Convenience Store Decisions September 2018 by WTWH Media LLC

Volume 29 • Number 9 • SEPTEMBER 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

Twice Daily

Is Reﬁning Retail Now with a one-of–a kind coffee concept, the Tennessee c-store chain is blending the best of what convenience has to offer.

INSIDE:

Packaged Sandwiches Show Growth Smokeless Tobacco Remains Stable Green Pays Off for C-Stores

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September 2018

Vol. 29 • No. 9

CONTENTS 30 COVER STORY

Twice Daily Is Reﬁning Retail Now with a one-of–a kind coffee concept, the Tennessee c-store chain is blending the best of what convenience has to offer.

EDITOR'S MEMO 8 Nurturing

Leaders and Your Corporate Culture

FRONT END 10 On Location: Community Service Stations Marks

100th Anniversary 16 CSD’s Quick Bites 18 Industry News 20 YEO Welcomes Three New Board Members 22 NAG Scholarship Winners Announced 24 Ricker's Debuts New Checkout Technology 26 Convenience Store Solutions: Sage Advice from a Veteran

FOODSERVICE 38 Chicken Rises to the Occasion

44 Packaged Sandwiches Show Growth 50 Winning With Coffee

TECHNOLOGY 86 Green Pays Off for C-Stores

92 Technology Column: Bypass Apprehending Shoplifters

OPERATIONS 96 Operations Column: Options Fuel Acquisition Frenzy 98 Operations Column: Acting on Data Analysis

BACK END 99 Product Showcase

104 Quick Stop 105 Ad Index

106 Industry Perspective: How to Create Compelling

Foodservice

56 Promoting Your Foodservice

60 Customers Look to Health + Wellness Trends

CATEGORY MANAGEMENT 62 Salty Snacks Charge Forward 68 Beverage Freeze Frame

76 Smokeless Tobacco Remains Stable 80 Beer Sales Grow Diverse

84 Healthy Drinks Earn Market Share 4 Convenience Store Decisions September 2018

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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

CStoreDecisions ecisions .com

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

Contributing Editors Anne Baye Ericksen Scott McKinney Pat Pape Brad Perkins Jeffrey Steele Lisa White Columnists Bill Bregar Jim Callahan Jeremie Myhren Mark Radosevich John Schaninger Production Manager Barbra Martin bmartin@csdecisions.com

Creative Director Erin Canetta ecanetta@csdecisions.com

Director of Digital Strategy Eric Shanfelt eric@nearviewmedia.com

EDITORIAL ADVISORY BOARD

NATIONAL ADVISORY GROUP (NAG) 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 Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas Greg Lorance, Dispensed Category Manager Cumberland Farms • Framingham, Mass. 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 September 2018

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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

Digital Operations Manager Nicole Lender nlender@csdecisions.com

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

YOUNG EXECUTIVES ORGANIZATION (YEO) BOARD

Bart Stransky, Board Chairman RaceTrac Petroleum, Executive Director, Merchandising and Supply Chain Garet Bishop, Chief Financial Officer BFS Cos. Kalen Frese, Food Service Director Warrenton Oil Co. Alex Garoutte, Director of Marketing The Kent Cos. Sharif Jamal, Corporate Training Manager Chestnut Petroleum Distributors Lindsay Lyden, Vice President, Development Truenorth Energy Jeremie Myhren, Vice President, IT Road Ranger Alex Olympidis, President Family Express Corp.

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

Nurturing Leaders

and Your Corporate Culture

N TODAY’S COMPETITIVE CONVENIENCE STORE industry, your corporate values and what you stand for are just as important to customers as the products you sell. More precisely, it is what defines your brand in the community and to the customers you serve. As such, brand culture is something convenience store retailers need to constantly coddle. Still, many cstore owners talk about their company culture, but often can’t identify what it is. That’s a concern because a welldefined culture is crucial for attracting top talent and keeping the customers coming back to your stores.

a good job at it requires training, “theDoing right tools and lots of feedback—and very few managers get these things. ” Simply put, this culture begins at the very top of your company’s organizational chart. Being a good leader and grooming young employees for leadership positions is vital to a company’s success. Study after study shows the main reason employees jump ship is a bad manager. And while you might think of a “bad boss” as one who is lazy, mediocre bosses usually have good intentions, they’re just poorly trained. That is a key takeaway from James Manktelow and Julian Birkinshaw, authors of Mind Tools for Managers: 100 Ways to Be a Better Boss. “In a tight job market, you must do everything possible to create a company where employees want to stay,” Manktelow said. “Managers have a hand in almost every aspect of how your employees perceive their job—from how meaningful the work is to how appreciated they feel.” In other words, being a good boss is a tall order. Doing a good job at it requires training, the right tools and lots of feedback—and very few managers get these things. The authors offered a few tips for creating the kind of workplace culture that will attract good people and, just as important, keep them from leaving. Learn to listen carefully to employees. For the book, Manktelow and Birkinshaw surveyed more than 15,000 managers and professionals worldwide. The survey found that 66% of managers think careful listening is one

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For any questions about this issue or suggestions for future issues, please contact me at jlofstock@ csdecisions.com.

of the most important methods you can use to understand and motivate people. It helps you understand what upsets the people who work for you so you can help clear these things away. It also helps you appreciate what energizes them so you can shape their work responsibilities. Active listening—where you make a conscious effort to hear not only the words another person is saying but to understand the complete message being sent—helps make employees feel heard. Give effective praise and recognition. The authors discovered that 54.8% of survey responders see giving praise as one of the most important ways of getting the best from their people. Walk around looking for opportunities to give praise. Be specific about what you’re praising and do it in an appropriate way—some people love public praise while others are embarrassed by it. Be sure that praise is honest and proportionate. Insincere praise will weaken trust. Help people develop self-confidence. People want to feel good about themselves and their abilities, and they want to be successful at work. When you build your employees’ self-confidence, you’ll help them achieve both goals. One good strategy is to set small goals for employees that allow them to demonstrate to you and themselves that they have mastered a skill—then you can move on to set progressively harder challenges. Handle poor performance right away. Don’t let it fester. When you don’t deal with poor performers, it puts a lot of pressure on other team members. This can cause high performers to leave. Dealing with poor performance effectively is a highly important management skill. These are not easy skills to master, but they are extremely important. Keeping good people begins with creating an environment that offers great leadership, makes them feel important, valued and like a member of the family. It’s hard work, but well worth the effort. And remember, if you’re not willing to take these steps, there are always other companies out there that will.

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FRONTEND

Profile

Community Service Stations

Marks 100th Anniversary The Framingham, Mass.-based company looks back at how its business has advanced over the past 10 decades. By Erin Del Conte, Senior Editor

OMMUNITY SERVICE STATIONS INC. IS celebrating its 100th anniversary—a high watermark in any retail channel. The company’s century-long presence in convenience demonstrates how managing a business successfully across 10 decades is rarely a linear exercise. What began as a single gas station expanded into a heating oil and c-store retail business, and today is making its mark as a wholesale gasoline distributor that also works with its c-store dealer partners to help them maximize potential. If there’s one thing Community, based in Framingham, Mass., has learned over its century in the industry, it’s that businesses must pivot and evolve according to their strengths in order to flourish into the future. This photo shows the Community gasoline fuel oil truck facility in Newton, Mass. in It’s a lesson all c-store retailers could benefit the 1930s. The site was rebuilt in 1989 as a modern gasoline station/convenience from as they stare down another age of disstore site and still stands today. ruption: the changing market will force them to adopt new technologies and ways of doing business in order to compete. Today, Community is a New England distributor of Mobil, Exxon, Gulf and unbranded fuel. In fact, Community is one of the oldest CENTURY HOME Riley’s grandfather, George Riley Sr., and his partner ExxonMobil customers in the nation. The company also operates one c-store and leases another. At one time, Paul Strang started Community Service Stations in 1918. They opened a single gas station in Brighton, Mass.—a the company operated about a dozen retail sites. “With the centennial anniversary this year, it’s easier section of the city of Boston—featuring auto repair, gasoto reflect on how much hard work and effort it took my line and parking. “The property had a fairly large garage. I’m told that one of the vehicles parked there belonged grandfather and father before me to be able to survive to the Cardinal with the Catholic Archdiocese of Boston. three generations of 100 years,” said Chris Riley, who represents the third generation in the family business. “It So we were in the fabric of the community from the start,” really strikes me this year as a unique accomplishment said Chris Riley who today is the president of the company. As the small business grew, Community added a heatand especially looking at how few firms in all industries ing oil and kerosene business, opened one of the first ever get to 100 years.”

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FRONTEND

Profile

depots in Boston’s western suburbs and expanded into wholesale heating oil distribution. George Riley Jr., after serving in World War II, was working toward a masters in business administration at Dartmouth’s Tuck School when George Riley Sr. became ill, so George Riley Jr. left school to join the family business. He served as president for 66 years. In the late 1960s, Strang sold his ownership to Riley, who became the exclusive owner. In the 1960s and early 1970s, the company moved more aggressively into the wholesale gasoline business. “My father hired a couple Mobil Oil Corp. employees to help him grow the gasoline wholesale business, and started to focus on it significantly, and it went from about 3 million gallons in the early 60s to 10 million gallons by the time I joined in 1979. They had tripled the business over 15 years,” said Chris Riley. Chris Riley became the third generation to join the family business in 1979. After graduating from college, Riley had worked for General Electric (GE) in the finance wing.

The founders of Community Service Stations, (left) Paul Strang and George Riley Sr., began the company in 1918 with a single gas station. Today, Community is a New England distributor of Mobil, Exxon, Gulf and unbranded fuels. 12 Convenience Store Decisions September 2018

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“As I was growing up, joining the family business wasn’t something I planned to jump into right after college. It took a few years of working for another corporation and then having an opportunity pop up for me to decide to work for the family business,” Riley said. In 1979, with interest, borrowing and investment rates skyrocketing, Riley saw an opportunity to apply the financial skills he honed at GE to enhance Community’s returns and assist with overall cash management. “I took techniques GE used and applied them to the company and that proved fruitful right off the bat, especially with the high costs of borrowing and substantial investment rates,” said Riley. Throughout the late 1970s and early 1980s the company expanded its convenience store/gas station presence to about 10 company-owned or leased sites. The sites were small—“more snack shops” than what we think of as c-stores today. BUSINESS MODEL SHIFT In the 1980s, the company began a new business model, helping retailers plan, develop and finance their c-stores. Community was one of the first Mobil-branded distributors to encourage independent dealers to rebuild bay sites and full-serve fuel islands into c-stores and selfserve pumpers, a focus it continues to this day. Between 1985 and 2017 it invested more than $20 million to help fund its customers’ transition to the new model. It also aggressively grew its heating oil business in the 1980s, which it later divested in 1990 to instead focus on gasoline and diesel wholesale distribution. By the mid to late 1980s the company also began to divest its company-owned c-stores, and also moved away from selling motor oil and spark plugs. “We came to understand we were not really geared as well to the retail environment with the way we were organized,” Riley said. “My personality and the personality of my father were more geared to wholesale. So the transition was a conscious effort to avoid being spread too thin.” In addition to distributing Mobil fuel, the company signed on to become a Gulf Oil LP distributor in 1999. Community’s emphasis today is on partnering with independently-owned retailers as a wholesale fuel distributor of Mobil, Exxon, Gulf and in some cases unbranded gas, while also assisting dealer sites with everything from financing to operations through a long-term contract. Community is one of the oldest ExxonMobil customers in the U.S. and one of four authorized ExxonMobil distributors in the New England states (with the exception of Connecticut). Today through its brand-fee agreement with ExxonMobil, Community also participates in product sourcing, terminal agreements and supplying former Exx-

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onMobil distributors. In 2010, Community’s gallon sales reached 37 million gallons. This year, fuel sales are expected to exceed 75 million gallons. BUSINESS EVOLUTION The company still owns one c-store in Newton, Mass., which was purchased in 1929. In the 1960s, the company remodeled the location and added its main office above the c-store. Community redeveloped the site again in 1989 to comply with a Newton ordinance requiring two service bays for automotive repairs. The c-store, or as Riley calls it, the “snack shop” remains only about 800 square feet today, and other than fresh fruit does not offer a foodservice presence, but is none-the-less a high-volume store set on a busy road. In addition, Community leases and subleases a dealeroperated gas station in Natick, Mass. “At the time we had a dealer death and our best means of controlling the prop-

erty was to go into a lease with the owner of the property,” Riley said. Both c-stores are exceptions to the rule, and not a model the chain is focused on pursuing today. But it’s exactly this flexibility, and openness to pivoting and evolving when needed, that Riley credits with helping the chain reach the 100year milestone. “We definitely had to change. If we hadn’t evolved for example, from selling kerosene in the 20s and 30s to running sites that had service bays, to our

George Riley Jr., son of founder George Riley Sr., and father of present-day company president Chris Riley.

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model today, we wouldn’t exist today. I think the key has been our evolution.” Riley also credits focusing on areas of business that matched the owners—both his and his father’s—personalities. “We looked for areas to grow and evolve that also aligned with our strengths. As a result, like my father I’m excited to grow the business and work is never a burden. That’s probably been most significant thing that helped us over the 60 years I’ve observed,” he said. While Riley has two daughters in their 20s, at this point a fourth generation member has yet to join the family business. “I feel strongly that anyone that works for the family business ought to work outside the business for a period of time and work for someone else. That’s crucial. A lot of my customers are family businesses, so I’ve seen a lot of family businesses passed down through generations successfully and unsuccessfully. It’s also important to see what passions the next generation wants to follow,” Riley said. As the company looks to the future, Riley is quick to recognize that its partners and customers have been a huge aspect of the company’s success, and will be key in helping the company continue to thrive for the next hundred years ahead. “Without those partners and customers, their willingness to grow and evolve and rebuild their sites and operate somewhat differently, we also would not exist,” Riley said. “A lot of our relationships are 15-25 years old, so we’re invested in each other’s success.”

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QuickBites at a Glance • 16% of the U.S. population

MEATY TREND

• Ages 13-24 • 52 million Americans • Over $500 billion in buying power, which is comparable to the GDP of several countries, including Belgium, Poland, Sweden, Thailand and Venezuela. Source: Packaged Facts “Looking Ahead to Gen Z: Demographic Patterns and Spending Trends.”

Korean BBQ (K-BBQ) is a growing trend in the U.S. Pounds of K-BBQ sauce shipped from broadline foodservice distributors to U.S. independent and micro chain (3-19 units) restaurants increased by 120% last year and continues to grow. K-BBQ can be sweet and sour or sweet and savory and lends itself to a variety of foods from burgers and jerky to tacos. Source: NPD Group, 2018

TEA TIME

Age-Old Differences

The following international tea trends are expected to help drive growth in the U.S. tea market from $8 billion in 2017 to $10 billion by 2022: • Matcha Tea – Popular in China and Japan, matcha is a highly nutritional form of green tea. • Moringa Tea –Origins rooted in India and made from the leaves of the moringa oleifera tree that is rich in antioxidants. • Sencha Tea –Variety of green tea considered the most popular tea in Japan where it originates. • Mizudashi (Cold Pressed Tea Process) – The adoption of the cold-brewed process in the ready-to-drink coffee category has begun spreading to the tea category.

Millennials (aged 24-41) and adult iGeneration (aged 18-23) consumers are driving the usage of both mobile banking apps and digital payments.

Source: Packaged Facts in the report “U.S. Beverage Market Outlook 2018”.

HOME COOKING

• Last year over 80% of meals in America were prepared and eaten in the home. • Foodservice spending was up 2% (due to the rising cost of a meal) in the year ending May 2018 , but foodservice visits were ﬂat in the period compared to year ago. • Americans look to foodservice for a shortcut when making meals at home. A growing number of in-home meals are a combination of prepared dishes and items purchased ready-to-eat from a foodservice establishment. • Almost 50% of dinners purchased from a restaurant are consumed at home. Source: NPD Group, “Future of Dinner” study, 2018.

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Younger generation members with bank accounts are likely to use banking apps:

• 85% of adult iGens • 82% of Millennials Younger generations are also more likely to make digital payments online or via mobile apps:

• 60% adult iGens • 61% Millennials • 20% baby boomers (aged 54-72) Source: Mintel’s “Retail Banking and Credit Unions US 2018” report

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INDUSTRY

News

Wawa Hits 2018 Coffee Goal Wawa, as of June, 2018, has achieved its 2018 sustainable coffee goal with 100% of all built-to-order cold brew coffee and espresso drinks now made from Rainforest Alliance Certified beans. The Rainforest Alliance is an international nonprofit organization working to develop and promote farming standards that protect the environment and promote the wellbeing of workers, their families and their communities. Wawa is committed to partnering only with roasters who source quality coffee and participate in practices that support responsible environmental and social standards in coffee-growing regions. Wawa will additionally strive to have all of its coffee varieties sustainably sourced by the end of 2020.

green PLC. Getty acquired fee simple interests in six convenience store and gasoline station properties for $17 million and simultaneously entered into a unitary lease with a U.S. subsidiary of Applegreen covering all of the acquired properties. The properties are all located within the metropolitan market of Columbia, S.C.

O’Connor Among ACE Awardees

Canadian-owned Irving Oil Co. is acquiring the Tedcastle group of companies, a Dublin-based energy marketing and distribution organization, which operates under the brand name Top Oil. Top Oil is a supplier of home heating oil, including kerosene, as well as petrol and diesel fuel in Ireland. It recently expanded operations into company-owned retail forecourts and aviation fuel. The acquisition will allow Irving to expand across the Atlantic basin, having previously purchased Ireland’s sole refinery in the village of Whitegate in 2016.

The American Coalition for Ethanol (ACE) honored a select group of advocates for their contributions to the ethanol industry during its 31st annual con- Bob O’Connor ference in Minneapolis this August. Among those honored were the c-store industry’s own Bob O’Connor, owner of Jetz Convenience Centers of Milwaukee, Wis. ACE Senior Vice President Ron Lamberty presented Jetz with the Paul Dana Marketing Vision award. The award is presented to a company that has exhibited leadership in ethanol marketing. “I’ve been a fuel retailer my entire life, pumping gas from the age of six, and there’s been a lot of bad press put out there about ethanol,” said O’Connor. “Years ago, I was convinced of that bad press, but when I did my due diligence and started to engage with the product, I found out I was wrong. Because of this industry’s efforts, I’m now on this stage as an advocate for your brand.”

Getty Realty Corp. Acquires C-Stores

Carolina Convenience Sells Sites

Getty Realty Corp. has closed on an acquisition and leasing transaction with a U.S. subsidiary of Apple-

Carolina Convenience Corp. has sold seven of its S-Mart branded convenience stores and its wholesale

Irving Acquiring Top Oil

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fuels distribution business in South Carolina to an affiliate of Dublinbased Applegreen PLC and Petrogas Global Ltd. Headquartered in Lexington, S.C. Carolina Convenience operated eight S-Mart convenience stores in Columbia and supplied numerous dealers primarily in the Columbia market with a handful of dealers in eastern South Carolina.

Kwik Trip Raises Money for PHA Kwik Trip has raised more than $81,000 during its 2018 coin canister campaign to support Partnership for a Healthier America (PHA)’s mission to leverage the power of the private sector to improve the food supply and increase physical activity. Now in its fifth year, this campaign has raised more than $336,000 since 2014 to create healthier futures for our nation’s children and young adults. Throughout the month of June, all 570 Kwik Trip locations in Wisconsin, Minnesota and Iowa urged guests to support PHA’s work with the placement of canisters at every checkout.

Core-Mark Helps First Responders

In August, Core-Mark Holding Co. Inc., in conjunction with state and federal disaster relief officials, aided firefighters battling two large California wildfires. Core-Mark leveraged its supply chain in the region, and with industry partner Andeavor, sent more than 2,500 cases of drinking water to support firefighters on the front lines of both the Hoopa and Carr Fires.

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FRONTEND

News

YEO Welcomes

Three New Board Members The National Advisory Group’s (NAG) Young Executives Organization (YEO) is pleased to announce that Alex Garoutte, Garet Bishop and Kalen Frese have joined the board of directors for a two-year term. By CSD Staff

he largest problem facing businesses today isn’t competition, rising taxes or access to financing. It is developing human capital. Executive leadership development is crucial to the long-term viability of businesses of all sizes, especially in the competitive convenience store industry. The Young Executives Organization’s (YEO) mission is to cultivate young talent in the convenience store and petroleum industry through implementation of education and networking. YEO is focused on providing a welcoming environment for next-generation leaders to help foster superior leadership skills. YEO is proud to announce that Garet Bishop, Alex Garoutte and Kalen Frese have joined the board of directors. Bishop serves as chief financial officer for family-owned BFS Cos. in Morgantown, W.Va. The chain operates 63 convenience stores and eight liquor stores in four states: West Virginia, Ohio, Pennsylvania and Maryland. Bishop recently returned to the c-store industry after completing his M.B.A. at Harvard University.

