Convenience Store Decisions November 2017 by WTWH Media LLC

Volume 28 • Number 11 • NOVEMBER Volume 19 • Number 6 • JUNE 2017 2008

Business Solutions for Retail Decision Makers

® A

HARBOR COMMUNICATIONS

P U B L I C AT I O N

2017 Convenience Store Chain of the Year

Committing to Coffee ......................48 Pizza Satisfies Profits ......................54 Marketing at the Pump ....................86

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DEPARTMENTS 8 Editor’s Memo: Service Culture for a New

Generation 10 On Location: The PRIDE Stores’ Unique

Appeal 18 Front End: CSD's Quick Bites 20 Front End: Industry News 22 Front End: Changes to SNAP Helps C-Stores 24 Convenience Store Solutions: Controlling

Your Stores 26 Chain of the Year Pictorial: Sheetz Toasted

as 2017 Chain of the Year

NOVEMBER 2017 • Volume 28 • Issue 11

54 Foodservice: Pizza, Roller Grill Satisfy Profits 60 Category Manager's Notebook: Cigar

InsidethisIssue

Category Skirts Regulation

34 Sheetz Earnz 2017 Chain of the Year Honors The Pennsylvania chain has a decades-long commitment to employees, customers and the communities it serves, making it the first two-time Chain of the Year winner in the award’s 28-year history.

64 Category Manager's Notebook: Beer

Supplier Performance from the Retailer’s Perspective 68 Category Manager's Notebook: Meat

Snacks Meet Expectations 72 Category Manager's Notebook:

Beverages: Packaged to Sell

48 Committing to Coffee Hot dispensed programs are growing along with changing consumer demands and tastes.

76 Technology: The Expanding Back Office 80 Operations: Clean Restrooms Are Good

86 Marketing at the Pump

Business

By utilizing a savvy forecourt strategy, which includes messaging on dispensers, c-stores can push up in-store sales.

42 Foodservice: Sandwiches Layer on Sales

84 Operations: Keeping Pace with Modern

Culture 90 Operations: Tax Planning C-Stores Can Do

Now 94 New Stuff! 100 Quick Shop 101 Ad Index 102 Industry Perspectives: Conducting a

Foodservice Focus Group

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FRUIT, VEGGIES & MORE

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Convenience Store Decisions

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

EDITORIAL

CONTRIBUTING EDITORS

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

ART Creative Director Erin Canetta ecanetta@csdecisions.com

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

COLUMNISTS

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

Jim Callahan Ed Collupy John Matthews

PRODUCTION Production Manager Barbra Martin bmartin@csdecisions.com Webmaster Dave Miyares dmiyares@csdecisions.com

EDITORIAL ADVISORY BOARD

NATIONAL ADVISORY GROUP BOARD

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

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

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

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

Brad Call, President Colour Du Jour • Salt Lake City

Greg Ehrlich, Chief Operating Officer Beck Suppliers Inc. • Freemont, Ohio

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

Doug Galli, Vice President, General Manager Reid Stores Inc./Crosby's • Brockport, N.Y.

Kyle McKeen, President and CEO Alon Brands • Dallas

Joe Hamza, Chief Operating Officer Nouria Energy Corp • Worcester, Mass.

Billy Milam, President RaceTrac Petroleum Inc. • Atlanta

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

Patrick J. Lewis, Managing Partner Oasis Stop 'N Go • Twin Falls, Idaho

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

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

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

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

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

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ADVERTISING

Mark Battersby Anne Baye Ericksen Brad Perkins Jeffrey Steele Lisa White

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

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

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

OFFICE LOCATIONS

Headquarters

19111 Detroit Rd., Ste 201 Rocky River, OH 44116 (440) 250-1583 (440) 333-1892 (fax)

Editorial and NAG

1420 Queen Anne Rd., Suite 4 Teaneck, NJ 07666 (201) 837-2177 http://twitter.com/CStoreDecisions www.facebook.com/CStoreDecisions

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.

www.linkedin.com/CStoreDecisions

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Congratulations The Coca-Cola Company would like to express congratulations to

Sheetz for being selected as the 2017 Convenience Store Decisions Chain of the Year.

