Convenience Store Decisions February 2018 by WTWH Media LLC

Volume 29 • Number 2 • FEBRUARY 2018 Business Solutions for Retail Decision Makers

® A

H A R B O R COMMUNICATIONS

P U B L I C AT I O N

2018

Foodservice Report From experience to delivery to healthy options, foodservice trends are evolving faster than ever. As a result, c-stores are ramping up innovation to keep pace with the competition.

INSIDE: C-Stores Enrich Coffee Programs 42 Tobacco Alternatives Heat Up 58 Small Steps Can Build Loyalty 74 January Cover 2.indd 1

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With a unique drive to constantly innovate in every aspect of AGDC, we bring the smartest strategies and comprehensive resources to retailers. We are committed to evolve with the latest industry trends and consumer insights so that we can help elevate your business.

your business

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OPERATIONS

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DATA ANALYTICS

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TREASURY

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February 2018

Vol. 28 • No. 2

CONTENTS 28 COVER STORY

The 2018 Foodservice Report From experience to delivery to healthy options, foodservice trends are evolving faster than ever. As a result, c-stores are ramping up innovation to keep pace with the competition.

EDITOR'S MEMO

OPERATIONS

8 Succeeding with a Service-Driven Culture

66 Integrating Hispanic Ingredients, Offerings

FRONT END

70 Tax Reform’s Impact on Customers

10 NAG Member Proﬁle: Fast Phil’s: Speeding Ahead

TECHNOLOGY

16 CSD’s Quick Bites 18 Industry News

20 Open Pantry Leader Celebrates 25 Years

22 Convenience Store Solutions: Promoting the Best of

C-Stores 24 Frontrunners in Foodservice: Chef Acevedos Sharpens Yesway’s Menu 26 Frontrunners in Foodservice: Donoghue Refocuses Weigel’s Foodservice

68 Rewards of Redesign

74 Technology: Small Steps Can Build Loyalty

BACK END 76 Products Showcase 80 Quick Stop 81 Ad Index

82 Industry Perspectives: Building Up Your Business

Backbone

FOODSERVICE 42 C-Stores Enrich Coffee Programs 46 Evaluating Equipment Needs

CATEGORY MANAGEMENT 52 Indulging Proﬁts Via Chocolate 58 Tobacco Alternatives Heat Up

62 Pufﬁng Up Cigar Sales

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THE CSD GROUP Convenience Store Decisions • Leading Through Innovation 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 . Convenience Store Decisions

EDITORIAL

Vice President, Editor-in-Chief John Lofstock jlofstock@csdecisions.com Senior Editor David Bennett dbennett@csdecisions.com Senior Editor/News & Online Erin Del Conte edelconte@csdecisions.com Associate Editor Howard Riell hriell@csdecisions.com Associate Editor Marilyn Odesser-Torpey mot@csdecisions.com Creative Director Erin Canetta ecanetta@csdecisions.com EDITORIAL ADVISORY BOARD

Robert Buhler, President and CEO Open Pantry Food Marts Pleasant Prairie, Wis. Jim Callahan, Director of Marketing (Retired) Geo. H. Green Oil Inc. • Fairburn, Ga. Brad Call, President Colour Du Jour • Salt Lake City Greg Lorance, Dispensed Category Manager Cumberland Farms • Framingham, Mass. Kyle McKeen, President and CEO Alon Brands • Dallas Billy Milam, President RaceTrac Petroleum Inc. • Atlanta Patrick J. Lewis, Managing Partner Oasis Stop 'N Go • Twin Falls, Idaho Scott Zaremba, President and CEO Zarco 66 • Lawrence, Kan.

OFFICE LOCATIONS

Headquarters 19111 Detroit Rd., Ste 201 Rocky River, OH 44116 P: 440-250-1583 • F: 440-333-1892 Editorial and NAG 1420 Queen Anne Rd., Suite 4 Teaneck, NJ 07666 (201) 837-2177 http://twitter.com/CStoreDecisions www.facebook.com/CStoreDecisions www.linkedin.com/CStoreDecisions 6 Convenience Store Decisions February 2018

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Contributing Editors Mark Battersby Anne Baye Ericksen Sylvia Klinger Pat Pape Brad Perkins Jeff Steele Lisa White Columnists Jim Callahan Steve Sandman Production Manager Barbra Martin bmartin@csdecisions.com

VIRTUALMART ADVERTISING

Group Publisher Tom McIntyre tmcintyre@csdecisions.com 440-250-1583 Publisher John Petersen jpetersen@csdecisions.com 440-250-1583 Vice President, Sales Tony Bolla tbolla@csdecisions.com 773-267-1897

Webmaster Dave Miyares dmiyares@csdecisions.com

NATIONAL ADVISORY GROUP BOARD

Peter Tamburro, Board Chairman Clifford Fuel Co. • Utica, N.Y. Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo. Greg Ehrlich, Chief Operating Officer Beck Suppliers Inc. • Freemont, Ohio Doug Galli, Vice President, General Manager Reid Stores Inc./Crosby’s • Brockport, N.Y. Joe Hamza, Chief Operating Officer Nouria Energy Corp • Worcester, Mass. Brent Mouton, President and CEO Hit-n-Run Food Stores • Lafayette, La. Robert O’Connor, President and CEO O’Connor Petroleum Co. • Hales Corners, Wis. Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.

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 2018, Harbor Communications, LLC

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, Director of Special Projects The Kent Cos. Sharif Jamal, Corporate Training Manager Chestnut Petroleum Distributors Lindsay Lyden, Vice President, Development Truenorth Energy Dana Moloney, Strategic Workforce Partner Warrenton Oil Co. Jeremie Myhren, Vice President, IT Road Ranger Bart Stransky, Executive Director, Merchandising RaceTrac Petroleum Inc.

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

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’S

Memo

Succeeding with a Service-Driven Culture

ROM GREAT CORNERS, CLEAN RESTROOMS and modern facilities to fresh food and a wide selection of popular snacks, convenience stores are committed to delivering outstanding service. This commitment is evident in the industry’s growing sales numbers at a time when other retail channels are struggling to break even. This service-driven culture is the industry’s foundation and it must continue to dominate your training programs and drive your recruiting efforts when you’re looking for your next great brand ambassador. Customers have shown—with their wallets and in focus groups—that price is relatively low on the list of reasons why they shop a convenience store. They want a friendly smile when they walk in the door, a clean store and a genuine sense that you appreciate their business. In other words, they want to feel respected. After all, would you continue to shop at a store that didn’t show you the respect you deserve?

The easiest, and possibly the most “affordable, way to build customer loyalty is to provide outstanding service. ” Regardless of a great price or a convenient location, you know deep down you wouldn’t. Why would you expect your customers to act differently? To succeed, a company must have people with formally assigned roles working together to accomplish the organization’s goals. According to human resources managers, managing these roles involves five principles: planning, organizing, staffing, leading and controlling. Having these principles in place helps you meet your end goal: serving customers. Satisfying Loyal Customers The Pareto Principle states that 80% of a store’s sales come from 20% of its customers. This means to keep customers returning, operators must take all the necessary steps to keep this core group of customers loyal to their stores. The easiest, and possibly the most affordable, way to build customer loyalty is to provide outstanding service. Let’s face it; delivering top-notch service has never been more important. Between rising unemployment rates and the stagnant economy, consumers’ discretionary

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If you have any questions about the redesign or have suggestions for future issues, please don’t hesitate to contact me at jlofstock@csdecisions.com.

spending is much more selective, creating significant competitive challenges for retailers and suppliers alike. The ability to maintain a loyal customer base requires customercentric strategies in collaboration with suppliers. It’s no secret that when store sales increase, everyone wins. To give you an idea of just how important the retail environment is, customer service experts seem to agree no matter what customers say they want, what they’re really looking for is something special. They can’t quite describe it, but when they find it, they know. Those little details of the buying experience may appear intangible. But what brands you sell and price is usually less important to customers than a great shopping experience. Other tips for generating loyal, repeat customers include: Treat them well. People simply want to be treated with respect and fairness. They want to feel like valued customers, whose time and opinions matter. If people can’t trust you to treat them right, they certainly won’t trust you with their money. Provide an efficient buying process. From start to end, did each step of the sale go smoothly? Could the buyers get the answers or help they needed? Could they find what they came for? Were prices and payment options clear and easy to deal with? Eliminate aggravation. A buyer is willing to endure a little inconvenience, such as a line during rush hour, but not for long and not every time. Your job is to minimize inconveniences, not treat them like business as usual. Walt Disney said, “Do what you do so well that people want to bring their friends to see you do it again.” This should be more than a timeless classic from a great salesman.Make it your challenge in 2018. Examine your brand beginning with your people and how you treat them, then consider how you can elevate your performance to drive a steady stream of new and repeat customers. When you do, they will be your best brand ambassadors and that, ultimately, is how your business will grow.

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NAG MEMBER

Profile

Fast Phil’s: Speeding Ahead

The North Carolina convenience chain is preparing for 2018 by employing some new retail strategies and sharpening some traditional ones. By David Bennett, Senior Editor

HE MOTTO, “WHOEVER SAID, ‘YOU can’t have convenience and low prices,’ obviously never shopped at Fast Phil’s” perfectly captures the spirit of this North Carolina convenience retailer. Fast Phil’s, a 10-store chain that’s part of Statesville, N.C.-based Raymer Oil Co., has become a comfortable commodity for the smaller communities it serves. Its promotion of affordable product prices that undercut nearby grocery stores in many cases isn’t an idle boast. Rather, it’s part of its retail philosophy— the same philosophy that has made it a shopping destination in western North Carolina, affording patrons the convenience factor they have come to expect. Matthew Redmond, president of Raymer Oil, said the c-store operation isn’t content to rest on its laurels and is in the midst of a business acquisition that will allow the family-owned company to increase

10 Convenience Store Decisions February 2018

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its 20-store portfolio by 10 locations. Raymer Oil also counts 10 Run In branded c-stores as part of its retail operation. Raymer Oil is also a fuel wholesaler. While it’s still too early to share the details of the merger, Redmond said its part of the company’s plan to grow its retail operation, including a robust revamp of its foodservice program. That includes continuing to add foodservice to every store that has space large enough to accommodate it, said Redmond, who joined the family business seven years ago. FORMULATING FOOD Bypassing partnerships with branded quick-serve restaurant operators, the chain counts larger sites such as its store in Statesville, which operates a full-service deli and serves made-to-order food. The store can do breakfast and lunch, enticing customers with buttery biscuits, custom sandwiches, pizza and

Foodservice has been a long-time calling card for Raymer Oil, where Matthew Redmond is president. The company’s chain of Fast Phil’s c-stores is slated to expand its foodservice program this year.

chicken wings. “I will say that being an acquirer of smaller chains we have become comfortable operating stores of varying sizes,” Redmond said. Some of the company’s locations range from 2,000 square feet to as big as 5,000 square feet, three of which feature sections for indoor dining. Some of the larger locations have enabled Fast Phil’s to operate its own foodservice program. The program is set to grow in 2018. “We are working on three deli additions,” said Redmond. Many of the Fast Phil locations

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Profile prices are the same from one Fast Phil’s location to the next, whether it’s on beverages, tobacco products or snacks. “Our price philosophy is pretty simple. We try to offer the highest quality customer experience at the lowest market price,” said Redmond. The burgeoning retailer isn’t focused solely on business. It also supports the local communities where it operates by giving back through a variety of charitable causes. Being a er than the local supermarkets. The third-generation business began in good corporate citizen is part of its business plan, said Redmond. 1945 with a local oil company founded “We sponsor a lot of local events by Redmond’s grandfather. The company, Raymer Brothers Inc., acquired and charities. I lost my mother to canRaymer Oil, Fast Phil’s, and Kevitt Oil cer in 2014 so I have a strong passion for local cancer charities,” he said. in October 2015. It also operates its “We also fund a scholarship in her own transportation company. memory. In addition to that we are inRaymer also operates its own volved with a local Christian ministry.” transportation company. Redmond’s generous side comes Usually, customers will notice that

This Fast Phil’s in Mooresville, N.C. has seating for 40 patrons, among other amenities.

now offer many modern conveniences, including fresh-brewed coffee stations, walk-in beer caves, and expansive cold vault spaces—some with 12-14 cooler doors. PASSION POINTS Since 1980, Fast Phil’s has been providing monthly and weekly specials on staple items—bread, milk, eggs and cereal—that are often low-

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Profile I think it’s important for us to get out in the community and help support “causes in any way we can. That can be as small as sponsoring a hole in a golf tournament, attending charity luncheons, sitting on committees, and I have even been a ‘celebrity bartender’ for a local cancer charity.

”

–Matthew Redmond , President, Raymer Oil Co.

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out in various forms, as his busy schedule is proof. “I think it’s important for us to get out in the community and help support causes in any way we can. That can be as small as sponsoring a hole in a golf tournament, attending charity luncheons, sitting on committees, and I have even been a ‘celebrity bartender’ for a local cancer charity,” said Redmond. “We have already budgeted to continue contributions to several of our go-to charities for the 2018 year, but we get requested regularly. Most recently we donated money to a local elementary school to help them implement some safety equipment. I’m incredibly proud of all the great causes that we have the benefit to be involved with.” In the field, Raymer Oil offers bonus programs for part-time and full-time employees. “When I entered the family business in 2011, we didn’t have any company-operated retail locations and only had three non-family employees,” said Redmond. “We now have 20 company-operated locations with more than 140 employees so we have really worked hard to maintain a small business feel with the large growth.” To further its expanding operation, Raymer Oil is turning to modern means to maintain peak efficiency. “We have recently started using social media to help us with store level hiring, and are currently working on adding some digital advertising,” Redmond said. To better accommodate its customers, the c-store is now planning for a new loyalty program, which could be rolled out as early as this year.

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QuickBites

Meet 60 million Americans make up this generation

1 in 5 (and counting) are hourly workers

67% are students

94% say pay is the #1 factor when looking or applying for jobs

37% of Gen Z workers want more hours than they’re getting

-Source, SNAGAJOB, GEN Z Infographic

82% want quick in-person feedback on the job

74% are willing to work multiple jobs to get desired hours

Millennial Spending Power Millennials’ spending power will reach $3.5 trillion in 2017. They

will account for nearly 30% of

consumer-packaged goods (CPG) spending by 2020.

81%

of retailers plan to have unified commerce by end of 2020.

-Source: IDDBA’s What’s in Store 2018 report.

42% Modest C-Store Dollar Sales Growth

U.S. convenience store channel dollar sales were

$7.9B, reﬂecting +1.3% year-over-year growth

during the four-week period ending Dec. 30, 2017, (vs +1.1% for 12-weeks; -0.3% for 52-weeks).

62% of retailers indicate

customer identification is their top customer engagement priority

Retailers Transforming Operations

will use customer-owned mobile devices as a point of sale within three years

Source: Boston Retail Partners, 2018 POS/ Customer Engagement Benchmarking Survey

83%

will suggestive sell based on previous purchases within three years

62% plan to increase their use of mobile devices at the POS by the end of 2019

Source: Wells Fargo Securities, using Nielsen data. 16 Convenience Store Decisions February 2018

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INDUSTRY

News

Marathon Petroleum Names Appointments Marathon Petroleum Corp. has appointed Brian Partee, currently director of business development, to vice president of business development, and Rick Linhardt, Rick Linhardt currently director of tax, to vice president of tax. Both positions are effective Feb. 1, 2018. Partee will report to Donald Templin, president of MPC, and Michael Hennigan, president of the general partner of MPLX LP, the master limited partnership sponsored by MPC. Linhardt will report to Timothy Griffith, senior vice president and chief financial officer of MPC. Both Partee and Linhardt will remain Brian Partee in Findlay, Ohio.

item from the shelf, it enters their virtual basket, and the item is removed from the virtual basket if they put it back. As customers exit through the gates with their groceries, their Amazon account charges them for what they take out the door, and they receive an electronic receipt.

