production.

As foodservice programs continue to evolve, c-store equipment to execute upon that menu later. Many c-stores operators continue to strategize to stay ahead of that vitally purchase a nice piece of equipment first, but then that limits what they can offer.” important foodservice equipment curve.

Adding innovative foodservice equipment, such as com“If you’re not constantly evaluating your operations and the food you’re delivering, while also managing your costs, bination ovens as opposed to regular convection ovens, has you’ll lose in some way,” said David Bishop, managing enabled RaceTrac to realize a top corporate priority, offerpartner at Balvor LLC, a sales and marketing practice based ing its customers higher-quality menu items. Given the speed-oven technology available today, RaceTrac can cook in Barrington, Ill. foods faster, while not worrying about problems associated Sometime the losses aren’t immediately apparent.

“You could be losing on margins because you’re not as effi- with using a microwave. This cutting-edge technology also cient, or on sales because your quality isn’t as good. It’s all reduces space and increases offerings on the RaceTrac menu.

“We have a speed oven that is used as our pizza oven, but about looking at how I can provide the consistent quality my can cook many different types of foods,” Derian said. That’s customers’ demand, while also seeking to manage costs.” a huge win when compared with the limitation of foodservice equipment a decade ago, he added. Back then, the huge REVIEW AND INVEST The most important reason c-store foodservice operators ovens consumed significant space and could only be used must regularly review and invest in new foodservice equip- to bake pizzas.

For other operators, a preferred approach may be to ment is their need for efficiency.

EW INNOVATIONS IN FOODSERVICE equipment are

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FOODSERVICE Since the majority of c-stores are moving toward new pieces of technologically-advanced equipment it is becoming difficult for any one company to wrest a competitive advantage over others based solely on innovative equipment. Speed-oven technology, such as that provided by Merrychef and TurboChef, is among the most promising innovations arriving in c-stores today.

invest in newer versions of their tried-and-true foodservice equipment.

One such example is Chris Carter, owner of Shout & Sack, a 40-year-old convenience operation, located on historic Route 66 in Vinita, Okla. Carter recently purchased his fourth fryer from Broaster, which helps cook the c-store’s to fan speed and microwave percentage levels in order to primary menu item. “(It helps me) keep up with my chicken business, [includ- cook frozen or thawed items perfectly. They are super usering] bone-in chicken breasts, wings, chicken strips, all friendly at the store level once they are programmed in a test kitchen.” hand-breaded,” Carter said.

At Circle K stores in his neck of the woods, Bishop has Carter also just added a Federal Industries deli case. “It will run as a peninsula on an endcap,” he reported. “I can noticed a rollout of new coffee equipment that produces hot get three times as many items in the same amount of space. chocolate, espressos and cappuccinos.

“They are essentially using the same type of machine as I’m just expanding that for my grab-and-go business.”

State-of-the-art software, when combined with food- Starbucks baristas use, with the distinction that it is selfservice equipment, can yield wholesale gains in efficiency, serve,” Bishop said. “You just can’t beat these price points.

Bishop said. The location of Louisville, Ky.-based Thorntons So if the machine pours and delivers just as good a cup Inc. he visited recently in suburban Chicago had introduced of coffee as Starbucks, but for $2 less, the rational person Spark Analytics software. The program enables the chain would ask, ‘Why not go to Circle K?’ What would appeal to to examine buying patterns, days of the week and even any retailer is attracting business from those not currently weather forecasts to decide how much of certain foods buying coffee at their stores.”

When it’s time to turn thumbs up or down on a new should be prepared. The system produces a strip bearing the time it was prepared and time by which it must be sold. piece of equipment, Carter does his homework. “Lots of my “With the Internet of Things (IoT), these analytics are friends have convenience stores,” he said.

“I let them be guinea pigs on new equipment, especially just as important as the traditional equipment,” Bishop said. “They ensure consistent quality while managing food with deli cases. There are so many out there at so many price costs. It’s increasingly becoming clear that in this day and points. A friend of mine bought this Federal Industries case, age, technology can enable and enhance the capabilities of and now he has them in all 16 of his stores. That tells me he traditional ovens and other food prep. The technology and is satisfied. I trust him and always listen to what he says.”

On deli case purchases, he invariably checks with the analytics are enabling stores to produce quantities closer to expected or forecasted demand, and they’re doing that his community’s health inspector to determine whether through analytic tools examining historical sales to adjust there have been problems with the specific model he’s considering. what’s prepared on a daily or hourly basis.”

The final determinant often is level of fit with convenience store operations. “It’s got to work in my store,” PROMISING INNOVATIONS Speed-oven technology, such as that provided by Carter said. “I take that into the equation before I punch Merrychef and TurboChef, is among the most promising the button.”

Added Bishop: “It’s important for retailers to evalinnovations arriving in c-stores today, Derian said. Speedy ovens deliver a combination of microwave and convection uate how good a fit the equipment is to their business.

Innovation without fit is not necessarily good.” cooking in the same oven.

Derian believes it’s not really possible to plan ahead for As a result of that dual capability, RaceTrac can preset the ovens so each item cooked has its own setting. That setting the innovations that may be coming next year or five years can then use different levels of each cooking type in order to from now. Still, c-stores can be proactive.

“Equipment companies are watching menu trends and ensure the best products.

“It used to be that you had an oven where everything was will stay in front of the industry’s needs,” Derian said. “The cooked, and you simply got what you got,” Derian said. last seven years alone have a seen a tremendous leap in “Now we can adjust the settings for time and temperature technology.” CSD 42 Convenience Store Decisions

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CStoreDecisions ecisions .com

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1/27/17 12:50 PM 1/17/17 2:47 PM

FOODSERVICE

Reheating Coffee Sales With so many options available, consumers expect to get their perfect cup of coffee all day, every day. Retailers share tips on how they turned their store coffee bars into daily destinations for brew enthusiasts.

By Marilyn Odesser-Torpey, Associate Editor

M

fast sandwiches to doughnuts, snack cakes and biscuits,” stores with coffee, and if the coffee program is said Roccagli, who works with the company’s 1,600 retail done right it is likely to boost overall foodser- partners in 32 states. “We found that just by being merchanvice sales, said a report published last March by dised alongside these items, our Royal Cup Coffee program drives companion sales and multiple rings at the register.”

Mintel market research.

At Englefield Inc.’s Duchess stores, with 118 locations in The good news, according to the researchers, is that more than half (56%) of Americans who have visited a c-store in Ohio and West Virginia, the retailer’s proprietary-branded the past three months feel that the stores make coffee drinks Crown Café coffee bar is usually located right next to the doughnut case to promote impulse sales, said Judy Dudte, as good as coffeehouses.

When asked which of the following made-to-order or the company’s director of foodservice.

Coffee-centric promotions, which change every two fresh foods/beverages they had purchased at a convenience store in the last three months, 42% of the respondents said months, include a free cup with the purchase of a breakfast hot brewed coffee/lattes/etc., making coffee the second sandwich, bundling with other food items and, in winter, all size cups are sold for 99 cents. The Crown Card loyalty prohighest ranking item, second only to fountain beverages.

With one-quarter of the consumers saying that a combo gram rewards customers who purchase five cups of coffee meal would encourage them to order more made-to-order with a sixth one for free.

Consumers really like and use loyalty programs, said foods from the stores, the researchers concluded that retailers could leverage the popularity of their coffee with Mintel foodservice analyst Caleb Bryant. Bryant noted that bundling and special meal deals such as charging a reduced in a recent Mintel survey, 36% of c-store coffee consumers price for a breakfast sandwich with the purchase of a coffee. would like to see loyalty programs where they shop.

At Dallas-based Empire Petroleum Partners LLC, Ted Roccagli, director of partnerships and preferred vendor pro- FRESH + LTOS Roccagli emphasized that the biggest enticement to increase grams, is a big believer in bundling food items with coffee not only to get a “bigger ring at the register,” but also to sales is the aroma of freshly-brewed coffee. He explained that this aroma is one of the things customers expect to experience introduce shoppers to the stores’ fresh food offerings.

“We bundle our coffee with everything from break- in a c-store with a well-run beverage and foodservice offering.

ANY CONSUMERS ASSOCIATE CONVENIENCE

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CStoreDecisions ecisions .com

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“It only stands to reason that if you want to be a coffee destination, you should have fresh pots available as long as the store is open,” he said.

“Coffee drinkers drink coffee 24 hours a day and, after all, as the old saying in our industry goes, ‘the first cup pays for the pot.’ You can’t get much more profitable than that.”

For glass pot systems, new batches should be brewed every 30 minutes to an hour to avoid smelling and tasting stale or burnt, Roccagli pointed out.

Thermal or air pot systems can hold fresh coffee for up to two hours.

“When I go into Panera Bread, I see that they note the actual time the coffee is brewed right on the pot,” he said.