ÂŠ 2017 The Coca-Cola Company

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EDITOR'SMEMO

Service Culture for a New Generation

NE OF THE FEW respites I enjoy is sleeping on the plane. I'm fortunate to travel the country viewing c-stores and speaking at events, but where some people can get work done on a plane, I've come to find an adult beverage and a power nap are much better uses of my time. So when a friend offered me a book to review recently for my flight back to New Jersey, I was hesitant to accept knowing full well I'd be pressed into a deeper discussion on customer service. But I'm glad I did. The book, "Driven to Delight: Delivering World-Class Customer Experience the Mercedes-Benz Way" by Joseph Michelli, delves into providing outstanding customer service in a unique way that helps create benchmarks to accurately measure your efforts.

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

DELIVERING ON PROMISES Where many customer service programs fall short, Michelli said, is delivering on promises to delight customers with an outstanding experience, which is literally the most important part of a customer service plan. It's all too easy to assume customers are delighted while, in reality, they have one foot out the door with an eye trained on one of your many competitors. Michelli shared four service-related red flags that require immediate attention. • You're not asking your customers how they feel. Directly asking customers what their level of satisfaction is, and why they feel that way, is a simple but crucial component of providing outstanding service. Making assumptions about how customers feel based on foot traffic or sales metrics isn't good enough. "Even if you're doing well profitably-wise right now, you lack indicators to tell you if you'll be dead in the water tomorrow," Michelli said. "It's possible that you're flatlining and you don't even know it yet. Consistently harvesting customers' opinions is the only way to keep your finger on the pulse of their service experience." • You aren't taking a "customer's-eye view" of the service experience. While you might be investing plenty of time, money and energy in making customer service improvements, if you haven't taken the time to map and design the service experience from the customer's perspective, you'll inevitably do a lot of work that's irrelevant.

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• Your social media strategy is halfhearted or nonexistent. No matter how popular or established your company is, no matter how loyal you think your customers are, you need to establish a social media strategy. "The young market doesn't look up companies in the yellow pages," Michelli said. "They turn to Facebook, Instagram and Twitter. But this isn't just about Millennial customers—even baby boomers are deeply interactive online. If you don't make it easy for customers of all ages to contact and engage with you in the way they prefer, you're treading on thin ice." • You're not listening to what people are saying about you online. Maintaining an active, updated social media presence is only half the online equation. "If you're not monitoring what people are saying about your company, your competitors, and your industry in general, it's just a matter of time before you find yourself wondering what went wrong," Michelli said. Now take that one step further. Can you imagine a customer putting a bumper sticker on their car telling others how much they love your company? "If not, that's a red flag, Michelli said, because Facebook 'likes' are the new bumper stickers. If you can't see your customers being excited enough to announce, 'Yes, this is a brand I'm proud to be associated with,' you are missing opportunities to secure satisfaction and emotional engagement." • Your employee turnover exceeds industry standards. Yes, some employee turnover is healthy, and if it's the right people who leave (i.e., low performers), all the better. But if your turnover exceeds industry norms, you have cause for concern. "Large pockets of turnover are often reflective of an unhealthy culture—and unhappy, disengaged employees do not provide outstanding service," Michelli said. "Plus, during tumultuous turnover, your customers are interacting with a new brand every day. They're not getting the benefit of personal relationships or the type of enthusiasm that becomes infectious in the life of the customer."