Wawa Expands Its Food Delivery Through Grubhub

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7-Eleven Inc.’s fleet of stores expanded last month with the closing of its Sunoco acquisition. 7-Eleven has acquired approximately 1,030 Sunoco convenience stores located in 17 states. This acquisition is the largest in 7-Eleven history and will bring the total number of stores to approximately 9,700 in the U.S. and Canada. The APlus, Laredo Taco, Ladson Grill and Stripes brands will continue to serve customers as the acquisition is completed.

Wawa Inc. is set to offer delivery to select locations in New Jersey through its partnership with Grubhub, an online and mobile food-ordering company. Wawa’s first New Jersey store to offer delivery, located at 500 New Jersey Highway 38 in Cherry Hill, N.J., becomes Wawa’s seventh store overall to partner with Grubhub, joining Pennsylvania locations in Philadelphia, Bethlehem and Ardmore. Wawa and Grubhub first started offering delivery in late 2017. Now in seven stores, online delivery via Grubhub is available for most of Wawa’s foodservice products, as well as a limited number of beverages, chips, candy and desserts.

Circle K Introduces Full-Service Franchises in Canada

Pester Marketing Acquires Western

VERC Enterprises Promotes Barry Ahern

Western Convenience Stores Inc. has sold its gasoline/convenience stores to Denver-based Pester Marketing Co. Western operated 42 stores in and around Denver, Colorado Springs, Pueblo, Grand Junction, Colo. mountain resort locations and Western Nebraska. Pester will rebrand all stores to their proprietary Alta Convenience Stores trademark and offer Phillips 66 gasoline products.

VERC Enterprises has promoted Barry Ahern of East Sandwich, Mass. to the position of vice president of operations. Ahern, who has been with VERC Enterprises since 2004, is an integral part of the firm’s new management team; he will work with Jim Fitzgerald, newly-appointed company president, as well as senior vice president, Paul Vercollone to help guide the company through its anticipated continued growth.

Amazon Go Store Opens in Seattle The much anticipated debut of Amazon’s new checkout-free store began Monday, Jan. 22 in downtown Seattle. The store spans 1,800 square feet and features the type of foods found in both c-stores and Whole Foods, which Amazon recently acquired. According to the New York Times, Amazon won’t reveal how the system works but says it involves “sophisticated computer vision and machine learning software.” Only those with the store’s mobile app can enter through the gates. Once inside, when a customer removes an

7-Eleven Closes On 1,030 Sunoco Locations

Alimentation Couche-Tard Inc., with over 15,000 stores globally, is introducing new full-service franchise opportunities with its Circle K brand in Canada. The expansion marks the first time the Circle K brand will be franchised in Canada with the offer initially targeting the Ontario province. Interested parties will be able to join a world-wide network of company-owned and licensed stores.

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FRONTEND

News

Open Pantry Leader Celebrates 25 Years Open Pantry recently recognized Debbie Markus, a store sales leader who marks a milestone with the retail company. By Erin Del Conte, Senior Editor

pen Pantry Food Marts of Wisconsin, along with a number of supplier partners, honored Debbie Markus, a store sales leader, on Jan. 8 as she celebrated 25 years with Open Pantry. Open Pantry operates eight locations in Wisconsin and Illinois. Markus is the store sales leader at the Open Pantry Convenience Store located at 4811 Northwest Highway, Crystal Lake, Ill. Supplier partners and Open Pantry team members gathered at the Crystal Lake store to surprise Markus at 10 a.m. Monday, Jan. 8 for the celebration, which included a performance by a live Mariachi band.

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MANAGEMENT MASTER “Debbie is a master at c-store management,” James Schutz, managing director for Open Pantry told CSD. “I have had the opportunity to work with her for 15 of her 25 years at Open Pantry; I can tell you she is still teaching me. I have been in leadership roles for some 30-plus years and have worked along side many great leaders, and no one has the dedication to success as Debbie does.” Robert Buhler, president and CEO at Open Pantry, gave Markus the title of ‘C-Store Queen’ many years ago due to her exceptional management and leadership experience. During the festivities, Buhler presented Markus with a card and a $10,000 check in recognition of her 25 years. She also received a tiara, cape and feather boa in honor of her nickname ‘C-Store Queen,’ which she proudly wore as she greeted her customers who congratulated her. “Debbie works very well in the company and impresses everyone for more—better ideas, better performance, better drive, and she’s a mentor to our other managers,” said Buhler as he presented the check. While many have come close, Markus is the first Open Pantry store sales leader to reach 25 years with the company. Markus began as a sales leader at the Crystal Lake store in 1993. She was later promoted to regional sales leader, but eventually decided to travel less and return to store sales leader, where she controls the day-to-day operations, financials, merchandising, customer experience and leadership. Markus told CSD she appreciated that so many people took the time to come out to the store for the celebration. “I can truly say I have enjoyed every year I’ve worked with Open Pantry,” Markus said. “They’ve been very good to me.” TEAM EFFORT During her 25 years with Open Pantry, Markus said she is most proud of taking over the Crystal Lake store when it was struggling and turning it into a profitable location within the first year. She’s also proud of the employees who help make the store a success, most of which have been with her between five to 19 years. Buhler noted that the store’s lack of turnover is testament to Markus’ welcoming personality, superior leadership and commitment to her team members and the community she serves.

F O R T O M O R R O W

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Advertorial

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CONVENIENCE STORE SOLUTIONS

Promoting the Best of C-Stores For convenience operators who doubt that effective advertising can be done affordably, just show us a sign. By Jim Callahan, Contributing Editor

VER WONDER WHY MANY LARGE corporate brands like Coke and Duracell spend millions on advertising? The answer: It works. The convenience store industry doesn’t spend nearly that amount on advertising as other industries. Then again, It doesn’t really need to because of a high visibility factor. Because c-stores are on many community corners and roadways, they just need effective messaging and a good place to put it. This belief is based on our visible fuel pricing signs and in-and-out locations, which do a good job of advertising for us. Indeed, if one prices aggressively enough only a negligible amount of retail advertising is necessary. That said, a bit of clever internet, newspaper, radio or billboard promotion can round out the job for you by bringing in those hard-to-attract customers.

PROMOTIONAL PLOYS This column is allotted to advertising ideas that are easy to implement and are affordable to boot. In other words, you can effectively promote products, engage customers, without breaking the bank Here are a few suggestions: • If you have a reader board/marquee on your premises, close to the highway trafﬁc, consider using it. I’ve found, over the many years that a short, hard hitting, message changed two or three times a week does the job: “Fresh, Hot Coffee 24 Hours A Day- $1.29.” “Coke 12 Packs. Three For $10.99.” “Free Lighter With Tobacco Purchase.” “Free 16 Oz Pepsi With ATM Usage” (This type of special promotion might require some vendor feedback). • To make the reader board message all the more effective, repeat the same message at the fuel dispensers and in the forecourt. • You can place messaging at all the counters. • Perhaps a button or badge can adorn a staff member. Then have employees repeat the promotions to customers. • Simple signage on displays or the area where the advertised product is housed can be effective. • Yes, you can utilize available space in your restrooms, where you have a captive customer for a limited amount of time. 22 Convenience Store Decisions February 2018

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

Most companies have some type of signage program on their computers that you can use to make effective and colorful advertising signs. By investing in a basic laminating machine you can use the signage and buttons/badges over and over for the promotions that work the best. Placing the actual promoted item at each pay point is a “silent suggestive selling effort,” and can also be effective in getting your merchandising message across to departing customers. This works extremely well if you can match the promoted item with an occasion. One example is displaying windshield washer after a melting snowfall or featuring gloves and toboggan hats when the temperature starts to dip below freezing. All are easy strategies to promote deals and better engage customers. INSTAGRAM IS INSTANTANEOUS Those who inhabit the social media world know tweets with images get more engagement. We’ve known for a while that photos on Facebook get more engagement. Even images on LinkedIn get more engagement—if you are promoting a new store location or a charitable cause, for instance. Three of the “newest” social networks— Pinterest, Instagram and Snapchat, are based entirely on images. So why aren’t you leveraging images of product and store activities when promoting your deals? Everyone from boomers to Gen-Y and even Gen-X are all now using the combinations of mobile technology and social media. Millennials have also proven that they prefer to research products through YouTube as compared to more traditional sources. Video is a must-have for retailers who want to sell more. These are slam dunk, proven ideas that are very inexpensive or basically free advertising for your store. I would wish you good luck but, luck isn’t part of this equation. Instead, I wish you the discipline and effort necessary to make every campaign you pursue a successful one. cstoredecisions.com

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FOODSERVICE FRONTRUNNER

Chef Acevedos Sharpens Yesway’s Menu Chef Carlos Acevedos draws on experience as he prepares to create Yesway’s signature dish and core menu. By Erin Del Conte, Senior Editor

Carlos Acevedos

hef Carlos Acevedos joined the Yesway team as That’s in addition to working as a chef at restaurants in New culinary innovation and research chef in October, York City and Washington state. He also served as a staff sergeant in the Air National and is set to drive new food initiatives and create Guard, and with the U.S. Coast Guard as a search and resunique food concepts for the chain in 2018. “My mission is to create food that will intrigue and de- cue expert. He has a bachelor’s in culinary arts from the light Yesway customers, and I have broad latitude to ex- Culinary Institute of America, and a bachelor’s in journalplore and experiment. For a chef, it doesn’t get any better ism with honors from Eastern Washington University. These jobs helped prepare him for his current role in than that,” Acevedos told CSD. CSD is recognizing Acevedos as a Foodservice Frontrun- many ways. “They taught me how to marry the creative side of the ner for his depth of foodservice expertise, as well as his innovation and role in developing Yesway’s foodservice program. brain—where you are imagining all the deliciousness you Acevedos said 2018 should be an action-packed year want to explore—with the rational side of the brain, where at Des Moines, Iowa-based Yesway, which has 80 locations you temper that revelry with discipline in order to produce tangible results on time and to spec,” Acevedos said. and touts an aggressive expansion plan. “It’s what we are calling our ‘year of operations,’ and that “Without the creative side, recipe developers run the risk of includes foodservice in a big way,” said Acevedos. “The being boring. Without the rationale side, they run the risk director of foodservice, Frank White, and I have a calendar of just playing with food all day long.” It also taught him accuracy and speed. full of big plans and chief among them is the development “At one point, I was developing hundreds of recipes a of our signature dish, that key food item that will embody year and to be frank, deficiencies—in the look, the flavor, Yesway’s foodservice personality.” “Additionally, we will be fleshing out our core menu and the texture or even in the written directions—were not an ideating a quick-service-restaurant concept. There will be option,” said Acevedos. “That level of accuracy requires a lot of taste panels, for sure,” he said. Recently, the first professionalism and focus.” He learned how to guide a team through the creative recipes were moving through the development process. He’s currently compiling ideas for recipes to pursue process. “I believe that collaboration is one of most importhroughout the year. Aside from considering trends, he fo- tant arrows in a recipe developer’s quiver,” he said. “So is cuses on empathy. “My best dishes inevitably come when research.” Over the years, he’s learned how to get the information I put myself in the customer’s shoes to understand what he needs effectively and quickly. “Time is a finite resource they want, need or crave,” he said. He also listens. “There are hundreds of employees at and the sooner you start cooking and working through Yesway, and they all have good ideas. To that end, I recent- concepts, the better,” he said. His experiences also taught him about cultivating a ly issued a company-wide invitation to send these gems good attitude. my way. The more I get the better!” “At the end of the day, it’s not about you, it’s about the STEPS FOR SUCCESS customer. So the research chef, the innovation chef, needs Before joining the Yesway team, Acevedos served as to take ego out of the equation,” Acevedos said. “You can test kitchen director for Grey Dog Media, overseeing rec- put your heart into your food, for sure, and certainly it is ipe development for custom food magazines. His career important to let your aesthetic guide how you cook, but you includes experience as the restaurant critic for The Des also have to listen and learn from feedback and are preMoines Register, senior food editor at Better Homes & pared to adjust, tweak, refine or even take a recipe back to Gardens and food editor for cuisine at Home magazine. the drawing board if necessary in order to achieve success.” 24 Convenience Store Decisions February 2018

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FOODSERVICE FRONTRUNNER

Donoghue Refocuses Weigel’s Foodservice As the Tennessee chain’s foodservice director, Brian Donoghue often succeeds in exceeding expectations. By David Bennett, Senior Editor

hen you drill down to determine what motivates Brian Donoghue to keep improving the menu at Weigel’s, it can be traced several years ago to the time when he met the woman he would eventually marry. “When I was in my 20s, I met my wife. She was a single mom of two and I remember her struggling from paycheck to paycheck, as nearly all of us have done at some point in our lives,” said Donoghue, director of foodservice at the 66-store chain. “What stuck in my mind was her going into the c-store and spending her last few dollars on something for the kids. I wasn’t in foodservice back then. However, when I got into foodservice, I went to work with the thought: What if the next customer is that single mom or dad spending the last of his or her money on something to eat for his or her children.” Since joining Weigel’s in 2008, Donoghue has worked to ensure he and his team members are meeting customer expectations while adding new offerings.

Brian Donoghue equipment to our operation, which allow us to get customers’ orders completed quickly.” COUNTRY GOODNESS Tennessee is home to home cooking, and Weigel’s tries to live up to that motto daily. “Since we live in the heart of the South and the middle of ‘biscuit country,’ biscuits do not last very long. We needed to find ways to make biscuits fast, while maintaining awesome quality,” Donoghue said. “So, we added speed ovens from Merrychef. This produced fast, awesome products. As we moved along we came up with some proprietary products that set us apart from our competitors like the ‘Big Pig’—a maple flavored sausage link rolled in open-ended, flaky, baked dough.” Weigel’s has put its own spin on traditional versions of burgers, chicken sandwiches, fries and roller grill offerings. Eventually, the decision was made to integrate modern foodservice equipment in many locations to prepare more food items on site. “We added a bunch of new equipment. We added Panini grills, Duke Product holding units, Ovention ovens, smoothie makers, Barista Coffee Machines, Taylor Soft Serve machines and most recently, our first fryers.”

GROWTH AND DEVELOPMENT Donoghue’s first career stop was in the family’s restaurant in Denver as a line cook and server. Eventually, he would join Town and Country Food Stores in San Angelo, Texas where he became the foodservice director in 1997. In late 2007, Town and Country Food Stores sold to Stripes TRAINING TO ACHIEVE Any foodservice program worth its salt has employee and Donoghue remained there until April of 2008, when training with the qualities that enable it to succeed. he joined Weigel’s as its foodservice director. “I have a great set of folks that are in stores daily, teachIn nearly a decade, Donoghue has helped the Powell, Tenn.-based retailer become a foodservice destination ing training, inspecting and coaching just foodservice,” through equipment upgrades, technological advances, said Donoghue. “They do a great job keeping standards and making sure we are doing the right thing. Additionally, but mostly—simple service solutions. His team and staff provide customers samples of food they partner up with the district managers and store manitems on the menu almost daily. Donoghue speaks to pa- agers to get the needed follow-up and things done. This trons, even watching their face and body language—all all happens in the field.” For every customer, including that single parent huntthe while taking copious notes. Of course, speedy service is another critical component ing for an affordable food option, Donoghue maintains the same high standard every day. It’s also the same philosothat Weigel’s provides. “The most visible differentiation to customers is the phy he shares with his employees. “I tell them to find their greater good,” said Donoghue. self-ordering kiosk. We were one of the first to add an ordering kiosk to the market,” said Donoghue. “We have “Be passionate about what you do, do the right thing and added several other high tech or new concept types of make a difference in someone’s life.” 26 Convenience Store Decisions February 2018

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Cover Story

2018 Foodservice Report

2018

Foodservice Report From experience to delivery to healthy options, foodservice trends are evolving faster than ever. As a result, c-stores are ramping up innovation to keep pace with the competition. By Erin Del Conte, Senior Editor

n 2018, expect to see foodservice operators scrambling to differentiate their offerings on everything from price to quality to technology and innovation. NPD Group, a global information company, forecasts flat to sluggish traffic growth for foodservice operators in 2018. Operators are looking to change that trajectory in a variety of ways, including focusing on the lower end of the price spectrum. McDonald’s, for example introduced a $1 $2 $3 Dollar Menu this January to better compete on value. The NPD Group predicts limited time only (LTO) items will be a major strategy for food operators as they target infrequent buyers, as will encouraging customer visits via loyalty programs. Expect customers to be even more strapped for time, meaning the demand for convenience especially around the dinner daypart will grow. NPD Group predicts delivered meals will be a source of growth for certain retailers, along with other convenient meal solutions. Customers will also be looking to order digitally via text messages and mobile apps, but one size doesn’t fit all. Rather, for convenience stores, realizing what foodservice solutions best meet the expectations of its customers will be as important to operational success in 2018 as it has been in the past. Nearly 50% of dinners purchased from a restaurant are consumed at home, and many in-home meals are a blend of dishes people prepare alongside ready-to-eat meals purchased at a foodservice establishment, according to the NPD Group. As new channels such as online grocery ordering disrupt food shopping, the ways in which retailers must appeal to customers are changing. Excellent customer service will be a key consideration for customers.