“It’s a good idea because it shows me how serious they are about coffee.”

Thirty-five of the Duchess store locations have satellite urns and most of the rest have traditional glass pots.

In these stores, fresh coffee is brewed every 30 minutes.

For almost a year, the company has been testing bean-to-cup brewers that grind the whole beans and brew a single cup at a time in four of its newbuild stores. The brewing process takes about 60 seconds.

“Although it’s a more expensive system, it delivers the freshest cup of coffee a customer can get anywhere,” Dudte said. “Another advantage is that there is little to no waste.”

One Duchess store also has a made-to-order offering set up where customers can get barista-prepared espressos, cappuccinos and lattes. The program has been running in the store for about a year. A second is scheduled to begin operating in mid-March.

Duchess stores offer a minimum of three blends—a signature blend, Duchess Dark and decaf. Stores with space for a larger coffee service also feature a rotating single country-origin World Brew such as Guatemala Highlands or Bogota Sunrise.

Different flavors and customization are achieved through mixing and matching of flavored creamers and syrups, some, such as peppermint for winter, of which are seasonal.

CStoreDecisions ecisions .com

1/29/17 9:58 PM

FOODSERVICE

4COFFEE CUES

1. Consumers expect great coffee all the time.

2. Coffee is a natural companion to foodservice offerings.

3. Fresh-ground and/or brewed aroma draws attention.

4. Specialty coffee sales are growing.

Our #1 selling snack items have

2- NEW Flavors!

To attract attention and drive sales, the coffee area should be well defined with attractive graphics and display an assortment of creamers, sugars and syrups so customers can readily see that they can prepare their cup anyway they want it, Roccagli said. In addition to offering a regular blend, dark roast and decaf, Roccagli suggests that Empire Petroleum partner stores also include one or two limited time offer (LTO) coffee varieties.

“A featured ‘Blend of the Month’ gives customers something new to try,” he said. “Write a short paragraph about the blend on a sign in the coffee area to pique their interest.”

Ninety percent of the partner stores also have cappuccino machines with a minimum of three heads for regular, French vanilla (the company’s No. 1 best seller according to Roccagli) and hazelnut. The machines are available at no charge to retailers who purchase the supplier’s coffee products.

GROUNDS FOR VARIETY The Specialty Coffee Association of America (SCAA) suggested that introducing a “luxury line” of coffee could pay off in 2017. The SCAA predicts that within the $48 billion U.S. retail coffee market, 55%, or $24.6 billion, will be spent on specialty coffee this year.

“A strong specialty program can help differentiate a c-store chain from its competitors,” the report concluded.

Mintel also found that 38% of convenience store customers who ordered coffee said they were interested in single origin and flavored coffee roasts.

Younger and more affluent customers in particular are looking for robust coffee bars where they can customize their own drinks with flavored creamers and syrups or have a barista do it for them.

As of last spring, Millennials have replaced baby boomers as the largest living generation, according to U.S. Census data. And, said SCAA, unlike their parents, these Millennials are more focused on the coffee experience than on price.

Millennials often look for sweeter coffee options that they view as a treat any time of day, Mintel’s Bryant explained. As examples, he pointed to Pilot Flying J’s recent Twix Cappuccino and Get Go stores’ seasonal Pumpkin Spice Latte.

Additions to sweeten up self-serve coffee bars can include marshmallows and chocolate sprinkles.

By tailoring your coffee bar to your core customer demographics, you could attract valuable new customers or entice lapsed customers to give you another try, Bryant said. CSD CStoreDecisions ecisions .com

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CATEGORYMANAGER’S NOTEBOOK

Chocolate Attracts Snackers While overall chocolate volume saw a slight dip in 2016, convenience stores helped buoy category chocolate sales.

By Brad Perkins, Contributing Editor

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the register can result in sales to even those who are avoidchocolate, many consumers have moved away ing the candy aisle.

“Suppliers need to be willing to be flexible and creative in from snacks perceived as unhealthy and toward ways to generate interest and excitement with their brands,” more health conscious eating.

Healthy snacks have become the norm in stores and in said Joseph Bortner, category supervisor at Rutter’s Farm some places have outpaced “unhealthy” snacks in terms of Stores, which operations 66 locations in Pennsylvania. sales. The good news is that despite health consciousness— “New product introductions can be extremely successful when we use our marketing tools to drive interest and or maybe because of it—people are snacking more.

“The big overarching trends are that consumers are snack- excitement not only for our customers but also for our team ing a lot—many times a day and in many different types of members.”

This creativity is key as chocolate producers respond to occasions or situations—but at the same time, they are concerned about their health,” said George Puro, president of the desire for more healthy options by encouraging sharing Puro Research Group, which published the recent Packaged and portion control and introducing alternatives to chocolate, like Hershey’s sweet and salty Snack Mix line, which Facts report, “Chocolate Candy Market in the U.S.” And though they may intend to buy healthy, when cus- added Take 5 and Almond Joy varieties; Hershey’s 2015 tomers come to convenience stores for snacks, they buy purchase of Krave Jerky; and Mars’ goodnessknows snack chocolate. Though the Packaged Facts report showed that square brand.

“Hybrid products, mix of snacks and chocolate, are seethe overall volume of chocolate sales decreased almost 1% last year, individual chocolate sales rose to $21.8 billion in ing tremendous growth, which is driven by tremendous levels of innovation and consumers looking for new and 2016. And convenience stores were a big reason why.

“Convenience stores are growth leaders, ahead of all other different items,” Ellek said. channels,” said Jenn Ellek, senior director of trade marketing and communications for the National Confectioners PIQUING PREMIUM TASTES But the major reasons for chocolate’s continued success Association (NCA). “They have unlocked growth in trips, dollars and volume sales. C-stores grew total category dol- are the brands’ willingness to experiment with taste, premilars 1.9% last year versus 0.8% across all channels and -1.8% umization and packaging.

“Convenience is benefiting from premiumization in their for drug.”

One reason for this growth is placement. Working with assortment, which is a proven way to attract sales, and suppliers to ensure visibility of new and existing products is shifting to larger packs on top of the individual items,” and putting chocolate in areas of the store that may be unex- Ellek said.

Meeting customers’ desire for higher-quality chocolate pected or in the line of sight when customers move toward ESPITE STUDIES THAT SHOW the health benefits of

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CATEGORYMANAGER’S NOTEBOOK into stand-up pouches for mobility and portion-saving. In addition, the candymaker plans to introduce Maltesers, the best-selling bite-size brand in the UK, to the U.S. this year.

Reese’s and Hershey will follow suit, with the introduction of bite-sized Reese’s Crunchers and Hershey’s Cookies and Cookies ‘n’ Crème Crunchers.

Still, larger candy sizes are still popular with many -JOSEPH BORTNER, CATEGORY SUPERVISOR, RUTTER'S FARM STORES. retailers.

“Bag, box and bar greater than 3.5 ounces grew 5.3% over the past year,” Ellek said.

Through all the changes—health consciousness, introhas led convenience stores to stock the shelves with innovative and higher-priced products that tip the scale in favor of duction of new products, premium products, flavors or snacks that are hybrids of chocolate and other snacks, snacking over health consciousness.

“The expansion of premium (chocolate) and its ability to brands continue to be strong. And it’s not just blind loyalty. get adults to indulge will help foster growth through next Though the NCA’s shopper research showed that “a familiar or favorite brand is the No. 1 factor in the purchasing year,” Bortner said.

Premium chocolate, which NCA defines as chocolate decision,” it also helps with the introduction and success of that sells for at least $11 per pound, grew 10% over last year, new products. mainly due to customers’ willingness to spend more to indulge, changing consumer preferences and the purchasing power of Millennials.

“Millennials, across store categories, have a greater interest in transparency and information, driving growth for premium attributes,” Ellek said. “This trend is only 1. Chocolate sales remain strong. While volume sales strengthening and will likely cause premium products to decreased slightly, overall sales increased to $21.8 billion continue to grow, if not accelerate.” and increased in convenience stores.

Consumers, she noted, are shifting to items featuring 2. Size still matters. Though both customers and companies high cocoa percentages, special ingredients such as nuts have embraced portable, re-sealable and shareable packor dried fruit, or focused on specialty attributes such as aging and are rolling out updates and introductions of organic, natural or fair trade. bite-sized items, larger sizes grew 5.3% over the past year.

“There is a lot of experimentation with fun and different 3. Premium is king. Premium chocolate sales grew 10% over ingredients from popular spices to bacon and other ingrelast year as customers’ want greater transparency and dients that would have seemed unlikely 10 years ago,” higher quality ingredients.

Ellek said.