Alex Garoutte

Garet Bishop

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Garoutte has been the marketing director for The Kent Cos. Inc., for three years, where he is responsible for the merchandising and buying for approximately 45 Kent Kwik locations. He leads a team of people as well as the Kent Distribution Center. Garoutte received his bachelor’s and master’s degree from Arizona State University, where he earned four varsity letters for football. “It is a great honor to be selected to join the YEO board for the National Advisory Group,” Garoutte said. “It has proven to be a great organization in which we have brought back many ideas to help drive our business forward.” Frese is the food service director of Warrenton Oil Co., which operates 35 FastLane c-stores in Missouri. Frese’s expertise is operations, customer relations and sales. In his current role, he oversees all c-store prepared food and is responsible for 13 FastLane Deli locations, a Dairy Queen and a 24-Hour Diner. Prior to Warrenton Oil Co. in 2017, he served as regional sales manager at Ronnoco Coffee. Frese studied business management at the University of Missouri. He and his wife, Chelsea, have a two-year-old son, Woodson, and a little girl due in November. Alli Bixler, of The Kent Cos.; and Dana Moloney, of Warrenton Oil Co.; have rotated off the board following two year terms. Jared Sturtevant, former YEO board chairman and supervisor of digital marketing for Alimentation Couche-Tard, rotated off the board earlier this year when he aged out of the organization. “With our evolving competitive landscape and the introduction of disruptive Kalen Frese technologies, engaging new

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Bart Stransky

Dana Moloney

ideas from our young leaders will remain a key to the industry’s future growth,” said YEO Chairman Bart Stransky, of RaceTrac Petroleum. “I am excited to welcome our new board members and I’d like to take this opportunity to thank Dana, Alli and Jared for their commitment in expanding the impact of YEO during their tenure on the board.” The full eight-member YEO Board of Directors for 2018/2019 includes: • Bart Stransky, RaceTrac Petroleum Inc. (Board Chairman) • Garet Bishop, BFS Cos. • Kalen Frese, Warrenton Oil Co. • Alex Garoutte, The Kent Cos. • Sharif Jamal, Chestnut Petroleum • Lindsay Lyden, Truenorth Energy • Jeremie Myhren, Road Ranger • Alex Olympidis, Family Express “As the convenience store and petroleum industry continues to evolve, training the next generation leaders of tomorrow is more important than ever before,” said John Lofstock, executive director of (NAG). “YEO is an exclusive organization created to help young executives broaden their horizons in the competitive convenience store and petroleum industry. All of our new board members are experienced and dedicated to convenience retailing, which makes them a perfect fit for this growing group.” ABOUT YEO YEO was developed to represent the interests of young executives (40 years of age or younger) in the convenience store and petroleum, industry. Participation in YEO is available to young executives from NAG member companies, including those being groomed for senior positions within their companies. cstoredecisions.com

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Alli Bixler

Jared Sturtevant

YEO’S OBJECTIVES YEO provides a networking and mentoring environment for young executives in the convenience store industry to enhance and develop their executive skills so that they may grow into strong convenience store industry leaders. In addition, YEO is committed to: • Provide meaningful learning and networking opportunities within NAG and YEO. • Provide an opportunity for NAG members to invest in their employees’ development as the next generation of industry executives. • Increase the awareness of the activities of NAG member companies to young executives and next-generation leaders. YEO acts as the voice and the resource for young executives for NAG member companies. YEO will provide members with a forum to express their views and recommendations on the industry to ensure its future growth and prosperity. Membership in YEO provides next-generation leaders in the convenience store and petroleum industry with an opportunity to network with other young executives, NAG members and influential industry leaders. It also gives young leaders a platform to express their ideas, leadership abilities and vision for the future of convenience retailing. NAG is an association driven by convenience store retailers for retailers. It is an organization committed to building profits and relationships for all of our members. NAG is aimed at small, midsize and family-owned convenience store chains and the executives that run them. For information about NAG, YEO or our upcoming annual conference in Ponte Vedra Beach, Fla., Sept. 9-12, visit www.nagconvenience.com, or contact NAG Executive Director John Lofstock at jlofstock@csdecisions.com.

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FRONTEND

News

NAG Scholarship Winners Announced The John MacDougall/NAG Memorial Scholarship awarded seven scholarships for the upcoming school year to NAG members and their children. By CSD Staff

• Jessica Weisensel, Univere all know the importance of a well-educated workforce and the convenience store landscape sity of Wisconsin-Whitewater, is certainly no exception. The National Advisory Class of 2020. Weisensel is an Group (NAG) Scholarship Fund was developed to help elementary education major at NAG members looking to further their careers and their Wisconsin. She is working her way through college as an emchildren offset the growing cost of a college education. Among NAG’s core mission is to help groom the con- ployee at Kwik Trip in Wisconsin. • Shae Wolfe, Dartmouth venience store leaders of tomorrow. In keeping with that theme, NAG created this scholarship fund to support College, Class of 2020. Wolfe studies neuroscience at Dartmember companies. As the founder of Nice N Easy Grocery Shoppes, John mouth and has spent the last MacDougall was a longtime supporter of NAG. In his per- three summers working at Pony sonal life, he was also a strong supporter of higher educa- Express stores in Nebraska. Her tion. To remember John’s work and his longtime support father, Andrew Wolfe, and aunt, Shae Wolfe of NAG, the association is proud for the third consecu- Leisa Guerrero, also work for tive year to award seven John MacDougall/NAG Memorial the Nebraska-based c-store chain. “The National Advisory Group’s Scholarship Program is Scholarships. For the 2018/2019 school year, NAG awarded scholar- important to NAG because college graduates earn, on avships totaling more than $7,000 to the following students: erage, $25,000 more per year than someone with just a • Kaylee Miller, Marist College Class of 2022. Miller is high school diploma, according to a report by The College a Biomedical Sciences major at Marist. Her father Richard Board,” said John Lofstock, NAG executive director. “The cost of attending college may seem daunting, but that’s Miller, works for Clifford Oil Co. in New York. • James Morgan, University of Georgia, Class of exactly why finding, applying for and receiving scholar2020. Morgan is a finance major at Georgia. His father, ships are essential to avoid big student loans. Scholarships Jimmy Morgan, is the president and CEO of Morgan Oil are no longer a bonus; they’re crucial for bridging the gap between the increasing cost of tuition and what families Co., also in Georgia. • Loreta Murataj, Penn State University, Class of 2020. can afford to pay out of pocket.” NAG’s Scholarship Fund is managed by the NAG Board Murataj is a labor and employment major and has been an of Directors, Convenience Store Decisions and Scholaremployee at Gate Petroleum ship America, and sponsored by the retailer and supplier in Florida for the past five years. members of NAG. This program was started in the late She is one of three employees 1990’s and has distributed more than 100 scholarships toawarded a NAG Scholarship taling nearly $111,000 to deserving students. The fund is financed through annual dues collections by NAG memthis year. • Holly Nye, West Virginia bers and drives from golf outings and conference sponsorUniversity, Class of 2018. Nye ship allocations. For more information on NAG and the NAG Scholarwill graduate in December, 2018 with a degree in mar- ship program, please visit www.nagconvenience.com, and keting. Her father, David Nye, be sure to mark your calendar for the 2018 NAG Conference in Ponte Vedra Beach, Fla., Sept. 9-12. works at Truenorth in Ohio. This year’s conference will feature speakers from a • Katie Suddarth, St. Louis Katie Suddarth College of Pharmacy, Cass of host of leading convenience store chains including Kwik 2026. Suddarth is studying pharmacology and currently Trip, Cumberland Farms, Maverik, High’s of Baltimore, works as a pharmacy technician for Walgreens. Her father, Stinker Stations and many, many more. View the full Richard Suddarth, works for Warrenton Oil Co., in Missouri. agenda at www.nagconvenience.com/schedule. 22 Convenience Store Decisions September 2018

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FRONTEND

News

Ricker’s Debuts

New Checkout Technology

Partnership with Skip combines mobile pay with AmazonGo-type experience. By CSD Staff

icker’s Convenience Stores, based in Anderson, Ind., has partnered with Skip to introduce a new frictionless checkout technology—a hybrid of mobile pay and AmazonGo “just walk out” experiences—to customers in 58 Ricker’s stores in Indiana. The partnership’s mission is to provide a best-in-class convenience store experience, easy access to promotional deals, and to enable customers to purchase in-store items at the pump or prior to arrival. Skip’s decision to partner with Ricker’s wasn’t just based on the company’s

experience as one of its primary company initiatives. By partnering with Skip, the c-store chain continues this mission by adding frictionless checkout to its omni-channel solution for customers. The beneﬁt to Ricker’s consumers is a simpler, faster and easier purchase process. Skip’s technology reduces the speed of checkout from an average of 60 seconds to an instant payand-go action controlled by the customer. Via its partnership with Zipline, Skip also acts as a cost cutter for retail businesses bringing down transaction fees. For Ricker’s, Skip provides

By adding Skip to our arsenal of customer service “competencies, we expect to see higher frequency and volume of transactions simply from the competitive advantage this partnership will provide. Not to mention being able to convert frequent fuel purchasers into loyal in-store customers. - Quinn Ricker, CEO and president, Ricker’s.

success but also because of Ricker’s dedication to customer-centric retail experiences via clean convenience, a strong commitment to the Indiana community, best-in-class customer service and a history of corporate trust. Working with Ricker’s allows Skip to better tailor its product speciﬁcally to the needs of the convenience store customer experience. FRICTIONLESS CHECKOUT Ricker’s has focused on providing customers with a top-notch customer 24 Convenience Store Decisions September 2018

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”

a competitive advantage expected to drive more transactions and frequency, including higher conversions from the forecourt to the food court. “By adding Skip to our arsenal of customer service competencies, we expect to see higher frequency and volume of transactions simply from the competitive advantage this partnership will provide. Not to mention being able to convert frequent fuel purchasers into loyal in-store customers,” said Quinn Ricker, CEO and president of Ricker’s.

Once the experience is fully optimized, which includes integrations with Zipline and Kickback Rewards, it will roll out across all Ricker’s locations by the end of September. ZIPLINE INTEGRATION Skip announced the integration with ZipLine’s Private Label Debit (ACH) consumer payment platform at the end of August. The Skip development team partnered with ZipLine over the summer to connect its systems via an API, which allows the companies’ respective products and services to seamlessly work together, providing frictionless mobile checkout with ZipLine ‘Payments as Loyalty’ platform for retail clients. The ZipLine partnership started with Skip’s rollout of frictionless checkout at Ricker’s. With nearly one in ﬁve c-stores already using ZipLine for merchant-branded payments, this integration point gives Skip the opportunity to connect with more clients and increase its nationwide speed to market. It also allows Skip to enable more automated ACH payments by cross-selling ZipLine’s product, creating mutually-beneﬁcial opportunities for both companies. While planning the Ricker’s launch, conversations focused on ways the Skip app could drive in-store transactions for Ricker’s. The partnership with ZipLine helps c-store retailers better convert fuel purchasers at the pump to in-store sales. cstoredecisions.com

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CONVENIENCE STORE SOLUTIONS

Sage Advice from an Industry Veteran Work lessons can take a lifetime to learn and to share. By Jim Callahan, Contributing Editor

OW THE TIME FLIES. IT’S been 50 years since I began my career in the convenience store industry, and I’ve been privileged to learn so much and meet so many good people along the way. Now it’s my turn to pay it forward and share some of the sage advice that I have learned over the past five decades. While some people may kid, “Seriously, Jim, what have you accomplished?” I can proudly point to my time learning from some of the titans of the convenience store industry, all of whom had the Midas touch. These titans include New York Association of Convenience Stores (NYACS) Hall of Famer Bob Seng, the brilliant Ned Dewey, the fierce Paul Montana and Carol Taylor, another NYACS Hall of Famer, who taught me to have a “never-say-die” mentality.

SAGE TIPS There have been so many great leaders along the way, and so many more astute business men and women. I learned what I could from them and quickly realized that what they didn’t teach likely wasn’t worth learning. I’m proud to share some of these things today. • I was shown early on that it’s wise to invest as many extra hours as possible during your first years on the job. Don’t get caught up in negative thinking that believes you only work the hours for which you are paid. Folk lore credits Abraham Lincoln with the following: “I’ve had a lot of luck in my life, and I found the harder I’ve worked, the luckier I’ve gotten.” • It’s not how much better things get if you keep trying, rather it’s how much worse they would get if you quit trying. I’m certainly not in Lincoln’s class, but that saying still gets me through the rough days. • I often remind cashiers who are itching to be promoted that like a video game, you must learn to mas26 Convenience Store Decisions September 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.

ter the level you are on before you can move to the next level. • Very often, assistant store managers start to believe they are better and more competent than their manager. While there might be some credence to their thinking, they often fail to understand that being in charge of a store for a weekend does not qualify you to run the store alone, especially when you’ve got that manager to fall back on for every question you have. Respect the store manager. It’s the honorable way to earn that promotion. • During negotiations never forget that when a vendor says, “That’s the best price I can give you,” this does not mean the negotiations are over. It just means that a particular pocket might be empty. I’ve never seen a pair of pants with just one pocket. Go look at what’s in pockets No. 2 and No. 3. You will often find things like product rebates, ad dollars and placement dollars for placing things close cash register. Plus, there are volume bonuses, bundle deals, discounted retail prices, etc. Be creative in your thinking and dig for that extra gold. • Getting customers to walk your store and view all that you have to offer is quite often a difficult task. Here’s an idea that makes that goal attainable for you and much more palatable for your customers. Bring the store to them with one small sampling section near the cash register and change it every week. Perhaps start with sunscreen and beach items the first week, then move pet supplies, automotive and so on. It generates excitement and will also boost sales in those categories. There is a lot more I’d like to say but the key here is to remember to constantly keep thinking, keep innovating and always learn from those that do things well. cstoredecisions.com

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Cover Story

Twice Daily

Twice Daily Is Refining

Retail

Now with a one-of–a kind coffee concept, the Tennessee-based c-store chain is blending the best of what convenience has to offer. By David Bennett, Senior Editor

he Twice Daily brand name came from the concept of having a store with such compelling foodservice offers and a wide variety of traditional convenience store products that guests would want to visit its stores at least twice per day. In terms of marketing strategies, that’s a lofty goal. However, if you talk to any Twice Daily representative, that’s the goal and they’re sticking to it. However, in the last two years, the convenience chain has been in motion to deliver a lot more to a growing customer base, including a unique coffee experience called White Bison. Owned and operated by Nashville, Tenn.-based Tri Star Energy LLC, Twice Daily has been serving residents of Middle Tennessee communities since 2011. The company is unabashed in its intent to outperform competitors in its operational footprint, which includes 55-store locations in Tennessee and Kentucky. “Our company vision is to be the Mid South’s premier convenience retailer providing a differentiated food and fuel experience that excites our guests and team members by delivering top tier performance every day on every site while leading in community support and involvement,” said Dawn Boulanger, vice president of marketing for Tri Star Energy. On the surface, that seems like a tall order. But delivering a superior customer experience is the order of the day at Twice Daily. Founded in 2000, Tri Star is a joint venture between the Parman Corp., Shell and Kimbro Oil Co., established in 1968.

WHAT AN IDEA The first phase of Tri Star’s retail concept launched in August 2011 with the first three Twice Daily locations. Over the past six years, the retailer has made regular changes to its foodservice and dispensed beverage offers to match both consumer preferences and the latest trends, including healthier snacking options. In the early going, the company developed a prototype with a “wow” factor in mind. Several design factors included a suspended “cloud” ceiling with recessed lighting directly 30 Convenience Store Decisions September 2018

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over the foodservice area and a rich, brown woodgrain underneath. All the foodservice islands and counters have granite countertops and have curved rather than straight lines. Those stores still bring the “wow,” Boulanger said. “The lighting and backlit ceiling soffits are also distinctive and differentiate our look from a traditional convenience store,” said Boulanger. “The design of the foodservice area differs from the design of the traditional convenience store area where products are merchandised with gondola shelving on a gray woodgrain floor. All Twice Daily stores offer a beer cave including a variety of 40 craft and specialty beer items to choose from.” However, with the development of White Bison Coffee in late 2017, Twice Daily went back to the drawing board to create a shopping experience that’s singular to say the least. The new integrated site features a creative floor plan with the checkout in the middle of the store, a White Bison coffee shop on one side and a Twice Daily cstoredecisions.com

convenience operation on the other. Rather than have one long counter, the retailer is now using checkout pods. The new store décor also offers fresh graphics and signage. Walk across the building to the spacious White Bison area, which features free

REFINING THE CONCEPT On either side of the scale, it can be said that Tri Star is exceeding customer expectations. The design of the

Bakery is just one of the daily offerings at Twice Daily. Integrating its convenience platform with a new coffee concept, the Tennessee-based convenience chain is traveling a singular retail course.

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Wi-Fi a large community table as well as individual seating space.

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Cover Story

Twice Daily

new integrated stores is spacious and Bison location with no fuel operates wanted to continue to expand our welcoming, featuring all the standard in the 12 South neighborhood of food and beverage offer but in a way that was differentiated from our comTwice Daily foodservice offers—fresh Nashville. petition,” said Boulanger. “Data and doughnuts and pastries, a hot foods research pointed to opportunities in and roller grill island and a fresh deli WHITE BISON case that features locally-sourced, Tri Star also operates a stand- beverage—specifically coffee, with handcrafted sandwiches, salads, wraps alone White Bison coffee shop in The consumption at an all-time high. We and breakfast items such as yogurt Nations community of Nashville. At were very deliberate in the coffee we parfaits and fresh fruit. 2,700 square feet, the shop, which wanted to offer—partnering with an “The only dispensed beverages has the same modern design fea- expert in the business, who goes to offered in Twice Daily are fountain tures as White Bison in the integrated origin, buys direct from growers, roasts drinks,” said Boulanger. “White Bison store locations, is plenty spacious for the beans and delivers to our stores. Coffee offers an extensive line of spe- patrons to sit and relax in front of their This heightened focus on coffee and cialty coffee drinks, including small smart devices. The shop also boasts a the relationship with our coffee partbatch pour-over coffee, cold brew, second-story mezzanine seating area ner, helped us in making the decision.” The strong emphasis on providing nitro and espresso beverages, as well and an outdoor patio. as hot and iced teas and smoothies.” Customized coffee service, includ- a quality product has earned White Currently, there are eight integrated ing the use of baristas, is helping White Bison growing attention from a curious Twice Daily / White Bison locations Bison meet the ever-growing demand clientele, resulting in a loyal followoffering coffee, convenience and fuel for convenient coffee occasions. It’s ing in the greater Nashville area, said including recently-opened locations in an added benefit to the morning day- Christine Garringer, director of operathe cities of Murfreesboro and Gallatin. part as well as to the afternoon when tions for White Bison Coffee. “Our product is superior to Starbucks. Four of these sites include drive- guests are looking for a snack or cafIt’s easy for us to say that, right. But through service where patrons can get feine pick-me-up, said Boulanger. their coffee on the go. “White Bison Coffee is a new we’ve had a lot of guest comments One integrated Twice Daily / White business model for our company— via social media and through Google developed as a growth strategy. We Reviews that make those same state-

The new integrated site features a creative floor plan with the checkout in the middle of the store, a large White Bison coffee shop on one side and a Twice Daily convenience operation on the other. Rather than have one long counter, the retailer is now using checkout pods.

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Cover Story

Twice Daily

Customized service, including the use of baristas, is helping White Bison meet the ever-growing demand for quick, convenient coffee occasions.

ments,” said Garringer. “No one else in the industry is doing what we’re doing.” The White Bison coffee shop boasts a sophisticated selection, featuring more premium products— freshly baked pastries & mufﬁns, a breakfast menu with sandwiches and breakfast bowls, bistro snack boxes, sandwiches on artisan bread and unique salads made with items such as quinoa and noodles. However, the future success of the ﬂedgling White Bison brand will probably come down to beans.