MILLENNIALS LEAD THE WAY

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Eric Richard, education coordinator, for the International Dairy Deli Bakery Association (IDDBA) noted crafting an experience is a must for brick-and-mortar retailers and something Gen Z—and Millennials especially—are demanding. cstoredecisions.com

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Meal kits are particularly appealing to younger adults— % of purchases are from consumers between 18-34.

“They want to go into a store and learn. They want to sample. They want to taste new ﬂavors and new ingredients. That’s something you can’t get online,” Richards said. Creating an experience lends itself to another trend: transparency. Let customers know what ingredients are used. If a retailer bakes its own bread, it can better engage consumers by highlighting the ingredients, the simplicity and freshness of the goods, Richards said. Let customers see employees making the food and allow for customization. “Traditional brick and mortars are really going to see this resurgence and it’s because new competition is making them maximize their potential as destinations,” said Richards. In different channels, Millennials have been driving the demand for ethnic cuisine the last few years. According to IDDBA’s “What’s in Store 2018” report, almost 45% of Millennials identify as ethnic or multicultural, making the generation the most diverse in U.S. history. Millennials the most likely generation to incorporate a customized eating approach, like meal planning, using paleo and other diets, and purchasing local and environmentally-friendly products. Millennials’ spending power hit $3.5 trillion in 2017, and they will account for nearly 30% of consumer-packaged goods (CPG) purchased by 2020. Richard also explained that Gen X and boomers are adventurous in choosing what items they purchase. Drilling deeper, Millennials hunger more for single-serving options, such as a mini pie or slice of cake slice rather than a whole, full-size dessert, said Richards. “They don’t want to commit to that without tasting it. Also, they might not have a big family or a large group to feed,” Richards said. “So buying a large-size product doesn’t make a lot of sense for them.” Millennials are also a group of U.S. consumers pushing for fresher product, more transparency and foods derived from local sources. They shop the perimeters of grocery stores instead of going right for dry goods like past generations. They want to know the origin of where their food comes from. The business of delivering prepared meals “If a chain is able to potentially work with a local producer, to American homes is undergoing rapid local grower and able to offer those products in the store, change as retailers with new online platforms that’s a big plus,” Richards said. This allows the store to craft race to capture their own slice of the pie. a story about the food being created or grown nearby. C-store competitors are moving ahead “You can build this whole story-telling component of the with technology to foster online ordering store and that really connects with a lot of people,” he added. and food delivery. According to HospitalIn addition, IDDBA’s report indicated meal kits are parity Technology, 49% of restaurant operators ticularly appealing to younger adults—43% of purchases plan to add new functionality and features to are from consumers between 18-34—and men are more their point-of-sale software in 2018. likely to purchase them than women and households with Though some convenience operators such children at home. Convenience operators are in a unique as 7-Eleven have implanted their own delivposition to craft their own meal kits using items from the ery systems, U.S. consumers accustomed to c-store, Richards pointed out. shopping online through apps or websites Mike Kostyo, a researcher and senior publications manwill hunger for even more convenient soluager for Datassential, concurred that because c-stores have tions, experts say. both foodservice and CPG options, they should look for

Delivery Takes Off

cstoredecisions.com decisions.com

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2018 Foodservice Report

more opportunities to combine those two categories in ways that customers increasingly prefer. Breakfast is also in high demand. “C-stores are in a great position to really capture that breakfast crowd by looking beyond just doughnuts and coffee to having a robust coffee program and really robust breakfast sandwich program made to order…It’s building that experience and allowing people to customize their food purchases,” Richards said.

HEALTHY GROWS STRONGER The deﬁnition of healthy continues to evolve. Kostyo explained that we began with Healthy 1.0—low-fat and low-calorie, and moved to the feel-good terms of Healthy 2.0, like organic and local, to the functional benefits of Healthy 3.0, focused on terms like “protein-enhanced” and “energy-enriched.” “Now we’re really reaching peak Healthy 3.0, particularly in regard to protein, which is now called out in so many of the products found at c-stores —jerkies, trail mixes, smoothies, etc.,” Kostyo said. Next up, c-stores should prepare for the next generation of functional foods, like algae- or seaweed-based energy bars, drinks made with adaptogens that reportedly help the body respond to stress, and prebiotic yogurts that support the growth of probiotics, he said. Clean labeling with natural ingredients is also top of mind for food customers, said Richards. “We’re seeing this continued shift where people are okay with certain ingredients that in the past maybe they shied away from, like real sugar. They want real ingredients,” Richards said.

HIGH TECH ON DECK An omnichannel approach using online, social media, as well as traditional marketing is key. As Amazon and other companies disrupt traditional retail, considering delivery, mobile ordering and the ways “convenience” is changing are crucial. “It could be online shopping with a delivery component or it could be online shopping with the pickup component… It’s really important to offer as many different options as possible to consumers and not pigeonhole the store into one style of operation,” Richard’s said. “Technology is going to move into the food space at an unprecedented rate and a lot of things that sound farfetched today will be a normalized in only a few years,” said Kostyo. “Self-driving cars and delivery robots are already on 30 Convenience Store Decisions February 2018

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CCRRC Explores Consumer Mindset The Coca-Cola Retailing Research Council (CCRRC) is composed of 18 executives representing a variety of retailers from small, independent operators to large U.S. chains that oversee research initiatives conducted by independent third parties. Convenience Store Decisions (CSD) asked Michael Sansolo (MS), research director for CCRRC North and Latin America, about its recent work and the outlook for the convenience store industry. CSD: Tell us about what CCRRC is and its mission. MS: CCRRC is driven by its retail members who select and oversee projects with the goal being research by retailers for other retailers. The members of the council, who serve four-year terms, select topics and then a research partner to run that project. Since the councils first began in the late 1970s, they have taken place globally on a wide range of important topics. CSD: CCRRC is now working on a retail study, with plans to publish a report this fall. What is the scope of the project? MS: The current council, which last year completed a report on employee engagement, now is looking at understanding the real drivers of consumer mealtime decisions in hopes of better understanding how c-stores can compete and win that business. The key is to get beyond simple statistics and to better understand the mindsets that drive consumers’ opinions about the cstore as a mealtime option vs all competition. CSD: Why did the council decide now was the time to study this topic? MS: As shoppers and competition continue to change, the realities of c-store success are shifting. The council discussed the importance of this study as recognizing the potential sales growth in meals and in hopes of helping operators better position themselves to win over this business. CSD: What do you hope the study will do for the c-store industry? MS: Hopefully this specific study will help c-store operators understand the key messages that will help current customers see the c-store as a better choice for mealtime needs and help new customers recognize the wider offerings found in c-stores today. For the full Q&A, visit cstoredecisions.com/2018/01/22/ccrrc/

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the roads and sidewalks. Digital voice assistants are about to truly be everywhere. Amazon is opening up its Alexa platform so that third-party manufacturers can incorporate it into wearables like headphones and ﬁtness devices, while Google is partnering with a number of companies to put its Google Assistant into cars and kitchen appliances.” Kostyo noted nearly one-third of Millennials prefer using a self-order kiosk to ordering it from a human. “Even if you don’t roll out these technologies in 2018, this should be the year you start preparing for them and taking them seriously,” he said. According to Datassential’s Foodservice @Home Keynote Report, 37% of consumers order delivery or pick up food to take home at least once a week, and at least 40% of consumers say they’ve increased their rate of food ordering in the past year. Kostyo noted c-stores represent about 5% of delivery and pickup orders currently, but are competing well against quick-service restaurants (QSRs) and fast casuals. “This could be a real area of opportunity for the segment.” In the pages ahead, c-store retailers share their thoughts on key food trends, including breakfast, delivery, healthy and on the go.

Breakfast

Clark’s Bolsters

Breakfast Program Quality menu offerings and superior customer service help grow morning meal sales. By Erin Del Conte, Senior Editor

lark’s Pump-N-Shop is a second-generation familyowned company that operates 63 stores in Kentucky, Ohio, West Virginia and Florida. It offers a robust breakfast menu to customers through its proprietary Clark’s Café program as well as through its partnership with Krispy Krunchy Chicken (KKC). CSD caught up with Brian Unrue, director of operations at Clark’s, to learn more about its breakfast options, which are a big part of the chain’s foodservice sales. CSD: Tell me about the breakfast program that Clark’s Pump-N-Shop offers. BU: We offer a grab-n-go breakfast, which is in 17 of our Brian Unrue of Clark’s Pump-N-Stop is provstores, including breakfast tornados and breakfast sausages ing breakfast is for off of roller grills. The grab-n-go concept also includes champions. AdvancePierre Fast Break biscuit sandwiches.Of course our Clark’s Café and co-brand Krispy Krunchy Chicken (KKC) both do a full-serve breakfast offering. Our ﬁrst KKC rolled out in Georgetown, Ky. in 2009. We currently operate it in seven of our stores. Clark’s Cafés were started in 2008, and currently are in six of our locations. Clark’s Café is our own concept. Breakfast is almost 50% of our sales a day. We bake the biscuits, fry eggs to order and have premade fresh biscuits ready for the customer on the go. Bacon, sausage and egg can be made fresh for the customer out of the hot case. Hash

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72%

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Sources: †National Restaurant Association Restaurant Industry Forecast ‡Technomic C-Store MarketBrief June 2017

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Cover Story

2018 Foodservice Report CSD: How did Clark’s begin building its breakfast program? Do you utilize bundling/cross merchandising with coffee and breakfast items? BU: When we ﬁrst rolled out our Clark’s Café and KKC programs we rolled breakfast right out. We bake doughnuts at our store in Catlettsburg, Ky., and deliver daily to seven of our stores; and, this is where bundling comes in, we offer daily a small coffee and a doughnut for $1.29. This draws the customer to the countertop bakery cases set up close to or on the hot bar.

browns are a plus and starting next week you will be able to get pancakes. This is a total full-serve concept.

CSD: What are customers demanding when it comes to breakfast? BU: I believe the customer wants fresh, hot and quality and at an affordable price, and they want it quick.

CSD: Breakfast is growing in popularity among customers. What have you done to boost your breakfast daypart as a destination in the last year? Are there any new/upcoming items planned? BU: Our quality with the home-cooked feel and great customer service are what drive our sales. We are setting up to test pancakes from scratch—not frozen—and a new Tyson product called Crispitos. This is basically a larger-size Tornado that will be sold out of the hot cases.

CSD: Who do you consider your biggest breakfast competitors? How are you standing out against the competition? BU: We have a few Sheetz Convenience Stores in some of our markets, but our main competitors would be c-stores offering the grab-n-go concept. I believe that our Clark’s Cafes and KKC programs can stand on their own as long as the pricing and quality remain consistent and customer service is always in the forefront.

On-the-Go

Pilot Steers Its On-the-Go

Program Forward While Pilot Flying J is known for adding some dash to its foodservice, Shannon Johnson is ensuring the program is around for the long haul.

Shannon Johnson is reforming on-the-go food at Pilot.

By David Bennett, Senior Editor

ver-the-road truckers and even the local commuter on the run can be challenged to eat a healthy diet and by the monotony of fast food. Pilot Flying J, which has a network comprising more than 750 retail locations across North America, has built its reputation as a provider of on-the-road amenities and has steadily improved the quality of its on-the-go offerings over the years. In 2017, Pilot hired Shannon Johnson as vice president of food innovation to expand the potentiality of the whole program. He recently pro34 Convenience Store Decisions February 2018

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vided CSD a snapshot of the latest additions. CSD: What can Pilot customers expect in terms of changes to Pilot Flying J’s grab-and-go program in 2018? SJ: In 2018, Pilot Flying J guests will continue to see an increased variety within the grab-and-go space, including new fresh salad and sandwich options. Throughout the year, we will also focus on bringing the convenience of our grab-and-go offerings to additional locations across our footprint, with an intentional focus on daypart and seasonal items. cstoredecisions.com

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2018 Foodservice Report

CSD: Because of the c o m p a n y ’s e v o l v i n g approach to providing new flavors and food experiences, is there an increased emphasis on the types of options Pilot customers can expect when they visit the grab-and-go case now? SJ: Grab-and-go cases will always be well stocked CSD: Since enlisting Chef Tim Love’s expertise to infuse with high quality, beautisome spice into the company’s fast-casual dining concept, fully presented, delicious PJ Fresh, how has his methodology influenced the way the food that requires no prior planning or wait times when company approaches on-the-go offerings? SJ: The relationship with Chef Tim Love has intensified travelers need to rush in our focus on delicious, high quality offerings that have a and rush out. Our focus on portable element as well. These items are all “road ready” new flavors and food expeand “crave-worthy.” We are excited to rollout Chef Tim riences is just one of many ways we continue to elevate Love’s new items this year at all Pilot Flying J locations. the overall guest experience and provide travelers even more options while on the road. CSD: How has the pursuit of freshness affected Pilot’s grab-and-go program since you came on board? SJ: At Pilot Flying J, we are committed to listening to the needs of our guests while on the road and know fresh food is a top priority. With this in mind, we continue to develop new grab-and-go menu items to increase overall choice and operational flexibility. We know the purchase decisions of our guests are all occasion-based and therefore are focused on enhancing our selection to offer the best quality grab-andgo items that also meet the most frequent occasions.

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» Anymore, on-thego options go far beyond just sandwiches. » Savvy operators such as Pilot Flying J are adding seasonal choices—cranberry salad, for example— to their grab-and-go selections. » Varied on-the-go offerings engage customers across different dayparts.

CSD: Can you characterize the way in which walk-up kiosks, now being rolled out in some locations for in-store self-serve ordering, are shaping deli and on-the-go choices at Pilot? SJ: The kiosks are a dynamic communication tool that allows us to display our menus through descriptive text and captivating food photography. Guests can visually see their food options and then communicate with team members directly on their customized food order—made just the way our guests like it. In a world where accuracy is critical, this clear communication sets the stage for us to surprise and delight our guests, while helping our team offer ultimate freshness and quality through our best in class execution and service delivery. CSD: Aside from self-ordering kiosks, what other design elements has the company invested in to ensure a high-quality, on-the-go program? SJ: We continue to invest heavily in our new PJ Fresh Marketplace locations to offer enhanced seating, bold digital menu boards, Wi-Fi and a bright well-lit environment for our guests. With PJ Fresh Marketplace, Pilot Flying J prides itself on providing guests with high-quality meals and on-the-go food options, most of which are prepared in-store daily. These elevated offerings through our PJ Fresh Marketplace are an effort to support the guests’ enjoyment of our vast array of food and beverages offerings—every day.