4. Flavors and textures are changing. Brands are experimentA number of companies are adding texture and introducing with adding texture to chocolate in the form of cookies, ing flavors into existing products, like Mondelez’ new Oreo while flavors ranging from caramel to bacon to spices are bars and Mars’ new M&M’s Caramel, which will launch appearing on shelves. this year. ”Hershey debuted the Hershey’s Cookie Layer Crunch bar, which has crunchy cookie bits inside Hershey’s choc“Brand helps drive new item trial as consumers have a olate to satisfy the desire for multiple textures in one product,” Puro said. “It’s also available in several packag- baseline trust in the brand,” Ellek said. “We see power of ing options (two different size bars as well as SUPs) so it’s brands at the national level, but also very strong loyalty available for many different snacking occasions. Last year, for smaller, regional brands—making variety all the more Hershey addressed the multi-texture trend with the intro- important.”

There are many reasons for customers, health-conscious duction of Reese’s Pieces Peanut Butter Cups.” or otherwise, to desire a snack. But one reason remains true—even the most health-conscious person wants a small CHANGING NEEDS As taste and portion size have evolved so too has pack- luxury now and then. And even if customers say they want aging. Brands have embraced the desire for mobility and to avoid unhealthy snacks, reality often interferes once they step inside a c-store. portion control.

“Most of the times we can idealize and think we want one “In packaging, we’re seeing a lot of innovation surrounding on the go and resalable/save some for later,” Ellek said. thing, but when we enter convenience stores, it’s to indulge For example, Mars plans to shift its laydown packages between stops when no one is looking,” Bortner said. CSD

“THE EXPANSION OF PREMIUM (CHOCOLATE) AND ITS ABILITY TO GET ADULTS TO INDULGE WILL HELP FOSTER GROWTH THROUGH NEXT YEAR.”

4 CHOCOLATE TAKEAWAYS

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CATEGORYMANAGER’S NOTEBOOK

Market Remains Competitive Despite a full-court press from regulators, cigar sales are still on the rebound.

By Howard Riell, Associate Editor

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marily alkaline and are either wrapped in natural leaf, or a signed into law on June 22, 2009, the U.S. Food wrapper consisting of at least two-thirds tobacco by weight, and Drug Administration (FDA) was given as required by the federal government. Cigarettes on the “authority to regulate the manufacture, distribu- other hand consist primarily of flue-cured tobaccos, are prition and marketing of tobacco products.” The government marily acidic, have a higher sugar content and are wrapped was primarily concerned with cigarettes at the time—but in paper.

While many little and larger cigars contain filters (a pracsince that day cigars have been enveloped into regulation.

On Dec. 9, 2016, the FDA issued warning letters to tice begun nearly 40 years ago), if little cigars were actually four tobacco manufacturers—Swisher International Inc., a substitute for cigarettes as some cigar opponents claim, Cheyenne International LLC, Prime Time International Co. the market share for little cigars would be much higher than and Southern Cross Tobacco Co.—for selling flavored ciga- it is, something the FDA overlooks. rettes that are labeled as little cigars or cigars, a violation of RISING DOLLAR SALES the Family Smoking Prevention and Tobacco Control Act. This is more than just semantics. C-stores that bank on The decision touches upon a debate regarding what connotes a cigarette and what connotes a small cigar. One of the cigar sales have a stake. According to Chicago-based marmanufacturers, Swisher, issued a formal response that there ket research firm IRI’s Infoscan Review data of convenience store sales for the 52-week period ending Nov. 27, 2016, should be no confusion with its product line.

Swisher stated that it doesn’t believe any action is nec- sales of cigars rose 8.58% to nearly $2.8 billion compared to essary on the part of convenience stores in regard to its same 52-week period in 2015.

“While retailers should be aware of the letters, I don’t little cigar products at this time. The manufacturer also responded that Swisher Sweets Little Cigars are, and have believe it is something that they should be concerned about,” long been, properly classified as cigars and not cigarettes said Don Burke, senior vice president of Management under federal law and are thus not subject to regulation as Science Associates, a information management firm in Pittsburgh. “My understanding is that manufacturers have ‘cigarettes’ under the Tobacco Control Act. According to the Cigar Association of America, little been planning on how to deal with the FDA’s Deeming cigars and cigarettes consist of different tobacco and wrap- Regulations since they were released, and will provide pers. Little cigars consist of air-cured or fermented tobaccos retailers with a product selection that meets these regwith a stronger taste and lower sugar content. They are pri- ulations and enables retailers to maintain their tobacco HEN THE ORIGINAL TOBACCO Control Act was

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CATEGORYMANAGER’S NOTEBOOK business. A good resource for retailers is their distributor STICKING TO THE RULES Also, as with cigarettes, convenience stores must remain and manufacturer reps.”

For some industry stakeholders, the lines shouldn’t blur vigilant against underage cigar buyers.

“As far as retailers, we are all concerned because cigars when it comes to what constitutes a little cigar.

“Our position is simple,” said Sal Risalvato, execu- are a good part of our sales,” said Ed Kashouty, the owner tive director of the New Jersey Gasoline, C-Store and of two Exxon-branded c-stores in Brick and Lakewood, N.J., Automotive Association. “If the manufacturers sell the prod- as well as the a retail store called the Cigar Lounge. “We uct to retailers as little cigars then that is what we should warn our employees, managers, everybody about selling to sell them as. If federal or state law specifically determines minors. We are very respectful of that, and I believe many retailers are very respectful of that. Among the retailers that that they are cigarettes, then we will abide by the law.”

I know, they are very Karl Reagin, partner strict when it comes to and general buyer for trying to avoid minors Kwik Marts-Sinclair in g et t ing c i ga ret t es.

Nederland, Colo., said They just cannot get that his stores’ younger them.” consumer demographic In addition to a has caused him to cut NACS video and sigback at on the amount of nage addressing the space he devotes to the topic, Kashouty also cigar category as part of has new hires sign a his store layout. letter that they have “ We ’ r e c u r r e n t l y read the regulation at one shelf, which is and understood it about two feet long,” completely and have Reagin said. “I’m carrywatched the video. ing 13 or 14 SKUs. Our “I know that they are best seller is probably really clamping down the Swisher’s, priced at two for 99 cents.” His When it comes to what constitutes cigarettes and what constitutes little cigars, on regulations, even the distinction seems clear, but there is still confusion at the regulatory level. with hookahs,” said company, founded in Many retailers are taking the position that if manufacturers sell the product Neissan Koroghli, a 1970, owns and operates as little cigars then that is the classification that they are sold under. In turn, 7-Eleven franchisee in a pair of locations with if federal or state regulators eventually determine that they are similar to Las Vegas. “They have 6,000 square feet of sales cigarettes, c-stores are bound to follow any rulings that follow. a major campaign that floor space. it’s not good for you, For Reagin, getting employees to have age requirements always in mind is a and they are trying to prevent it.”

To make certain his in-store staff of nine keeps the issue matter of constant word of mouth. “You need to constantly be talking to them about it. We also have a short video of underage sales top of mind, Koroghli insists that they that talks about it that we got from (National Association view a video on the topic that 7-Eleven has provided. He of Convenience Stores) NACS years and years ago. They also talks to employees about the stiff penalties that are watch it when they are hired as part of their employee due when the law is violated. “They know that if they do it, whether the penalty is $500 or $1,000, they are responsible orientation.”

Other top brands like White Owl, Game and Black and for paying it. And that also, as an owner, I get penalized, as Mild are remain strong performers across the convenience well. We absolutely consider it a high priority.”

“It’s also a good thing that 7-Eleven has undercover guys channel.

Little cigars remain popular because they are signifi- that they send out who look like they are underage, to test cantly less expensive than cigarettes for a couple of reasons. our employees,” Koroghli added. “They show up here once Many states have a significantly lower sales tax rate for every month or couple of months. Of course, we never cigars than cigarettes. Cigarettes and small cigars have the know when they’re coming.”

Koroghli emphasizes cautions when it comes to smart same federal tax rate ($50.33 per 1,000, or about a nickel for each cigar or cigarette sold). State sales taxes vary widely marketing of little cigars, and recommended that operators but cigars are usually are taxed at a lower rate compared to institute their own mystery shopper programs to ensure that employees are following the rules. CSD cigarettes in most states.

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CATEGORYMANAGER’S NOTEBOOK

E-Tobacco:

What’s Next?

C-stores remain cautious with regards to what direction the e-cigarette and vaping industry is headed this year.

By Anne Baye Ericksen

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ETWEEN THE U.S. FOOD and Drug Administration commanded the majority of market share (33.6%) for the (FDA) deeming regulations finally released last same four-week period.

“VUSE’s ability to maintain strong pricing (+15.7%) is year and a bevy of new state taxes and regulations restricting who can sell or purchase tobacco and a testament to its strong competitive positioning,” said other-tobacco products, 2016 was a tumultuous year for Bonnie Herzog, senior analyst for Wells Fargo Securities.

However, MarkTen XL by Altria also made a notable gain e-cigarettes.