SPECIALTY JOURNEY

“Coffee is a seasonal product. By deﬁnition, specialty coffee refers Beans from different parts of the world to the whole process from farmer to are at peak freshness at different times cup using single-origin coffee. The of the year,” Garringer said. “To make journey specialty coffee travels from a sure customers are drinking the highplanted seed to a customer’s cup can est quality cup available, we source be long and complicated. Executives with our coffee partner for beans with at Twice Daily and White Bison aren’t this in mind. Rainy seasons trigger taking their foray into specialty coffee the ﬂowering, and nine months later lightly. The source of White Bison cof- the ripe cherries are ready for harfee is based on the seasonality of the vest. Getting a coffee ready for export coffee. This is directly displayed in its can take up to three months. Once exported, it is at its peak freshness.” offerings of single-origin coffees. 34 Convenience Store Decisions September 2018

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Of course, no work is done in a vacuum. The development of White Bison has incorporated a string of vested partners, starting with the coffee farmer who is growing the beans that go into the retailer’s product. “Great coffee starts with the producer whose family likely has spent generations perfecting their approach to farming the highest quality coffee possible, “said Garringer. The string continues to the purchaser of the coffee beans and ﬁnally, the consumer. cstoredecisions.com

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product is superior “toOur Starbucks. It’s easy for us to say that, right. But we’ve had a lot of guest comments via social media and through Google Reviews that make those same statements. No one else in the industry is doing what we’re doing.

”

-Christine Garringer, director of operations, White Bison Coffee

Daily recently brought in Christy Cox making it easier for them to apply for as its new vice president of human open positions. We did this by including a robust search bar to search and resources. Cox has brought a wealth of busi- find the right location and position for ness competencies to Nashville, each candidate as well as the ability to Tenn.-based Tri Star Energy, which simply click to apply.” Tri Star Energy gives each of their includes the Twice Daily convenience chain. Before arriving at the Tennessee 1,200 team members the opportunity convenience chain, Cox spent 20 to advance their careers, learn meanyears at Logan’s Roadhouse restaurant ingful skills and give back to their chain, including a period as director of surrounding community, said Cox. It’s why Tri Star Energy was recognized human resources there. Just like other retail channels, the recently as one of Nashville’s top workhunt for good employees to staff the places across all businesses and retail chain’s growing operation has been channels. “For team members, servant leadconstant work, though there are more ership, great benefits and career company tools to use. “In this war for talent, it is impor- advancement are the key initiatives tant to cast a wide net. Attracting to creating a culture of employee new employees is anchored on shar- value,” Cox said. “We offer our ing our employer brand through a new teams competitive benefits, tuition career website we launched in January reimbursement and unique bene2018,” said Cox. “We know this is the fits to include a chaplain program, an HUMAN KNOW-HOW If the retail venture knows its beans, first place candidates will go to learn employee assistance program and it also knows that its employees are about our company, so we provide volunteer programs. Our managers the factors that will ultimately decide candidates with an authentic view of have been recognized by their teams the success of not just White Bison, who we are as a company and what as true coaches that not only care we have to offer as an employer. We about their concerns but are there to but Twice Daily. As part of upgrading its staff, Twice focus on the candidate experience, help them learn and grow.” CSD

“Specialty coffee exists through the dedication of the people who have made it their life’s work to continually make quality their highest priority,” said Garringer. “This is not the work of only one person in the life-cycle of a coffee bean. Specialty can only occur when all of those involved in the coffee value chain work in harmony and maintain focus on standards and excellence from start to finish.” This also includes the roasting operation. “Coffee must be closely monitored during the roasting process and scientific principles of heat transfer, thermodynamics and coffee chemistry must be applied to ensure the highest standard of quality and flavor come through in the final roasted bean,” Garringer said.

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Foodservice

Chicken

Chicken Rises to the Occasion

Whether it’s grilled, baked, fried or topping a salad, chicken is ﬂying high on many c-store menus. By Jeffrey Steele, Contributing Editor

Fast Facts: » Sales of chicken sandwiches continue to trend upward in the convenience channel. » Chicken is a consistent seller, month to month and year to year, with predictable margins that continually place the white meat among the top foodservice items retailers offer. » A prepared chicken program represents an excellent platform for launching innovative new menu items, ﬂavors and portion sizes, and also offers a good platform for cross-utilization of other ingredients and other uses such as pizza and chicken pasta. 38 Convenience Store Decisions September 2018

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n addition to the latest headlines involving better-for-your offerings and healthier choices, Americans are set to eat more meat in 2018 than ever before. In weight, the average consumer will eat 222 pounds of red meat and poultry this year, according to the U.S. Department of Agriculture, surpassing a record set in 2004. Chicken consumption has nearly tripled since 1965, making it now the most popular meat in the U.S. In fact, Americans ate 92 pounds of chicken per person last year. According to the National Chicken Council, Americans consume well over one billion wings in the days leading up to and including the Super Bowl. That’s a lot of bones spent and a lot of bones gnawed. The love for chicken is not lost on the convenience store industry. More chicken means more affordable items on a c-store’s menu, which means more poultry accessibility for all income levels. Not every convenience retailer offers prepared chicken programs. But those that have considered adding such programs and decided to wing it often report that sales of tenders, bone-in, sandwiches and other chicken offerings are top sellers. Chicken provides a welcome protein entrée, and provides outstanding opportunities for innovation. According to Kim McLynn, spokesperson for the NPD Group, a food industry research ﬁrm, ready-to-eat chicken and turkey main entrée servings from convenience stores are down 10% in the year ending June 2018 compared to the same period in 2017. But on a more promising note, McLynn said, sales of ready-to-eat breaded chicken sandwiches increased 17% during the same period. cstoredecisions.com

8/24/18 11:38 AM

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Foodservice

Chicken

PROTEIN PACKED One convenience retailing veteran who has experienced considerable success with chicken is Brian Unrue, director of operations for Clark’s Pump-N-Shop, a chain of 85 locations based in Ashland, Ky. The chain

features Krispy Krunchy Chicken cobranded programs in eight of the company-operated Clark’s Cafés. Clark’s Cafés is the in-store dining program at Clark’s. “We opened our ﬁrst Krispy Krunchy inside our ﬁrst store nine years ago,”

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he said. “With chicken, it’s easy to manage and control. On top of that, who in the world does not like some kind of chicken?” Unrue found the hold time of four hours helps keep waste under control, and the labor factor is easier to manage. Clark’s offers bone-in, tenders and wings, with bone-in being eight-piece cuts that are always fresh, never frozen. Tenders are large, thick and average three to four ounces. Also sold are four-ounce chicken sandwiches from self-serve grab-and-go warmers. All the chain’s chicken is fried in high-quality oil. “I’m a big believer in our chicken programs,” Unrue said. “Our chicken performs consistently the same month to month and year to year. The margins and supply side of the operation are always consistent. Sales have longevity and continue to stay in the top ﬁve items that we offer in any of our fast food offerings. Honestly, some of my Cafés are in rural areas where we see the same customers every day, and would think they would tire of it. But that is never a factor.” At Knoxville, Tenn.-based Pilot Flying J, Shannon Johnson vicepresident of food and beverage innovations, said the chain has offered chicken for years, with leading sellers being wings and tenders. “We are innovating around half chicken and other cuts, and we’ve introduced a version of roasted half chicken,” Johnson said. “We have a grilled chicken that we use for salads and other items we prepare. We don’t currently have a chicken sandwich, but anticipate having one down the road.” Pilot Flying J has more than 750 retail locations in 44 states. The cstoredecisions.com

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Foodservice

Chicken

ularly with consumers who enter daily. Locations are more heavily promoting multi-piece chicken featuring eight to 12 pieces for working families. “It’s a higher ring with some good margin,” Like a growing list of retailers, Pizza Hut is committing to cut Unrue said. antibiotics from its menu. Maybe the biggest change in This past June, the pizza chain announced a plan to transition Clark’s Pump-N-Shop is the size of fully to chicken raised free of antibiotics important to human medihot cases in store. The chain began cine by 2022. The announcement included its chicken wings. with three-footers and now places no “Today’s announcement to no longer serve chicken raised with smaller than four-foot cases. Clark’s antibiotics by 2022 demonstrates our commitment to serve food installed a much bigger, eight-foot hot that not only tastes great, but that customers can feel good about case in its newest store in Olive Hill, Ky. eating,” Marianne Radley, Pizza Hut’s chief brand officer, said in a At Pilot Flying J, Johnson noted statement at the time. chicken is the leading protein in the Pizza Hut’s most recent announcement comes a year after it world currently. For those in traditional transitioned to using antibiotic-free chicken in its pizza toppings. In food business targeting the widest 2016, Papa John’s announced it had transitioned to poultry raised swath of customers, “chicken has to without antibiotics. Last year, KFC said its U.S. poultry suppliers be part of the menu, for its popularhad been given until the end of 2018 to stop raising chickens using ity, relatively low cost and versatility,” antibiotics important to human medicine. Unrue said. Chicken is a great platform from which to launch innovation, he added. Foodservice operations can use chicken “Another [aspect of] the chicken is as a base to deliver new flavor profiles company also offers the PJ Fresh Marketplaces, which provides pre- the sides that go out with the chicken, to guests. Chicken also provides a base pared meals and on-the-go food whether wedges, green beans, mac- from which to cross-utilize other ingreoptions, most of which are made in- n-cheese, red beans and rice or dients from other menu preparations. jambalaya. These add-ons all have For example, one of the most popular store daily. pizzas with Pilot Flying J’s customers is The travel center operator is intent great margins.” Clark’s continues adding two to six a chicken bacon Alfredo pizza, Johnson on controlling for moisture in its food new Clark’s Cafés yearly, with chicken noted. and environment, Johnson said. “Chicken fits into larger trends as “One of the ways to protect qual- as the anchor of each. Tenders are ity is to control moisture. We’re using becoming increasingly popular, partic- well. One of those is that customers love to see the product being sauces to make sure we’re delivmade,” Johnson said. “No one in ering a moist, delicious product the last 20 years has built a closed every time. The least desirable kitchen environment,” he added. piece of chicken is a piece of “Seeing the work and effort that dried chicken. The opposite is goes into the food is important to moist and delicious flavors.” our guests. Expectations continue to be higher and higher every year, CHICKEN TRENDERS given that guests are more knowlPrepared chicken programs edgeable than in the past. They’re invariably evolve over time. reading about food, watching The All Krispy Krunchy and Clark’s Food Network. People are being Café locations are experiencmore conscientious.” ing growth with catering menu pricing. “Whether for parties or church gatherings, the tenders KEYS TO SUCCESS are very popular,” Unrue said. At Clark’s Pump-N-Shop, Unrue While chicken makes a good has identified several keys to sucentrée, it lends to extra sales in cess with chicken. additional side items. “You must always be fresh and

Stepping Back from Antibiotics

42 Convenience Store Decisions September 2018

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cstoredecisions.com

8/23/18 8:19 PM

cases need to always look full,” said Unrue. “No one wants to buy the last piece of anything. Never look like you are going out of business.” In addition, Unrue urges stores to use fresh, never-frozen chicken for the enhanced taste and quality. Cases should feature clean glass and look appealing. Hold times must also be zealously monitored to ensure cases cradle the freshest chicken products. As well, “your whole facility needs to be clean and organized,” Unrue said. “No one wants to see a dirty kitchen. [Use] clean uniforms and aprons.” Finally, Unrue believes in the idea of all managers understanding the entire program. “If a store has a foodservice offering it should be managed by a

fast-food manager,” he said. “We cross train cashiers, the general manager and the district manager, so all know how to prepare, package and sell all items in a Clark’s Café.” Asked to identify Pilot Flying J’s keys to success in preparing and presenting chicken choices, Johnson responded that there are two critical parts to any foodservice program: delivering an excellent food experience and, providing a great service experience to customers. Having one without the other, “you don’t win,” said Johnson.

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Foodservice

Packaged Sandwiches

Packaged Sandwiches Show Growth Prepackaged sandwiches may be considered old school by some in the convenience store industry, but new generation shoppers appreciate that such food choices ﬁt their busy lifestyles. By David Bennett, Senior Editor

Fast Facts: » In the year ending June 2018, prepared sandwich servings at c-stores rose 3% compared to same period year ago, according to a NPD Group/CREST report. » 50% of operators say that small store size/lack of physical space are a limitation to their foodservice program – so even if they wanted to offer freshly-assembled sandwiches, many c-stores simply don’t have the space. » A new Nielsen study ﬁnds only 10% of shoppers plan as far ahead as the meal they’ll be having later that day. 44 Convenience Store Decisions September 2018

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f beverages and tobacco products are the backbone of traditional c-store merchandising, then pre-prepared sandwiches arguably might be the the foodervice legs in the sense that packaged sandwiches—in addition to roller grill items—were one of the original grab-and-go foodservice options identiﬁable with the industry. The question of convenience among U.S. consumers seemingly is looming larger than ever. A new Nielsen study ﬁnds that many shoppers today don’t want to linger in a grocery store or warehouse club location. Almost half of the shoppers Nielsen surveyed (46%) see grocery shopping as a chore and only 10% of those surveyed plan ahead as far as the meal they’ll be having later that day. This lack of enthusiasm for shopping, as the study indicates, has resulted in a decline in major, stock-up grocery trips in favor of more need-based store visits. These changing shopping habits could explain what has been happening in retail segments that rely on stock-up shoppers, such as warehouse clubs. Such consumer habits, however, could prove advantageous for convenience retailers and the services they bring to the table. Moreover, the capability of c-stores to produce convenient food options remains an important retail dynamic.

BREAD WINNER Sandwiches are still popular with c-store customers and are now tailored to a variety of tastes, dietary preferences and dayparts—not to mention that few foodservice items can hold their own as do sandwiches when it comes to portability and convenience. Just how important are sandwiches as a consumer item in convenience retail? cstoredecisions.com

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Foodservice

Packaged Sandwiches

Subway Spices Up Service Subway and associated vendors are investing $80 million to make changes to its 26,000 U.S. restaurants by summer 2019. The new merchandising program, free of charge to franchisees, was piloted in San Diego and aims to emphasize the brand’s personalized customer experience. “Fresh Now” will feature flavor stations where customers can add their own spices, seasonings, oils and spreads; new beverage stations.

In the year ending June 2018, prepared sandwich servings at c-stores rose 3% compared to same period year ago, according to a NPD Group/CREST report published recently. In total number of servings, that’s 5.1 million. Among sandwiches, the servings growth leaders in the period were: breaded chicken sandwiches, which jumped 17% over the previous year. That was followed by roast beef sandwiches, up 13%; cold-cut combos, up 11%; and egg sandwiches up 7%. Most pre-prepared sandwiches are eaten somewhere other than where they are purchased —which means packaging that works well for transport matters. That’s a logical beneﬁt for c-store patrons. Conversely, there are built-in advantages for convenience retailers that are able to develop effective prepackaged sandwich programs as

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part of their foodservice model. Some are outlined in Datassential’s “The Keynote Report: Convenience Stores,” from 2016, the last year such data was compiled by the market research ﬁrm for the food industry. Among the ﬁndings: • 43% of c-store visits are mid-day (lunch or afternoon snack). • 50% of operators say that small store size/lack of physical space are a limitation to their foodservice program—so even if they wanted to offer freshly-assembled sandwiches, many c-stores simply don’t have the space. • 40% of operators say limited staff is a challenge too, especially as the industry endures staffing shortages in the foodservice channel overall; c-stores struggle to have qualified staff to build sandwiches on-site or fresh-to-order. • 32% of operators are very inter-

cstoredecisions.com

8/24/18 1:26 PM

ested in offering foodservice around the clock—having pre-made options is important to doing this. • 32% of operators are trying to reduce the labor needed for their foodservice offerings. Of course, c-stores must balance such numbers with meeting customers’ expectations. Square One Markets in Pennsylvania has shifted its focus away from prepackaged sandwiches to keep up with customer demands, said Lisa Dell’Alba, president and CEO of the Bethlehem, Pa.-based chain of nine c-stores. “We are now offering pre-prepared sandwiches at most of our locations and we have a full service food offering at one of our stores,” said Dell’Alba. “We have definitely seen a shift in customer demands and trends with respect to what they are looking

cstoredecisions.com

44-49_Fdsv_Sandwich.indd 47

for. For several years now, customers ing their sandwiches, as what’s inside. have increased in their desires for fresh More and more packaging must look and local offerings. While this, at times, appealing and help keep sandwiches can be an uphill battle when sourcing fresh—even in prepackaged sandproducts and ingredients from store wiches. Some analysts point out that to store, we find that our customers Millennials look for eco-friendly packappreciate the value.” aging while other-age shoppers want Demand for particular sandwiches to be able to view the sandwich offerand related food items vary depending they’re buying. ing on the geographic location of each There might be a grain of truth to Square One Market store. such a perception. McDonald’s, earlier “Italian hoagies still reign supreme this year, announced it wants to have in this area,” said Dell’Alba. “We 100% of its customer packaging come see chef salads being in pretty high from renewable, recycled or certified demand in particular and adding them sources by 2025. was a result of utilizing product for our Ann Golladay, senior project sandwich program.” director at Datassential, said given McDonald’s sheer size, anything it does is bound to impact the industry PACKAGING MATTERS More recently, many U.S. con- overall and of course, their direct comsumers have become almost as petitors. However, it’s unclear if the concerned with the packaging encas- impact of making a packaging change

September 2018 Convenience Store Decisions 47

8/24/18 1:26 PM

Foodservice

Packaged Sandwiches

will be quite as noticeable as the fast food giant’s transition to 100% cagefree eggs. “Packaging is a different beast than eggs or other agricultural products. Having one business that offers sustainable packaging doesn’t mean that

entire factories need converting or Also, McDonald’s packaging is largely those other permanent changes must for freshly-prepared sandwiches, which be made to the supply chain,” said is different than grab-and-go type Golladay. “Companies are more likely offerings which are more common at to change their packaging due to cus- c-stores.” Some consumers look for a combitomer demand than simply because of what one major competitor is doing. nation of service factors. “Consumers are certainly looking for both better packaging and fresher foods. This is likely stemming from increased awareness of environmental issues, but also because especially among younger consumers, there is a willingness to pay more when eating out,” said Golladay. “But, these consumers also expect more when dining out; they will reach deeper into their pockets, but they still insist on value and want more—better ingredients, better packaging, etc.—for that higher price tag.” Packaging is an important consideration to Dell’Alba, especially as it pertains to clean labeling. “Label requirements are a huge topic. Many consumers today are managing calorie intake and macronutrients, which creates a huge demand for transparent labeling,” said Dell’Alba. “I always consider my own habits and those of my family members and it is something I personally manage. I think that this has made on premises preparation a little more challenging with respect to transparent labeling. Although we have decreased our offer with respect to prepackaged sandwich items, the labeling concerns do make this a more viable and safe option. Small businesses like ours do not always have the resources to do this properly and it could ultimately hinder sales.” At Flory’s Convenience, Gas & Delis, based in Fishkill, N.Y., labeling remains an important component of its deli-infused foodservice program. The retailer’s patrons want to know what they are getting and the chain of four stores provides that information daily, said Jamy Flory, company vice president. “Co-branding ourselves with qual-

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cstoredecisions.com

8/24/18 1:26 PM

several years now, customers have increased in their desires “forForfresh and local offerings. While this, at times, can be an uphill battle when sourcing products and ingredients from store to store, we find that our customers appreciate the value . - Lisa Dell’Alba, president and CEO, Square One Markets

ity foods such as Boars Head Deli meats puts us in a good position to use clean labels along with our simple barcodes showing ingredients and nutrition facts using the Boars Head logo,” Flory said. Flory explained that at his stores, there is a constant demand for high quality fresh foods packaged for grab and go “made several times throughout the day, not just daily.”

cstoredecisions.com

Because of customer customization and more emphasis on a quality product, the gap between made-to-order programs and pre-prepared sandwich programs appears to be narrowing, which in turn is influencing the packaging decisions that c-store retailers make. “Obviously on-site customization changes what packaging is available, since sandwiches aren’t sitting around

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QUALITY ASSURANCE

”

pre-made for a few hours, but portability is still key,” said Golladay. “C-stores are a favorite source for sandwiches because they are fast and convenient and packaging needs to work well for the consumer who is very unlikely to eat the sandwich on site. Most purchased sandwiches are eaten somewhere other than where they are purchased, which is especially true of c-store sandwiches.” CSD

September 2018 Convenience Store Decisions 49

8/1/18 4:25 PM

8/24/18 1:27 PM

Foodservice

Coffee

Winning with

Coffee

Whether it’s served by a barista, or made by a well-designed brewing machine, good coffee helps c-store sales ﬂow. By Scott McKinney, Contributing Editor

T Fast Facts: » Fresh, affordable and consistent are important ingredients for robust coffee sales. » Specialty hot coffee is a rising star at the convenience store coffee bar. » Strategic retailers can draw a steady stream of foot trafﬁc and compete with Starbucks and other specialty coffee retailers.