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FRONTEND NAG PROFILE

The PRIDE Stores’ Unique Appeal PRIDE differentiates itself from the public’s perception of convenience stores with upscale programs, an eye toward the future and a welcoming experience. By Erin Rigik Del Conte, Senior Editor

ARENT PETROLEUM’S THE PRIDE Stores lives up to its tagline “not your typical convenience store.” Not only does the c-store chain offer high-end, madeto-order food and an expansive beer, wine and spirits selection, but it is also in-step with industry trends and technology—recently adding Amazon lockers, and currently revamping its loyalty program with future plans for mobile pay.

With 12 c-stores in the Chicagoland area, PRIDE is committed to offering a competitively-priced, friendly experience, while challenging the boundaries of what a c-store can do. With its high-end offering solidified, the Illinois chain is now turning its attention to growing its footprint in 2018 and beyond. In 2018, The PRIDE Stores expects to build and open three new c-stores in Saint Charles, Palatine and Naperville and expand its car wash operations. Currently, it runs three conveyor car washes and three roll-over car washes on its c-store properties. The company will be constructing a conveyor carwash at its PRIDE of Cicero location in 2018. The upcoming Naperville and Palatine locations are also both expected to feature conveyor car washes. But that’s not all. “We have a few stores we’re looking to acquire, and we’re looking for a couple of pieces of land to build more stores in 2019,” said Mario Spina, an owner of Parent Petroleum and CEO of The PRIDE Stores. As it grows, The PRIDE Stores remains committed to 10 Convenience Store Decisions

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providing a friendly, warm experience with fairlypriced, name-brand items. The PRIDE Stores operates a 13,000-square-foot c o r p o ra te o ffi c e i n Warrenville, Ill., which also houses PRIDE’s 1,000-squarefoot commissary and 7,000-square-foot warehouse. Self-distributing through its commissary and warehouse allows the chain to offer its own PRIDE Fresh Food grab-and-go program, and also its PRIDE Café foodservice program—one of three foodservice programs the chain provides. “One advantage of our commissary is if we can’t get a product at a price that will allow us to compete with other large grocery stores or convenience stores in the area, we’ll buy it direct,” Spina said. BUILDING PRIDE

Parent Petroleum was founded in 1983 by Mario Spina’s father, Peter Spina. After a career as a regional sales manager for Texaco, Peter Spina went into business for himself, operating distribution companies and real estate companies before starting Parent Petroleum. He purchased his first auto bay and gas station property in Carol Stream, Ill. in the late 1980s. In 1990 Spina gutted the building and introduced his first convenience store with self-serve gas, and named the CStoreDecisions ecisions .com

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FRONTEND NAG PROFILE property ‘The PRIDE of Carol Stream.’ From there he expanded, building The PRIDE of Villa Park, The PRIDE of Geneva and so on. When the company had five stations, it closed on a large acquisition of 70 sites from BP that included the right to supply 40 dealer-owned sites, and 30 c-store properties. It kept six of the c-stores, and went on to acquire a few more stores, bringing its store count to 12. After finishing his MBA, Mario Spina joined the company in 2002, managing the real estate end of the business—“we had 50 pieces of commercial real estate”— before he began overseeing the retail operations as well.

In 2007, the company introduced a new logo and banner, branding the chain “The PRIDE Stores.” When Peter Spina passed away in 2012, Mario became an owner of Parent Petroleum. Today, Parent Petroleum supplies 350 stations in the Chicago market, and in 2016 it distributed over 380 million gallons of fuel. Of the 12 PRIDE Stores 10 are branded BP and two are branded Mobil. The 12 stores combined sell more than 60 million gallons of fuel per year with two sites—one in Kildeer, Ill. and one in Cicero, Ill.—selling more than 1 million gallons of fuel per month. UPSCALE FOOD OFFER

PRIDE runs three foodservice operations: Urban Counter, Taco Urbano and PRIDE Café. Each c-store features one of the three concepts. Five locations feature Urban Counters—four inside the stores and one standalone on a c-store property— that offer fresh, made-to-order salads, hand-pressed burgers, fries, breakfast sandwiches and handchurned milkshakes. The standalone Urban Counter opened in 2016 in

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CONGRATULATIONS

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FROM ONE LOCAL GREAT TO ANOTHER

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FRONTEND NAG PROFILE

Taco Urbano offers a modern twist on traditional Mexican food. So far, PRIDE offers two locations with Taco Urbano restaurants and expects to roll out more as new locations enter the market. All Taco Urbano food is made on site—including the guacamole. The only exceptions are the mild green salsa and hot red salsa, which are made in the chain’s commissary.