“Sales in this category fell 20%,” said Todd Badgley, pres- in dollar share, registering a 15.7% increase in distribution, ident of the MotoMart convenience chain, which operates according to Wells Fargo Securities.

Since the FDA announced that neither e-cigarettes nor 79 MotoMart stores in six states throughout the Midwest.

Its parent company, FKG Oil, is based in Belleville, Ill. vaping devices are exempt from the 2009 Tobacco Control “Assuming the shift is to open systems, I assume these cus- Act, smaller and independent producers have filled the tomers are shopping at vapor stores versus c-stores since retail space with the intent to sell off inventory and close shop instead of submitting a new tobacco product applithere is a much wider selection to choose from.”

While legislation and market pressures on the e-cigarette cation to obtain FDA approval, which will be required to and vaping products caused a seismic wave in the conve- continue producing and selling. The FDA granted two years nience store channel, stakeholders are curious to see how for applications to be submitted and another year for review, 2017 shakes out—especially with a new president taking the during which current products can continue to be sold.

The expected fallout will be drastic, some retailers helm.

Even though current profit margins are lagging com- predict.

“In my opinion, it is clear that the FDA regulations will pared to a few years ago, e-cig dollar sales across all retail channels for 2016 rose an estimated 9% to $850 million com- force smaller companies out of business. It will eliminate pared to 2015, according to Nielsen data reported by Wells smaller manufacturers and a lot of vape shops,” said Anna Bettencourt, category specialist for VERC Enterprises. The Fargo Securities.

Wells Fargo touts that e-cigarette sales experienced a 17% Duxbury, Mass.-based company operates 25 locations in boost for the last four weeks of 2016. VUSE by R.J. Reynolds Massachusetts and New Hampshire.

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CATEGORYMANAGER’S NOTEBOOK in the vapor category,” added Badgley. “Regarding e-ciga- Bettencourt. “We have others considering different regulations that are still pending. It will hurt our sales and move rettes, we continue to offer and support Big Tobacco only.”

There was some hope legislators could override the business to other towns.” predicate date portion of the FDA ruling. Last spring, U.S. Representatives Tom Cole (R-Okla.) and Sanford Bishop PRODUCT DEVELOPMENT Despite sales slowdown and the slew of new taxes and (D-Ga.) introduced a federal budget amendment to change the predicate date from Feb. 15, 2007, to a 2016 date, which regulations, analysts express optimism for where the induswould grandfather in products that have come to market try is poised to go. Still, they temper the enthusiasm by over the past decade. Industry watchers thought the Cole- noting the next year probably will continue the trend of Bishop Amendment might pass in a November omnibus moderate gains. Wells Fargo Securities estimates the total vapor category will top out with 5% growth over the next bill, however, it failed to be included.

11 months.

The source for the long-term confidence stems from Big LEGAL WRANGLING Last year marked the passage of several state laws and Tobacco announcing new product development. For examtaxes against e-tobacco products, and several lawsuits by ple, Philip Morris International released iQOS, a heat, not e-tobacco makers and retailers. In July 2016, Pennsylvania burn e-cigarette, in Japan last spring and in the United lawmakers voted in a 40% tax on all wholesale vapor prod- Kingdom this past fall.

Bloomberg reported the company soon plans to submit ucts along with another 40% floor tax on existing stock.

According to the Inquirer Daily News, more than 70 vap- both a premarket tobacco application and modified risk ing stores already have gone out of business since the taxes application to the FDA for future sales in the U.S. were implemented this past October. As a response to the new law, a family-owned wholesale and retail vaping business filed a lawsuit in December and is awaiting a court date.

In Indiana, a 2015 law mandating that e-liquid manufacACCORDING TO THE ASSOCIATED Press, there were turers must obtain a permit from a state-appointed firm to more than 65 reports of e-cigarette battery explosions in 2015 sell in the state triggered several lawsuits from local vape and 2016 combined. Safety concerns have prompted the U.S. producers as well as accusations of conflicts of interest Food and Drug Administration to initiate an investigation. It anwithin certain regions. nounced a two-day public meeting in April during which officials The Indianapolis Business Journal reported this past will hear customer concerns and input from manufacturers.

August that the FBI was investigating whether any illegal activity was involved with creating and passing the law. The newspaper also reported in December that state “We continue to expect iQOS to be commercialized in officials have agreed to revise the law in 2017. As of midJanuary, a bill that would transfer permitting duties to the 2017,” said Herzog. “Bottom line, we remain bullish overall Indiana Alcohol and Tobacco Commission has already been on reduced risk products (RRPs) as we expect consumers will shift from e-cig/vapor products to next-generation introduced.

Last May, California Gov. Jerry Brown signed Senate and RRPs led by iQOS.” RAI announced it has completed clinical trials on Revo2, Assembly bills that required e-cigarettes and vaping products be classified as tobacco products, and as of Jan. 1, the a heated tobacco product. British American Tobacco, which statewide legal purchasing age is 21. In addition, retailers agreed to pay more than $49 billion for RAI last month, is expected to introduce Vype Raptor later this year. It was must now pay a $265 annual licensing fee.

This year appears to be continuing the trend. New York unclear, however, as to which markets would be targeted.

This past December, United Tobacco Vapor Group Gov. Andrew Cuomo has stated he wants to define e-cigarettes and vaping products as tobacco products and impose announced its patent for qmos, a new wickless and spongeless e-tobacco technology. a new tax of 10 cents per milliliter.

There’s also supposition about how vaping devices could Both Texas and Washington State lawmakers are weighing bills to raise their states’ minimum purchase age to 21, be adapted for medical and recreational marijuana use. too. Elsewhere, cities have passed their own laws raising After the November election, eight states and Washington, D.C. have legalized recreational use and sale of marijuana. age requirements.

“I try to remain optimistic in regard to the category,” said “Massachusetts has different regulations by town. One town changed the purchase age on Jan. 1. Another town Badgley. “I do believe there is a need/demand for this type has a flavor ban that will take effect on March 1,” said of product. The big question is how much.” CSD

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TECHNOLOGY

Pairing Menus and Automation

Technology for menu boards and kiosks is quickly revamping how foodservice is being delivered in the convenience channel.

By Lisa White, Contributing Editor

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TILIZING TRADITIONAL BACK-LIT LED frames for menu boards,

Pride Stores, a St. Charles, Ill.based retailer with 12 stores, wanted to step its foodservice program up a notch.

The opportunity arose when the chain built its first free-standing Urban Counter foodservice site in early January.

“We wanted to better showcase our food and drink items, so we installed video screens that can rotate images and menus,” said Mario Spina, The Pride Stores’ CEO. “This was so successful that we then updated all of our Pride Cafes with the screens and also will be installing these in our first freestanding Taco Urbano site.”

While the former menu boards were basic and static, the video screens are capable of rotating graphics with different menu offerings as well as changing the order of food items based on different dayparts.

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being prepared. These are rotated with photos around the menu item lists.

“For example, one of the videos shows the steps in making our shaker salad, which is served in a 20-ounce cup to be easily eaten on the go,” said Spina. “We have so many different foodservice offerings, such as crepes, paninis, pasta, orzo salads, espresso drinks and soon Mrs. Field’s cookies, that we needed the ability to rotate items for better marketing capabilities.”

Depending on the location, the video content is either accessed and changed remotely or switched out via USB sticks.

“Not only does this technology provide a better visual of our menu offerings, but it also enhances the presentation of our stores,” said Spina.

“We eventually will rotate in specials for three-second increments.”

In recent years, more retailers have been taking advantage of menu board technology that not only serves as a marketing tool, but also can reduce labor at the store level.

MENU BOARD ADVANCES With foodservice increasingly becoming a differentiating factor in the convenience channel, stores are seeking new presentation methods for products.

Aston, Pa.-based ElectroMenu, a menu board provider, has been focusing on enhancing its technology. The company’s newest line is a self-contained, non-Windows device that operates independently from computers and the internet. It provides users with the ability to change prices and add menu items quickly.

Stores are converting from cloudbased technology and thumb drives to these plug-and-play type systems due to security issues, service attacks and router problems.

Bellefonte, Pa.-based Lykens Market, which has three c-stores in Pennsylvania, utilizes ElectroMenu’s menu boards to display items.

“Our goal was to advertise items like quick-service restaurants, and visibility was an important factor,” said CStoreDecisions ecisions .com

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TECHNOLOGY videos. These can be programmed to run during different dayparts, days of the week or other durations.

The menu boards can be managed individually or as a group and have WiFi capability to pull content from the internet or can manually transfer files from a USB stick.

Sprint Mart in Tuscumbia, Ala., part of a 75-store chain, installed Origin Menu Boards when the store was remodeled five years ago.

The signage content is controlled through the company’s corporate office.

Origin Menu Boards provides a Kacie Lykens, who co-owns the operavariety of media players with software tion with her husband Chris.