50 Convenience Store Decisions September 2018

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he U.S. retail value growth cappuccino (18.5%) and reﬁlls (12.2%). for ready-to-drink coffees Competition for convenience store is projected to reach nearly retailers in hot dispensed beverages $1.6 billion between 2017 comes primarily from quick-service and 2022, according to Euromonitor restaurants (QSR). The cappuccino subcategory has International. Conversely, cold brew has experienced 150% revenue performed strongly between 2015 and 2017, and it showed improvegrowth in the past year. Despite those impressive growth ment in 2017 in average store sales, tracks, quality hot coffee programs are gross proﬁt dollars and gross margin helping drive convenience store food- percentage. Customers want their coffee fresh, affordable and consistent, service sales. Fresh coffee remains a hot pros- according to NACS. Specialty hot coffee is also a rispect in convenience stores, even in the face of newer innovations in the ing star in the coffee world, according packaged coffee arena, according to data from the Specialty Coffee to industry experts and convenience Association (SCA). The market share of specialty coffee, in cups, increased store managers. In 2017, hot dispensed beverages from 40% in 2010 to 59% in 2017, with were the second largest category in an average of three cups consumed foodservice at 14% of sales, according per day, per drinker. to data from the National Association of Convenience Stores (NACS) State RAISING THE BAR of the Industry Report for 2017. Coffee Coffee consultant Bruce Milletto, continued to lead this category, mak- president of Portland, Ore.-based ing up 58.6% of sales, followed by Bellissimo Coffee Advisors, sees cstoredecisions.com

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More ways to

a t re m e n d o u s o p p o r t u n i t y f o r convenience stores to tap into the specialty coffee market. “In the last five years, convenience stores have raised the bar on quality of coffee they serve,” said Milletto. “They’ve seen the many advantages of premium coffee given the fact that people will stop in to get coffee, and end up getting something else.” Milletto noted that coffee provides a high-profit margin way to draw traffic into the store, but emphasizes the importance of quality and freshness in convenience store coffee. “Once a customer has had a great cup of coffee, their palate remem- BEAN-TO-CUP bers that, and they aren’t going back Greg Parker, president and CEO to drinking poorly made coffee that’s of Savannah, Ga.-based Parker’s, said been left out for hours,” said Milletto. that customers are becoming more In fact, a quality hot coffee bar is a educated and knowledgeable about way to draw more customer traffic to the coffee they like. the convenience store. “The biggest hot coffee trend we’re “What I think the c-store would like seeing at Parker’s is that customto capture would be the person that is ers expect a consistent, robust, fresh making a stop—oftentimes for gas in the cup of coffee 24/7,” said Parker. “The morning—coming in the store, buying company invested in bean-to-cup their coffee there, and having it be high machines that deliver a fresh-ground enough quality that it is competitive with and fresh-brewed coffee on demand, what they’d get at a professional coffee and buys 100% Arabica coffee. We bar. They can do that by setting stan- are willing to spend more in order dards: how they brew their coffee, and to offer the best cup of coffee. The with good quality beans,” said Milletto. response from our customers has Yet, he noted that the only place been extremely positive.” he’s seen full blown espresso machines Parker’s operates 52 convenience work is in large convenience stores. stores across Georgia and South Considering space, training and cost, Carolina. it doesn’t make sense for smaller There is also a demand for premium stores, like the corner convenience convenience store options that are store, to offer a full espresso bar. competitive with professional, barista“What I’ve seen convenience stores made espresso drinks, Parker said. do is go to a professional brewing “We’ve experimented with espresso system, into a pump pot—generally drinks and with nitrogen-infused cofself-service, but not always. Many also fee at individual stores, but have not put timers on them, so when they’ve taken either concept company-wide,” been out for a long period of time, he said. Parker asserted that his coffee they can replace them,” he said. is half the price of Starbucks, yet betA competitive source for beans, ter quality. such as a good local roaster, is an added bonus. “If you own a conve- TAPPING SPECIALTY nience store in a major city, and you’re Foxtrot Market currently operusing a local roaster, from a marketing ates four stores in Chicago. Its standpoint, it’s a huge advantage.” business model blends e-commerce, cstoredecisions.com

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Foodservice

Coffee

The Foxtrot Market menu features local ingredients and artisanal items to complement its coffee offering. It employs baristas, which has earned a loyal following.

on-demand delivery and a striking brick-and-mortar experience to meet consumers’ shopping needs for quick, quality goods and foods. Foxtrot Market features local ingredients on their menu, artisanal items such as fresh pastries from neighborhood bakeries, a bevy of wines, microbrewed beers, healthy waters other convenience merchandise and locally-brewed coffee. The chain also offers a selection of house-made sand- years, the company has also expanded the somewhat anticipated summer its coffee offerings, which has boosted slump—for hot coffee sales, an overall wiches and other foods. When it comes to coffee, Foxtrot its bottom line, said Spencer Young, the growth within that space,” said Young. “Each summer we see a rapid expanMarket has garnered a loyal following c-store’s retail manager. “With the addition of our Wicker sion of our cold brew and iced coffee among city residents, based partly on its employment of baristas. In the last few Park location, we have seen—despite sales. However, including our espresso bar, hot coffee transactions are consistently high across all of our locations.” In its quest to become a coffee destination, the company has made its stores as inviting as possible with Wi-Fi, spacious seating and healthy snacks. Convenience stores can often model an authentic coffee offer“Foxtrot Market’s coffee strategy ing by contracting with a local roaster. Here are some tips retailers has been to provide an elevated cofshould be aware of when doing their due dilligence to find a great fee experience, on par with dedicated roaster partner. third-wave cafes within our convenient retail space,” said Young. “It creates 1. Find a roaster that knows the market and has either a successa Third Space, which differentiates us ful track record of coffee programs in the market, or at least an from other local c-stores in that we are educated understanding of the customer profile. encouraging customers to stick around and work, relax or otherwise enjoy our 2. If you don’t have an in-house service department, ensure the offering. All of this is served through roaster has a service department that can service your equipment our baristas, as we do not have any in the event of an emergency. Some experts say there’s no faster self-serve coffee options.” way to lose your customers than by not giving them their morning Young said Foxtrot Market has cup of coffee. plans to tweak its coffee program going into 2019. 3. Determine water quality. Your roaster should be aware of what “We are in the process of expanding your store’s water profile looks like. It will affect the way your coffee our partnership with our coffee roaster tastes, and over time affect the way your equipment operates. for a selection of exclusive and new offerings, as well as expanding our cur4. Consider how in step the roaster is with the retail industry. The rent retail coffee offering to see a new better the roaster knows your business, the more he can take what rotating menu of additional coffees and he knows from his own field and effectively implement it into yours. coffee roasters,” Young said. CSD

Finding a Coffee Roaster

Source: WB Law Coffee Co.

54 Convenience Store Decisions September 2018

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Foodservice

Marketing

Promoting

Your

Foodservice Offering fresh, delicious meals and snacks is only half of the equation of foodservice success for convenience stores. Just as important is the strategic use and combination of marketing tools to satisfy hungry patrons. By Marilyn Odesser-Torpey, Associate Editor

n a February, 2018 research report, global con- SAMPLING SELLS sulting ﬁrm AlixPartners found encouraging news Kent Kwik Convenience Stores, with 44 locations for food-forward retailers. The report revealed primarily in Texas and one each in New Mexico and that foodservice is the primary reason for consum- Oklahoma, uses sampling both inside and at the ers’ in-store visits. In fact, c-store is the fastest-growing pumps to encourage foodservice trial and showcase foodservice segment, taking share from others such new items. as quick-service restaurants (QSR) and grocery stores. “When we sample at the pump, we usually see Still, there is a lot of room for growth in the c-store about a 20% lift in our foodservice sales that lasts foodservice sector, explained Molly Harnischfeger, about 60 days before it levels out,” said Meredith a director in the restaurants, hospitality and leisure Bright, Kent Kwik’s director of corporate communicapractice at AlixPartners. Only one-quarter of the con- tions and brand development. sumers polled for the study said that they would be Ideally, said Bright, the stores would sample at likely to try new food offerings from places that have the pumps continuously, rotating every eight weeks not traditionally sold food. Half of those polled said between limited-time-offer (LTO) items, either somethey would be unlikely and another 25% said they thing brand new or a returning favorite such as street were indifferent. tacos, and ones that are available every day. The Sixty-ﬁve percent of those consumers who said they everyday items may be specially priced such as two would not try the food offerings were baby boomers. breakfast burritos for $3. Two-thirds of Millennials said they would be likely or indifferent to trying the new items. Reaching such a diverse consumer population requires a multi-pronged approach employing a variety of marketing tools, Harnischfeger said. » Sampling often sells a c-store’s program. “One major factor for all groups is being in » Utilize social media to entice younger front of them when they’re making food decicustomers. sions,” said Harnischfeger. “That makes in-store and pumptop signage and sampling some of the » Online ordering enables incremental sales. most effective ways to move the needle.”

Fast Facts:

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Foodservice

Marketing

“We tried featuring items for shorter periods such as four weeks instead of eight but found that it takes at least a few weeks for people to catch on that we have freshlymade food inside,” Bright said. “The eight-week period also makes it easier to justify the cost of signage and other advertising.” The only thing that keeps the stores from sampling all the time is a shortage of staff to stand outside and interact with customers. “But we know it’s important to build brand awareness and drive traffic into our stores,” said Bright. Inside the stores, bright, colorful signage featuring food items and ingredients with the tag line “Food Made Fresh” echoes the overall foodservice quality message and high- new kitchen equipment and on-site food preparation,” lights any new products and/or special pricing. At two of Thornbrugh said. “That visual reinforces our message of the Kent Kwik stores that freshness.” An exception to the inside-the-store sampling strategy have made-to-order pizzas on their menus, is QuikTrip’s support of high-profile community events with the company posted food donations. On July 4, for example, the company samlarge signs in the front pled some of its specialties at a major fundraiser for families windows calling out of fallen and disabled military service members. Convenience is the message Also, donating foods to events embraced by the surthis offering. Bright to which a growing number of said that this yielded rounding community is an effective way to get the products foodservice consumers respond, a 40% lift in pizza sales into consumers’ hands and minds, said Bright. global consulting firm AlixPart“We reached a lot of people and got some great at the stores. ners discovered in a February, “It’s important that response when we donated breakfast burritos to a recent 2018 research report. This year, we remind them of three-day ‘Rock the Desert’ event,” she said. 41% said that they pick up food Pump-N-Pantry, which has 15 locations over six norththe quality and value when they are already gas and/ of our foodservice eastern Pennsylvania counties, offers food-centric support or grocery shopping and it is while they’re inside for a wide range of community events from donating pizza easier to pick up these items. the stores making for “National Night Out” celebrations bringing police and That number almost doubled their purchasing deci- citizens together, to operating a hot dog cart and donating from last year. the proceeds to a local Chamber of Commerce, to sponsions,” Bright said. Price is less of a factor Although QuikTrip soring a coffee cart that school children run to teach them than last year when 56% of convenience stores social and business skills. foodservice consumers said “In the long run, our participation pays off not only by have tried sampling these ready-to-eat meals were foodservice products establishing Pump-N-Pantry as a good neighbor, but we cheaper. This year, price was the at the pump, inside- hear people say things like, ‘I was at the Bridgewater event primary factor for only 35%. the-store sampling and had your subs there—I didn’t know you had subs,’” According to Mike Thornseems to be more said Wade Robinson, the chain’s food service supervisor brugh, vice president of marketeffective, according to and digital marketing manager. ing for QuikTrip convenience stores, consumers in his compaMike Thornbrugh, vice ny’s stores respond most strongly president of market- SOCIAL AWARENESS to messages of freshness and ing for the chain, which AlixPartners’ Harnischfeger pointed to social media as a quality ingredients. has 779 locations good way to reach Millennials. While only 24% of total con“Considerations such as quick in Arizona, Georgia, sumers said they follow their favorite food establishments in and out and competitive pricIowa, Illinois, Kansas, online, 41% of Millennials said they do. ing are important, but, beyond Nebraska, North The use of social media, particularly Facebook, has everything, consumers want the Carolina, Oklahoma, “changed drastically” for Kent Kwik over the past couple food to look and taste good,” South Carolina and of years. said Thornbrugh. “That’s the Texas. “Before, we would post on the fly every once in a while, primary message we promote “Inside the store, but had no consistent presence,” Bright said. “Now we put with our marketing.” c u s t o m e r s a l s o a big focus on it, posting two or three times a week and get a visual of our responding to Yelp and Google reviews, and believe it is

Marketing Message

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stores and, since then, has noticed a major increase in increbuilding awareness of our food and fresh ingredients.” QuikTrip promotes its foodservice on Facebook, mental sales of items such as the addition of double meat and Instagram and Twitter as well as on its own app. With its QT bacon to sandwiches and breadsticks with pizza orders. “In stores where we never sold any breadsticks, all of a Card, customers can accumulate points toward fresh food sudden every other order includes them,” Robinson said. product purchases. Robinson attributes at least part of the “really good first “The suggestive selling works; customers just need to know half of the year we’ve had with our foodservice” to the what we offer.” Advertisements with coupons in free local shopping debut of two new marketing tools—digital menu boards guides, which are distributed to residents in the stores’ and online ordering. Last year, the stores completed their conversion from market areas have been working well for Pump-N-Pantry for more than 20 years. The strategy has undergone various static menu boards to digital ones. “When we used the static boards, we rarely changed the tweaking over that time. Last year, Pump-N-Pantry stuck with high-value buy-onephotos,” said Robinson. “Using inexpensive televisions, we can now show our customers the wide range of our food get-one-free on pizza and subs. This year, the company is “mixing it up a bit” with a $2 off any large pizza offer. products with a constantly changing slide show.” A trade agreement with a popular local country music The digital boards also make it easy to change prices to station exchanges fuel for air time with Pump-N-Pantry. The promote special deals, he said. Kent Kwik is also rolling out digital menu boards to 12 company sponsors the weather report and gets commerof its stores with delis, Bright said. The company tested the cials on the channel at various times throughout the day. Kent Kwik is in the process of wrapping its food distriboards in a handful of locations, she said, and customers responded well, especially to the made-to-order items that bution center trucks with food photos to turn them into mobile billboards. The company currently has three trucks were promoted on them. Last April, Pump-N-Pantry introduced online ordering in 10 that deliver fresh food to the stores daily. CSD

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September 2018 Convenience Store Decisions 59

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Foodservice

Healthy Foods

Customers Look to Health

+Wellness Trends A

s the meaning of “healthy” evolves, customers are seeking the latest trends when shopping for foods. While customers today want healthier foods, according to IDDBA’s “What’s In Store 2018” report, consumers have two different ways of viewing 50 health and wellness. 1. Fresh, less-processed, which can include clean labeling, inherently nutrient-dense, 40 organic. 2. “Premiumization” (i.e., high-quality DRINKABLE ingredients, storytelling, transparency). 30 Customers continue to demand fresh and funcYOGURT tional foods, and foods with high protein, including Following on the from plant-based sources. And all age groups, from 20 heels of the Greek baby boomers down to Gen Z are paying attention yogurt trend, cus10 to the health and wellness trends of today. tomers are reaching The Hartman Group’s “Gen Z 2018” report found for drinkable yogurt Gen Z is likely “the most educated teen cohort the 0 and yogurt smoothU.S. has seen” when it comes to health and wellness, ies. Drinkable yogurt is one of the fastest but it pointed out most aren’t overly concerned growing breakfast about following health and wellness rules just yet. foods, with a growth rate of 20% in the past year. It’s expected to grow another 13% by 2022.

GEN Z’S HEALTH PERCEPTIONS

49%

of teens say they think drinking soda is unhealthy.

25% of teens aged 15-17 say they worry about staying healthy.

-Mintel, 2018

“

A new generation of health foods is emerging focused on function and positive nutrition. Consumers want to know what their foods and products will do for them— supply protein and energy, support their health.”

”

-- DATASSENTIAL’S FOODBYTES: 2018 TRENDS

CUSTOMERS BELIEVE THEY EAT LESS HEALTHY WHEN DINING OUT 80 70 60 50 40 30 20

64%

of customers say they eat less healthy

58% of customers

10 0

2015

2017

-”Health + Fitness 2017” report, The Hartman Group, Inc

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REASONS 58% OF PEOPLE FEEL THEY EAT LESS HEALTHFULLY WHEN EATING OUT

41% There are not enough healthy menu options for me 30% The portions are too large 29% It’s harder to tell what is healthy and what’s not 28% There aren’t enough healhty restaurants 25% It’s more affordable to eat healthy at home 24% I am focusesd on things other than health and wellness when I eat out

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Category Management

Salty Snacks

Salty Snacks Charge

Forward

As more consumers are shifting to healthier and protein-ﬁlled salty snacks as meal replacements, c-stores are well positioned to reap the rewards. By Lisa White, Contributing Editor

Fast Facts: » Packaged Facts forecasted that dollar sales of salty snacks in the U.S. will grow at a compound annual rate of 4%, reaching $29.3 billion in 2022.

» The inclination of more Americans to seek healthier snacks such as nuts, seeds and dried fruit, to offset more indulgent snacking, will continue to augment the category. » Clean-label salty snacks are beginning to populate the category.

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Still, innovation across the whole he salty snack category in the last few years has experienced a category continues to spur loyal resurgence with new products consumers to try new flavors, while and healthier options, due to the attracting a whole new audience. With fact that today’s consumers are replac- the convenience channel well-positioned to capitalize on these trends, ing meals with snacking more often. In its “Salty Snacks: U.S. Market a number of salty snack brands are Trends and Opportunities” report pub- experiencing healthy growth. According to National Association lished this past July, Packaged Facts forecasted that dollar sales of salty of Convenience Stores’ (NACS) “2017 snacks in the U.S. will grow at a com- State of the Industry Report,” salty pound annual rate of 4%, reaching snacks grew sales by 5.6% to $84,477 annually per store. Gross margin $29.3 billion in 2022. Undoubtedly, a significant share increased by 0.82 percentage points, of those sales will come from conve- helping gross profit dollars grow by 7.9% to $32,622 annually per store, nience stores. The report notes the inclination NACS reported. “The approach to salty snacks varof more Americans to seek healthier snacks such as nuts, seeds and ies widely amongst c-store operators,” dried fruit, to offset more indulgent said Ed Collupy, executive consulsnacking, will continue to augment a tant at Chicago-based W. Capra category traditionally led by popular Consulting Group. For example, at chain-operated potato chip brands, tortilla chips and stores, such as 7-Eleven, Cumberland other salty products. cstoredecisions.com

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WE KNOW YOUR MISSION IS TO PROVIDE FRESH, SAFE PRODUCTS TO YOUR CUSTOMERS. SO IS OURS. As a convenience store operator, nothing is more important than ensuring fresh, safe products for your customers. That’s why we’ve invested over $1 billion in an end-to-end cold chain solution with a multi-step monitoring process that constantly validates product temperatures from the time they arrive at our distribution centers until they’re delivered to our retailers. It’s why we’re a member of IFDA and GS1— organizations dedicated to foodservice supply chain integrity and traceability. And, it’s why all of our facilities undergo independent audits by Mérieux NutriSciences, a leading certification body and auditing provider for the global supply chain. To learn more about our custom cold chain solution, visit mclaneco.com/coldchain

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Category Management

Salty Snacks

On the other side of the country, Farms and Speedway, there are ample year’s fad is about taking simple snacks ways to maximize sales and margins in and making them haute,” said Daniel Utica, N.Y.-based Clifford Fuel Co.’s Levine, director of the Avant-Guide 19 stores are seeing growth in the salty this category with store brands. snacks category. “Private label products are very Institute, a consultancy in New York. “Nuts and seeds have been a great prevalent at these stores and clearly category for us,” said Mike Clifford, provide customers with variety and FOCUS ON HEALTHY value. Choices go well beyond the NACS’ report reveals health- category manager. “Part of it is offertraditional potato chip; 7-Select’s conscious consumers shifted the ing a better assortment of flavors, and C a r a m e l P o p c o r n C l u s t e r s t o landscape for snacking, but they are it could be a little more on trend with Cumberland’s Farmhouse Trail Mixes not willing to sacrifice flavor and indul- healthy eating. Although more people come in multiple flavors,” said Collupy. gence. Instead, cleaner labels and are looking for nutritious options, our “Upscale salty snacks abound, with simpler, healthier ingredients have Doritos numbers are also great.” Levine has seen a number of healthSpeedway’s Speedy Choice brand’s become more prevalent. Premium label nut line and regional While sales of puffed cheese ier salty snack launches. “Clean-label salty snacks are part operator Alltown, in a three-foot sec- jumped 9.3% in 2017, sales of potato tion, offering Terafina nuts.” chips and corn chips also experienced of this foodie trend,” Clifford said. Private label products also offer sales spikes of 6% and 4.9%, respec- “Foodies want ‘real’ food, even when consumers better value. tively. Still, some retailers report strong they are snacking. I am seeing many new snacks that offer a healthier form “In my shopping, I’ve seen sav- sales with more nutritious offerings. ings on the low end at 8%, but also “We’re seeing a lot of trends of indulgence.” over 40% on a big bag of chips,” said towards healthier options, such as the Collupy. nut mixes and things like that,” said INNOVATIVE OFFERINGS Single-store operators have differ- Marylou Mendez, chief financial offiSalty snacks is one category that is ent opinions on what works. cer at Plaza Chevron Service Center, constantly evolving. Today’s products “Mom and pops clearly recognize the Costa Mesa, Calif. “Also, there’s been are not only healthier, but also provide value of stocking the local namesake growth in the meat snack products, as spicy options, international/ethnic flabrand, while many of the chains don’t people are looking for no carbs. There vors and seasonal snacks, according to carry the locally-named brand,” said is lots of jerky like turkey jerky and all the NACS’ report. Collupy. “One operator told me that he the different flavors, while manufacPlaza Chevron recently added P3, a lets the route drivers decide what variety turers are getting away from the oily new portable protein snack pack from to carry, while his competitor chooses to sticks [of the past].” Kraft Heinz to its salty snacks lineup. A carry specialty brands—Oogies, Pretzel Plaza Chevron is part of Chevron’s number of varieties are available that Pete, Joe Chips—and takes advantage j o i n t - v e n t u re c h a i n , E x t r a M i l e combine nuts, cheese, turkey, bacon, of rack display units provided by some Convenience Stores LLC, which beef jerky and other ingredients. of the brands.” comprises about 770 locations in “Those are doing really well “Last year, the trend in salty snacks California, Florida, Hawaii, Oregon because they come packaged in porwas all about being salty-sweet. This and Washington state. tion control packs,” said Mendez.