St. Charles, Ill. It has a pouring license and offers four craft beers on draft and two wines that pair with the food. Even as a standalone building on the c-store property, customers continue to view the three stores and is made in the commissary and self Urban Counter offer as gas station food, Spina said. distributed. PRIDE Café offers nitro coffee, espresso The chain is currently doing 10-second promotional drinks, crepes, panini, various side salads including videos to capitalize on how the food is so good you an orzo salad, shaker salads and pizza slices, which can’t believe it’s made in a gas station, plus a 30-sec- are made in the commissary and cooked on site. ond TV commercial aired in local areas with an Urban Using the pizza oven on site, the chain is also baking Mrs. Field’s Cookies at the three cafes, and in one of Counter Restaurant. The PRIDE of Batavia, and a new Villa Park loca- the Urban Counter locations. All locations offer the PRIDE Fresh Food program, tion that just opened in October both feature a Taco Urbano, which Spina describes as a “modern twist on which includes grab-and-go items made at the comtraditional Mexican food.” The Villa Park Taco Urbano missary and self distributed. is a standalone building with a drive-through on the “Usually at the cafes we c-store property that replaced an old conveyor car have a larger grab-and-go wash. All Taco Urbano food is made on site, except selection where we carry a for the mild green salsa and hot red salsa, which are full variety of offerings and made in the commissary. Even the guacamole is also more inventory,” Spina said. made fresh in front of customers. L a s t ye a r, t h e c h a i n “As we continue to grow, we’re hoping to add more Taco Urbanos,” Spina said. The new Saint Charles switched its Lifeway Frozen location planned for 2018 is expected to have a Keifer program to a TCBY frozen yogurt offering, to Taco Urbano. The chain’s PRIDE Café concept is available at appeal to more of its customer base. The partnership allowed the chain to also offer Mrs. Field’s Cookies, which are also owned by the same company. PRIDE features the TCBY offering at seven locations, two of which offer TCBY vending machines. SOMETHING DIFFERENT

Last year, the chain switched its Lifeway Frozen Keifer program to a TCBY frozen yogurt offering, to appeal to more of its customer base. The partnership allowed the chain to also offer Mrs. Field’s Cookies, which are also owned by the same company. 14 Convenience Store Decisions

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Customers can find bottles of wine at The PRIDE Stores in a range of price points from $5-$50. The wines are marked with up to three different wine ratings, including from Wine Spectator, to help customers compare options. A nearby display of Wine Spectator magazine offers more insights. The PRIDE of Wheaton sells about a case and a half of wine per day. CStoreDecisions ecisions .com

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FRONTEND NAG PROFILE As it grows, The PRIDE Stores remains committed to providing a friendly, warm experience with fairly-priced, name-brand items.

The chain’s Saint Charles, Ill., location measures only 1,500 square feet. When PRIDE was unable to expand the site or gain beer or foodservice approval from the local municipality, it purchased the lot next door and created a 5,000-square-foot standalone building that includes an Urban Counter and a “PRIDE Beer and Wine Plus Spirits” liquor store. The liquor store features a heavy craft offering for both beer and spirits. “In the wine selection we carry over 300 bottles of wine going up all the way to $250 a bottle,” Spina said.