Prior to installing ElectroMenu’s that can be remotely accessed to make technology, the stores used traditional regional or global changes on video flip menus. With the new systems, boards.

“Any time we need to make changes, all three menu boards can be programmed from the office, with content we just send the main office an e-mail,” said Brian Timms, retail manager at sent remotely.

“The menu boards are easy to oper- Sprint Mart. “We have three screens in ate,” said Lykens. “It’s important to the store. One is used for advertising stay current with technology, and this our specials, then there’s a stationary deli menu board in the foodservice was the next big thing.”

Land Mark Products Inc., based in Milford, Iowa, implemented ElectroMenu’s menu board technology as part of its Piccadilly foodservice brand in c-stores about three years ago.

Its product offerings, including pizza, sandwiches, appetizers and breakfast items, are typically sold in 100-150 square feet of space. The company provides kiosks, branding and graphics.

Video screen proponents say the brighter colors and movement of photos are more eye catching. Plus, the ease of digital management with electronic menu boards creates better management efficiencies across opera- Chris and Kacie Lykens, who operate Lykens Market in Pennsylvania, invested tions with multiple store sites.

With this technology, each screen in menu boards from ElectroMenu, which uses a system attached to the screen, can be programmed from the office, with and it’s simple to hook up and pro- content sent remotely. Such technology gram with templets, product shots and is helping expand foodservice programs.

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area, while another screen displays our Hunt Brothers Pizza program menu.”

In addition to saving space, the technology has served as an effective tool to consolidate prices.

CASE FOR KIOSKS While automated robotic kiosks have infiltrated the quick-serve restaurant segment, this technology has not taken hold as quickly in the convenience channel.

There has been much publicity about McDonald’s deploying iPadstyle kiosks at many of its locations as well as Subway and Pizza Hut entering the space with similar systems.

Dean Cline, Jr., president of Chicago’s Cline Consultants, sees kiosks falling into the same category as traditional vending machines.

“Kiosks would take people away from the store, so they would not be exposed to as wide a range of products,” said Cline. “I’d question it from a feasibility standpoint in terms of marketing, impulse sales and upselling.”

This self-serve selling technique may make more sense during off hours, but could impact profits in stores during business hours.

“Also, clogging up pumps with people trying to decide what to purchase from a kiosk also may be detrimental,” said Cline.

In 2015, the University of Illinois’ Springfield campus installed self-contained, automated convenience store kiosks on its campus to complement its other campus amenities, but the program has been discontinued.

Critics of this technology cite problems that include long lines and space limitations, although retailers can benefit from labor savings and cost-cutting.

Still, signs point to robotics as the next retail frontier. A recent article on eater.com reported that a robot burger restaurant will soon be launched in San Francisco with a device developed by Momentum Machines that is capable of producing up to 400 burgers an hour. CSD CStoreDecisions ecisions .com

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COLUMN OPERATIONS

Store Data Deserves Protection Too As c-store retailers implement enhanced inventory-management solutions, they should also consider doing more to secure inventory data.

By Ed Collupy

S

O MUCH OF THE attention on data security in the last few years has been focused on payments and many companies throughout the convenience fuel retailing industry have implemented measures to protect their customer’s data.

But industry leaders indicated in a recent survey that data security, beyond payments, was high on their list of what keeps them up at night.

During this same period many leading c-store operators have been implementing enhanced inventory-management solutions that result in significant cost savings freeing up capital due by reducing overstock, having the right items in stock to meet customer demand, and being able to more accurately measure category margin performance.

In another recent study, shared at the RetailROI Super Saturday event, inventory management systems rank No. 3 for where retailers will be making investments in 2017.

RISK MANAGEMENT Taking a view of data security through an information risk management lens leads one to realize that there is much at stake should any information driving business processes and decisions be breached. Any disruption that doesn’t ensure an adequate inventory of product to be sold is a serious concern and should be backed up in a business continuity planning process.

With many back-office and inventory management systems now available as hosted or managed service offerings (i.e.“the cloud”) third-party information risk management and data security should be a priority in any agreements between the retailer and software/service providers.

Securing inventory data also means securing price book data where you maintain your vendor/wholesaler costs and retails. Ensuring this data doesn’t find its way into competitors’ hands is important and some retailers may be contractually obligated to maintain the confiden64 Convenience Store Decisions

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tiality of the product costs with their suppliers.

Data security is important when it comes to the inventory management lifecycle whether it’s receiving product from vendors, regular inventory checks and audits or ordering product. Traditionally, there are three primary reasons for closely managing inventory data: 1. Ensuring your replenishment plan is suffi cient to meet sales—keeping product on the shelves without building too much inventory;

OTHER DATA CONCERNS IN TODAY’S WORLD, CUSTOMERS have naturally come to expect that their sensitive data will be kept secure. It can be an intimidating step for a small business that likely doesn’t have an IT department. Here’s a list of tips to help c-stores tackle general security concerns.

1. Identify your sensitive data.

2. Train your employees on more than just the registers.

3. Install the security basics.

4. Any device that holds or gives access to data needs to be monitored.

5. Be aware of different operating system platforms (think iOS versus Windows) and their different security requirements and updating methods.

6. Frequently review all passwords being used in their systems and update them.

7. Limit and monitor individuals’ access to data.

8. Properly dispose of old computers and any other device that stores data.

9. Automate your back-up process.

10. Regarding customer data—especially credit card information—ensure you are putting in the right steps to protect them.

Source: Secure Sense

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COLUMN OPERATIONS 2. Managing shrink—making sure that you’re actually selling the product rather than it disappearing; and 3. Making sure that you are making sufficient margin— that the costs and prices are current and accurate.

Security threats to these objectives could be a sales disruption or more serious impact where people, internally or externally, develop a scheme including systematically hacking into and modifying inventories.

PREPARING A DEFENSE The cost of data breaches is getting cheaper for hackers, and access to the toolsets required to perform the hacks are becoming more readily available; tapping into your inventory data is becoming a more critical attack vector. The FBI in January issued an alert about “a definite uptick” in ransomware in businesses and other organizations.

Not only are these hackers demanding money to unlock what they’ve done, they also threaten to release sensitive or proprietary information. These infections can be devastating and recovery can be a difficult process that may require the services of a reputable data recovery specialist.

FUEL PRICING:

PROTECTING A KEY STRATEGY FUEL PRICING STRATEGY PERTAINS to how a c-store prices fuel in order to compete in the market. Protecting that strategy and its components should be kept in mind whether the data is in a spreadsheet or in a more sophisticated fuel price management system.

Be on alert for hackers who could attempt to breach your system in order to access these strategies or other data that could include sales, margins or volumes. Remember to use offsite backups and additional preventative measures. Integrated system solutions require sophisticated encryption from the point of sale to the back office to the fuel management solution.

Active monitoring is also a key step in data breach prevention.

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COLUMN OPERATIONS A KEY CONSIDERATION AROUND DATA SECURITY AND INVENTORY MANAGEMENT IS TO HAVE IN PLACE A BROAD AND COMPLETE SECURITY APPROACH FOR THIRD-PARTY SUPPLIERS AND VENDOR PERSONNEL, WHO HAVE ACCESS INTO YOUR SYSTEMS. A key consideration around data security and inventory management is to have in place a broad and complete security approach for third-party suppliers and vendor personnel, who have access into your systems. An integrated in-store system of point of sale, electronic payment system and back-office controllers create multiple entry points and a source of inventory data. If you allow third parties to access it, you have additional security work to do.

Consider the following as part of your defense strategy: • Utilize or create an extranet for your supply chain sys-

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tems with adequate separation from your other systems that contain sensitive data; • Make sure you have solid Identity and Access Management standards, and apply them to third- party personnel accessing any of your systems; • If third-party suppliers are accessing your store systems directly, secure those network connections.

Why do all this? Well, to prevent access to your margins, volume movements, daypart peaks and valleys, and the performance of your new food offer are just a few data points to safeguard.

A colleague at W. Capra, Matt Beale, whose team specializes in all things security—said recently, “And here’s the kicker… if your inventory data is walking out the door, how long do you think it will be until your credit card data or personnel data is holding its hand on the way out?”

In that case, the results can be catastrophic.

Ed Collupy, executive consultant at W. Capra Consulting Group has IT leadership and business team experience directing and supporting retail systems for store operations, merchandising, fuel and accounting teams in the c-store industry. He can be reached at ecollupy@wcapra.com.

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OPERATIONS

Solar-Powered Store Design More convenience stores are taking on green energy initiatives, designed to cut costs while reducing their carbon footprint.

By David Bennett, Senior Editor

W

City solar developer, EnterSolar, is the first-ever shared stores, convenience retailers are always looking solar farm in the state of New York—under new policies for measures to lower electrical bills. Even ret- approved by the state’s Public Service Commission.