C-store sales of puffed cheese jumped

9.3%

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in 2017.

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Category Management

Salty Snacks

4.6%

3.1%

“Also, in our deli, we have a hummus and pretzel combo that is a hot seller as well as a dill pickle packaged in a Peanut Butter Other Snacks foil packet with no juice for easier eating on the go.” Potato chips are the most Clifford Oil recently expanded on common type of chips consumed its Biggs lineup from Boulder, Colo.in the U.S., accounting for 23.5% based Thanasi Foods with new flavors. of the $41.6 billion snacks “One of the big ones is the Taco industry in 2018, according Bell Supreme sunflower seeds,” said to IBISWorld. The research Other Chips Clifford. “Other snack varieties firm also explains the weren’t so out of the norm in terms of growing Hispanic population Nuts and Seeds varieties.” is driving the growth of Experts note the number of salty tortilla and corn chips. snack SKUs continues to increase in Chips made of ingredients Tortilla/Corn c-stores. other than potato or corn Chips “I just tried Phoenix-based Halfpops’ account for 17.8% of revenue. Dill Pickle popcorn snacks, but could have enjoyed anything from Berkley, Potato Chips Source: IBISWorld, “Snack break: Healthier Products Calif.’s The Good Bean’s Chili Lime and More Innovative Flavors Will Boost Industry Chickpeas to the UK’s Graze Snacks’ Growth,” May 2018 Sweet Memphis BBQ peanuts to Fairfield, Calif.-based Calbee North America’s Harvest Snaps Red Lentil Snack Crisps,” said Collupy about the focus on flavor and new varieties. More and more, the salty snacks for salty snacks,” said Collupy. “Small entire gondola to salty snacks on one category is facing significant competi- package chips are merchandised side, energy and meal replacement tion from meat snack offerings, which above the fresh food refrigerated bars on the other and end caps with is experiencing innovation as well. case, on low-profile racks in front of kettle and Hispanic-style chips. “It’s similar to ExtraMile’s HydraZone “Jerky is a growing snack food the service counter and at the checkcategory, and pulled pork jerky is out counter. Cumberland Farms has beverage concept,” said Mendez. taking a simple snack to a delicious even created a product line called “With that program, manufacturers extreme,” said Collupy. “In addition, Diner Side Snacks—turning foodser- have to pay to be included in the Jim Beam is lending its credibility to vice items like mac and cheese and display.” Clifford Oil places its salty the co-branded Burts Chips Jim Beam sweet potato fries into salty snacks.” Original BBQ Crisps. Calling them Collupy added that salty snack snacks near the cooler doors by the crisps upscales them, as does the items are often used in promotions, beverages. “Although we haven’t yet done packaging, which promises they are such as ‘two for’ pricing and buy a soft any cross promotions, we have some gluten-free and made without MSG, drink and get a salty snack for free. artificial flavorings or colors.” Plaza Chevron promotes salty end cap displays with bigger chip snacks constantly, mainly chips, but packages and beer,” said Clifford. also nuts and nut mixes. It recently “Potato chips are a huge seller, but PACKED PROMOTIONS A number of convenience stores promoted its new P3 brand line with numbers have been pretty flat, and continue to dedicate considerable a two for $3 promotion, which was we’re seeing growth in nuts, seeds and tortilla corn chips like Doritos shelf space to salty snacks, but also successful. “Hummus and pretzels don’t need and Tostidos.” use temporary floor displays and wingInnovative flavors, healthlike fixtures on aisle end cap shelving a promotional push,” said Mendez. to offer and expand on their salty “Our salty snack offerings are in a sep- ier options and protein snacks are expected to remain on trend in this snack selection throughout the store. arate and dedicated gondola.” The store is currently one of 50 category for the foreseeable future, The more placements, the better. “The growing foodservice cate- c-stores that are part of Chevron’s as consumers seek more nutritious gory in c-stores also provides cross ExtraMile pilot program called The meal replacement options without category promotional opportunities Snack Bar, where retailers dedicate an sacrificing flavor. CSD

Chips Ahoy

17.8%

32.2%

18.8%

23.5%

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Convenience Store Decisions Honors Kwik Trip as the 2018 Chain of the Year!

th Chain of the Year Award

Join us as we honor the Wisconsin retailer’s decades-long commitment to co-workers, guests and the communities it serves. The industry will recognize Kwik Trip on October 8th, 6pm-9pm at the Stratosphere Hotel and Casino in Las Vegas during the NACS Show. Kwik Trip exempliﬁes what it means to be a “people company.” It is fully committed to customers, employees and its vendor partners, not as a strategy to grow the business, but because it’s the right thing to do. When this is your core mission, greatness surely isn’t far behind. The chain serves as a shining example of how to serve others and for this reason the Editors and the Editorial Advisory Board of Convenience Store Decisions are proud to honor Kwik Trip as the 2018 Convenience Store Chain of the Year. RETAILERS ONLY Register here: https://2018kwiktrip.eventbrite.com SUPPLIERS CONTACT: Tom McIntyre, Group Publisher, Convenience Store Decisions 440.250.1583 • tmcintyre@csdecisions.com

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Category Management

Frozen Beverages

Beverage Freeze Frame

Summer c-store promotions are more effective than ever when it comes to pumping up frozen beverage sales. By Anne Baye Ericksen, Contributing Editor

Fast Facts: » Summer has always been the biggest season for the frozen beverage segment, which is partially due to the climbing heat index and partly to special promotions.

» Combining ﬂavor proﬁles is one of the most notable trends in beverages. » Gen Z food and beverage choices are often linked to personal experiences.

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“It’s doing fantastic,” he said. “I’m hen DC Oil Co. opened its newest Quick Shop con- really pleased with how well it’s done venience store in late July, for us.” The Quick Shop team determined David Collins knew customers expected to find an ICEE machine the iconic beverage brand should be prominently displayed on the premise featured prominently in the store’s and they expected it to be filled with grand-opening promotional campaign. Coca-Cola, cherry and blue raspberry For the month of August, customers to this location could purchase any size slush mixtures. “In Alabama, ICEE is such a domi- ICEE—12-, 20- or 32- ounces—all for nant name—we have ICEE machines just 99 cents. “It helps that our distributor gave us in all our stores—and we always try to keep those top three flavors,” said free syrup and cups, because unless Collins, president of the Birmingham, you have free products, it’s hard to Ala.,-based chain, which operates 13 do that type of promotion when a sites throughout the Yellowhammer 32-ounce ICEE can sell for $1.79,” said State. “When we have a fourth bar- Collins. “We’ll go back to the regular rel, we play with the flavor to see what prices in September.” does best.” For this specific location, Collins SEASONAL PROMOTIONS selected Orange Dream as the fourth More and more, convenience option. retailers are taking advantage of the cstoredecisions.com

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Category Management

Frozen Beverages

“

[We’ve] had a big summer full of promotions and exciting product offerings, and we are actively looking at ways we can continue to promote the category outside of the traditional selling season. We’re looking at new flavors and app coupons to continue to drive traffic and trial to frozen beverages.”

”

- Tiffany Piemmons, senior category manager, RaceTrac

ing the next big seller can be a game traffic- and profit-driving value of fro- er’s coupon in its mobile app. Regional c-stores offered their own of hit-or-miss. zen dispensed beverages, prompting “It’s funny how some flavors sell them to widen flavor assortments in promotions to entice people to cool traditional carbonated and non-car- off from summer temperatures. The really well at some stores, and five bonated products. Summer has always Cumberland Farms convenience chain, miles down the road, you can’t sell been the biggest season for the frozen for example, sold Hyperfreeze drinks them at all,” said Collins. That said, there are certain indusbeverage segment, which is partially for 69 cents through Labor Day. RaceTrac, a c-store chain with try staples, such as cherry and blue due to the climbing heat index and nearly 500 stores throughout Georgia, raspberry. Indeed, according to Mintel partly to special promotions. Some retailers have built special Florida, Louisiana and Texas, recently research, consumers’ cherry favoritannual promotions on frozen bev- debuted a new mobile app campaign ism continues to grow. It is one of the erages. For instance, each July 11, featuring the Wintastic Rewards game. strongest performers on the Mintel “When a guest purchases a qualify- Menu Matrix. Other leading flavors 7-Eleven celebrates its anniversary with a free Slurpee offer between 11 ing beverage or food item, they scan also include lemonade and citrus, and their app for a one-in-three chance Mintel named orange as an expanding a.m.-7 p.m. This year, participating 7-Eleven to instantly win dozens of deals on flavor. Only strawberry was recognized stores also marked the “National Stick drinks and food items,” said Tiffany as lagging or declining in penetration. Frozen blended coffee drinks conOut Your Tongue Day” on July 19 with Piemmons, senior category manager Slurpee tongue straws in four shapes for RaceTrac, headquartered in Atlanta. tinue to be popular—both McDonald’s and colors. Customers were encour- “This was a great promotion to entice and Dunkin’ Donuts have expanded aged to post pictures of their colorful our guests to continue their loyal their category selections. For coffeetongues on social media for a chance behavior and make RaceTrac their des- based beverages, frozen and otherwise, Mintel called out French vanilla, hazelto win a year’s worth of free Slurpee tination this summer.” The company also teamed up with nut and mocha as leading flavors. drinks, or one medium size per day However, combining various flafor 365 days (approximately $550 the Atlanta Braves to highlight the value) in the Sun’s Out-Tongue’s Out addition of ICEE’s Fanta Green Apple vor profiles is one of the most notable flavor. The sports organization pro- trends in beverages at the moment. Sweepstakes. However 7-Eleven wasn’t the moted the product and c-stores on its More specifically, savory beverages coupled with sweet are set to become only national c-store chain to shine social media and ad platforms. “It immediately became a hit. We the next beverage breakthrough. This a spotlight on carbonated and noncarbonated frozen beverages this were excited to see the lift in buzz at could be an appeal to Millennials and Generation Z because of their pensummer. Circle K preempted its com- our stores,” said Piemmons. chant to experiment with tastes. When petitor with a free Froster offer on that’s applied to frozen beverages, you July 10, advertising the event with COLD AND HOT the slogan: “First in refreshment. First Price discounts are an oft-employed see offerings like ICEE’s Warhead’s in flavors. First in the hearts of frozen strategy to attract attention to any pairings of strawberry basil or blackbeverage lovers everywhere.” Circle K category. Introducing new flavors is berry mint limeade. This brand also estimated 10,000 frozen carbonated another way to entice shoppers, espe- heats things up with its Hotheads drinks would be served up in the U.S. cially with such a small category as products: lava, piping hot pineapple to people who downloaded the retail- frozen beverages. However, identify- and molten mango. 70 Convenience Store Decisions September 2018

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Category Management

Frozen Beverages

7-Eleven’s handle on the frozen beverage segment remains strong as more consumers grab Slurpees.

The company also plays to people’s caffeine cravings with its new Twisted Chill blends. At the 2017 National Association of Convenience Stores (NACS) show, ICEE debuted the Twisted Chill machine, which mixes flavor infusions with a base in a single serving. Flavor options include pumpkin spice coffee, nitro cold brew and 2015, doesn’t attach as much cresweet tea. In addition, ICEE introduced dence to smaller, boutique brands as a frozen nitro dispensing machine this Millennials tend to do. Rather, their year, offering mocha, vanilla, hazelnut food and beverage purchases are more akin to personal experiences. and Irish cream choices. “Food marketers should understand To keep heat on in the category, Sunny Sky Products LLC, manufacturer that [Gen Z] grew up knowing that of Jolly Rancher Slushies, has spiced food is much more than sustenance; up its flavor game by releasing the food represents culture and thereHotties line, which plays to the spicy- fore is an expression of who they are,” sweet palette with cherry habanero, NPD’s David Portalatin told Modern watermelon cayenne, blue raspberry Restaurant Management recently. In fact, you see the correlation Siracha and green apple ginger. But analysts caution against con- between childhood expressions or flating Millennials and Gen Z into sentiments and frozen beverages one mass consumer group. Research reflected in certain flavor promotions. indicates discovering the Gen Z demo- For this year’s anniversary, 7-Eleven graphic, born between 1995 and re-issued its Cap’n Crunch’s Crunch

California Dissolves Sugary Drink Tax California lawmakers this summer approved a bill that prevents local communities in the state from adopting any new sugar-sweetened beverage (SSB) taxes on groceries for the next 12 years. The measure is retroactive to Jan. 1, 2018 and would continue until the year 2031. The law preempts grocery tax proposals targeting SSBs that were under consideration in the California cities of Sacramento, Santa Cruz and Richmond. The “Keep Groceries Affordable Act of 2018” (Bill 1838) was a last-minute measure that overturned a state ballot measure, slated for a November vote. The ballot proposed that local jurisdictions seeking to raise taxes would require a two-thirds vote instead of the 50% threshold currently in place.

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Berries cereal Slurpee. In spring, Circle K announced its partnership with PepsiCo/Frito-Lay’s Cheetos to sell a limited edition Sweetos Cinnamon Sugar Froster. “Our biggest volume for frozen beverages is deﬁnitely kids trying to talk their moms into buying an ICEE, but then their moms buy one, too,” said Collins.

FALL AHEAD While September may still bring summer-like weather to some regions, maintaining the same level of excitement toward frozen drinks that are on display between Memorial Day and Labor Day can be challenging. Autumn means temperatures fall and people’s pumpkin spice obsession kicks into high gear. Consumers are more likely to reach for a hot beverage than a chilled slush or shake. Perhaps the key to keeping the category flowing isn’t necessarily to position it as a competitor to hot drinks, but rather to keep customers on their toes through ﬂavor rotations and year-round price incentives. At least that’s the strategy Piemmons is adopting. “[We’ve] had a big summer full of promotions and exciting product offerings, and we are actively looking at ways we can continue to promote the category outside of the traditional selling season,” Piemmons said. “We’re looking at new flavors and app coupons to continue to drive trafﬁc and trial to frozen beverages.” CSD cstoredecisions.com

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Category Management

Smokeless Tobacco

Smokeless Tobacco Remains Stable Despite lingering health concerns and the threat of continued regulation, smokeless remains a durable part of c-store tobacco sets. By Howard Riell, Associate Editor

mokeless tobacco remains a dependable product category, with popular brands like Copenhagen, Skoal and Grizzly, a plethora of price promotions, and a solid customer base made larger by Americans transitioning from cigarettes due, in part, to the greater social acceptability of smokeless. Despite the threat of continued regulation, smokeless remains a durable part of c-store tobacco sets. According to IRI, store sales of smokeless tobacco for the 52-week period ending July 15, 2018 rose to nearly $7.2 billion, an increase of 9.06%. Within the smokeless category, chewing tobacco/snuff registered more than $6.8 billion, with movement up 8.3%. Spitless tobacco sales increased 25%, to nearly $375 million during the same 52-week period.

Fast Facts: » C-store sales of smokeless tobacco for the 52-week period ending July 15, 2018 were nearly $7.2 billion, an increase of 9.06%. » During the same 52-week period, chewing tobacco/snuff registered more than $6.8 billion, with movement up 8.3%. » Spitless tobacco sales increased 25%, to nearly $375 million during the same 52-week period.

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The relatively high average retail price of MST (moist smokeless tobacco) still makes it a compelling category. Premium-priced volume is declining at convenience stores by about 2.7%, based on industry shipment data. What is also driving the relative lack of growth is the slowdown in low-price product volume, up just 1.5% year to date. The biggest lowprice brand is Grizzly, whose volume is up just 0.5%.

MORE COMPETITON Those who are less enthusiastic about the smokeless category explain that it is mature, making it more difficult to generate historical growth rates. In addition, many kinds of nicotine options are available, giving consumers several other options for nicotine satisfaction—some of which, like e-cigarettes/vape and nicotine patches, boast innovation, which many find attractive. Still others claim retailers can do a better job of selling MST pouches, which account for 18% of category volume and often serve as the point of entry for new consumers. These products are often not easy to spot on the rack, and can look nearly identical to their ‘loose’ versions. Many also fail to capitalize on strong consumer desire for value-priced product. “Smokeless will continue shifting toward more affordable and socially acceptable forms,” suggested David Bishop, managing partner in Balvor LLC in Barrington, Ill., a sales and marketing firm that provides analytic, consulting, research and sales support services to retailers, product suppliers, and other organizations across foodservice and retail classes of trade. “This means continued growth in price-value brands, as well as pouches, primarily and snus, secondarily.” cstoredecisions.com

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Category Management

Smokeless Tobacco

STABLE SALES At QMart, smokeless tobacco has sustained an independent offering with very stable sales, said Mary Sonatore, retail buyer and merchandiser for Houston, Texas.-based Northwest Petroleum Inc.’s (NWP) 26-store chain. “Poly tobacco users are driving the smokeless tobacco category. In our marketing, we are attracting those who are looking for alternatives to combustible.” Over the next 12 months, NWP plans to follow up this year’s opening of a co-branded, joint retail location between QMart, Phillips 66 and Burger King at the San Antonio International Airport with the development and opening of 10 new convenience and fuel retail sites. QMart executives have found that any price point on smokeless tobacco that has been significantly discounted does well, according to Sonatore. The promotions that have worked well in her stores have been deals consisting of from 50 cents to 75 cents off per can. Packaging has proven a factor, as well: QMart customers are seeking smokeless tobacco in traditional flavor pouches. “As vaping options and technology begin to improve,” Sonatore forecasted, “smokeless tobacco may plateau or slightly decline from poly users who are looking for other options in alternatives to combustibles.”