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Fast Facts:

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Healthy Foods

Kwik Trip Committed

to Healthier Choices

Kwik Trip’s partnership with Partnership for a Healthier America has spurred many changes at the c-store chain. By Erin Del Conte, Senior Editor

wik Trip Inc. (KT) partnered with Partnership for a Healthier America (PHA) in May 2014 and was recognized by PHA for its commitment for healthy food in 2016. KT increased bulk produce sales by 5.5% in its ﬁrst year as a PHA partner. CSD spoke with Erica Flint, director of food research & development for KT, to learn more about KT’s commitment to healthy foods.

Erica Flint has infused healthy ideas at Kwik Trip.

produce. We offer popular seasonal items as well such as peaches, cherries and different apple varieties. Whole grain items and low fat dairy are available in all of our stores. Kwik Trip is still partnering with PHA in 2018 and thinking of new and exciting ways to expand our commitments.

CSD: How is KT catering to the demand for healthful foods when it comes to foodservice? EF: Regardless to whether you’re looking for something CSD: Why did KT decide to team with PHA? Tell me healthy or indulgent, our food offerings aim to provide more about the changes you made via the partnership. EF: In 2014 Kwik Trip teamed up with the PHA because guests with options. Our Hot Spot offerings include an Egg we wanted to make meaningful changes. Our stores were White, Ham & Cheese Sandwich for breakfast and a Garlic already taking steps toward offering a selection of health- & Herb Chicken Sandwich for lunch/dinner. Additionally, we ier foods and beverages. PHA provided guidance on what offer a variety of salads and sandwiches out of our Fresh changes would be meaningful not only to our guests but Case, which pair wonderfully with our whole fruits, fruit cups also to the industry by changing or veggie trays. Another great feature of our foodservice the perception of what a conve- offerings is the ability to customize sandwiches and salads by using the free condiment bar available in all stores. nience stores sells. Since 2014 there have been Add tomatoes, lettuce, jalapeños, onions, pickles and other many changes in our stores. sauces and toppings to meet your preferences. In preparation for our 2014 PHA commitment, Kwik Trip Bike racks are installed at all » Kwik Trip joined new stores and existing store developed its EatSmart program, which highlights some of with PHA in 2014. remodels, produce offerings the better for you options available in our stores. Items that have expanded, Eat Smart are included in the program are hard-boiled eggs, fruits and Healthy Concessions and vegetables, yogurt, sandwiches, salads, soups, low-fat » Kwik Trip has programs were created. cheese and nuts as well as coffee, water and other low- or made numerous Employees receive a piece of no-calorie beverages. changes under Partnership for a Health- fruit when at work, our offerCSD: What trends are you seeing when it comes to ings of healthy packaged ier America recomhealthy food? foods have expanded and we mendations, from EF: Guests are taking note of the ingredients in their also teamed up with the Drink adding bike racks to food and beverages and are looking for options with less Up initiative to name a few. more healthful food Our produce offerings sugar and also for items that have fewer and more recognizprograms. have really evolved over the able ingredients in them. KT’s vertical integration allows us years. Stores started out selling more control over the products that come out of our Dairy, » Customers want bananas, which is something Beverage Plant, Commissary and Bakery. Our teams have options with less we’re known for today. In addi- been working with the recipes and ingredient supplier to sugar, fewer and tion to the bananas, stores also help meet the interest of our guests. more recognizable Marketing through a variety of different avenues allows sell potatoes, onions, tomatoes, ingredients. avocados, apples, oranges, stores to communicate to our guests that healthy food pears, lemons and limes as bulk options are available in our stores.

Fast Facts:

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Delivery

OUR #1 SELLING SNACK ITEM

Opening the Door

to Foodservice Delivery While more convenience retailers are mapping out how to deliver food items to customers, 7-Eleven is molding its next model of innovation. By David Bennett, Senior Editor

s convenience retailers labor to distinguish their foodservice program, some c-stores have added offsite delivery as part of the package. For example, Wawa Inc. recently announced the company will be delivering to select locations in New Jersey through its partnership with Grubhub. Arguably, the chain with the most developed delivery Gurmeet Singh has seen delivery at vehicle on the road is Irving, Texas7-Eleven soar. based 7-Eleven Inc. The largest chain in the industry really got rolling when it partnered with Postmates in the summer of 2015 and hasn’t turned back since. CSD recently asked Gurmeet Singh, 7-Eleven’s chief digital ofﬁcer and chief information ofﬁcer to explain where the company’s foodservice delivery plans are now directed. CSD: 7-Eleven recently partnered with Postmates for additional exposure in the delivery industry. Can you share more information about the partnership and any success it has had with customers thus far? Gurmeet Singh (GS): Approximately 50% of the U.S. population lives within one mile of a 7-Eleven store, which perfectly positions 7-Eleven to deliver what customers need when and where they want it. 7-Eleven has been testing a variety of delivery options to give customers what they want: effortless convenience. We recently expanded our partnership with Postmates to include more than 30 of the metro areas in which 7-Eleven operates stores. In November, we celebrated our enhanced collaboration by offering customers free delivery when they place a 7-Eleven order via the Postmates app. Postmates is an important collaboration as they are also powering the

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delivery component behind the 7-ElevenNOW app. We will continue to collaborate with Postmates and other food delivery services to provide our customers with the more convenient and valuable experience. CSD: As 7-Eleven has expanded its product assortment of fresher and healthier food and beverage offerings in the last few years, has the delivery program aided that effort in reaching more customers with such offerings? GS: Today, it is clear customers are increasingly looking for quality, freshness, differentiation and value along with healthy options. However, our customers are not looking for extremes; they are searching for mainstream options that do not compromise taste or freshness. Customers using the 7-ElevenNOW app for either delivery or pick-up can order from a breadth of options, making their delivery experience even more convenient. We offer different varieties of food for our different varieties of customers. App users can order bananas, fruit blends, salads, juices and granola bars, or they can request products from gummy bears, to ice cream, to a phone charger all in one order. We began a test for the 7-ElevenNOW app in Dallas and look forward to bringing it to more customers in 2018. CSD: Around the same time, 7-Eleven made headlines by achieving one of the first Federal Aviation Administration-sanctioned drone delivery in the U.S. Two deliveries were completed from a 7 Eleven store to a local customer’s house in Reno, Nev. How did this futuristic feat come about? GS: 7-Eleven has implemented a cult u re o f c o n t i n u e d innovation that has met consumers’ needs for over 90 years. We will continue the legacy of innovation that 7-Eleven has pioneered through digital transformation; delivering new and delightful experiences to customers. 7-Eleven customers have demanding s c h e d u l e s , a re o n the go 24/7, are time starved, and turn to us to for convenience. We are always look40 Convenience Store Decisions February 2018

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ing for new ways to deliver the products and services they need, whenever and wherever they need them. Our delivery efforts create opportunities to redefine convenience. CSD: Was this trial just an experiment, or is the company confident that its expanding delivery platform will include drones, going forward? GS: We will continue to explore drone delivery as government regulations evolve. CSD: Moving from one technology to another, please explain how the new “7-ElevenNOW” app will complement the company’s foodservice agenda? GS: We know customers are looking for more variety than ever before, and they are visiting fewer stores. We also know that whatever we offer should be well-suited for our busy customers, eating on the go. We believe we are uniquely positioned to meet their needs given our convenient location and variety of food options including better-for-you products. That’s why at 7-Eleven, we want to redefine convenience through software. We strive to be in the ecosystem of our customers in order to serve their needs in an effortless way. With the 7-ElevenNOW app, customers in the Dallas area can expect a real-time view into available inventory, deliver beer to their door or have wine prepped for pick-up, and even earn 7-Eleven reward points. The new app allows us to reach our customers in a seamless, effortless and delightful way. CSD: With the app, customers can have snacks, hot food, and beverages delivered anywhere, but for now, the service is available primarily in central Texas. Are there plans to roll out the service to more U.S. locations in 2018? GS: We are currently testing 7-ElevenNOW in 10 store locations in the Dallas/Uptown market and we look forward to bringing this unique service to more customers in 2018. CSD cstoredecisions.com

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Foodservice

Coffee

C-Stores

Enrich Coffee Programs

Anymore convenience retailers are expanding their foodservice programs with beverage options offering more, better and different. By Pat Pape, Contributing Editor

W Fast Facts: » About 62% of American consumers drink some version of coffee every day. » Hot-dispensed beverages make up 3.74% of overall c-store sales. » Retail sales of refrigerated cold-brew coffee grew a whopping 460% from 2015 to 2017.

hether it’s a homemade coffee, a beverage shop latte or a conveniencestore brew, Americans turn to coffee when they want to get going, and that trend shows no signs of stopping. In fact, about 62% of American consumers drink some version of coffee every day, according to the Harvard T. H. Chan School of Public Health. Coffee is an important c-store category that drives store trafﬁc. The 2017 State of the Industry Report from the National Association of Convenience Stores (NACS) pointed out that hot-dispensed beverages made up 3.74% of overall c-store sales in 2016, and coffee fans often pick up another item or two to go with their beverage. However, consumer tastes continue to change, new products appear on the market and competition isn’t going away. In response, many c-store operators are focused on making their coffee bars even more inviting, while keeping vaults better stocked with cold, bottled java.

NEW YEAR, NEW BREWS York, Pa.-based Rutter’s toasted the New Year with an updated coffee offering. “We had six flavors that we’d always carried – two house blends and four additional offerings,” said Chuck Moyer, foodservice category supervisor at Rutter’s. “We didn’t change our house blends. They have a loyal following and have been a staple of our program. But the other four have been converted into new offerings. We’ve always offered quality products, but we thought we could take it a step higher and differentiate ourselves from the competition.” The 70-store chain recently introduced an upgraded decaffeinated coffee. “We felt this could be an easy customer segment to capture because decaffeinated is that flavor you carry because you have to,” said Moyer. “For most of the industry, it’s about 10% of coffee sales. It never moves, never grows. But that doesn’t mean that there isn’t the ability to capture customers from your competition and grow that flavor.” The new offering is decaffeinated using a special water process, not the typical chemical procedure. “It’s more of the clean-label product that people are seeking these days, and it’s a much better-tasting, quality, decaffeinated offering,” Moyer said.

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Foodservice

Coffee

Hazelnut, Rutter’s standard flavor option, had long enjoyed a loyal following, but like decaf, it made up 10% of sales. “We now offer LTO coffee flavors that will change four times a year,” said Moyer. “The goal is to have something new and exciting that every customer can take advantage of at some point during the year.” The stores got ahead of the 2018 coffee launch by rolling out Harvest Spice, which is similar to Pumpkin Spice, in the fall. “The ideal time to convert to a new flavor is when offering the No. 1 flavor profile of the year,” said Moyer. “Next, we rolled into the holiday with Buttered Rum Cake and got great feedback. It has a great aroma and will run through February. Then, we’ll bring out a spring flavor and another in the summer.” The chain has offered a coffee that fits the popular darkroast profile, “but it was more a high-caffeine option that just happened to be dark roast,” said Moyer. “We found a nice upgrade—a quality European dark roast that still provides the high-caffeine kick customers want,” Moyer added. Recognizing that terms such as “free trade” and “Rain Forest Alliance” are meaningful to many coffee drinkers, Rutter’s replaced it’s 100% Rain Forest blend with a biannual LTO that will be a sustainable-origin coffee. That means the beans come from a single, distinct coffee-growing region, and the first offering was Bogota Sunrise from an area in Colombia. “It’s something we’ve been seeing in the coffee industry,” said Moyer. “A portion of the cost of the beans goes directly back to the farmers. They get the money for the [original] sale and additional funds go back to help them learn better farming techniques and water management. It helps them be more sustainable and directly impacts their lives and communities. We’ll do a different sustainable origin coffee every six months.”

BEAN TO CUP Last year, Pilot Flying J, Knoxville, Tenn.-based travel center, announced it would spend $500 million during a five-year initiative to update existing locations, starting with a fresh, new logo and more cont e m p o r a r y s t o re exteriors. Inside, the network of 750-plus locations has begun making improvements, including testing novel 44 Convenience Store Decisions February 2018

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options for the coffee bar, such as bean-to-cup coffee equipment. The self-serve equipment lets customers select their preferred cup size, grinds whole beans of their choice and works much like a French press to deliver a hot, fresh cup of coffee. “We are dedicated to food and beverage innovation,” said Caitlin McCall, associate beverage innovation and development manager. “In 2018, we’ll continue to test the bean-to-cup program. We test platforms extensively and are identifying if these units will honor our guests.” The same equipment also can produce cold coffee, and Pilot Flying J is interested. “We’re continuing to invest in this segment because of the growth we’re seeing in this category,” said McCall.

COLD COFFEE CRAZE Retail sales of refrigerated cold-brew coffee grew a whopping 460% from 2015 to 2017, with sales expected to reach $38 million for last year, the Mintel Group reported. “Despite the fact that cold brew has revolutionized coffee house menus and garnered increased media attention due to its popularity, the average consumer is not highly engaged with iced coffee or cold brew,” said Megan Hambleton, beverage analyst at Mintel, who added that many consumers may see cold brew as an occasional treat. Rutter’s currently sells iced coffee in half of its stores, “and one of my goals is expanding it into as many stores as I can,” said Moyer. “We serve fresh-brewed iced coffee utilizing our fresh, iced-tea brewers. It’s a self-serve option. Customers take a fountain cold cup, add ice and self-pour. Then, they dress it at the condiment bar like any hot coffee.” Scott Zaremba, president of the Lawrence, Kan.-based convenience store chain Zarco USA, installed cold-brew coffee machines in his stores after customers requested it. “People really like it,” he said, adding that pre-packaged nitro coffee is an even bigger hit. “We just have not seen a big push—for us anyway—of customers wanting dispensed, high-caffeine nitro. Maybe it’s because Red Bull and Monster are packaged. Our customers go the vault and buy it cold.” There were a number of nitro and cold-brew coffee options – both in the bottle and on tap - showcased at the most recent NACS Show, Moyer noted. CSD

How have you brewed up interest in your coffee program? Answer by going to: www.facebook.com/CStoreDecisions/CoffeeQuestion cstoredecisions.com

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Foodservice

Equipment

Evaluating

Equipment Needs Convenience stores assessing whether to test new foodservice waters have increasing access to modern equipment options, which can keep them from getting in over their heads. By Howard Riell, Associate Editor

Fast Facts: » Compact ovens offer high output, with both space and energy savings. » Operational simplicity is what often sells store owners. » Today’s “speed” ovens are not only fast, but consistent in the heating process.

s foodservice sales grow across the convenience store landscape, equipment continues to evolve as well, from innovative ovens that allow for greater menu versatility to energy- and space-efficient warmers and grills. Thus, as many c-store menus expand to include sandwiches, pizza, baked goods, empanadas, pastries, cookies, tarts, pies, pretzels, proteins, bread products and more, they are also finding savings in food, labor and energy costs, as well as improved speed and consistency. With more Americans obtaining meals and snacks from c-stores, retailers have a significant opportunity to increase revenue by adding new, high-quality food products. Technological advances have helped to raise the industry bar. Of course most convenience retailers who concern themselves with offering good food in a timely manner can upgrade their foodservice programs without paying a heavy cost. Operators looking to update their foodservice equipment packages might consider the following: • Compact quarter- and half-size convection ovens take up little space, have high output and consume only a modest amount of electricity. Some models have four-shelf capacity. Other features include an optional high-speed broiling feature ideal for products topped with cheese such as pizza and some Hispanic dishes. • Fast-cooking or “speed” ovens not only produce at a very fast rate, but are consistent in the heating process, and with the enhancements in heated airflow of later models, can produce even browning. “Combo-technology and double-sided grills are more effective than warmers and convection ovens, as food can be cooked far quicker without the need for hot holding,” said John Reed, the owner of Customized Culinary Solutions, a culinary consultancy in Skokie, Ill. “With pre-programming capabilities and higher output, labor efficiency is improved and the floor space reduced. You have higher yields, less operator training and more consistent offerings. This takes the c-store away from re-heating operations to cook-from-scratch mentality.” Smaller equipment can provide c-stores diverse and convenient product options. For