Maria D’Amelia, Stewart’s spokesperson, said there are rofitting existing locations with energy-efficient a few reasons why the retailer chose to diversify its power equipment is routine.

There’s a much smaller group of retailers that are con- capabilities with solar. In addition to battling the volatility necting to alternative energy providers—a list of providers of rising gas prices, the project offers Stewart’s an opportuthat continues to grow partly because of state-sponsored nity to engage in a cleaner energy solution.

“The rooftop project has been particularly effective as our incentives.

Techniques and technology developed to harness solar plant’s peak demand is when solar output is at its greatest; energy have reached new levels of efficiency and afford- resolving power distribution problems of the grid,” D’Amelia ability, resulting in more budget-conscious businesses said. “We are continually tracking how much energy we’re switching over to solar energy. However, such energy generating and can say our expectations have been met. So, options remain largely unknown within the c-store industry. you could call our solar projects a shining success.”

The U.S. leads the North American solar market. New That is slowly changing, however. solar hotspots in the nation include the growing market in the Northeast region, which includes the states of New York HALFMOON RISING Saratoga Springs, N.Y.-based Stewart’s Stores is the big- and New Jersey.

Stewart’s isn’t the first c-store chain in New York to gest c-store chain arguably to incorporate a significant solar energy program. The company today operates 337 shops, employ solar.

Crosby’s convenience store chain, based in Lockport, 17 of which are supported by a remote net-metering system powered by solar technology in the town of Halfmoon, N.Y. N.Y., a few years ago installed two solar-powered systems, The Halfmoon Project, completed in 2016, includes a solar including a 110 panel, 29-kilowatt solar energy pilot in the city of Amherst. With 66 panels on the gas pump canopy array of more than 1,700 panels.

Panels were installed on the roof of the company’s 17 and another 44 on the store’s roof, the green initiative has store locations, and are powered by a dedicated solar plant. reduced the convenience store’s energy consumption by at The 582-kilowatt Halfmoon Project, undertaken by least 15% yearly.

Over the next five years, New York—home to Stewart’s Colorado-based Clean Energy Collective and New York HEN IT COMES TO designing and powering new

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OPERATIONS SUNNY NOONER’S Other states such as Texas are also providing companies financial incentives to go greener.

San Antonio-based Nooner’s has installed solar panels at eight c-stores. With two more locations currently under construction, Sean Nooner, president of Nooner Holdings Ltd., said its commitment to solar power has shaved off an average of $900-$1,000 from its monthly electricity costs.

“Our investigation and desire to install green energy is what led us to solar,” Nooner said. “We have been installing solar since 2012. All of our current stores have solar and the next two stores have already been contracted to have solar installed as part of the ground up construction. We even have solar on our office building.”

At most locations, Nooner’s has installed solar panels on the roof and the canopy.

The average cost of each complete solar add-on is $260,000. However, because of authorized tax abatements and other incentives granted by the state of Texas, the final cost of each project has ended up being approximately $65,000, Nooner said.

It’s a long-term investment that should address electrical costs, going forward.

As part of cost-control measures, Nooner’s, based in San “Energy prices are only Antonio, has added solar panels to each of its eight locagoing to go up, so saving tions. Not only has the convenience retailer gotten positive a block of kilowatts each feedback from patrons, but with the addition of solar, the month will pay back more company’s electric bills have shrunk by half. over time,” Nooner said.

and Crosby’s—is expected to install more than 3,000 megawatts of solar electric capacity, ranking the state fifth in the U.S. over that time span. This is enough to power 492,000 homes and more than six times the amount of solar capacity installed in New York State over the last five years.

Graham Smith is the founder and CEO of Open Energy, a provider of debt financing solutions for commercial solar projects. Open Energy, which provided the financing for the Halfmoon Project, is part of a new breed of companies helping drive the U.S. solar market, which is gaining added support via state legislation in states such as New York.

Considering that businesses can save 10-20% on their electrical bills, solar is a sensible option, if the return on investment is there,” Smith said.

“It’s a huge, growing trend. Smith said. “It’s a no-brainer.”

GREEN AMBITIONS Stewart’s Shops is committed to making many of its store locations greener, when the opportunities come along.

“For us, one of the most noticeable initiatives may be the continuous upgrades to LED lighting inside and outside of our shops. We also have an extensive recycling program to minimize waste,” said D’Amelia. “More than four and a half million pounds of cardboard, office paper, plastic, metal and light bulbs are recycled annually.

We are using reusable containers to transport product, offering a number of reusable coffee mugs in our shops, and our to-go cups are made from paper rather than Styrofoam.”

Stewart’s is likely on the right track, especially since energy sustainability has become a consumer consideration of younger Americans, said Rebekah Matheny, an assistant professor of interior design within the Department of Design at the Ohio State University.

“When we look at research on Millennial and Gen Z consumers, we uncover that those generations put their spending power behind their personal beliefs, of which environmental and social consciousness of brands leads the way,” Matheny said. These generations are smart and responsible consumers. They do their homework, they know where and how the products they are purchasing are manufactured and they care about fair trade, living wages, child labor issues, working conditions, materiality and the generosity of the brand. In other words, they care how the retailer is participating in the greater good of the environment and society, from a local to global impact.”

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KEEPING WATCH The U.S. Energy Department said in a 2016 report that the cost of getting power from wind fell more than 40% from 2008 to 2015, and solar panel prices dropped more than 60% during that period.

Renewable energy accounts for about 15% of the electricity generated in the U.S. President Donald Trump also has called for reviving the coal industry, which has struggled in part because of the rise of renewable energy. Still, the growing momentum of renewable energy keeps retailers such as Stewart’s scouting for greener prospects.

“We continue to seek potential sites for remote net metering projects as long as a reasonable return is determined, both financially and environmentally,” said D’Amelia. “We have looked at a remote hydro system that would allow us to put charging station in a few dozen shops, but we have encountered some regulatory resistance.” CSD CStoreDecisions ecisions .com

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NEWSTUFF Creations & Innovations to Convenience Products and Services

EXPERIENCE COFFEE Born from the adventure of a lifetime and raised in Austin, Texas, High Brew puts expertly-crafted cold brewed coffee in a can to enjoy whenever and wherever you want it. We believe that great coffee helps you navigate anything the day throws your way, that’s why we cold brew every batch to be smooth, bold and full of natural energy with way less sugar. High Brew is for the participators and the precipitators. The go-getters and the trend setters. The Doers. It’s an elevated coffee experience with a can-do attitude, it’s cold brew for those who do.

For More Information from High Brew www.highbrewcoffee.com

SEASONAL BREWS Samuel Adams was one of the first craft brewers to offer rotating beers that capture the essence of each season, and now through April, the brewers are introducing drinkers to two new seasonal beers: Samuel Adams Hopscape and Fresh as Helles. It may be unconventional to have two seasonals at one time of year, but Sam Adams has never been known to follow the rules.The brewers felt that these two brews capture the essence of the ever-changing season across the country through April.

Citrus and piney hop flavors with a nice lingering bitter finish make Hopscape best enjoyed during cold, brisk temperatures. Fresh as Helles is a light amber, medium-bodied helles brewed with Mandarina hops and orange blossom petals. Both brews will be available in six-packs for a suggested retail price of $7.99-$9.99, 12-packs (bottles and cans) for a suggested retail price of $14.99-$17.99, 16-ounce, single-serve cans for a suggested retail price of $1.99-$2.49, and on draft. Both beers will also be available in the Samuel Adams Spring Variety 12-Pack for a suggested retail price of $14.99-$17.99, and 24-packs for a suggested retail price of $22.99-$24.99.

REHYDRATE & RECHARGE HYDRIVE Energy Water is light, refreshing and specifically formulated so customers get all the hydration benefits of water with the added perk of energy from B Vitamins and caffeine. The tagline says it all: Rehydrate. Recharge. Enjoy the flavor and function you need, without the calories you don’t. Hydrive Energy Water comes in four, zero-calorie flavors including Black Cherry, Blue Raspberry, Triple Berry and Citrus Burst.

For More Information From Big Red Inc. www.hydriveenergy.com

EXCEPTIONAL BLENDS Red Diamond continues to streamline perfection through its Estate Coffees, designed uniquely for first-class service. Whether customers and guests desire a complex roast, a smooth, rich cup or a spirited flavored coffee, Red Diamond’s Estate Coffee line is certain to include the ideal blend. From medium to dark roast coffees, the enticing blends of the Estate Coffees are handpicked and sundried to ensure perfection. Master roasters taste every coffee when it arrives at the Red Diamond facility to guarantee it has the idyllic qualities for which it was selected. The Estate Coffees are custom roasted daily using world-class Scolari roasting systems, promising consistent delivery of fresh coffee. All Red Diamond coffees are selected from only the finest 100% Arabica beans. Estate Coffees are available in a variety of pack weights to meet operators’ specific needs. Blends include: Gourmet Reserve, Colombian, French Roast, European Roast, Italian Roast, Max Caff, Naturally Decaffeinated, French Vanilla, Hazelnut, Highlander Grog, Irish Cream, Jamaican Me Crazy and Southern Pecan.