OPTIMISTIC OUTLOOK Mallorie Kemo, category manager for Certified Oil Co. in Columbus, Ohio, which either operates or supplies more than 140 c-store locations in Ohio, Kentucky and West Virginia, said smokeless is doing very well across her system. “The category was up 4.43% for the first half of 2018 compared to first half of 2017.” An introduction of new promotions has helped drive that sales increase, she noted. Grizzly and Copenhagen are both strong, with Grizzly Longcut Wintergreen leading the pack. “The mid-range price point does best for us.” Multican discounts and multi-can rewards promotions have had limited success. Kemo said she is optimistic about smokeless’ prospects going forward. “As the tobacco industry continues to change, we expect to see more cigarette customers opt for alternative and smokeless tobacco options.” Not every c-store chain is seeing entirely positive smokeless sales. Maverik’s different results: “Year to date, the MST (moist smokeless tobacco) volume is down 1% nationally,” said Travis Hanke, category manager for cigarettes, tobacco and general merchandise for Salt Lake City -based Maverik Inc., which operates 313 stores across 11 Western states. “At Maverik we’re experiencing different results, as the MST volume is up 5% year to date.” 78 Convenience Store Decisions September 2018

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According to Hanke, the moist smokeless category continues to face velocity pressures from increased competition in the alternative smokeless tobacco segment, with items such as snus and nicotine pouches. “The nicotine pouch segment, led by ZYN, Dryft and ON!, has rapidly grown over the past two years. The new poly users entering the MST category continue to start off in the pouch segment.” The Copenhagen brand, led by long-cut and fine-cut, continues to be the category leader, Hanke noted. “Grizzly performs well, too, led by wintergreen long-cut and wintergreen pouches.” Skoal has seen some erosion, he added, however it is still a solid third brand in the category, led by long-cut straight and mint pouches. Now, the smokeless tobacco category has too many price points. “Less than one-third of the price points in the set are actually displayed on the fixture,” said Hanke. “I’d like to see the number of price points reduced, so that the price points can all be displayed on the fixture, and the pricing is simpler to understand for the new poly users to the category.” According to Hanke, “The new poly-use MST customers are looking for what’s easy, which is a simple program and a pouched product.” The existing MST customers are looking for value, as they know what product they want with the occasional new trial. “Retailers implementing two-can and/or roll pricing is pretty much industry standard at this point in order to optimize value shown to their customers,” said Hanke. “In the c-store channel, the MST customers have some of the highest shop frequencies and largest-sized baskets of any consumer.” According to Hanke, the promotions that present the biggest challenges from an execution, product placement, auto-replenishment, product rotation and inventory standpoint are the pre-priced deals. “As a retailer,” Hanke said, “I see minimal impact to the category today based on Maverik’s footprint. The vendor partners in the category do an outstanding job keeping us informed and compliant with changing regulations.” Instead, he said he believes the biggest challenge today for retailers when it comes to smokeless is on the operations side. “The consistent execution expectations on purchase-age compliance aren’t new, however the current labor market situation presents some challenges,” said Hanke. ”The pending legislations on flavor bans could impact the category in future.” Despite these challenges, Hanke added, “I see continued growth and innovation with the poly-use trend, specifically in the pouch segment.” CSD

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Category Management

Beer

Beer Sales

Grow Diverse

The right assortment, coupled with a local brewery presence, will enable craft sales to splurge. By Brad Perkins, Contributing Editor

t’s safe to say that craft beer is a fully mainstream product. New breweries are popping up seemingly everywhere— there are more than 6,000 in the U.S.— and though they’re smaller, at least in terms of sales, they dominate public opinion. Demand for craft brews and Mexican beers in the U.S. reﬂects a shift in Americans’ drinking preferences—a trend accelerated in 2018. Beer shipments from U.S. breweries are down 3.5% so far this year, according to The Beer Institute, an industry trade group. The big four U.S. brands—Bud Light, Miller Lite, Coors Light and Budweiser—have experienced declining sales. On the other hand, the Beverage Marketing Association

Fast Facts: » Mintel’s “Beer and Craft Beer—U.S. Market Size and Forecast, October 2017” report showed that 50% of beer drinkers choose craft beers. » Sustaining craft beer growth means a balance of selection, price, assortment and seasonality. » Mexican beer and local craft are recipients of U.S. consumers’ shifting preferences.

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recently noted that in convenience stores, craft beer only accounts for about 8-10% of beer sales and less than 20% of inventory. Moreover, craft beer sales grew 5% in 2017, according to the Brewers Association. With sales and interest on the rise, it’s easy to see why the major players are hedging their bets. For instance, Bud Light this past April expanded the brand’s citrus portfolio with a refreshed Bud Light Lime and the addition of Bud Light Orange. Both light lagers are brewed with real lime and orange peels. Beyond just flavors, Anheuser-Busch over the last seven years has purchased 10 smaller breweries, including Goose Island, Breckenridge and Blue Point, and is poised to be the largest craft brewery owner in terms of sales. Those 10 breweries’ sales grew 20% through the first half of 2018, according to Beer Marketer’s Insights, to $100 million, surpassing both Sierra Nevada and Boston Beer Co. With larger companies’ purchasing top brands and smaller brands working out distribution deals, the availability of craft beer has never been higher. Market research firm Mintel’s “Beer and Craft Beer—U.S. Market Size and Forecast, October 2017” report showed that up to 50% of U.S. beer drinkers choose craft beers, “Beer Marketer’s Insights’ C-Store Snapshot” indicates just a 0.4% spike in craft sales so far in 2018. Helping balance overall U.S. beer volume sales is the increasing demand for Mexican brands. “Mexican beer and local craft continue to experience the strongest trends, while domestic lights continue to decline, but remain the largest beer segment within convenience stores,” said Brian Sudano, managing partner of Beverage Marketing Corp. cstoredecisions.com

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Category Management

Beer

U.S. craft beer sales grew 5% in 2017. MERCHANDISING CRAFT Despite still being the largest, the need for macro breweries to share shelf space is on the rise. And that space is increasingly being shared by both national and local brands. “I think having an assortment of craft is absolutely the right thing. It’s just a matter of making sure you have the right assortment and you can be localized enough with an assortment,” said Jason Homola, director of category management at Wawa, which operates 800 stores in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Florida and Washington, D.C. “We’ve over-spaced in craft if you look at it as a percentage of sales, but that was done intentionally to make a stance that we are going to carry local brands as well as craft breweries.” Wawa provides its customers enough selection to satisfy various preference, including premium, ultra-premium and craft “I would say the premium and the ultra-premium products are still the crux of the business,” Homola said. “We focus on craft as being a differentiator for us as we’ve entered the beer market more heavily in Florida, so we’ve tried to pride ourselves on carrying a broad enough assortment in both the cold box and the beer vault for craft.” Beer vaults or caves are an important factor in craft sales. With more room to stock, comes the ability to have a greater selection. In Florida, Wawa entered the market with a mix of national players like Dogfish Head and Sierra Nevada and local breweries as well as other states. “It’s very important that we get localized with things like Cigar City in Tampa and other localized products,” Homola said. “We have one store where we sell beer in Pennsylvania, and we have some items from Conshohocken brewery and some other local Pennsylvania breweries. We think it gives a good local feel to the store and helps support some of the local businesses.” Mike Clifford, category manager at Clifford Fuel, which runs 18 stores in central and western New York, agrees with that assessment. His stores have seen an increase in local and New York brands. “Locally for us, Saranac, Ommegang and Good Nature brands have all grown in sales,” said Clifford. “The sales for Southern Tier, another New York state brand, have increased significantly. The national brands like Sierra Nevada, Lagunitas and New Belgium have performed well, but are not growing at the same rate.” 82 Convenience Store Decisions September 2018

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PACKAGING SELLS Packaging is also a trend that continues to grow. Earlier this year, Clifford Fuel added 19.2-ounce cans of Founders All Day IPA, which, along with other 16-ounce craft offerings, were two sizes that had been lacking in the craft beer category. “The craft single cans have performed really well this year. We are up 36% in units sold as a chain,” Clifford said. Those sales have also grown not only because they found a niche—no other craft beer targeted the single-serve category—but because, while craft beer sales are about taste and availability, catching shoppers’ eyes doesn’t hurt, either. “Some of the new packaging out there has been effective, from different size cans and bottles and some package size innovation,” said Homola. “I think what they’re trying to do is to increase usage during different occasions when that size better suits that occasion, and to make it a little more mainstream.” In terms of craft , retailers shouldn’t be too one-sided. “In a convenience store where you’re operating at a finite amount of space, you’ve got to be careful not to damage the premium product lines or the discount product lines by carrying too much craft because there is still a huge consumer base looking for those,” he said. But for now, the future seems bright. Even with news of breweries closing, many more are opening and thriving. Mintel’s report predicted yearly growth of at least 3% yearly in the category through 2022. “Continued momentum in the economy and employment should support continued growth in beer within convenience stores, especially in high-end, including local craft and healthy-lifestyle beer,” Sudano said. Sustaining that growth means a balance of selection, price, assortment and seasonality. It’s important to rotate the stock, and to work with distributors. “I think it’s going to continue to grow. I see no reason why craft won’t continue to grow as a share of sales,” Homola said. He added craft beer customers are less price sensitive and more assortment driven.“It’s really about making sure you’re capturing that growth and carrying the right assortment, which I think is the hardest line to walk.” CSD

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Category Management

Juices & Teas

Healthy Drinks Earn

Market Share Better-for-you tea and juice products are helping drive today’s ready-to-drink beverage category. By Pat Pape, Contributing Editor

ot long ago, consumers seeking an afternoon don’t see them resonating well with the Millennials and the pick-me-up reached for a bottle of juice or sweet- Gen Zs, who want supplemental health benefits from their ened tea. The drinks were refreshing, tasted great beverages.” and provided a welcomed energy boost. But today, many shoppers are more concerned about TEA FOR NEW making responsible food choices—particularly Millennials More than 158 million Americans drink tea on any given and Generation Zs—and they want flavorful drinks that pro- day, according to the New York-based Tea Association of vide a more powerful health punch. the U.S.A. Refrigerated ready-to-drink teas generated more Historically, juice, especially orange juice, has been a than $1.36 billion in sales at U.S. multi-outlets for the 52 leader in the U.S. non-alcoholic beverage category. But weeks ending May 20, 2018. That’s an 8.3% increase comas many consumers have given up sugary sodas, they are pared with the prior-year period, according to Chicago also shying away from juices heavy with sugar. For example, research firm IRI. 7-Eleven stores this year began carrying a line of proprietary “We’re seeing more health-conscious purchasing from juices that rival those prepared fresh in free-standing, high- our guests and realize that providing a larger variety of end juice bars. The new organic, cold-pressed juices are part options is important,” said Melanie Wegner, director of of the retailer’s 7-Select GO!Smart private brand line. operations for Busy Bee, a Madison, Fla.-based chain of 18 According to recent data from IRI, the Chicago-based c-stores. “Our manufacturers are also helping to provide research organ, 58% of consumers across generations are more options, allowing us to appeal to a broader range of steering clear of sugar. About 50% don’t want to add sugar guest needs.” to their food or drink, while 30% avoid consuming products Fast Break convenience stores, headquartered in that contain sugar. Klamath Falls, Ore., haven’t seen customers abandon The growing stigma against sugar has taken its toll on carbonated soft drinks, thanks to the chain’s traditional cussales in the juices and juice category, which dipped 0.9% in tomer base. 2017, according to a report from Beverage Digest. “We’ve seen nothing but growth in our (carbonated soft Lisa Dell’Alba, president and CEO of Square One Markets drinks),” said Michael Cordonnier, category and marketing based in Bethlehem, Pa., said sugary juices aren’t as popu- manager for Fast Break. But that is also true for ready-tolar with customers as they once were, and she plans to drop drink tea. high-sugar bottled juices from her stores’ product offerings. “Peace Tea, Gold Peak, Arizona and Pure Leaf are on fire “Young kids are still trending toward those juices, but in our areas,” said Cordonnier. “And 64-ounce Gold Peak they’re not extremely popular anymore,” said Dell’Alba. “I is one of the fastest growing packages in our market right 84 Convenience Store Decisions September 2018

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now. We’re working to get it into our door.” “Some of the Monster teas are doing really well for us,” said Dell’Alba. “I’m not the target consumer, but I’ve been intrigued by some of the cans and purchased them. There is one Monster that I really love – Dragon Fruit tea.” Recently, a report from Packaged Facts, a market research ﬁrm, predicted that the tea category, including ready-to-drink beverages, will reach $19.5 billion in sales by 2022. Although the report noted that consumer concerns about sugar could impact growth, those issues should be offset by the “health halo” of black and green teas. The report added that ready-to-drink tea sales will slow as the category starts to mature, but that segment will remain the fastest grower.

TOP REFRIGERATED TEAS (Individual Brands) In Retail Channels

$ Sales for 52 Weeks

% Change vs.Year Ago

Market Share

% Change vs Year Ago

Category Total

$1.36B

8.3%

100%

N/A

Private label

$246M

-1.4%

18%

-1.8%

Gold Peak

$212M

-8.3%

15.6%

-2.8%

Red Diamond

$135M

-4.8%

9.9%

-1.4%

Milos

$134M

17.2%

9.8%

0.7%

Turkey Hill

$116M

-1.8%

8.5%

-0.9%

Source: Information Resources Inc. (IRI). Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending May 20.

PROTEIN REFRESHMENT Protein drinks have been around for years and were of protein per serving. Isopure is a zero-carb protein water traditionally targeted to the workout crowd. But today with amino acids in a variety of flavors. According to Arizton, a market information company, the everyone—whether a professional athlete, weekend warrior or health-oriented shopper—wants to stay well-hydrated, global coconut water market is expected to hit $8.3 billion and the newer drinks with added protein and amino acids by 2023. are appealing. Protein is an essential building block for the body, and it’s found in everything from muscle to enzymes. WELCOMING INNOVATION According to Global Insights, the U.S. protein drink marAware that sugar-rich drinks are déclassé with more ket is expected to reach $6.7 billion by 2019, a $2.7 billion consumers, beverage manufacturers are rolling out betterjump over 2015. for-you offerings. Plant-based proteins, often created from pea and brown When Mott’s research revealed that more than 60% of rice, are gaining popularity among shoppers who prefer people are concerned with the amount of sugar in juice, non-dairy protein. Even Starbucks announced a limited the Keurig Dr Pepper-owned company launched Mott’s addition to its cold brew line that features an infusion of Sensibles, drinks made with apple juice, coconut water and plant-based protein. a touch of vegetable juice. Each contains approximately Protein waters are said to provide people who sip small 30% less sugar than 100% apple juice. amounts all day consistent energy benefits. Glanbia has Simply Beverages, owned by Coca-Cola, has released a rolled out two new beverage offerings, each with 20 grams light, non-GMO juice drink in four flavors. Orange Pulp Free and Orange with Calcium & Vitamin D contain 50% fewer calories than the brand’s regular juices, while Lemonade and Lemonade with Raspberry have 75% less sugar and calories than traditional lemonade. » According to recent data from IRI, the Early this year, Tropicana, a PepsiCo brand, introduced Chicago-based research organ, 58% of two new juice offerings: Tropicana Kids and Tropicana Coco consumers across generations are steering Blends. Tropicana Kids is made with 45% organic juice and filtered water, but no added sweeteners. Tropicana Coco clear of sugar. Blends is an organic juice drink with a splash of coconut water. Of course, choosing among such offerings requires nec» More than 158 million Americans drink tea essary cold vault spacing in a c-store. on any given day, according to the New York“If we have a cooler section that is designated for water, based Tea Association of the U.S.A. we’ll assign a provided space for the fusion waters,” said Wegner. “Now more than ever, there is value in analyzing » The tea category, including ready-to-drink the movement in our coolers. By analyzing this data, we are beverages, will reach $19.5 billion in sales able to assess what is not moving quickly and replace it with by 2022. an item that might better fulfill our guests’ needs.” CSD

Fast Facts:

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Technology

Energy Efﬁciency

Green Pays Off

for C-Stores Many c-stores are ﬁnding a win-win by instituting environmentally-friendly initiatives that also reduce costs and attract customers. By Erin Del Conte, Senior Editor

n 2018, many consumers, especially Millennials, are serious about eco-conscious choices, from product purchases to water usage and light bulb selection, while cities are following suit with plastic bag and straw bans. Savvy c-stores know that eco-friendly choices, from reducing energy to managing water usage also help reduce costs and resonate with earth-conscious customers. United Dairy Farmers (UDF), headquartered in Cincinnati, Ohio, with nearly 200 UFD c-store locations in Ohio, Kentucky and Indiana, knows ﬁrsthand that a commitment to energy efficiency is not only good for the environment, but also benefits the bottom line.

UDF teams with Springridge Partners to manage its engineering needs. Nearly two decades ago, it began monitoring energy by adding an Emerson control system to each store to track refrigeration, HVAC and lighting. Today, UDF features control systems at all its c-stores. The control systems alert UDF to any system failures quickly, allowing it to use preventative maintenance to avoid a full failure, thus saving on energy and labor. “We create set points and alarms. If, for example, the refrigeration system is not operating properly, and it goes down as the temperature creeps up, then the control system will send an alarm to the store manager and the maintenance staff so some-

All new UDF stores feature 100% LED lighting, which decreases energy and maintenance costs. Adding the Emerson SiteSupervisor to its newest location will allow the convenience store chain to better monitor stores’ energy usage remotely. 86 Convenience Store Decisions September 2018

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Fast Facts: » A control system can alert you to energy loss issues. » Upgrading from T-12s to LEDs at older stores can mean signiﬁcant cost savings. » Reduced emissions programs can aid the environment while attracting customers. body can ﬁx it right away,” said Matt Diepenbrock of Springridge Partners, who acts as the chief engineer for UDF. “For example, if we see the compressor temperature starting to creep up bit by bit or it alerts us that the amps have increased 5% in a short period of time and it looks like the compressor is getting ready to fail, we can swap it out now so it doesn’t go down in an emergency.” The control system allows UDF to determine how much energy the chain is using, and make necessary adjustments. “You can’t manage anything you don’t measure,” Diepenbrock said. One such adjustment was to upgrade the stores’ lighting. All new UDF stores now feature 100% LED cstoredecisions.com

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Technology

Energy Efficiency

lighting. When UDF upgrades an older store from T-12 florescent lighting to LED, it sees roughly a 75% savings on lighting costs. “LED typically uses one-fourth the energy of a typical T-12, but it also allows us to decrease maintenance dollars because we’re not replacing lights as often. We save a tremendous amount of labor hours in not needing to replace the lights,” Diepenbrock said. UDF is also exploring daylight harvesting, utilizing light from windows to reduce the amount of overhead light needed on sunny days. Diepenbrock estimates the stores could turn the LEDs down by 30% on sunny days.

ways to leverage technology in other areas of our business to increase both awareness and engagement of our staff as a whole,” Lindner said. Tim Clifford, director of maintenance for UDF said the SiteSupervisor will give the team “unparalleled access to the energy management system.” “Our staff will be able to access various levels of data via their phones, iPads or computers in the store. We

and we believe that technology integration will allow us to have an even bigger impact on the overall operation,” Clifford said.

MEASURING FOR SUCCESS

Measuring progress helps evaluate next steps. Diepenbrock conducted a high-level energy study at one of the chain’s 10-year-old stores in 20162017. “I put current transformers on every wire in the panel and tracked power usage for an entire year. We learned a lot about what we actually spend our power on.” UDF is embarking on this same study by Springridge Partners at a new store and expects to see a lighting cost drop of 70% due to LEDs, REMOTE ACCESS lighting controls and lighting layout. Most recently, UDF rolled out It’s also looking into ways to further Emerson’s new SiteSupervisor to its reduce water usage, and landscaping newest store location in Sharonville, changes to reduce irrigation needs, as Ohio, allowing it to view the store’s well as considering how water qualenergy usage remotely and see any ity impacts maintenance and life of changes in real time. equipment. “The technicians can log on, see “We are currently reviewing the what’s happening, talk to the store refrigeration system design to furmanager and decide whether they ther reduce our energy usage and need to go to the store or not,” optimize our defrost cycles on the Diepenbrock said. This allows employ- To track energy usage, UDF’s chief engineer refrigeration equipment,” said ees to make the best use of their time put current transformers on wires in the circuit Diepenbrock. “We are also looking instead of driving out to a store for a breaker at one of the stores to track enery usage at changes to our refrigeration boxes false alarm. over one year. to further reduce the energy require“The new Emerson SiteSupervisor ments, increase product quality and is a continuation of our strategy to integrate technology into our opera- anticipate that our maintenance staff to protect against losses.” Des Moines, Iowa-based Yesway, tions,” said Brad Lindner, UDF’s CEO. will be more proactive and better able “This particular technology will allow to manage their time by having these which operates 150 c-stores in our team to be more proactive in new tools available to them,” Clifford Iowa, Kansas, Missouri, Oklahoma, addressing issues before they become said. “It will also allow them to trou- Texas, South Dakota, Wyoming and emergencies and it allows us to main- bleshoot issues much faster in order to Nebraska, plans to acquire, improve tain the quality of our products at a minimize product losses and maximize and rebrand 500 c-stores over the the quality of our fresh foods.” next several years. It looks to add very high level.” UDF plans to roll the SiteSupervisor LEDs to both the interior and exterior What’s more, the system is expected to assist UDF in its plans to out to all store locations, once it of acquired sites. “Exterior LEDs are efficient, and continue reducing the energy it uses in finishes making the necessary adjustments. The maintenance department help bring a modern element to the its operations. forecourt to attract more customers. “By allowing our team to analyze the welcomes the new technology. “Our (maintenance) staff is excited LEDs deliver energy efficiency and trend data, we are able to make intelligent decisions regarding set points, about having these new tools savings on our utility expense, and equipment selections and food qual- available to them. We have been pre- when strategically placed in cooler ity. We will continue to look for new paring for this over the past two years, doors, have the added benefit of bet88 Convenience Store Decisions September 2018