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Foodservice

Equipment

Energy Star claims that commercial kitchens can even save up to

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example, snack toasters on the market utilize quartz infrared heat, with elements reaching 1,100 degrees, even in a 120 volt-format, with preheat times of just 20-25 seconds. Single- or double-deck units can be used for quickly heating pastries, bagels, sandwiches, quiche and desserts. Pre-made sandwiches can be finished on cast-iron Panini grills. Key characteristics of the Panini grill include ﬁne-grain cast iron in order to retain heat, and even heat distribution so that multiple sandwiches can

be heated at the same time and come THE HUMAN ELEMENT out with the same quality. Today’s technology and the operWarming displays should be sim- ational simplicity of modern kitchen ple, ﬁt into any décor, and have some equipment help retailers when it kind of humidity feature to obtain comes to staff training. maximum holding times. Dual service “The main emphasis in choosing allows loading from the back while all of our equipment is ease of use the customer takes the food products by staff,” said Shannon Harvey, foodfrom the front. service and hot dispensed beverage For c-stores looking to prepare category manager for Ricker’s based more offerings on-site, modern cold in Anderson, Ind. “We want to take prep tables don’t take up a lot of personal judgements out of the bakkitchen space, helping maintain fresh ing/cooking equation.” ingredients longer. Ricker’s uses Duke Tri-channel units

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Foodservice

Equipment

hot holding and potential waste.” for cold and hot holding, Rationale and money on both labor and food cost. Lori Gunnlaugsson, with owner “Pizzas and burgers are cooked in the Merrychef ovens for cooking and heating foods, Accutemp steamers and Merrychef units,” Harvey said, “while Kevin Schartner, heads the 30-year-old, Panasonic microwave ovens. Stores other items are served from hot hold- family-owned S Stop Inc., a conveoffer customers made-to-order burritos, ing units.” The ovens are used around nience retailer based in Sturgeon Bay, tacos, pizzas and burgers. The steamer the clock for all dayparts, she added. Wis. The company purchased its first unit qualified for energy rebates, Harvey “They help to decrease waste due to convection countertop oven—the pointed out, while the oven saves quickly cooking as needed, rather than Tyson 620 Commercial Convection Countertop Oven—almost a year ago through Eby-Brown. What the team found was that with the Tyson 620 Commercial Convection Countertop Oven, the store could broaden its menu and expand its overall foodservice program. “What I like about the oven is that it is small, it cooks really well and it doesn’t stink up your store,” said Gunnlaugsson. “There is no hood needed. It’s just a small, cute little convection oven that really works great.”

Give them a tasty reason to hit the brakes.

FITTING THE BILL There are no plans at present to expand the c-store’s menu any further—for now. “We are a small family-owned operation, and we serve things like chicken tenders and fries, things like that and sometimes during the Lenten season we will do fish and fries,” said Gunnlaugsson. “Before this we mainly had soups and brats. But the new oven cooks Tornados really good. We will cook them and then throw them into the warmer. Everybody is looking for that around noon, and sometimes they get sick of the fast food.” While food cost has risen by approximately 10% since installing the oven, sales have also trended upward, Gunnlaugsson added. “I don’t know if it was just the timing of the oven, but our sales in general this whole last year have been a lot higher.” Most recently, Schartner has added eggrolls to the mix to diversify the menu. “If you want to expand a little bit and give people more than that soup and roller grill, it gives you a chance to make things like chicken tenders or onion rings or French fries and mozzarella sticks.” CSD

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Save the date to attend the 5th Annual YEO Roundtable, which will be held at Cumberland Farms May 16-17 in Westborough, Mass. This premier industry event is open to nextgeneration leaders 40 and under and is free for members of the National Advisory Group (NAG). YEO is the convenience store industry’s exclusive organization for next-generation leaders and up-and-coming decision makers.

Registration for the 5th Annual Roundtable opens Feb 15. Visit www.nagconvenience.com for details. “NAG’s YEO is extremely focused on bringing great young talent together from across the country and giving them a platform to discuss the successes and struggles facing next-generation leaders throughout the convenience store and petroleum industry,” said Jared Sturtevant, YEO board chairman and supervisor of digital marketing for Couche-Tard Inc.

For information on NAG membership or NAG’s Young Executives Organization (YEO) contact NAG Executive Director John Lofstock 201.837.2177 • jlofstock@csdecisions.com

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Category Management

Chocolate

Indulging Profits

Via Chocolate Chocolate candy has remained a relative uncomplicated c-store offering, with the same appeal that keeps customers coming back for more. By David Bennett, Senior Editor

ost convenience retailers would agree that one of the most popular impulse buys is chocolate candy. Chocolate accounts for about 60% of the $35 billion U.S. confectionery industry—about $22 billion, according to the National Confectioners Association. Candy’s health halo has expanded because of demand for more organic and wholesome ingredients, clean labeling, fewer preservatives and less artificial sweeteners. Also, snacking chocolate, a concept popularized by barkTHINS—now a business unit of Hershey—continues to gain traction as new players enter the segment. Of course, bigger candy makers are innovating more than ever. Last year, Hershey introduced Reese’s Crunchy Cookie Cups and a new Crunchers range. Darren Seifer, food and beverage industry analyst for the NPD Group, a Port Washington, N.Y.-based market research firm, said even the stability and mainstream of the confections industry must bend some to the increasing diversity reflected in today’s consumer. “We are a demographic that is vastly changing in this country,” said Seifer. “We have a very big Hispanic population that is known for its spicy flavors. We have a big Asian population known for spicy and bold flavors. And, it’s not a surprise to see products reflect that.” That’s why, Seifer said, you can see that the rollout of spicy chocolate candy has become more predominant in U.S. markets.

Fast Facts: » Declining sales of gum

and mints are prompting some c-stores to expand their candy shelf space.

» Chocolate accounts for

about 60% of the $35 billion U.S. confectionary industry—about $22 billion, according to the National Confectioners Association.

» Nestlé recently an-

nounced it was selling $3 billion worth of its U.S. candy brands, including Butterfinger, Baby Ruth and Crunch to Ferrero.

TWICE DAILY TriStar Energy LLC, which does business as Twice Daily in more than half of its 52 Convenience Store Decisions February 2018

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with

INNOVATION

Bringing you incremental category growth through consumer-led innovation. Join the conversation: @HersheyCompany The-Hershey-Company thehersheycompany.com

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Category Management

Chocolate

stores, realized four years ago that declining sales of gum standard and king-size chocolate offers that allow a conand mints warranted a rearrangement of space in its stores, sumer to more easily enjoy a smaller portion at any one said Rick Staley, merchandise manager who oversees vari- time,” Staley said. ous categories at Twice Daily. “We decided to change our space allocation and INDUSTRY CHANGES reduced our space dedicated to gum and mints by 25% Gary Randell, vice president of marketing at Marion, and reallocated that area to increasing our chocolate and Ind.-based McClure Oil Corp., said the chain of nearly 40 non-chocolate count goods candy offering,” said Staley. locations has also experienced a steady decline in gum and “We also noticed a strong increase in bag candy sales and mints. However, candy sales have taken up the slack. significantly increased our space allocation on this pack“We have given more space to king-size bars as they are age type in many cases doubling the merchandising space. growing faster than standard bars,” said Randell. “Seven of Both of these changes have paid dividends to our overall our top 10 items currently are king size.” candy/confection category sales.” He projects 2018 will be a good year for candy sales. Based in Nashville, Tenn., TriStar Energy operates more “In 2017 sales were up about 3% for us driven by many than 80 stores in Tennessee, Kentucky and Georgia. top sellers,” Randell said. “We look to promote many of After strong chocolate sales last year, 2018 is shaping up the same bars again in 2018 and utilize manufacturer proto be promising for the Tennessee retailer. motions to drive it. It will be interesting to see if the recent Staley explained that the c-store continues to see suc- mergers and acquisitions change how the top companies cess with stand up bags (SUB) at many Twice Daily locations, promote, going forward.” partially because the SUB offers customers a portion-conOne of the biggest deals is when Nestlé recently trol option. announced selling nearly $3 billion worth of its U.S. candy “Some of the SUB and other bagged packages have brands, including Butterfinger, Baby Ruth and Crunch to individually-wrapped ‘mini’ or small bag versions of the Ferrero, the maker of Nutella. CSD

54 Convenience Store Decisions February 2018

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INDIANAPOLIS MARCH 13â&#x20AC;&#x201C;15, 2018

M-PACT 2018

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Category Management

E-Cigarettes

Tobacco

Alternatives

Heat Up

The popularity of pod devices and the growing buzz around heat-notburn products have primed the e-cig/vaping category for a proﬁtable start to the new year. By Anne Baye Ericksen, Contributing Editor

P Fast Facts: » BAT plans for a substan-

tial-equivalence filing for its heat-not-burn product, glo, with the FDA in 2018.

» JUUL had an increase in unit sales of about 700% for the four weeks ending Dec. 30, 2017.

» The e-cigarette and vaping category is expected to grow 15% in 2018.

hilip Morris International (PMI)’s recent announcement was surprising: “We’re trying to give up cigarettes” on display in newspaper ads in the United Kingdom. The unexpected declaration generated plenty of click-worthy headlines, but many in the convenience store industry weren’t all that surprised because PMI and other Big Tobacco makers have been touting their commitment to electronic nicotine delivery systems (ENDS) for the past few years. Wells Fargo Securities forecasts the e-cigarette and vaping category will grow 15% this year, cashing in on more than $5 billion through all retail channels. Furthermore, the market research ﬁrm anticipates convenience stores, along with drug stores and mass retailers, will register $650 million in sales of vapors, tanks and mods, and another $800 million from e-cigarettes in 2018. But much of the optimism for the category is tied to the much-anticipated introduction of heat-not-burn (HnB) devices. “We expect consumers to eventually shift from e-cig/vapor to next generation reduced-risk products, such as heat-not-burn platforms led by iQOS,” said Bonnie Herzog, senior analyst for Wells Fargo Securities.

A REAL JUUL This time last year, convenience retailers were wondering if the e-cigarette and vaping category would survive the 2016 U.S. Food & Drug Administration (FDA) deeming rule mandating ENDS and e-liquids be regulated to the same degree as traditional cigarettes. The mandate also set various deadlines for manufacturers to apply for and gain FDA approval to continue selling products introduced between Feb. 15, 2007, and when the ruling took full effect on Aug. 8, 2016. However, FDA Commissioner Scott Gottlieb is setting a goal to lower nicotine content in cigarettes to below addictive levels, and the commissioner expressed a willingness to review how new technology could be used to aid smoking cessation. “It’s the first time the FDA commissioner not only talked about flavors [of

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Category Management

E-Cigarettes

e-liquids] as being negative because of attracting children, but also vaping as a strategy to help adult smokers quit,” said Gregory Conley, president of the American Vaping Association. Even more impactful was the agency’s decision to extend the deadline for applications of new ENDS until Aug. 8, 2022. “A change to the grandfather date and view on harm reduction are both very positive signals to the industry,” said David Bishop, managing partner for Balvor LLC, a sales and marketing practice. “Both help protect what many believe—in and outside the industry—is important innovation that has the potential to positively and profoundly impact public health concerns related to combustible cigarettes.” The announcement appeared to leave an impression at the cash register, too. “[The category] was really strong from the third quarter on, with JUUL leading the way. JUUL seemed to explode over the summer and into the third quarter, and that carried on into the fourth quarter,” said Tim Greene, category director of tobacco and gen-

eral manager for Smoker Friendly. The Boulder, Colo.-based business operates 102 stores in five states, including Gasamat c-stores. The gap continued to widen during last December between JUUL, and Vuse of R.J. Reynolds Vapor Co., according to Nielsen data from all retail channels reported by Wells Fargo Securities. JUUL accounted for 46.8% of dollar share for the four weeks ending Dec. 30. This is a 14% spike over the month of October, in which JUUL generated 32.9% dollar share. The traditional top-selling electroniccigarette brand Vuse—part of Reynolds’ and parent British American Tobacco’s (BAT) portfolio—dropped to 20.7% of share in the same four-week period. While Vuse continues to holds a top spot for many c-stores across the industry, Wells Fargo reported dollar sales gains for JUUL rose 719.6% for the 52 weeks ending Dec. 30. Comparably, Vuse experienced an 18.6% gain for the same period. “JUUL has created an impression with consumers and it will likely continue to enjoy that loyalty,” said Conley. With the JUUL device, users snap on a cartridge with nicotine liquid, which uses nicotine extracted from tobacco. To activate the cartridge, users simply draw on the end. “JUUL is definitely my No. 1 brand,” said Anna Bettencourt, senior category manager for VERC Enterprises. “Personally, I think a lot of its success has to do with the design. It’s very techy looking and not as large as some

ALL-CHANNEL ENDS SALES Company

Period ended 12/30/17

Unit Sales y/y

of the tanks and mods I have seen.” The Northeastern-based c-store chain operates 27 locations in Massachusetts and New Hampshire.

HEATING UP At fault is the FDA’s regulations requiring new tobacco products released after August 2016 to secure its approval before going on sale in the U.S., which is a lengthy and costly procedure. “If the approval for iQOS is granted, though, it will be a landscape-changing development and will expand the reduced-risk market,” said Conley. In December 2016, PMI submitted a modified risk tobacco product application for iQOS, which heats tobacco contained in cartridges instead of burning it. If granted the modifiedrisk classification, the company will be allowed to market iQOS as a reduced harm or reduced risk product. At presstime, the application was under review by the FDA’s Tobacco Science Advisory Committee. “I think the application will be granted in the first quarter,” said Conley. “I’m very anxious for it because it is so different. We plan to carry it, but I’m wondering how the market will react because it’s an expensive device. I think it retails around $80 in Japan,” said Bettencourt. BAT also confirmed it will submit a substantial equivalence application to the FDA for its glo-brand HnB device in 2018. CSD

Dollar Share

Unit Share

4WK

12WK

52WK

4WK

12WK

52WK

4WK

12WK

52WK

BAT-Reynolds Vapor

-15.0%

-12.6%

-1.6%

20.7%

24.2%

31.0%

26.4%

29.3%

35.3%

JUUL Labs Inc.

699.8%

633.6%

639.2%

46.8%

39.8%

23.8%

26.6%

21.7%

12.1%

Altria Group Inc.