For More Information From Red Diamond www.reddiamondbevservice.com

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SAVE THE DATE! The convenience store industry’s exclusive organization for next-generation leaders and up-and-coming decision makers will be held May 24-25 at Maverik’s Base Camp headquarters in Salt Lake City.

A team-building Habitat for Humanity project will take place on May 23.

In addition to networking and a firsthand tour of Base Camp, Maverik’s test kitchen, training facilities and convenience stores, YEO’s will hear how the chain nurtures its outstanding retail culture, communicates with customers through its industry-leading loyalty program, tackles foodservice, staffing and developing its convenience store operations.

Registration for the 2017 YEO Roundtable and the Habitat for Humanity team-building project will open in mid-January.

For information on NAG and YEO membership or to reserve a space in the the 2017 YEO Roundtable, contact NAG Executive Director John Lofstock at (201) 837-2177 or jlofstock@csdecisions.com.

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NEWSTUFF Creations & Innovations to Convenience Products and Services

BAKED PROTEIN BARS Convenience store consumers want fresh, quick, healthy options that taste great and offer nutritional benefits, so they’ll be thrilled to try new Better-for-You (BFY) Protein Energy Bars and Cookies from Rich’s Foodservice.

An industry first, the fresh-baked protein energy bars and cookies are made with real, simple ingredients, like vanilla, nuts, quinoa, flax seed and blueberries.

The portfolio, compatible with ACT ovens, launched to c-stores nationwide on Jan. 3. The BFY Protein Energy Bars come in three flavors: blueberry cinnamon cashew, chocolate chunk cherry almond and dark chocolate peanut butter.

Each bar has 200 calories or less, has zero trans fat, is low in cholesterol, and represents a good source of protein (9-10 grams per bar) and fiber (5-6 grams per bar). Each dough bar is 1.95 or 1.90 ounces, 105 per case. The BFY Cookies are available in two flavors: oatmeal dark chocolate chunk raisin cranberry and quinoa flax seed chocolate chunk pecan. Each cookie is 100 calories or less, with zero trans fat and low cholesterol. The oatmeal cookie is low in sodium, and the quinoa cookie is a good source of ALA.The cookies are available in .85-ounce dough pieces, 192 per case.

CHORIZO-SPIKED TURKEY To meet growing demand, Butterball now offers Chorizo Seasoned Ground Turkey to the foodservice industry. Flavor and healthier choices are key drivers of the food decisions patrons make when dining out, and Butterball’s turkey chorizo gives them a chance to try something new. For chefs, turkey chorizo is a versatile product that is ideal for menu applications across every daypart.

Foodservice operators cite the top 10 uses for ground turkey as chili, meatballs, meatloaf, tacos, lettuce wraps, shepherd’s pie, empanadas, nachos, Bolognese sauce and pizza (Datassential Menu Analysis, 2015)—all of which can be easily spiced up with chorizo turkey.

For More Information From Butterball Foodservice www.butterballfoodservice.com

MEAT SNACKS FOR KIDS

For More Information From Rich’s Foodservice www.richsfoodservice.com

GRANOLA BARK Viki’s Foods is introducing its unique new product line, Granola Bark. Available in four flavors—Original, Banana, Chocolate and Cinnamon—Viki’s Granola Bark features the brand’s signaturestyle granola, transformed into an addictive, brittle-style treat. Viki’s Granola Bark is made with the same high-quality ingredients, featuring addictive flavor combinations and easy-to-eat portability that consumers are sure to love.

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The New Primal, makers of the world’s healthiest, most responsibly-sourced, 100% grass-fed beef and free-range turkey jerky, has introduced Snack Mates, the firstto-market Paleo-friendly meat sticks made just for kids. Snack Mates are 0.5-ounce meat sticks sold in five-pack bags with six grams of protein in every serving. The new meat sticks are easy to chew and have a mild, non-spicy flavor, perfect for the young palate. Featuring easy to open, kid-friendly packaging, Snack Mates are available in two flavors including Classic Beef and Classic Turkey. Snack Mates are made with pasture raised grass-fed/grass-finished beef and free-range turkey and are non-GMO, hormone and antibiotic free, gluten-free, soy-free and Paleo-Certified. Plus, they are a Top Eight Allergen Friendly snack. Snack Mates’ five-pack bags retail for $5.99.

For More Information From The New Primal www.thenewprimal.com

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NEWSTUFF Creations & Innovations to Convenience Products and Services

VERSATILE COFFEE STATION Specialty Merchandisers create selling space and added storage with enhanced visibility for stronger retail sales. This photo shows how when used in combination with a coffee island, you can provide an attractive unit to display artisanal coffee for increased bag sales. MasonWays Specialty Merchandisers are durably constructed for long-lasting use and dependability. Adjustable Shelf Merchandisers are designed with three adjustable wire shelves for added versatility with sign/price ticket channels and attached wheels for easy movement.

For More Information From MasonWays www.masonways.com

PANORAMIC CAMERA LILIN North America, the U.S. entity of IP video provider Merit LILIN, is bringing 360-degree panoramic coverage to indoor video surveillance with its FD2452 IP camera that enables a single camera to visually monitor all activity in very large indoor spaces, such as a hotel lobby or reception area, in clear, high-quality HD 1080p video. By doing the work of four standard IP cameras, the FD2452 eliminates any blind spots, while dramatically reducing overall system cost-of-ownership. Fitted with a five-megapixel sensor, the camera also features true day and night functionality, two-way audio, built-in video motion detection with on-camera recording capability, along with mobile access using iOS or Android phones or tablets, and free 72-channel recording software for comprehensive video management. It seamlessly integrates with LILIN and third-party NVRs.

For More Information From LILIN North America

PANFREE BATTERS Banana Chocolate Chip has debuted as the newest flavor of the extended line of PanFree Predeposited 18-ounce Loaf Cake Batters from Bake’n Joy. As part of the FreshBakes (freezer to oven) line of predeposited muffin, loaf and cake batters, these 18-ounce loaves go directly on a sheet pan for hassle– free cycle baking. They are perfect for convenience stores. All Bake’n Joy’s FreshBakes predeposited batters are trans-fat free. The Banana Chocolate Chip loaf is perfectly sweetened with banana puree, loaded with chocolate chips and finished off with a touch of molasses. PanFree Predeposited Loaf Cake Batters are premeasured and deposited into paper–lined aluminum pans and flash frozen for the freshest taste and perfect performance. The pans are placed in plastic carrier trays, six per layer, for easy handling and are packed 18 to a case for convenient storage.

For More Information From Bake’n Joy Foods Inc. productinfo@bakenjoy.com

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www.meritlilin.com

ENERGY BEVERAGES UPTIME Energy is one of the fastest growing energy beverages in the country. The beverage’s users, surveyed from its social networks, are attracted to the product because of its streamlined, premium packaging, but it’s the refreshing taste that has them returning to purchase more. UPTIME separates itself from the sea of competitors in the vault because it provides a sustained and balanced energy boost, while avoiding the spike and crash so often seen with traditional energy beverages.A wide-range of consumers enjoy the daily benefits of UPTIME from professionals, to drivers and outdoor workers, to students, busy moms, entrepreneurs, programmers, cameramen and weekend warriors.

That’s why sales are growing exponentially. Suggested retail price: $2.99.

For More Information From UPTIME (800) 441-5656 orders@up-time.com

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cover story The new store looks to invite guests to ward will be this format, Lenker added.

Boosting Retail While quite a bit of attention is stay a while and visit—like old country “We are looking at our old stores to see paid to team members, a keen focus stores from yesteryear. To help encour- how we can remodel them to be similar. remains on offering an unsurpassed age guests to hang around, RaceTrac Lots of times we are constrained by real convenience store offering. RaceTrac's added more seating, digital screens, free estate or parking,” Lenker said.

Part of the redesign was recogniz6,800 team members continually aim Wi-Fi service and in-store music. Other to deliver a "wow" retail shopping features include a coffee bar, 12 fresh- ing that guests crave convenience and experience. Emphasizing employees brewed teas, 24 frozen beverage flavors, that c-stores have the capacity to offer Mediterra is introducing two 10-flavors of frozen yogurt with some 40 so much more. and ramping up foodservice operanew Yogurt & Oat flavors: "We are well beyond the days of toppings and a walk-in beer cooler. tions has seen revenue grow 80% per Lemon & Walnuts and Fig “We have been looking to make our narrowing our offering to gasoline, store in five years. & Almonds. With these new As consumer demand for faster stores more friendly to our guests,” cigarettes and beer," Moran said. "As flavors, Mediterra now offers Wrigley is extending Pack lines Extra Spearmint and we saw Mega demand soaronfor a wider varifamily confi-its successful transactions and convenient retail said Lenker, a close Bolch four Yogurt & Oat bars that also Polar Ice to include Extra Peppermint and 5 gum.