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Technology

Energy Efﬁciency

ter showcasing merchandise to drive ide (CO2) from the atmosphere,” said sales,” said Derek Gaskins, Yesway’s Jason Murray, 7-Eleven’s zone vice senior vice president of merchandis- president for the North Pacific. ing and procurement. The chain also One year in, 7-Eleven has now adds LEDs to the cold vaults and mod- planted 70,000 trees and offset 24,000 ernizes the HVAC and cooling systems metric tons of carbon emissions, and of newly acquired sites, which “deliv- is now expanding RENEW to 142 ers utility savings, and creates a better additional fuel stores and 698 nonenvironment for our team members fuel locations in California, Oregon, based programs including our goal to and customers alike.” Washington and British Columbia, reduce 7-Eleven’s energy footprint in stores and offices by 20% by 2025. We “In the regions we operate… Canada, this September. improved HVAC systems have the “7-Eleven believes it is important decreased energy use (via LED lightpotential to deliver major efficien- to bring innovation and sustainabil- ing, energy management systems and cies to our rebranded Yesway stores,” ity options to our customers. This high-efficiency HVAC units) in stores by Gaskins added. program’s proven success in several 21% over seven years and shifted to renewables i.e. purchasing 100% wind energy in all Texas stores in competiREDUCED EMISSIONS tive energy markets and introducing Irving, Texas-based 7-Eleven Inc. sustainable coffees,” said Murray. partnered with GreenPrint LLC in Twice Daily also partnered with August of 2017 at its stores in Portland, GreenPrint to launch its Thrive proOre., Seattle, and Madison and gram, which has been live for three Milwaukee, Wis., to launch its RENEW states helps us meet our 2025 cor- months, at all 54 Twice Daily locations reduced emissions fuel program. “For every gallon of fuel purchased porate responsibility targets.” Murray in Kentucky and middle Tennessee. in the 7-Eleven RENEW program, an said. “RENEW furthers our efforts to Thrive has already offset almost 26 milinvestment is made in reforestation, reduce our environmental footprint lion gallons of fuel, planted over 4,000 green-scape projects, wildlife protec- and offers customers an opportunity trees and offset a little over 12,000 tion and renewable energy projects to make an impact on the environ- tons of CO2. designed to help reduce car emis- ment, while they pump. RENEW “The Thrive program is offsetting sions. The local, regional and global furthers our ability to make a differ- guests’ cars’ carbon emissions by certified carbon reduction projects ence in the communities where our up to 30%,” said Dawn Boulanger, are designed to remove carbon diox- customers and employees live.” vice president, marketing for Tri Star Energy. “The Thrive program is allowing us to further our reach in and COMMUNITY CONNECTIONS This year 7-Eleven will plant over around middle Tennessee by allowing 100,000 trees in the U.S. through our guests to help our environment a partnership with the Arbor Day without changing their fill-up habits.” Twice Daily Thrive is nationally partFoundation, and at least 10,000 trees in Canada with Tree Canada. 7-Eleven nered with the Arbor Day Foundation, also has a “Plant it Forward” campaign through which it will plant 25,000 where customers can plant a free tree trees in the first two years; GROW Enrichment, through which the team for themselves and a friend. “We are seeing growth in sales at also plants trees; and the Nashville participating fuel locations, which can Tree Foundation to give away 800 be attributed to the community support trees at eight local farmer’s markets this fall during “Tree Fest.” of the RENEW program,” said Murray. “We constantly hear from guests “We believe that corporate responsibility is a pillar of what makes us a that they love what the Thrive prothriving organization. We take our gram is bringing to the local areas,” responsibility as a global citizen seri- said Boulanger. “We’re also finding This year, 7-Eleven plans to plant 100,000 ously. Our corporate responsibility exciting ways to be more involved in trees in the U.S., as well as at least 10,000 goals include several environmentally- our local communities.” CSD

north of the border in Canada.

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CStoreDecisions ecisions .com

CStoreDecisions.com is geared toward C-Store retailers, convenience store suppliers, and distributors looking to stay abreast of industry trends, new product offerings and category management best practices.

Thank you to our Key Partners:

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Bypass Apprehending Shoplifters Sometimes a good theft deterrent is as simple as saying hello. By Bill Bregar

have never been a fan of apprehending shoplifters. It’s messy: Observing them covertly, following them, stopping them, searching them, then calling and then holding them for the police, who seem to take forever to show up. Actually, I started my career as a police officer. I left that world early on and went into loss prevention and have been there for the last 35-plus years. The reality is that unless you are absolutely forced to, your staff shouldn’t feel inclined to apprehend a shoplifter in the store or in the parking lot. It’s a losing game financially. It takes you away from your core business— selling. Also, the liability involved in possible injury or worse, isn’t worth the risk. So what do you do to protect your property from threats of theft? How do you run shoplifters off without the help of authorities? Remember that the police aren’t there to prevent anything. They are there to react after the fact. There are only two means to adequately shut down the threat of shoplifters. The first is something most

“

Over half of all shoplifters are “impulse” shoplifters. That means they only steal when a store employee provides them ample opportunity to steal store merchandise.

”

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Bill Bregar is is a loss prevention specialist with more than 35 years of loss prevention experience, He can be reached at (770) 4267593 or at bbregar@ LossPreventionSystems. com.

retailers already know: customer service. Currently you use customer service as a tool to sell. What some cstores should better understand is that customer service is also a weapon to combat shoplifters. Over half of all shoplifters are “impulse” shoplifters. That means they only steal when a store employee provides them ample opportunity to steal store merchandise. Many reliable studies over the years indicate that if an impulse shoplifter is greeted when they enter your store, it’s likely that they will not carry out stealing merchandise at that time. Just a cashier saying something like: “Welcome to (store name). How can I help you?” or “Welcome. I will be with you in a moment,” lets all of your customers know that the store staff acknowledge their existence in the store. This lets the impulse shoplifter know you are aware of their specific presence and are alert and watching. The same studies have shown that this is enough to deter them from stealing during that visit. Think of it. Over half of all shoplifters can be deterred by simply welcoming all customers. That doesn’t cost you a thing except the good will that develops by greeting every customer. BIRDS OF A FEATHER The other segment of shoplifters fall into two other groups: amateur and professional. Amateur shoplifters usually steal mainly to keep the merchandise. They have entered your store with the intent to steal, not for selling the items. Amateur thieves may give it to someone, but that is about the extent of the crime. While the amateur thieves category also includes the impulse shoplifter, who for whatever reason is compelled to steal merchandise, most amateurs are more determined than an impulse shoplifter. Professional shoplifters make their living from stealing from retailers. They steal your goods and then resell

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8/24/18 1:45 PM

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Technology

Security

them, usually to a middleman, for about 10 cents on the dollar, so volume is very important to them. Often, pros bring devices such as bags or clothing with them that are modified to hold your merchandise. Many amateur and a few professional shoplifters are often deterred by the aforementioned greeting, but chances are a convenience store operator will have to apply a higher level of customer service. This will involve

approaching them and going a step further. Imagine this: You suspect that someone has concealed a piece of your merchandise. Let’s pick something common to a c-store like a few candy bars. Approach them and ask, “Would you like a soft drink to go with your candy?” If it’s a legitimate customer who picked up the items, he or she will acknowledge the employee without guilt and without trying to hide the merchandise. Instead, the opportunity to upsell the customer may produce a real sale. How about: “We have a special on (fill in the blank) right now and that would be great together,” or something like that. Keep the customer service going and in the end, strategic communication will pay dividends. 94 Convenience Store Decisions September 2018

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ARM’S LENGTH But what happens if they are a shoplifter and they concealed the candy bars? In this case, just approaching shoplifters often makes them believe you saw them conceal the merchandise. Their mindset is theft and they know they have concealed merchandise. So what happens? Well, they could bolt out the door. This is a good time to bring up something I was taught as a police officer. Always stay an arm’s length and a beer bottle away from someone in a potential adversarial situation. If he bolts, let him go. He knows you, he is a shoplifter with a blown cover and chances are he will not return. If he does, call the police and tell them what happed on the date he was last in the store. In this case, you may have lost the battle (merchandise), but won the war (shoplifting prevention). The second way that you can shut down shoplifters is to use an Electronic Article Surveillance (EAS). This is a technological method for preventing shoplifting from retail stores. If you aren’t familiar with EAS, there are plenty of consultants in the field who can answer your questions. You also need to understand a little bit more about the shoplifter themselves. About a quarter of all nonprofessional shoplifters (those who shoplift “to resolve personal conflict,” rather than for resale and profit) admit to being repeat offenders. A substantial majority of both adult and juvenile shoplifters say they never considered the possibility of being caught. And a majority of both adult and juvenile shoplifters admit that they did not plan to steal. Rather, the decision to shoplift occurred on impulse. In terms of technological solutions, camera systems do very little to stop shoplifters in a lot of cases. Those who are brazen thieves sometimes don’t care that you have cameras. Chances are they will be gone by the time you see anything on a system. Camera systems are great for robbery prevention and looking at the suspects after the fact. CSD

cstoredecisions.com

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The convenience store industry’s young executives and next-generation leaders face unique challenges as they grow their businesses in the fast-paced, competitive convenience store market. The National Advisory Group’s (NAG) Young Executives Organization (YEO) was formed specifically to addresses these challenges and help the industry’s leaders of tomorrow identify solutions with others in their age group. YEO exists to serve as an effective conduit for getting young professionals more involved and prepared for leadership positions both in their companies and in the broader convenience store industry. YEO membership offers next-generation leaders a network of other young leaders in similar positions. The group meets twice annually at the YEO Conference in the spring and the NAG Conference in September.

For information on joining YEO contact NAG Executive Director John Lofstock at jlofstock@csdecisions.com. THANK YOU TO OUR 2018 YEO CONFERENCE SPONSORS:

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Operations

Column

Options Fuel Acquisition Frenzy

Mark Radosevich is president of PetroActive Real Estate Services LLC, offering confidential mergers & acquisition advisory, representation and financing services exclusively to petroleum wholesalers. He can be reached by email at mark@petroactive.net and directly by phone at (423) 442-1327. His professional bio and other company info can be found at www. petroactive.net.

The economy is open to convenience retailers intent on upgrading their operations. By Mark Radosevich

he ongoing waves of petroleum industry consolidation and acquisitions have been the news of late, but not much has been reported about the corresponding financing environment that has been its catalyst. In preparing this article, I discussed the subject with various well-known petro-lenders and sale leaseback investors to gain a better understanding of the business today and help bring some clarity as to various borrower preferences and motivations, based upon two primary operational models. Prior to diving into the subject, it’s worth noting a few quiet elephants in the room: the growing national debt, budget deficits and resultant higher interest rates. Our national debt obligation currently equates to $65,000 per person or $175,000 per taxpayer. The key takeaway is the uncertainty as to where interest rates are headed and how that will affect existing mortgages with periodic rate adjustments, new mortgages and sale/leaseback rent capitalization rates. Higher interest rates will negatively influence acquisition multiples, as cash flows must cover higher payments and rents. But, let’s focus on the here and now, while financing options are plentiful, interest rates and lease cap rates are low and quality c-stores still trade at high valuation levels. DEBT FINANCING The store acquisition end game for traditional marketerbuyers is to grow equity for future generations of the business, using debt financing and the gradual extinguishing of mortgages to yield ingrained equity. On the flip side, as mortgages are paid down, depreciation and interest tax deductions are also diminished and depreciation recapture becomes a reality when the properties are eventually sold. This deliberate slow grow strategy is exactly what industry lending institutions are looking for. They strive to form long-term relationships with established quality operators, running quality stores for the funding and facilitation of growth and operational upgrades. In today’s highly acquisitive market, a debt financing 96 Convenience Store Decisions September 2018

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approach has shut out many traditional marketers from choice acquisition opportunities, as high purchase multiples have stretched beyond traditional lender limitations. This requires higher levels of buyer equity investments or more creative financing structures that few marketers are willing to embrace. To grow in this environment, marketers are relegated to finding quiet deals that fly below the radar. SALE LEASEBACK For store operators, income is the end game. Having equity tied up in real estate is a drag on operational growth and limits income potential. These operators tend to be equity groups or investors that use sale leaseback financing to make acquisitions with reduced investments of their own cash. The higher advance rates that sale leaseback provides is a key contributor to the run-up in purchase multiples and acquisition prices. Leasing allows full tax deductibility of rent payments through the life of the lease versus property ownership where interest and depreciation tax write-offs diminish through time. Most institutional leases contain various covenants designed to protect the investor/landlord including assignment clauses that limit the lessee-operator’s ability to exit a site by transferring the lease to another operator without the landlord’s consent. Lease transfer consent usually requires the assigned-party to have a credit rating equal or better than the current lessee-operator. All told, lease transfers work well when the lessee-operator is able to improve store profitability and resultant enterprise value and then flip the lease to a larger entity while pocketing upside proceeds. Conversely, when a once profitable site becomes significantly impaired due to new competition or other reasons, a substitution clause helps mitigate the downside by allowing the lessee to exit the site by substituting another property in its place.

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Lease transfers work well when the lessee-operator is able to “ improve store profitability and resultant enterprise value and then flip the lease to a larger entity while pocketing upside proceeds. ” Lease rates are based upon a number of criteria including the strength of the operator, geographic area of operation and location of the subject properties, with urban or suburban being preferred over rural sites. The investors ultimately assess the value of the underlying real estate in case they have to take the store back in the future. Concentration is another risk analysis factor, whereby investors assess the current number of leases that they already have in a given market or with an individual lesseeoperator and try to avoid having too much concentration in either area. MARKETER EXIT Preservation of equity is a primary exit consideration for traditional petroleum marketers. Through time, reduced debt and fully depreciated stores leaves many with a significant amount of capital gains and depreciation recapture that will significantly erode proceeds from a sale. Tax and estate planning must go hand-in-hand with strategic business planning to help avoid last minute scrambling once the business is marketed and an acceptable purchase offer is obtained. Few things are more disconcerting than to inform a willing and able buyer that you can’t ultimately accept a previously acceptable offer because some last minute tax related considerations arose. One tax mitigation approach is to sell the business enterprise and enter into a marketable lease on the stores with the buyer. Depending upon the financial strength of the buyer, the lease may be sold sometime in the future to another investor and the proceeds retained as cash or substituted for another non-petroleum related lease using the IRS 1031 provision. This capital gains deferment method allows one property to be exchanged for another like kind property. Leasing the stores preserves equity and provides consistent rental income from that equity. One downside of this exit strategy is that a leasing provision will limit the number of qualified buyers that will assess the deal. For highly profitable stores of a modern configuration, the chances are great that a significant number of pro-leasing pure store operators (as discussed above) will participate in the sale. Better tenant quality will improve the value of the lease cstoredecisions.com

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while enhancing the chances to sell the lease to a third party investor. Many marketers reject the idea of taking back a lease and prefer to pay the tax; for fear that they may someday be forced to take back an impaired store after they’ve fully exited from the industry. The following example may dispel those fears: Leasing of the Subject Store: (EBITDAR = Earnings before Interest Taxes Depreciation Amortization and Related Entity Rent)

1. EBITDAR is $100,000, buyer pays 3.5 times for the Business Enterprise = $350,000 cash at closing. 2. Buyer enters into a lease for 50% of EBITDAR, Annual Rent = $50,000 per year or $4,167 per month. 3. In seven years the lessee-operator will have paid back an amount equal to the Enterprise Value ($350,000) yielding total proceeds of $700,000 or a seven times multiple of EBITDA (an amount the store would have sold for in the beginning), and the marketer still owns the store. 4. Should the marketer garner a quality tenant, the lease may be sold to an investor at an attractive rent capitalization rate. Using a cap rate of 8%, the lease with $50,000 in annual rent is now worth over $625,000. When added to the initial business enterprise proceeds, the overall store value increases to $975,000 versus $700,000 if it was initially sold for a seven multiple of EBITDAR. When considering the tax savings, rental income and potential upside, a fear of someday getting the stores back seems unwarranted. In summary, given the current and continuing low interest rate environment, there is a lot of capital out there looking for a place to park. The window of opportunity for high valuation multiples, fueled by multitudes of willing buyers and their lenders, will begin to close as interest rates rise. Marketers that are contemplating an exit should pragmatically consider taking a sooner-than-later approach, while buyer and lender appetite is high, rent capitalization rates are low and before traditional valuation levels return. CSD

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Operations

Column

Acting on Data Analysis Asking simple questions of your scan data can help improve operations and increase sales. By Jeremie Myhren

ost convenience stores today are collecting scan data, but that’s only half the battle. Knowing how to maximize your data analysis to drive sales, best the competition and improve your bottom line is the ultimate goal. In order to continue down the path to that goal, start thinking of what questions you wish to ask of your data, and ensure it can answer them for you. Today, many convenience stores are using scan data to complete a thorough consumer analysis, which can bring strategic advantages. Tracking your consumers’ shopping habits allows you to target them with offers that better resonate with their preferences, which means it’s more likely to inspire sales. Evaluating your competition’s strengths and weaknesses and then measuring that against your own can likewise reveal new opportunities within your own business plan.

ASKING QUESTIONS To further improve your bottom line, ask the following questions of your company’s scan data: • What are we going out of stock on? What is the margin impact of those lost sales? Using basket analysis, what items that normally pair with the out-of-stock items are also not being sold as a result? Communicate these findings and understandings to your teams and suppliers. • Are we suffering from phantom out-of-stocks? Merchandise stuck in the backroom or in wholesaler’s tote is as bad as an out-of-stock, if it is not on the shelf ready to sell. Reporting on items that commonly sell and show as in-stock but have gaps in sales can help you identify these costly phantoms, and as a result you can better optimize key delivery times and your labor on hand to unpack those deliveries. • What items have a statistically higher than average association with each other? Knowing the common associations, you can create relevant combination offers and ensure products are placed in a way that removes friction from a customer’s ability to buy them together. Don’t make the mistake of only looking at this globally. Look to individual stores to understand what works. In some cases, you’ll discover associations in a single store that are a result of accidental optimization that you can then apply to the rest of your chain. 98 Convenience Store Decisions September 2018

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Jeremie Myhren has been managing IT in the convenience retail industry since 2000. He is presently the chief information officer (CIO) for Road Ranger LLC in Rockford, Ill.

• What patterns exist that you have not recognized or could not possibly recognize on your own? Big data and machine learning related developments have created new ways of understanding and responding to data. Perhaps four of your stores are within a one-mile radius of a school. You may not even be aware of those stores shared association with schools, but that association is hiding in your scan data. Machine learning algorithms can detect those patterns, helping you to then merchandise and market locally based on them.

“

Look to individual stores to understand what works. In some cases, you’ll discover associations in a single store that are a result of accidental optimization that you can then apply to the rest of your chain.

”

• Are certain key products/categories lagging in certain stores as compared to your chain overall, or as compared with your best performing stores? Maybe it is time to invest in some new ice chests, or change the way high value items are merchandised in certain areas to encourage sales and reduce friction for the customer who may be a potential buyer. • What items in a given store haven’t moved in the last quarter? How about the last year? How about longer? Even the most sophisticated retailers who do a great job of working with their scan data sometimes overlook this simple way of looking at scan data and have been surprised to see items on-hand that haven’t moved in longer than five years. How much of your working capital is tied up in dead inventory that makes for full shelves but is otherwise doing nothing for you?

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PRODUCTShowcase Hybrid Beverage ZICO COCO-LIXIRS is a fusion of the new ZICO Chilled Organic coconut water and organic, coldpressed juice. This ﬁrst-of-its-kind cross-category hybrid beverage taps into both the coconut water craze and the cold-pressed juice trend. An industry breakthrough, ZICO COCO-LIXIRS uses organic coconut water as a base, which is naturally low in sugar and calories, loaded with electrolytes and delivers a fresh, smooth drinking experience. The innovation is then combined with the nutrient density and greensin-a-bottle goodness of cold-pressed juice in one convenient package. ZICO COCOLIXIRS is available in three ﬂavors: For Lemon’s Sake (organic coconut water, lemon juice, pineapple juice, ginger and turmeric); Unbe-leaf-able (coconut water, cucumber, celery, kale, spinach, lemon, parsley and ginger); and Turn Up the Beet (coconut water, carrot, blueberry, apple, beet, lemon and baobab).

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

Conveyor Toasters Hatco Corp.’s industry-leading, redesigned TQ3-10 Toast-Qwik Conveyor Toaster has a modernized, patent-pending design and guarantees the best ﬂexibility and performance available to provide consistent uniform toasting. The TQ3-10 uses the patented ColorGuard Sensing System to monitor and adjust conveyor speed for consistent toast results, even during peak serving periods. A Power Save mode is activated by pressing the power save button to conserve energy. The model features an air intake ﬁlter, which is removable for easy cleaning. The TQ3-10 is available in standard Designer Black to match your décor.

Company: Hatco Corp.