23.2%

25.4%

46.3%

12.4%

13.7%

15.2%

19.9%

21.0%

21.9%

Imperial Tobacco

6.9%

5.1%

8.0%

9.5%

10.4%

12.9%

11.0%

11.5%

12.7%

Logic

22.1%

16.3%

26.7%

5.8%

6.5%

9.7%

8.1%

8.7%

Source: Nielsen Total US xAOC Including Convenience Database and Wells Fargo Securities, LLC, Jan. 9, 2018 60 Convenience Store Decisions February 2018

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Category Management

Cigars

Puffing up

Cigar Sales

Innovation in ﬂavors and packaging are helping energize what was formerly a stodgy tobacco category. By Jeffrey Steele, Contributing Editor

hile some other tobacco through an increased focus on foil product sales have been pouches, but also with singles, [where] somewhat flat in the last Black & Mild is the only horse in the quarter, convenience store race,” said David Bishop, managcigar promotions continue to ignite con- ing partner with Balvor LLC, a sales and marketing firm headquartered in sumer loyalty. Once considered a stodgy segment, Barrington, Ill. “Packs play a role with key brands, the cigar market has become increasingly innovative, with manufacturers although this segment has declined offering a variety of new flavors, packag- over time due to price inflation. Staying ing and merchandising ideas. Retailers on trend is key for retailers, as a lot of point to limited time offers and two-for- [the cigar category] growth in conone promotions as among the catalysts venience is driven by new product. bringing customers into stores, helping Previously hot products—like grape flavored—are falling out of favor for new keep interest in cigars fresh. As a result, popular brands are regis- segments, like unflavored, natural leaf.” At FriendShip Food Stores, a tering growth in terms of units sold and Freeport, Ohio-based retailer with 24 in dollars generated. According to Nielsen data from all locations in Ohio, hot sellers continue retail channels reported by Wells Fargo to be all the brands one might expect Securities, cigar sales were strong at the to find in a c-store. “We definitely sell end of 2017. For the four-week period a high percentage of two-for-99-cents ending Dec. 30, cigar sales were up items like Swisher Sweets and White 12.6%. In addition, Altria Group Inc.’s Owls,” said Kevin Campbell, FriendShip Middleton brand of cigars rose 4.4% Food Stores’ director of marketing. in volume and 9.6% in pricing, while “And obviously, we do very well with the Swisher gained 9.6% by volume, and Black & Mild products.” Over the past year, the FriendShip 0.4% in pricing. “Retailers are growing cigars mainly chain has experienced stronger 62 Convenience Store Decisions February 2018

62-64_CM_Cigars.indd 62

Fast Facts: » Middleton and Swisher

both registered sales gains—4.4% and 9.6% respectively—in the most recent reporting period.

» Two-for-one and limitedtime-offer promotions are solid means to spur category sales and launch new product offerings.

» By August 2018, manu-

facturers will be required to follow the U.S. Food and Drug Administration’s “Warning Statements on Small-Packaged Cigars.”

cstoredecisions.com

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17SWM1647_GM-WHTPCH-TradeAd-CSD_r3.pdf

8/21/17

3:44 PM

REACH FOR PEACH

CMY

Contact Swedish Match Representative • 800-367-3677 • customerservice@smna.com GAMECIGARS.com

1/25/18 4:31 PM

Category Management

Cigars

customer interest in Garcia y Vega Game Leaf Natural, made by Swedish Match, which also produces White Owl cigars. The product appeals to smokers who prefer what some call a cheroot right out of a Clint Eastwood-style spaghetti western. The Game Leaf Natural comes in four flavors, cognac, mango, natural and sweet aromatic. Cigar sales were up 17% at the chain in 2017, versus a 1% rise for cigarettes. “You have consumers switching over to that price point,” said Campbell. The stores display their cigar selection behind the counter for optimal visibility. “And most of our stores have a four-foot set,” Campbell said. “It’s actually on the same rack as the snuff, and we have five rows below the snuff. Most of our stores follow that same set. In the past, we’ve done promotions on Black & Mild singles to build our business. More recently, our sales have been good, so we haven’t had to do many promotions. We tried Optimo cigars on a scan down, which would be like 20 cents off a two-pack. Instead of two for 99 cents, it would be two for 79 cents.” At Shout & Sack, a convenience store operation based in Vinita, Okla. owner Chris Carter said the only cigars the c-store now carries are what he calls inexpensive cigars. That, however, wasn’t always the case. The retailer used to stock high-priced products for the true cigar connoisseur. However, it couldn’t seem to find a significant market for these fine cigars among those who frequented the c-store. “I used to have humidors in here years ago, but it was like selling clam juice over tacos; it didn’t work,” Carter said with a chuckle. “I have been in this business for 43

Small Cigars Are Warned On Aug. 22, 2017, the U.S. Food and Drug Administration (FDA) issued a new guidance document titled “Warning Statements on SmallPackaged Cigars.” In this document, the FDA informed cigar manufacturers that they will not be required to label each cigar individually with one of the required warning statements. Instead, the FDA said that a statement posted near the point of sale (POS) can satisfy this requirement. The requirement officially goes into effect on Aug. 10, 2018 but cigar manufacturers must begin putting plans in place now in order to comply with this new requirement. At that time, it will be unlawful for anyone to manufacture, package, sell, offer to sell, distribute, or import for sale or distribution within the U.S, any cigar that doesn’t meet the new mandate. 64 Convenience Store Decisions February 2018

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years and know what I can do, and I wasn’t any good at selling good cigars. But the cheaper ones we sell a lot of. Everyone comes in and said, ‘Give me a stick.’ That’s what they’re calling them these days—sticks. I’ve got more than 20 flavors of these more inexpensive cigars here. And we get them in to the store about three times a week.” Leading the pack among top-selling cigars at Shout & Sack are regular Black & Mild, as well as the Black & Mild Jazz wood tip, featuring a cedar mouthpiece. Regular Swisher Sweets and Swisher Sweet Grape Natural Foil Wrapped Cigarillos are also big with Shout & Sack customers. For those seeking greater cigar innovation or simply tired of the same old thing, Carter said there are always new flavors being launched. He added that the cigar selection at Shout & Sack seems to appeal most to a younger adult demographic comprised primarily of 18-35-year-old males. It would be difficult, Carter said, for any customer to fail to notice his cigar selection while at the cash register. “It’s right next to the cigarette rack behind the counter, and it’s very visible,” he said. “When you are checking out you can’t help but see them.” Never one to miss an opportunity to promote items to patrons seeking a deal, Carter reported that whenever a manufacturer’s promotion is offered, he always passes the savings along to customers. “Buy one and get one free are popular promotions,” he said. “Whenever we have them offered, I jump in with both feet.”

RAISING THE BAR Managing inventory and sets are two of the keys to success in cigar sales, according to FriendShip’s Campbell. “This was the only category that was declining for me four years ago,” said Campbell. “We reduced the amount of inventory, especially on the seasonal in-and-out, limited time offers. We control that better now, and have better set integrity. We actually put one and two facings in the set that were speciﬁc for in-and-out items. We had space speciﬁcally for a Swisher Grape in-and-out product.” In addition, he reported a definite plan of attack at FriendShip Food Stores is to “fend off the three-for-99 and four-for-99” cent cigar promotional offerings. CSD cstoredecisions.com

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Operations

Hispanic Marketing

Integrating

Hispanic Ingredients,

Offerings

Retailers with a strong Hispanic customer base should consider their unique needs and demands. Not all Hispanic customers are the same and understanding key differences can help your bottom line. By Sylvia Klinger, Contributing Editor

To understand Hispanic food, it’s important to talk about its rojections from the U.S. Bureau of the Census indicate Hispanic population growth will con- culinary history. I prefer to categorize Hispanic food by Mexico, tinue, with Hispanics making up roughly 30% of the Caribbean, Central America and South America and Spain. nation’s entire population by 2050. Addressing the unique dining differences among this MEXICO MAKINGS population will be beneficial to the consumer and can help Mexican cooking uses a wealth of fresh ingredients to convenience retailers distinguish the benefits of catering to create a dynamic flavorful cuisine. the various segments of this growing demographic. Mexican food options can include: If it’s reasonable to include Hispanic offerings to their • Agua Fresca: Fresh fruit juice with sugar and water. menus, it’s important that c-stores understand that different • Arroz a la Mexicana: Long grain white rice cooked with geographic regions have different dietary patterns. tomatoes. Still, Hispanics are most often influenced by the core • Café con leche: Coffee with whole milk and sugar. elements of their country of origin, which include grains, • Chorizo: Spicy Mexican pork sausage. legumes, fresh fruits and vegetables. There are a bevy of • Empanadas: Small turnover (filled with meat, sweet items convenience retailers can use to spice up their foodyams or pineapple). service offerings. • Mole: Red, green or brown sauce prepared in hundreds Hispanics tend to incorporate some western food favorof different flavors, colors and nuts or chocolate. ites as they spend more time in the U.S. and achieve better • Picadillo: Mixture of ground beef or pork, shredded economic status; however, they are rooted in their culwith other ingredients such as raisins, vegetables, etc., ture and the traditional foods from their country, which still and usually used as stuffing. marks their specific preferences. • Pozole: A hearty soup with hominy and pork or chicken. Cooks from the Caribbean (e.g., Cuba, Puerto Rico and Dominican Republic) tend not to use chilies in their cook- PUERTO RICO IS POPULAR ing. Instead, sofrito—generally used to flavor many dishes The popularity of Puerto Rican cooking reaches beyond Caribbean and Latin American is a sauce made of tomatoes, its shores to a large Boricua immigrant population in New onions, peppers, garlic and herbs. York and other American cities.

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Typical ingredients in Puerto Rican cooking are chicken, CUBAN CUISINE fish, seafood, avocados, calabaza (pumpkin), greens, chaThe Cuban cuisine had as its Sylvia Klinger is the yote, okra, gandules (pigeon peas), apio, ñame (yams), foundation the broad and varied founder of Hispanic plátanos (plantains) and sweet potatoes. Spanish cuisine which is a sumFood CommunicaPuerto Rican cooking is distinguished by its use of adobo ming up of regional cuisines. This tions Inc., specialand sofrito. Adobo is simply a marinade or rub, typically with is a common phenomenon in the izing in recipe degarlic and lime juice that is used to season meat and poultry. Hispanic Caribbean. velopment, training Mofongo, mashed plantain mixed with pork cracklings, There, the red kidney beans and development, often serves as a meal’s starch. Plantains are also popular as are called “kongo” and the rice nutrition and wellfried chips called tostones that are served with garlicky mojo “ri.” The combination name ness marketing. sauce. Arroz con pollo, or chicken with rice, is considered comes from the Haitian Creole, something of a national dish. meaning red kidney beans with rice. Traditional fare from Puerto Rico includes: • Adobo: A basic seasoning combination for Puerto Traditional Cuban offerings are: Rican cooking. • Moros y Cristianos: Black beans and rice mixed together. • Arroz con gandules: A medium grain white rice sea• Arroz con pollo: Yellow rice with chicken. soned with sofrito, achiote and green pigeon peas. • Ropa vieja: Seasoned shredded beef (dried). • Arroz con pollo: A medium grain white rice seasoned • Licuados: Made with whole milk, fruit and sugar or conwith sofrito, achiote and chicken. densed milk. • Bistec: Cubed steak; used to prepare pepper steak. • Maduros: Fried sweet plantain. • Empanadillas: A turnover or fritter made of dough It’s important to note the most characteristic feature of stuffed with beef picadillo. Cuban food is a mixture where the tomato sauce with a few • Tostones: Slice of green plantain fried, smashed flat and sautéed spices or Cuban sauce stands over the rest of the refried. ingredients. CSD

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February 2018 Convenience Store Decisions 67

1/29/18 10:30 AM

Operations

Lighting & Design

Rewards of Redesign

Fast Facts: » Remodels often

pay off in increased customer trafﬁc.

» A store facelift

can refresh your brand and image.

» Redesigns can

showcase operational strengths.

By Marilyn Odesser-Torpey, Associate Editor

fter acquiring 31 PDQ convenience stores last October, Kwik Trip launched an interior to exterior conversion program to be completed in three phases. Everything from the coffee equipment and cash registers to the parking lots will be overhauled and by August the stores will be totally rebranded and reimaged as Kwik Trips, according to Will Churchill, the company’s merchandising manager. Kwik Trip has long been known for its signature fresh bakery and robust Hot Foods and grab-and-go Fresh Case programs. One of the ﬁrst imperatives during Phase 1 was adding tables in front of the registers to showcase bakery products. Phase 2, which is expected to be completed in May, is also food-focused and includes tearing down walls to accommodate coolers for grab and go and larger kitchens to launch the company’s Hot Foods program. Phase 3, set to begin in April, will encompass a complete revamp of the exteriors. Kwik Trip has also been remodeling some of its existing stores, Churchill noted. Some of the stores are being expanded by as much as 1,000-3,000 square feet by acquiring nearby real estate. “We particularly focus on how we can improve our Red Zone area where we have our Hot Foods, Fresh Case, bakery, coffee bar, cold beverage and register areas—the parts of the store where most of our sales and growth are generated,” he said. In 90% of Kwik Trip’s new and some remodeled stores, the Red Zone has been expanded for easier customer access. Since fresh food offerings such as whole fruits, cheeses and sandwiches have gone from being displayed on an end cap to a 12-foot, four-tier, open-air, refrigerated island case, in some stores sales have doubled in that category, Churchill noted.

68 Convenience Store Decisions February 2018

68-69_Oper_Lighting.indd 68

Whether it’s rebranding an acquired site, expanding a merchandising space or simply sprucing up the interior, convenience retailers around the country are investing in remodeling projects to entice today’s customers.

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1/29/18 10:32 AM

BETTER ILLUMINATION

significant savings on utility bills,” Gaskins said. After dark, The remodeled sites also increased the cold beverage the lights stand out on the blacked-out canopy for a sleek cooler from 15 doors to 19. A switch from LED flood lights and modern design. to LED strip lights in the beer caves provides three times the illumination, said Ryan Roberts, one of the company’s DISPLAYING CORE STRENGTHS store engineering project managers. Renovations to new acquisitions and existing stores by Roberts said all the stores are being retrofitted with LED NOCO Express in western New York are showcasing the lighting inside and outside, increasing energy efficiency company’s signature, freshly-prepared, grab-and-go Nickel and providing more consistent light levels year-round. City Foods, snack options and expanded beers, said Jim Derek Gaskins, the retailer’s chief customer officer, said DeFilippis, NOCO’s vice president and general manager. commitment to its customers has fueled a constant updatAn updated, more open floor plan has been moving ing of the stores as well as their offerings. stores away from some grocery items and given more visLast year, Rutter’s remodeled more than 20 stores and ibility to grab-and-go meal items and snacks. Four-foot another 20 are in the queue. Three new stores were opened back-to-back island cases offer sandwiches, coffee drinks, last year in central Pennsylvania. Another seven to 10 loca- yogurts and parfaits, and cheeses. tions are scheduled to open this year, including in West To differentiate the craft beer section from the rest of the Virginia and Maryland—both new markets for the company. store, the company has installed copper tile ceilings and One of the new additions to the stores are beer caves, uses easy-to-change magnetic signage to promote the hot300-400 square feet in size with four to eight doors. Video test local brewery brands. screens above the cave entrances televise promotions. Since switching to LED lights, including lights on merStore lighting has taken a giant step forward with solar chandising shelves in 2016, the company has seen a $1,000 tubes and skylights that harness the sun and utilize nat- per store annual savings in energy costs, which DeFilippis ural light even on cloudy days. The result has been “a described as significant. CSD

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February 2018 Convenience Store Decisions 69

1/29/18 10:33 AM

Operations

Taxes

Tax Reform’s

Impact on Customers Because convenience stores bank on America’s disposable income for much of its proﬁts, the effect of tax reform could be signiﬁcant.. By Mark Battersby, Contributing Editor

Fast Facts: » Some economists are predicting that because of new tax reform measures, U.S. businesses will have more net income, and more proﬁts to allocate. » Under the new law, taxpayers will see seven tax brackets but at reduced rates with the highest tax bracket dropping to 37% from the former 39.6%. » Of those 5% who will see a higher tax bill, it’s mostly afﬂuent taxpayers in high-tax states such as New York, New Jersey and California, who are having their state and local tax deductions capped. 70 Convenience Store Decisions February 2018