Front End Bulk is a fastsolutions has reached an all-time high, dant, who will retire Dec. 31 after more ety of consumables, we realized our include Cherry & Pistachio and Apricot & Pistachio. The new flavors adhere growing segment of gum, especially in c-store and the Mega Pack holds over RaceTrac responded by introducing than 40 years with RaceTrac. “We have retail offering could be redefined not to the Mediterranean Diet, considered by experts to be one of the healthiest twice as much gum as aby standard pack, so customers do not have our 15-stick history, but by the needs of We have its largest retail prototype to date. The worked hard on the interior. ways to eat, according to Telemaque Lavidas, founder of Mediterra. Like to worry about running out.

The 5 Gum (MSRP $2.99) and Extra Peppermint beer company in late 2012 debuted its new always had a great gas design. But we our guests. Naturally, things like the original, the new delicious Yogurt & Oat bars are bottom covered with Mega Packs (MSRP will cigarettes launch in Juneare 2017retail at retailers nationwide. and mainstays, have improved our food offers and$2.49) retail format in Acworth, Ga. yogurt-style coating, 1.6- ounces, all-natural, non-GMO, gluten-free, certified The new store design stands at about the quality of everything in the store. but new guests now think of us when kosher and contain six grams of protein. The MSRP is $1.99.

For More Information Fromare Wrigley headed for lunch or looking than gaso- they 6,000 square feet. RaceTrac President Guests have a reason other Max Lenker said RaceTrac worked on line to come and see us.” www.wrigley.com to bring dinner home to their families.

For More Information From Mediterra All of the company's stores going for- Providing a great, upscale offering has the project for “six to eight years.”

TASTY NUTRITION BARS

MEGA PACK GUM

www.mediterranutrition.com

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Convenience Store Decisions 79 1/28/16 9:03 AM

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ADVERTISER INDEX 800.922.0972 / www.addsys.com

AdvancePierre ......................31 www.advancepierre.com

Alto-Shaam ..............................43 www.alto-shaam.com

Altria Group Distribution Co. ..................2 www.AGDC.com

Apter Industries .............................11

Hoshizaki America ........................41

800.438.6087 / www.hoshizakiamerica.com

Hunt Brothers Pizza .....................25

www.HuntBrothersPizza.com/CSD

KT&G ......................................15,17

www.ktngusa.com

Kretek ..........................................5

Cheyenne International, LLC ...........53

866.294.5655 www.cheyenneintl.com/en/strawberry

Del Monte Fresh ..............................61

800.950.3683 / www.freshdelmonte.com

Dyson ..................................19

877.415.4100

Little Debbie .....................................33

800.615.6208 www.LittleDebbieCStore.com

Logic .....................................57

Swedish Match .............................55

800.367.3677 / www.whiteowlcigar.com

Swisher International ..........................84

Mars Chocolate N.A. .........................49

Texas Pete ...............................35

www.mars.com

336.661.1550 www.TexasPeteFoodservice.com

MasonWays ...................................81

Tillamook Country Smoker .................67

E-Alternative Solutions ...........59

McCain ....................................21

312.483.9452 / www.cuevapor.com

www.McCainUSAFoodservice.com

Gulfcoast Software Solutions, Inc. ....3

McLane Company ............................9

727.449.2296 / www.gulfcoastsoftware.com

www.mclaneco.com/goto/link

Hershey ..................................51

Mondelez International .....................13

Home Market Foods ................22-23

Subway ................................46

203.877.4281 / www.subway.com

800.874.9720 / www.swishersweets.com

800.837.2881 / www.masonways.com

www.RollerBites.com

919.781.9744 / www.sepetro.org

844.552.9623 / www.logicvapes.us

855.720.6169 / www.dyson.com

www.hersheyconvenience.com

Ruiz Foods ......................................39

Southeast Petro-Food Marketing Exposition .......................................68

Liggett Vector Brands ..........................69

CB Distributors .........................63

R.J. Reynolds ....................................83

www.rjrt.com

Krispy Krunchy ..............................37

Cash Depot ...............................66

888.824.3256 / www.cbdistributorsinc.com

Prairie City Bakery ............................47

800.338.5122 / www.pcbakery.com

www.ruizfoods.com

800.290.6097 / www.krispykrunchy.com

800.776.8834 / www.cdlatm.com

Pizza Expo ................................73

www.pizzaexpo.com

www.djarumcigar.com

800.441.7146 / www.apterindustries.com

www.mondelezinternational.com

North American Bancard ....................80

866.481.4604 / www.nynab.com

ClassifiedAds

ADD Systems ........................65

800.325.2220 / www.tcsjerky.com

Tomlinson Industries ..........................79 216.587.3400 / www.tomlisonind.com

Tyson ........................................7 www.tysonconvenience.com

Whitecastle ..................................45

614.559.2473 / www.whitecastle.com

Wonderful Pistachios .....................27

888.528.NUTS (6887)

Economical Bases • Merchandisers • Forecourt Products

CStoreDecisions ecisions .com

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INDUSTRYPERSPECTIVES

Managing Grab and Go Making food that is not to order and that becomes a retail item without a guaranteed sale is a foreign concept to many foodservice professionals.

By Fran Duskiewicz

H

ERE'S A SCENARIO THAT happens often.

Your favorite source of grab-and-go food— whether it’s a supermarket or a convenience store with dedicated foodservice—continually seems to be out of stock of the item you are there to buy. Sure, if there’s a made-to-order option available, you can have one made for you, but that takes extra time out of your day.

You leave dissatisfied, feeling that you wasted time when your goal was saving time by buying a pre-prepared food item.You also lose trust in what should be your favorite source of foodservice.

Why is this more of a common occurrence than the exception? I believe it has to do with the differences between formal retail and foodservice management training, as well as retail and cost accounting systems. Category management approaches should be considered, too.

SPOILING THINGS Retail Category Management 101 teaches that an out-of-stock is a deadly sin, especially with fast moving items, including perishables such as milk, bread and produce. You lose that sale and you might lose everything else that goes with it, not to mention eroding the customer’s trust. It’s better to experience some reasonable spoilage than to disappoint a customer and lose a sale. In fact, reasonable spoilage is often worked into the adjusted cost of goods and, therefore, the retail price.

Retail category management and accounting accept waste as a reasonable risk.

The foodservice world is risk-averse. Risk adds cost and cost is the enemy. While retailers think in terms of gross margin dollars, cost accounting is all about cost percentages. Moreover, c-stores have moved on from being caught up in gross margin percentages, realizing that you must actually sell something in order to earn gross margin dollars.

Making food that is not to order and that becomes a retail item without a guaranteed sale is a foreign concept to many foodservice professionals. It’s counter-intuitive to everything they’ve learned about managing food costs.

Therefore, they often become incredibly conservative in managing the grab-and-go sections of their departments. They breathe a sigh of relief when the pre-made 82 Convenience Store Decisions

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items are gone. Why? There’s no spoilage. Instead of making more right then and upping the inventory of quickly moving prepared items the next day, they think “mission accomplished” and do nothing. The goal of maintaining a cost percentage has trumped earning more gross margin dollars.

There’s no one to blame here. It’s simply the intersection of two very different mind-sets and it can be remedied.

Someone within organizations with highly evolved foodservice operations needs to create a form of foodservice category management that moves grab and go into the realm of retail sales. And someone needs to take ownership of examining the data generated from those sales and instituting practices that maximize the sales and margin dollars currently being lost. And, yes, also ensuring that customers shopping for those items are never disappointed.

Pre-made food items need to be in the price book with internally created UPC codes, which can be scanned through the point of sale (POS). Spoiled items should be scanned through, also, if for no other reason than to ensure fast moving items aren’t out of stock and that slower moving items are not being prepared at the same production levels every day simply out of habit.

These sound, data management practices— communicated to open-minded, less risk-averse foodservice managers—should result in improved foodservice profitability.

SERVICE FIRST Look at many of our stores at 7 a.m. The parking lot might be full of construction and landscaping vehicles filling up their gas tanks, but also buying lunch from your pre-made section. They may not be near your store at lunchtime, but they still like your sandwiches, wraps, salads or whatever, enough to buy them from you and take them along in the ice chest. You simply cannot disappoint these people.

Or your customers might be a couple of retired guys heading to the beach for a sunset. Guys who want your really great pre-made Cuban or Sausalito sandwiches to eat on the beach. Only the Cuban and Sausalito sections are always empty.

Our industry can do a better job with managing graband-go offerings. Our livelihood depends on it.

CStoreDecisions ecisions .com

1/30/17 12:47 PM

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