(800)-558-0607 • www.hatcocorp.com

Bubbler Program Sunny Sky Products LLC has introduced the new line extension from Pure Craft Beverages. The new Pure line includes hand-crafted bubbler juices, teas and lemonades that will give consumers the ultimate beverage experience they have been craving. With a wide range of flavors offered, Pure Craft Beverages boasts superior flavor quality, with a pure difference you can taste. The Pure line is perfectly balanced with a mix of traditional flavor offerings as well as more complex and on-trend flavors that will add excitement to your bubbler program. The flavor spectrum consists of refreshing classics such as Berry Tea and Strawberry Watermelon to our innovative lineup consisting of Ginger Pear and Raspberry Hibiscus Tea. The “crafted for you” beverages are made with real sugar, real juice, natural flavors and are free of high fructose corn syrup. Pure Craft Beverage Bubblers are sold in .5-gallon bottles.

Kitchen Connections Delfield, a global brand of Welbilt that offers high performance quality refrigeration, fabrication, and serving systems for the foodservice industry, is revolutionizing the reach-in category with its new Specification Line that offers customers 24/7 connectivity, ease of operation and energy efficiency. Delfield’s new Specification Line features a 4.3-inch display, euro design and GreenGenius R290 refrigeration, Delfield’s most advanced, energy-efficient, environmentally-friendly hydrocarbon refrigeration system. The new Specification Line provides the peace of mind operators need. If you are offsite, use our app to connect all your locations and view all equipment with one click. If you are onsite, the innovative and intuitive control panel provides all your kitchen data and you can easily access it by swiping across the screen. Delfield’s Specification Line features easyTouch technology.

Company: Welbilt www.delﬁeld.com

Company: Sunny Sky Products www.sunnyskyproducts.com cstoredecisions.com

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PRODUCTShowcase New Pizza Rolls Truffle 3-Packs Alter Eco, a chocolate-centric, sustainability-directed snack company that takes healthy indulgence to a whole new level, is launching Truffle 3-Packs for its Sea Salt, Mint Crème and Salted Caramel Truffles. Rolling out at retailers in September and October, the portion-friendly pack size makes it easy to enjoy an enlightened indulgence crafted with nourishing, next-level ingredients. Each truffle is rich and velvety, featuring a smooth dark Ecuadorian chocolate shell on the outside, with a blend of cacao, creamy milk and pure coconut oil on the inside. By using coconut oil, Alter Eco offers a sustainable alternative to palm kernel oil, which leaves a negative environmental impact through its conventional production. The truffles are also free of soy, emulsifiers and artificial flavors, and are USDA Organic, Certified Fair Trade, Non-GMO Project Verified, Carbon Neutral Certified and Certified Gluten Free. Alter Eco Truffle 3-Packs will launch in single packs and 12-count trays with a retail price of $2.99 per three-pack.

Company: Alter Eco Sales@alterecofoods.com

www.alterecofoods.com

General Mills Convenience is bringing one of America’s favorite snack items to the foodservice area of convenience stores. Totino’s Pizza Rolls, small bites of pepperoni pizza rolled in a snackable crust, allows retailers to offer their customers a hot, ready-to-eat snack option from a nostalgic brand. The packaging, exclusive to convenience stores, features two opening options for easy onthe-go eating. Shipped frozen, Totino’s Pizza Rolls are easy for convenience store staff to prep and package in store. The frozen pizza rolls are warmed in-house, packaged in the convenient grab-and-go container and placed in a warmer or hot holding area. General Mills also offers a number of point-of-sale marketing materials such as window clings, shelf tags and more. SRP: $1.99

Company: General Mills Convenience

(800) 767-5404 • www.generalmillscf.com

St Pierre is introducing the Brioche Popover to retailers nationwide. The Popover is a deliciously light brioche pastry with a sweet, flavorful filling baked into the dough. While similar in appearance to a classic breakfast muffin, the new Brioche Popover is anything but ordinary. It is airy and delicate with a buttery crumb, soft texture and moist filling swirled throughout it. The Brioche Popovers launched in August in three flavors—vanilla, chocolate and cinnamon. The Popovers come in retail packs of two to satisfy the increasing demand for on-the-go snacks. Whether pairing with your morning coffee, looking for an afternoon pick-me-up or indulging in an after-dinner treat, St Pierre Brioche Popovers are perfect for any meal occasion.

Company: St Pierre

(586) 447-3500 • www.stpierrebakery.com

Performance Beverages Kill Cliff, the maker of clean, advanced performance beverages, is kicking off summer 2018 and peak beverage season with the launch of IGNITE, a clean energy drink for the tenacious warrior in all of us. Kill Cliff IGNITE clean energy drink joins ENDURE clean endurance and RECOVER clean recovery to offer a complete beverage solution that meets pre-, during and post-workout needs for athletes of all ages, missions and levels. With its expanded product offering, Kill Cliff is releasing new, refreshed packaging with a robust design better communicating the brand and product benefits across all three beverage lines. The full system of IGNITE, ENDURE and RECOVER Kill Cliff products will be available in retailers across the U.S. IGNITE (12 ounces) is consumed for energy before a workout or when you hit that mid-day crash, and offers clean energy and hydration with a specialized blend that includes 150-milligrams of natural caffeine (green tea, ginger, ginseng), B-vitamins, and electrolytes (potassium and magnesium at 10% daily value, surpassing that of other leading pre-workout/energy drinks). At 25 calories per can, IGNITE is lightly carbonated for a killer taste and contains no sugar or artificial flavors and colors.

Company: Kill Cliff www.killthequit.com

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Popovers to Go

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PRODUCTShowcase Game Has Changed Swedish Match North America’s Game brand has redesigned the look and feel of its packaging across all 13 everyday items to provide a fresh and clean look for consumers. With bold colors, each FOILFRESH pouch is easy to identify for both consumers and retailers. Game’s cigars remain the same, a blend of the ﬁnest tobaccos from around the world, providing a sophisticated smoking experience for most. Game cigarillos are available in “2 for 99 cents,” “2 for $1.49” and “Save On 2” formats.

Company: Swedish Match North America (800) 367-3677 • customer.service@smna.com

SuperfoodInfused Granola

Undercounter Freezer

Lehi Valley Trading Co. has introduced soft baked granolas that are handcrafted in small batches with the freshest ingredients. Simply Forage Granola includes superfood grains, nuts and seeds, and fruit all blended together for a one-of-a-kind granola experience. Full of hearty and delicious ingredients like Puffed Wild Rice, Quinoa Puffs and Cranberry Seed, mixed with Pepitas, Coconut, Pecans, Filberts, Apricots, Cranberries, Apples and Currants, and rounded out with Rolled Oats and Honey – every bite is a tasty adventure. SRP: $3.99 for 10 ounces. Cranberry Orange Pistachio Granola is the perfect granola to add some zip to your day. Fresh and tart Orange Zest and Cranberries, blended with superfoods like Chia Seeds, Pepitas and Pistachios are sure to brighten up your breakfast. Add in hearty Rolled Oats, sweet Honey, and crunchy Almonds and you have a well-rounded, not to mention delicious way to keep you fueled all day. SRP: $3.99 for 10 ounces.

Hoshizaki America Inc. has introduced an undercounter freezer with glass doors and LED lights to its refrigeration line up. The 27-inch wide cabinet, CRMF27-GLP01, includes 7.2 cubic feet of interior storage, one spring assisted self-closing/stay open hinged glass door with a lock, and includes one adjustable epoxy coated shelf. The glass door low profile unit is front breathing to fit in tight spaces and at only 31.9 inch tall on 2.25-inch casters it is ADA compliant. The cabinet is constructed with stainless-steel exterior front, sides and top, as well as, a stainless- steel interior with energy efficient LED lights on a switch. All units are engineered to maintain food-safe temperatures even in +100 degree kitchens. In addition to this new model, HOSHIZAKI continues to manufacture 27-, 36-, 48-, 60-, and 72-inch wide undercounters with stainless-steel doors and/or drawers. Single and double overshelf kits are also available for all cabinets.

Company: Lehi Valley Trading Co. www.lehivalley.com

Company: Hoshizaki America www.hoshizakiamerica.com

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BFY Sausage Options Johnsonville is introducing a new Applewood Smoked Chicken Apple Split Sausage for customers seeking a better-for-you sausage option without compromising on flavor. The new naturally smoked chicken sausage has real pieces of apple, about half the fat and calories of a pork sausage, and is the first chicken sausage in Johnsonville’s Smoked Sausage line for foodservice customers. The split format of the Applewood Smoked Chicken Split Sausage is an ideal addition for summer menus, perfect for sandwiches, panini, eggs benedict and breakfast sandwiches. The presplit butterflied sausage link allows for more versatility in the kitchen, fits on a variety of bread carriers, and provides a new experience for customers seeking interesting menu offerings. Chicken sausage is a great way to lighten dishes while also offering a satisfying protein that is lower in calories and fat. Being free of gluten and MSG, the Applewood Smoked Chicken Split Sausage also fits the lifestyle choices of today’s consumers. It’s frozen for storage convenience, and available 10 pounds to a case.

Company: Johnsonville

(800) 837-5391

www.foodservice.johnsonville.com

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PRODUCTShowcase Mount Windshield Center

Chocolate Chip Muffins Otis Spunkmeyer has introduced a new Chocolate Chip Muffin to its popular Delicious Essentials foods. Made with whole grains and rich chocolate chips, the new Delicious Essentials muffins meet school nutrition standards, for both breakfast entrees and Smart Snacks, without sacrificing taste. The perfect snack any time of day, the Chocolate Chip Muffins are available in a two-ounce size. The muffins are individually wrapped to stay fresh for 21 days at room temperature once thawed, making them convenient to store and serve for foodservice professionals. These Chocolate Chip Muffins expand the broad offerings of Otis Spunkmeyer Delicious Essentials that are made for convenience, from frozen pre-portioned cookie dough to thaw and serve muffins and meet even the most stringent school nutrition standards. Existing flavors of the Delicious Essentials muffins include Blueberry, Banana, Chocolate Chocolate Chip, Apple Cinnamon and Corn.

Company: Otis Spunkmeyer www.aryztaamericas.com

The TwoFold Pole Mount Windshield Center is uniquely designed and manufactured with convenience and accessibility in mind. This efficient, attractive and innovative fixture has every essential feature for your forecourt area: single or double washer bucket, dual & lockable C-fold towel dispenser, and ample ad space. Your customers will love the ergonomic access to squeegee and windshield fluid, the ease to dispense towels and they will take a closer look at your promotions for in-store sales that can be prominently displayed on the front of the unit. Your staff will appreciate the minimum maintenance and labor required to keep this unit at optimal performance. The TwoFold Pole Mount is made of strong plastic material for longevity and to resist impact, scratches or dents. It has added UV inhibitors to preserve its fresh appearance and to prevent color fading from exposure to the elements. Unit includes a secure mounting block for easy installation and can be attached to round poles, concrete, brick and other types mounting surface. Your customers will benefit from the user friendliness of the TwoFold Pole Mount Windshield and your forecourt will look refreshed, tidy and more inviting with the addition of this great unit.

Company: Forte Products

(816) 813-3337 • dhimes@forteproducts.com • www.forteproducts.com

Now With Fudge Nougat Milky Way introduces Milky Way Fudge in both Share Size and Mini SUP (Stand Up Pouch). New Milky Way Fudge delivers a magnificent combination of rich fudge nougat covered with a layer of smooth caramel, enrobed in creamy milk chocolate. This delicious, limited-edition item featuring a fudge-flavored nougat makes this treat the richest flavor of Milky Way fans have tasted yet. The introduction of Milky Way Fudge marks the newest Milky Way flavor since the release of Milky Way Simply Caramel in 2010. All Milky Way flavors are filled with a layer of caramel on top of the nougat and then covered in chocolate. Milky Way Fudge differs from the other Milky Way flavors by being filled with fudge-flavored nougat. The fudge-flavored nougat in Milky Way Fudge bars makes this treat taste even richer than the already delicious Milky Way flavors. Milky Way Fudge is currently available at retailers nationwide and will be available throughout the end of 2019. SRP: $1.99 Milky Way Fudge Share Size bars and $2.99 for Mini SUP.

Company: Mars Wrigley Confectionery www.mars.com

Uncured Turkey Franks Diestel Family Ranch is introducing Uncured Turkey Franks, a high-quality frank. Made with whole-muscle, butcher cuts of thigh meat and smoked on real hardwood for premium taste and texture, Diestel’s turkey franks are crafted with care for a super satisfying eating experience. Diestel’s Uncured Turkey Franks are made from thoughtfully-raised turkeys given individual care, a wholesome 100% vegetarian-fed diet, plenty of fresh air and room to roam. The product is also completely free of antibiotics, nitrates, nitrites, gluten and carrageenan, low in fat, and only 75 calories per frank. Diestel’s Uncured Turkey Franks are available to retailers and foodservice customers nationwide. The product comes in 12-ounce packages.

Company: Diestel Family Ranch info@diestelfamilyranch.com

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Classifieds /Ad Index Altria Group Distribution Co. Apter Industries 800.441.7146 / www.apterindustries.com

cover story Avery Dennison www.averydennison.com/freshmarx Blu www.blucigs.com

Hershey www.hersheysolutions.com

Pierce Chicken 800.336.9876 / www.poultry.com

Home Market Foods 800.367.8325 / www.HomeMarketFoods.com

Pizza Hut www.yum.com

Hoshizaki America www.hoshizakiamerica.com

Prairie City Bakery 800.338.5122 / www.pcbakery.com

Hussman 877.543.6034 / www.convenience-works.com

R. J. Reynolds www.EngageTradePartners.com

Brakebush Retail Inline ThePlastics new store looks to invite guests to Boosting 46-47 28-29 800.933.2121 800.826.5567 / www.inlineplastics.com stay a while and visit—like old country While quite a bit of attention is www.brakebush.com/conversation JUUL from yesteryear. To help encourpaid to team members, a keen focus stores 74-75 www.JUUL.com/retail/wholesale Cash Depot age guests to hang around, RaceTrac remains on offering an unsurpassed 59 800.776.8834 / www.cdlatm.com Kent Companies more seating, digital screens,104 free convenience store offering. RaceTrac's added www.thekentcompanies.com CB4 Wi-Fi service and in-store music. Other 6,800 team members continually aim 87 646.776.0293 / www.cb4.com Krispy Krunchy include a coffee bar, 12 freshto deliver a "wow" retail shopping features 41 800.290.6097 / www.krispykrunchy.com Cheyenne International 25 brewed teas, 24 frozen beverage flavors, experience. Emphasizing employees 866.254.6975 / www.cheyenneintl.com KT&G of frozen yogurt with some 40 and ramping up foodservice opera- 10-flavors 5,7,9 www.ktngusa.com Click It 93 toppings and a walk-in beer cooler. tions has seen revenue grow 80% per www.clickitinc.com Liggett Vector Brands 71 “We have been looking to make our store in five years. 877.415.4100 Danone North America stores more friendly to our guests,” As consumer demand for faster 888.620.9910 52-53 Little Caesars 13 Lenker, a close Bolch family confitransactions and convenient retail said www.DanoneAwayFromHome.com 313.471.6764 / www.LCEcorp.com solutions has reached an all-time high, dant, who will retire Dec. 31 after more Del Monte Fresh Little Debbie 61 57 than 40 years with RaceTrac. “We have RaceTrac by introducing 800.950.3683responded / www.freshdelmonte.com 800.315.6208 / www.LittleDebbieCStore.com its largest retail prototype to date. The worked hard on the interior. We have E-Alternative Solutions McLane Company had a great gas design. But 63 we company 888.727.1841in late 2012 debuted its new always www.mclaneco.com/coldchain 27 www.LeapVapor.com have improved our food offers and retail format in Acworth, Ga. NicoGen Pharma Solutions www.cuevapor.com 79 17 quality/ of everything in the store. The new store design stands at about the 516.693.7367 www.RogueNicotine.com Gulfcoast Software Solutions, Inc. Guests have a reason other than gaso6,000 square feet. RaceTrac President 3 North American Bancard 727.449.2296 / www.gulfcoastsoftware.com 103 to come/ www.nynab.com and see us.” Max Lenker said RaceTrac worked on line 866.481.4604 Hatco All of the company's stores going forthe project for “six to eight years.” 55 Oberto Brands 877.234.7904 / www.cattlemanscut.com

888.815.8460 / www.hatcocorp.com

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l November 2014

107

Raybern’s ward will be this format, Lenker added. 49 www.rayberns.com “We are looking at our old stores to see Ruiz we Foods how can remodel them to be similar. 45 www.ruizfoods.com Lots of times we are constrained by real Smokey estate orMountain parking,” Lenker said. 77 www.smokeymountainsales.com/airio/ Part of the redesign was recognizSonic ing that guests crave convenience and 43 866.332.9049 / www.sonicfranchises.com that c-stores have the capacity to offer Spark Vapor so much more. 33,81 800.280.8089 / www.sparkvapor.com "We are well beyond the days of Stryve 15 narrowing our offering to gasoline, www.stryvebiltong.com cigarettes and beer," Moran said. "As Subway 40 we saw demand soar for a wider vari203.877.4281 / www.subway.com ety of consumables, we realized our Swisher International retail offering could be redefined 108 not 800.874.9720 / www.swisher.com by our history, but by the needs of Tomlinson Industries 105 our guests./ Naturally, things like beer 216.587.3400 www.tomlisonind.com and cigarettes are retail mainstays, Tyson Convenience 35 but new guests now think of us when 800.682.7272 / www.tysonconvenience.com they are headed for lunch or looking Wilbur Curtis 51 towww.wilburcurtis.com bring dinner home to their families. Providing a great, upscale offering has

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INDUSTRY

Perspective

How to Create Compelling Foodservice Follow these top 10 steps to ensure your foodservice offering is positioned for success. By John Schaninger

n today’s convenience environment, do you need to have a compelling food offer? The answer is a resounding yes. If you’re new to foodservice or limited in your current offer and have a desire to expand, there are several items to consider to improve your program. Today, we will focus on 10 key considerations.

1. Determine why you want to sell food. Are you losing traffic to declining fuel and cigarette trips? Is there a competitor in the market with an attractive offer that is pulling customers? Do you want to drive higher gross profits? All (and more) are valid reasons. 2.

Where do we begin? It’s been often said in our business that if you own the morning, you own the day. Maximize your breakfast offer, and then when you think you have it…improve it again…and again…and again. Once you have all processes and systems perfected, and are consistently able to execute breakfast, then it may be time to consider expanding to other dayparts.

3. What food category should you focus on? Where is the opportunity in your market? Can you offer a great sandwich, or is a great fried chicken offer what is lacking or perhaps a phenomenal burrito offer priced right? Measure the opportunity as part of your assessment. 4. Assess your company capabilities and commitment. Commitment begins at the top. Adding a foodservice operation is not the same as taking in the newest snack chip or candy bar. Think about your biggest investments: real estate, fuel and people. Foodservice is just as important and just as long term. Commitment at all levels, from senior management through all store operations and the support center, is paramount. To that end, you should develop a corporate structure that facilitates process and systems, and the people to manage them. Where does that person, or persons, fit in? Do you have the correct people for food development and daily management? 5. Assess your distribution partner. Is your current grocery distributor forward looking and food focused? 106 Convenience Store Decisions September 2018

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Should you assess the need for a foodservice partner or a local foodservice operator to provide fresh-made direct delivery?

John Schaninger is the owner and marketing expert at The Schaninger Group. He can be reached at john@theSchaningergroup.com.

6. Don’t forget advertising and promotions. There are a few keys to driving food sales: innovation, promotions and limited time offers. There is a reason that the local coffee shop always has some new variety to offer, typically for a set time period—it drives sales! Great promotions drive trial, and if it’s a great product, repeat sales. 7. Choose between proprietary or branded. There are pros and cons to proprietary or branded foodservice from advertising, systems and processes, to the effects on sales and net profitability. Be careful in analyzing, again, reviewing your current and future capabilities. 8. Create a quality/value strategy. “I want to sell the best sandwich anywhere.” Yes, you can, remembering there are cost of goods and retail factors to analyze. Assess the market, know the competitors, and find your best price point and quality for your customers. 9. Develop a strong plan. You wouldn’t build a store without a ground up plan would you? Of course not, and foodservice needs long-term and short-terms plans to drive people, products and profits. 10. Know the near future. What does the future bring? Read the trade and restaurant magazines and go to the shows. Follow the bloggers. One of the best ways to learn what’s happening is to take a tour in a great food city and see what concepts are flourishing. Go out to eat at new places. There’s a host of things to think about and a lot of work to do when you decide to sell food. Do your analysis, bring in external assistance, if needed, but if done right, your customers and team members will be thanking you. I love talking foodservice and marketing. Should you have a question or comment, send me an email. I know some wonderful c-stores where we could grab a great cup of coffee or lunch.

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8/23/18 8:31 PM

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