70-72_Oper_Tax Code.indd 70

he passage of the massive Tax Cuts and Jobs Act (TCJA) received a mix of publicity. Even now, some groups claim any tax savings are illusionary, with the middle-class being hit especially hard in states with high taxes. But, do the lost personal deductions outweigh the tax cuts and have an adverse effect on disposable income? And, because convenience stores bank on America’s disposable income for many of its profits, the impact of TCJA could be significant. Economists surveyed by the Wall Street Journal recently predicted that 2018 would see solid growth and a continued decline in the jobless rate. One factor in that rosy forecast was the tax cut bill signed into law this past December, which most say will boost the economy for several years at least. Growth in healthy food and beverages sales led to positive overall sales at convenience stores in 2017, and retailers expect the momentum to continue in 2018, according to a survey of retailers released by the National Association of Convenience Stores (NACS). But, questions are now being asked about the impact the recently enacted tax “reforms” will have on convenience store customers. The tax reform bill was designed to stimulate economic growth by encouraging businesses to invest in the domestic economy. Some economists are predicting that because of new tax reform measures, U.S. businesses will have more net income, and more profits to allocate. But the question remains: will the increased income and bigger profits in the business sector flow through to the consumers that constitute the customers of the average convenience store business? Despite the hue and cry, the predictions of higher tax bills and the alltoo-real loss of many itemized personal deductions, experts say that the cstoredecisions.com

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1/25/18 4:274:21 PM PM 6/29/17

Operations

Taxes

effects of these changes will vary. Factors such as family size, income and which deductions they are eligible to claim will all impact on each individual’s tax bill. It doesn’t take an expert on the new federal tax law to realize its impact on states like New York has been misrepresented by its many critics. Among the many arguments against the new tax cuts are the claims that taxes are going up. This would significantly impact the incomes of convenience store customers. While technically true, according to the Congressional Joint Committee on Taxation, there will be 177 million tax “units” in the U.S. next year. By all accounts, fewer than 5% of those units will see a tax increase in 2018. Of those 5% who will see a higher tax bill, it’s mostly affluent taxpayers in high-tax states such as New York, New Jersey and California who are having their state and local tax deductions capped and those who continue to itemize deductions, rather than utilize the new, much-higher standard deduction. In high-tax states, officials have been focused on

On the heels of businesses awarding bonuses of up to $3,000 to over one million workers due to the anticipated benefit of Trump’s tax reform victory, several major utilities have announced plans to cut rates in a consumer payback related to the lower taxes, according to media reports. Walmart, the nation’s largest private employer, has, for instance, boosted its starting hourly wage to $11 and is delivering bonuses to employees reportedly to capitalize on the tax reforms and stave off competition in a tightening labor market. To predict the impact on your customers, however, it is necessary to take a look at what they face under the new tax laws. Under the new law, taxpayers will see seven tax brackets but at reduced rates with the highest tax bracket dropping to 37% from the former 39.6%. The standard deduction doubles to $12,000 for single filers and $24,000 for married couples filing jointly. On the downside, personal exemptions and most additional standard deductions have been suspended. On the personal side there are new limits on itemized deductions and a $10,000 cap on state and local tax deductions. The mortgage interest expense deduction can be claimed only for mortgages of less than $750,000 and severely limits theft and casualty losses. The new law also generously excludes 20% of income of owners of “pass-through” businesses like partnerships and limited-liability companies. But that won’t be available to firms involved in legal services, accounting, health, finance or consulting—basically, mostly high-income professionals.

MAINSTREET IMPACT For many Americans, the result is expected to be a lower federal tax bill, at least initially. As mentioned, those facing higher bills will, for the most part, be concentrated in some high-tax states. The TCJA closes unfair loopholes, lowers protecting taxpayers from the impact of the new $10,000 tax rates, simplifies our tax law and repeals the Affordable cap on deductions for state and local taxes. In California, Care Act’s Individual Mandate, all of which should translate Connecticut, Massachusetts, New Jersey and New York, into increased spending power for the convenience store more than one-third of tax filers claim the state and local industry’s customers. tax deduction on their federal tax returns with the average On the personal level, the doubling of the standard deduction in each state being over $15,000. deduction alone will mean a tax cut for most of the middleGovernors in a number of other states are reportedly class as even the Tax Policy Center (TPC), a liberal think tank worried that their own current tax policies could inflict pain has reported. The TPC, a joint venture of the Urban Institute for taxpayers as a result of the federal changes. More than and Brookings Institution, recently estimated that the TCJA 40 states have income taxes, and nearly all of them rely to would reduce taxes on average for all income groups in some degree on definitions from the federal tax code. both 2018 and in 2027 when many of the individual rates The true test for the pro-growth policies under TCJA is and tax breaks expire. whether they will result in a more participatory economy The formula is simple: When the economy accelerates, in which workers’ incomes meaningfully increase over the employers compete for employees and wages increase. long run. The early results appear promising. Some busi- The stronger the economy, the harder it is to get good nesses are already handing out bonuses and increasing employees. Conversely, when growth is weak, as it was dur401(k) matches, base wages and capital spending, thanks ing most of the previous eight years, employees compete to the new, lower corporate tax rate. for jobs and wages stagnate. CSD 72 Convenience Store Decisions February 2018

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Technology

Loyalty

Small Steps Can

Build Loyalty As loyalty programs evolve, they’re working to reach customers in a more personalized, consumer-centric way. By Brad Perkins, Contributing Editor

Fast Facts: » A loyalty program

should be straightforward. If it’s too complex, consumers won’t use it. » Personalization of of-

ferings is a key ingredient to loyalty success. » The best features of a

loyalty program deliver true value to customers.

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successful loyalty program comes in many forms. It can be a physical card, a mobile app or a credit card associated with a program. It can involve points, free items and special deals. But, what it absolutely needs is customer appeal. “To be successful and meet the changing needs of the guest, loyalty programs have to be adaptable,” said Tyler Tanaka, director of digital and innovation at Pilot Flying J. “If something was working before but isn’t working now, it is important to walk away and try something new.” Loyalty programs have long been a source of enticing and keeping customers. And while they began with just the basics of earning a set goal based on spending, they have expanded to include segmentation, customization and choice. “Loyalty programs have their beginnings in the airline, hotel and banking industries,” said Bill Hanifin, practice leader, customer engagement and loyalty, at Impact21. “Early adopters in these industries had success with these ‘spend and get’ models. But to connect with today’s highly-informed and digitally-connected customer, loyalty programs need to be transparent, accessible and experiential.” This means that as customers become more engaged, they desire greater flexibility and ease of achieving and redeeming rewards as well as the ability to easily understand the rewards and program terms. “Thanks to ever-increasing consumer demands, loyalty programs have evolved to become more personal and more immediate than ever before,”said Sheila Murray, COLLOQUY editor-in-chief and assistant vice president of marketing, global solutions, LoyaltyOne. “The influx of customer data and many sophisticated ways of analyzing it have allowed retailers to begin shifting from generic, one-size-fits-all rewards, sales and offers to the ability to provide customers with personalized discounts based on factors like their most commonly bought cstoredecisions.com

1/29/18 10:33 AM

In building or expanding a program, it is important to listen to both your data and your customers. While programs should be easy to understand, the ability to personalize and customize programs with specials and bonuses can add up. “Always think about simplicity and sustainability ﬁrst,” McDonald said. “If customers don’t ‘get’ the program, they will abandon ship quickly. Sustainability is also important. Don’t think of offering great deals today. Think of offering enticing deals every month. In fact, monthly seems to be the sweet spot for us. We’ve learned that one-day deals aren’t always as successful as we want. Deals that last two or three months become the new norm and people are unhappy when we take them away. One month is just right.” Adding in features that target specifics is important. For example, MacFood Marts changes bonus point items monthly but also targets seasonality by offering additional bonus points based on the season, or a According to consumer holiday or other promotion. “We may only make one survey research from the or two changes a year,” said McDonald. “Typically, our 2017 COLLOQUY Loyalty changes come from our manof U.S. Census, agers. I thought our Monster program was going great, but consumers identified “easy when two managers told me that many customers were asking for to use” as the main reason a Rockstar program, I thought for participating in a loyalty it was a good opportunity to expand our offerings.”

products. All of the data at retailers’ ﬁngertips has also led to more timely communications and offers based on customer shopping patterns or important milestones like birthdays or anniversaries.” It’s that customer-centric approach that breeds success, according to Tanaka. “It is important to personalize offerings in order to better accommodate and reach our broad base of guests,” Tanaka said. “We are working to be more targeted with our offerings in order to deliver the one-to-one personalization that we are striving to offer our guests. For example, over the road drivers, regional drivers and RV customers all have very different needs, which change along their journey. Our myRewards offers and incentives need to reﬂect those differences and offer value to each of those guest types.”

GETTING STARTED

In the two years that Macfood Mart, which operates four stores in Indiana, has offered a rewards program, it has learned that customers enjoy having options. “We have seen great success with our clubs—particularly any club that involves caffeinated beverages,” said Melinda McDonald, media coordinator at Macfood Mart. “People really like the versatility of our program. For every gallon you program, above “gives me pump or for every dollar you spend in-store, you earn two BUSINESS BOON great discounts” (39%) and points that you can spend just Pilot Flying J’s features like cash. We don’t pick the include items targeted to their “easy to understand” (37%), prizes, the customers do.” main demographics. among other reasons. For Quicklee’s, a 15-store “The myRewards points prochain in upper New York, the gram, which is primarily targeted desire to gauge where and when to professional drivers, has been their customers shop led to a three-year brand develop- very successful with high engagement,” said Tanaka. “In ment effort launched in 2017. addition to our points program, myRewards includes fuel “We felt we were missing something that success- discount and incentive programs, coffee club, shower proful retailers were offering—a customer rewards program gram and more. Most recently, the launch of myOffers has designed to build customer loyalty and retain a larger share been a huge success, providing myPilot app users with of the market,” said Ken Perelli, Quicklee’s vice president. targeted digital offers and exclusive deals that can be The goal was to make a stop at Quicklee’s more reward- redeemed in-store.” ing by allowing customers to earn points on any purchase Redeeming rewards quickly and often is important to except lottery tickets. The points are available for use for deriving value. Loyalty programs that meet customer needs pump or in-store purchases and also feature random bonus can bring in repeat visits from customers who may not have points for swiping the rewards card, birthday deals and visited more than once or purchased more than gas. monthly drawings for gift certificates. “The features that work best are the ones that deliver “We believe that our rewards program gives the most true value for members,” Murray said. “When done well, options and flexibility to our customers by allowing them to a loyalty program can be a driver for increased spend and use their loyalty rewards on anything in our stores, not just greater profit, but neither can be achieved if your customthe high margin items,” Perelli said. ers don’t feel it’s worth their time to participate.” CSD

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PRODUCTShowcase New RTD Flavors Coca-Cola Co. has introduced Dunkin’ Donuts Ready-to-Drink (RTD) Iced Coffee and is preparing to launch new flavors to the line. Since its launch earlier this year, Dunkin’ Donuts RTD coffee has been responsible for 67% of segment growth. In late Q1 2018, CocaCola is adding Cookies & Cream to the existing lineup of RTD coffee. Cookies & Cream introduces a new flavor that has tested well in terms of uniqueness, purchase preference and brand fit to the category. In September 2018, it will launch Pumpkin Spice RTD coffee for a limited time. Dunkin’ Donuts RTD coffee is part of Coca-Cola’s growing RTD coffee portfolio, which also includes Gold Peak, illy and McDonald’s McCafé Frappés. Dunkin’ Donuts RTD Coffee is made with Arabica coffee blends, real milk and sugar in a variety of flavors, including Original, Mocha, French Vanilla, Espresso and the new Cookies & Cream. Dunkin’ Donuts RTD Iced Coffee launched nationwide in February 2017. Cookies & Cream will launch in March 2018.

Company: Coca-Cola www.coca-colacompany.com

Heat And Eat Sandwiches Day’n Night Bites, a provider of pizza and sandwiches to the convenience store industry, announces two new sandwiches: the Maid-Rite and Sausage Gravy Biscuit. In 1926, way back before Facebook and even before TV, people just didn’t know how to waste time. But being really bored paid off for Iowa butcher Fred Angell. He worked to get just the right combination of a special cut and grind of meat and selected blend of spices. When a deliveryman tasted Fred’s new creation, he said, “This sandwich is made right!” With that, the one-of-a-kind, delicious Maid-Rite was born. The thaw-n-heat sandwich heats in 90 seconds. SRP: $3.29. Regarding the second sandwich, ask a fan of Southern-style “Biscuits and Gravy” and you’ll ﬁnd that the only problem with the dish is that it’s not easy to eat on the go. However, Day’n Night Bites has solved the problem with the Sausage Gravy Biscuit. Delicious, peppery country gravy tops a generous patty of breakfast sausage made ready for the Go by a ﬂaky biscuit. SRP: $2.79. Distributors are welcome to contact Day’n Night Bites directly. Day’n Night Bites is a brand of Land Mark Products.

Company: Land Mark Products Dana Evaro, (800) 338-4340, dana@lmpinc.com

Cookie Parfaits Rich’s Specialty Cookie Parfaits offer layers of delicious indulgence in a single-serve cup—it’s the perfect grab-andgo treat. Choose from three varieties: layers of rich chocolate cookies with either chocolate, vanilla or cookies ‘n creme whipped topping. These prepackaged, 3.25-ounce cups come eight per case, frozen. The SRP is $1.99.

Company: Rich’s Foodservice www.richsfoodservice.com

Grab ’N’ Go Sweets Otis Spunkmeyer has introduced a new line of Grab ‘N’ Go foods, which are made with their “No Funky Stuff” promise. This means they don’t contain artiﬁcial ﬂavoring or coloring, high fructose corn syrup or partially hydrogenated oils. Its new line of sweets is available at convenience stores nationwide and come individually packaged. The line includes four new product offerings: Chocolate Chunk Cookies, Mini Brownie Bites, Iced Lemon Loaf Cakes and Cinnamon Crumb Loaf Cakes.

Company: Otis Spunkmeyer www.otisspunkmeyer.com

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PRODUCTShowcase Drop-In Heated Wells An insulated, full-sized well that is grouped in a modular fashion, the Drop-In Modular/Ganged Dry Heated Well from Hatco Corp. keeps hot foods at consistent holding temperatures for extended periods. Using dry, convected heat, the uniform convected airflow consistently surrounds each food pan for efficient heat transfer. The DHWBI features compact individual thermostatic controls for temperature regulation of each well and a separate On/Off switch to retain settings. It also offers increased design flexibility and reduced installation costs due to the lack of plumbing restrictions. With a ¾-inch NPT brass drain, easy cleanup is guaranteed should any food spills occur and it provides additional protection to the motor and fan from any liquids that might accumulate in the well. Available in one- to six-ganged units.

Company: Hatco www.hatcocorp.com

See-Through Apple Sauce

Chunky MAXX Style Soups Campbell’s introduces Chunky MAXX, the newest line of soups from the Chunky brand. Chunky MAXX is made for men looking for quick, filling and tasty foods to fit their on-the-go lives. With premium meats guys love, each microwaveable tub features 40% more meat and 18-26 grams of protein. Chunky MAXX is available in six flavors, and hit grocery shelves in September.

Company: Campbell’s www.campbells.com/chunky-maxx

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People who love the convenience of apple sauce pouches can now enjoy them with complete confidence thanks to a new, innovative packaging design that allows people to see into the pouch before they eat from it. Tree Top has launched its apple sauce in clear, see-through pouches. The new line-up includes six healthy, on-the-go fruit pouches. This is the first transparent pouch in the apple sauce category. Made from 100% USA Apples from the local orchards of the Cooperative’s grower-owners along with other fruits and with no artificial ingredients. Tree Top’s new, clear pouches come in six flavors: Apple, Cinnamon, Strawberry, Mango, Tropical and Mixed Berry. The variety is available in the popular 3.2-ounce pouch at several restaurant chains and in early 2018, consumers will also be able to find the clear apple sauce pouches in either 12- or four-count boxes in retail stores throughout the western United States.

Company: Tree Top www.treetop.com

Reducing Roller Grill Costs Creative Serving, a Union, N.J.-based manufacturer of retail countertop foodservice equipment, is offering roller grills for hot food sections with re-designed heating elements designed to reduce energy costs. These more efﬁcient, “green” units are designed to deliver up to a 20% reduction in energy savings, which can equate to hundreds of dollars per unit annually. Traditional roller grills require higher wattage heating elements, which must be turned on more often, due to their design. Heated air can continuously escape from both sides of the hollow rollers used, causing heat variances across the surface of as much as 50 degrees. This can cause product to be over or undercooked and fall below proper warming or food safety standards. In contrast, roller grills from Creative Servings have sealed ends, which can reduce these variances to less than 20 degrees and distribute heat more evenly. By preventing heated air from escaping, lower wattage heating elements can be used. The result is a more consistent temperature that minimizes food waste and improves food safety, while also reducing electrical costs.

Company: Creative Serving

(908) 688-0800

http://creativeserving.com

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PRODUCTShowcase Caffeine Gum New Yogurt Evolution Chobani LLC has unveiled a major brand evolution in celebration of its 10th anniversary to commemorate its national distribution in 2008. To bring specialness and magic to the yogurt shelf and position the company for another decade of growth in yogurt and beyond, the company evolved its visual identity with a new wordmark, packaging design and new products offered regionally. Beginning in December, Chobani started rolling out its first-ever regional offering, Chobani with a Hint Of—a simply crafted, blended Greek yogurt made with only natural ingredients, hand-selected varietal real fruits and spices for delicious flavor with less sweetness. Priced at $1.49 per 5.3-ounce cup, A Hint Of will be available first in Pacific, Northeast and Florida markets, and expand to national distribution in July 2018. “A Hint Of” provides Chobani fans with a new option with only natural sweeteners (9 grams sugar) and high protein (12 grams), and a mildly sweet taste in five curated flavors: Madagascar Vanilla Cinnamon, Wild Blueberry, Monterey Strawberry, Gili Cherry and Alphonso Mango. Chobani is also expanding its offerings across existing product platforms.

Company: Chobani’s www.chobani.com/next10years

Mars Wrigley Confectionery introduces Alert Caffeine Gum, which gives adults an innovative, simple and portable alternative to energy drinks, coffee and soda. One piece of Alert Caffeine Gum provides 40 milligrams of caffeine, about the same amount as half a cup of coffee. Alert hit store shelves in September, is available in Fruit or Mint ﬂavors and can be purchased at retailers nationwide. SRP $2.49.

Company: Mars Wrigley Confectionery www.mars.com

The Hershey Co. has introduced Kit Kat Dark King Size Bar, meaning one of Kit Kat’s most-requested ﬂavors is now available in king size. Crispy, sweet wafers covered in smooth dark chocolate create a bold, new Kit Kat bar. As part of the launch, Kit Kat Dark Standard bar is getting a new look. Both bars now have an eye-catching glossy black label that stands out on shelf and clearly announces the dark chocolate ﬂavor. King size is available in a three-ounce bar. SRP $1.99. The product hit store shelves this fall. Company:

The Hershey Co.

www.hersheys.com/cstore

Premium Breakfast Collection Johnsonville is introducing its Premium Breakfast Sandwich Collection, which features five new signature hand-held breakfast options. Johnsonville’s new Premium Breakfast Sandwich Collection is made with high-quality ingredients, innovative flavor combinations, and is designed to expand all-day breakfast and graband-go menu options for c-store operators. Backed by three years of research with c-store consumers, Johnsonville’s new hand-held breakfast sandwiches deliver a high quality Johnsonville flavor experience for core on-the-go consumers, plus appeal to savvy Millennials and Generation Z consumers, who are hungry for premium grab-and-go foods. The Breakfast Sandwich Collection includes: Breakfast Sausage & Waffle Stack; Italian Breakfast Panini; Savory Breakfast Croissant; Andouille Scramble Wrap and Spicy Sausage Bagel. Johnsonville’s new Premium Breakfast Sandwiches are pre-packaged and individually wrapped – allowing for several display and selling options. C-store operators can offer sandwiches hot and ready in Johnsonville branded warmers or pass-through warmers; or in their refrigerated cooler case. The sandwiches are frozen for storage convenience and available 12 sandwiches to a case.

Company: Johnsonville

(800) 837-5391

http://cstore.johnsonville.com

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Fit for a King

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PRODUCTShowcase Unique Sports Drink BODYARMOR is a premium, sports drink that provides superior hydration. It is packed with electrolytes, coconut water and vitamins and is low in sodium and high in potassium. BODYARMOR contains natural flavors and sweeteners and no colors from artificial sources. In 2017, BODYARMOR launched two new products: BODYARMOR LYTE, which has all the same nutrients as BODYARMOR but is naturally sweetened and has only 20 calories per serving, and BODYARMOR water, a premium sport water designed by athletes, for athletes. BODYARMOR LYTE debuted in Peach Mango and Cherry Berry flavors. In 2018 more flavors will be added including Blueberry Pomegranate and Orange Citrus. They will be available in 16-ounce and 28-ounce bottles in c-stores across the U.S. BODYARMOR also recently unveiled the brand’s newest flavor, “Knockout Punch,” designed specifically for its partnership with the UFC (it is now the official sports drink of the UFC); available ONLY in c-stores in 28-ounce bottles. SRP: 16-ounces $1.50-$2 and 28-ounces $2.49-$3.

Company: BODYARMOR www.drinkbodyarmor.com

New Butter Cake Flavors Prairie City Bakery has introduced two new flavors to its delicious Ooey Gooey Butter Cakes – Key Lime and Peanut Butter. The Key Lime tastes like a citrus tropical paradise (made with Nellie and Joe’s Famous Key West Lime Juice), while the Peanut Butter has a sweet and creamy flavor, topped with mini chocolatey chips. These two flavors join the existing lineup of: Original, Lemon, Cinnamon, Sea Salt Caramel, and Chocolate Chip. With the addition of these new flavors, Prairie City now has a family of 7 Ooey Gooey Butter Cakes.

Company: Prairie City Bakery

Anna Gryce, agryce@pcbakery.com

Fuller Protein Snack Packs Chef’s Cut Real Jerky Co., the chef-led jerky brand that delivers an authentic culinary snacking experience, has launched Protein Snack Packs. Each Protein Snack Pack pairs chef-crafted, perfectly tender jerky with 100% all-natural cheese, dehydrated using a proprietary drying process, resulting in a rich, crunchy cheese crisp. Chef’s Cut Real Jerky Co.’s new Protein Snack Packs are available in two combinations, Real Steak Jerky – Original Recipe & Cheddar Cheese, and Real Turkey Jerky – Teriyaki & Pepper Jack Cheese. The Protein Snacks Packs offer a modern take on a classic pairing – meat and cheese. Perfect for on-the-go lunching and munching, each Protein Snack Pack is high in protein, ideal for a complete snack or a satisfying meal replacement.

Cuber Ice Machine Hoshizaki America Inc. is introducing its newest icemaker with the KMEdge Design featuring greater energy efﬁciency, a shorter overall height and a lower voltage wiring. The KM650M_J model (formerly KM-650M_H) produces up to 647 pounds of crescent ice daily while using 4.6% less electricity at a 115 voltage, making it the largest daily ice production model on a standard outlet in the market. At 30-5/16-inches the overall height of the icemaker has been shortened by seven-inches. The 22-inch wide icemaker is available as air, water or remote air-cooled. The remote air-cooled model is ENERGY STAR qualiﬁed.

Company: Hoshizaki

America Inc.

www.hoshizakiamerica.com

Company: Chef’s Cut Real Jerky Co. www.chefscutrealjerky.com cstoredecisions.com

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CSD_Ad_Template.indd 2

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Classifieds /Ad Index ADD Systems

cover story

800.441.7146 / www.apterindustries.com

800.922.0972 / www.addsys.com

Apter Industries Cash Depot

800.776.8834 / www.cdlatm.com

12, 69

Inline Plastics

800.826.5567 / www.inlineplastics.com

Johnsonville

800.837.5391 / www.cstore.johnsonville.com 32, 33

JUUL

www.JUUL.com/retail/wholesale

The new store looks to invite guests to Boosting ConvenienceRetail Distribution KT&G 71 5,7,9 stay a while and visit—like old country While quite a bit of attention is 703.208.1649 / www.cdamarketplace.net www.ktngusa.com paid to team members, a keen focus stores from yesteryear. To help encourCore-Mark Krispy Krunchy 37 49 age guests /to hang around, RaceTrac remains on offering an unsurpassed www.core-mark.com/food-service/ 800.290.6097 www.krispykrunchycash.com convenience store offering. RaceTrac's added more seating, digital screens, free Curtis Liggett Vector Brands Wi-Fi service and in-store music. Other 6,800 team members continually aim 43 19 www.wilburcurtis.com 877.415.4100 to deliver a "wow" retail shopping features include a coffee bar, 12 freshDel Monte Fresh Little Caesars brewed teas, 24 frozen beverage flavors, experience. Emphasizing employees 45 48 800.950.3683 / www.freshdelmonte.com 313.471.6764 / www.LCEcorp.com and ramping up foodservice opera- 10-flavors of frozen yogurt with some 40 E-Alternative LSI Industries and a walk-in beer cooler. 14 tions has seenSolutions revenue grow 80% per toppings 56-57 312.483.9452 / www.cuevapor.com www.lsi-industries.com/vertex “We have been looking to make our store in five years. Gulfcoast Softwaredemand Solutions, for Inc. faster stores M-PACT 2018friendly to our guests,” more As consumer 3 55 727.449.2296 / www.gulfcoastsoftware.com www.-M-PACT.org transactions and convenient retail said Lenker, a close Bolch family confiHatco National Solutions dant, whoRetail will retire Dec. 31 after more solutions has reached an all-time high, 47 67 888.815.8460 / www.hatcocorp.com 833.289.2767 / www.nrsplus.com RaceTrac responded by introducing than 40 years with RaceTrac. “We have Hershey NicoGenhard Pharma Solutions worked on the interior. We have its largest retail prototype to date. The 53 15 www.thehersheycompany.com 516.693.7367 / www.nicogenpharma.com company in late 2012 debuted its new always had a great gas design. But we Homeformat Market Northimproved American Bancard have our food offers and retail inFoods Acworth, Ga. 17 80 800.367.8325 / www.homemarketfoods.com 866.481.4604 quality /ofwww.nynab.com everything in the store. The new store design stands at about the have a reason other than gaso6,000 square feet. RaceTrac President Guests Hoshizaki America NRF Protect 23 20 800.438.6087 www.hoshizakiamerica.com www.nrfprotect.com/CSD to come and see us.” Max Lenker /said RaceTrac worked on line All of the company's stores going forthe project for “six Hunt Brothers Pizzato eight years.” Philip Morris USA 2 800.453.3675 / www.huntbrotherspizza.com/CSD 31

cstoredecisions.com

Tomlinson_half.indd 1

38 Convenience Store Decisions 81_Ad index.indd 81

l November 2014

Portion Padl

330.608.5928 / www.portionpadl.com

Prairie City Bakery

800.338.5122 / www.pcbakery.com

R.J. Reynolds

www.EngageTradePartners.com

36 39 83

ward be this format, Lenker added. Ruiz will Foods 41 “We are looking www.ruizfoods.com at our old stores to see how we can remodel them to be similar. Spark Industries 61 Lots of times/ www.sparkvapor.com we are constrained by real 800.280.8089 estate or parking,” Lenker said. Subway Part of the redesign was recogniz50 203.877.4281 / www.subway.com ing that guests crave convenience and Swedish Match that c-stores have the capacity to offer 800.367.3677 so much more. www.whiteowlcigar.com 13 "We are well beyond the days63 of www.GAMECIGARS.com narrowing our offering to gasoline, Swisher International 84 cigarettes beer," Moran said. "As 800.874.9720and / www.swishersweets.com we saw demand soar for a wider variTexas Pete 35 ety of consumables, we realized our www.TexasPeteFoodservice.com retail offering could be redefined not Tomlinson Industries by our history, but by the needs81 of 216.587.3400 / www.tomlisonind.com our guests. Naturally, things like beer Tyson and cigarettes are retail mainstays, 27 www.tysonconvenience.com but new guests now think of us when Whitecastle they are headed for lunch or looking 25 614.559.2473 / www.whitecastle.com to bring dinner home to their families. Providing a great, upscale offering has

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INDUSTRY

Perspective

Strengthening the Backbone of Business

C-stores can improve the aspects of their operations by challenging their successes. Steve Sandman has worked in the tobacco industry for more than 30 years, most recently as president of Republic Tobacco. His extensive experience includes product management. He can be reached at (812) 569-1388.

By Steve Sandman

nother year usually brings about a new list of challenges we create for ourselves. We focus on losing weight, reducing unhealthy behaviors, exercising more, saving money or doing volunteer work—any areas where we perceive to be lacking. The same spirit inundates the work world, where businesses tackle operational shortcomings. Often in the business world, if we do things differently than we have in the past, we achieve success. So, make 2018 the year to strengthen the backbone of your business. We’ve all heard of the old 80-20 rule, which many retailers adhere to. We spend the bulk of our day dealing with problems, trying to fix them and focusing on all the negative things we either can’t get right or wish we could do better. And we get caught comparison shopping. Many retailers reason that because a competitor has been successful in some operational aspect, they should follow suit. INSIDE BASEBALL Still, no matter how impressed we are with the power of Babe Ruth, we should recognize that we can’t replicate hitting a baseball like him. More to the point, no matter how well an operator does foodservice, which might incorporate a kitchen, a commissary and supporting infrastructure, we can’t deliver the same experience with just a roller grill. Instead, we should concentrate on the things we do best and make them even better. That means spending 80% of the time working on the things we think our company does well, then challenging and questioning those things. The areas where we already excel comprise the backbone of our current success, and without them, a business can get into trouble quickly. Instead, work on an incremental improvement of the program in question. Realizing a 10% improvement rate from the processes we are good at pays a greater dividend than improving something we aren’t good at by 50%, in my opinion.

A SMALL PERCENTAGE Here’s a few methods that are solid practices retailers can employ to wrangle that 10%: 82 Convenience Store Decisions February 2018

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1. Ask a different set of eyes to make recommendations to an existing, successful program. For example, ask customer service to look at sales performance and ask them how could the sales team sell more stuff? Ask accounting to give their impressions of a marketing campaign and that might give you the “outside” look that your customers receive. 2. Ask yourself or your team if you were to create a new program to replace the existing successful program, what would it look like? Gather a representative from many company departments and you may be surprised at the great ideas that exist and were never shared because no one asked those folks for their opinion. 3. Evaluate strengths and weaknesses and encourage others to ask questions. Inquiries that challenge the acceptable norms or might be a little off base often produce some real revelations. 4. Create a task force to tear apart the program in question and rebuild to its most basic levels. Not only will you find better ways to do tasks, but you can uncover hidden costs. Create a challenge to come up with three new elements that aren’t part of the current way the program in question is operating. The biggest challenge in revisiting the successes we have is that no one is screaming about them, and when we look at a list of potential problems, they aren’t always crystal clear. Successful aspects of our business are well-earned and it’s unusual to challenge the components that created that success. However, we have to create this challenge, push it to the forefront and literally make more work for ourselves. Keep your eye on your strengths. If you were to coach a football team, you might have a wide receiver throw a pass once or twice per season. So, would you want him to spend 80% of his practice time throwing the ball? No, you would have him catching the ball mostly because that is where he excels. Go back and learn an even better way to do those things you do well. It will make 2018 a strong year for your business.

cstoredecisions.com

1/29/18 10:37 AM

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