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About 1,000 square feet of space remains in the building, and Spina is considering a brewery so PRIDE can create its own beers and distribute them to its stores. As technology evolves, PRIDE is advancing with the times. It recently installed Amazon lockers at all its locations where customers can pick up or return Amazon products. Amazon provides a coupon from The PRIDE Stores that customers can use when they arrive to access their locker. It is also in the process of switching its loyalty provider and launching a new loyalty program, which it expects to include within its mobile app. Spina said the chain will turn its attention to providing mobile pay through the app and pre-pay for its restaurants once its new loyalty program is up and running.

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Sheetz,

CAPS OFF TO YOU!

Chain of the Year 2017

FROM YOUR FRIENDS AT

SUNKIST and Design is a registered trademark of Sunkist Growers, Inc., USA used under license by Dr Pepper/Seven Up, Inc. ©2017 Sunkist Growers, Inc. and Dr Pepper/Seven Up, Inc. All other trademarks are the property of Dr Pepper Snapple Group affiliates. ©2017 Dr Pepper Snapple Group.

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FRONTEND

CSD’S QUICK BITES Exhausted Employees Cost Millions

• $1.4 Million: amount a U.S. employer with 1,000 workers stands to lose per year in absenteeism, diminished productivity and healthcare costs because of exhausted employees, many of whom have undiagnosed and untreated sleep disorders. • $80 Million: annual cost of fatigue in an average-sized Fortune 500 company. • $40 Million: amount average Fortune 500 company could save if half of its workforce were engaged in a sleep health program. • Employers can calculate the cost of fatigue on their workplace at nsc.org/tiredatwork

Sugar Intent Vs Behavior • 50%+ of U.S. adults and teens say they’re “trying” to get less sugar in their diet.

Source:The National Safety Council and the Brigham Health Sleep Matters Initiative

• 66 pounds is the amount of sugar consumed by the average person annually (three times the recommended amount). • Consumers are more likely to cut back on cola drinks than fruit juices because they feel that juice has more nutritional benefits and the sugar is naturally occurring. Source: NPD Group’s “Impact of Sugar Concern on Consumption Behavior: What We Say vs. What We Do” report.

king to c a n S Clean ndy Sales a Drive C t sales of confectiodnebryy 2020.

Spice it Up • 75% of U.S. adults, especially young adults, are open to trying new foods. • 7% increase in dollars of spices and seasoning shipped to food outlets/restaurants. • 11% growth in curries, like tikka masala and yellow curry being shipped to restaurants/food outlets. • 12% growth in chili peppers such as aleppo and habanero.

oun cee lion –am cted to ex • $41 bil ts in U.S. are expe e h bite-siz produc rowth wit & chocolate g s d a le n nacking rks, fruit • Clean s te in thins and ba hocolate, and clea c la o rk c da cho igh cacao snacks, h ucts. 2020 d label pro et sales in ales. rk a m ry e s y on late cand f confecti • 60% o cted to be choco e are exp Source: Packaged Facts,“Chocolate Candy in the U.S., 11th Edition.”

Source: NPD’s SupplyTrack, year ending March 2017

of $13.6 billion

retail coffee market.

460% refrigerated

growth expected from 2017-2022.

cold brew coffee

sales growth at retail from 2015-2017.

Refrigerated cold brew coffee sales are set to reach an estimated $38.1 million by the end of this year.

_____________

(RTD) coffee = 20%

67% RTD coffee

_____________

Ready-to-drink

_____________

Battle of the Brews

Source: Mintel’s “Coffee U.S. 2017 and Coffee and Tea On-Premise U.S. 2017.”

18 Convenience Store Decisions

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INDUSTRYNEWS

BP Brings Back Amoco Fuel Brand BP is reintroducing its Amoco retail fuel brand, giving current BP marketers more growth options in select U.S. markets and helping BP boost retail fuel sales nationwide. Last seen more than a decade ago in the U.S., the Amoco brand will be available to BP marketers as a complementary retail offering in cities where there could be additional growth opportunities. It also will help resolve local, competitive station conflicts in markets where there may already be one or more BP stations in close proximity.

Honey Farms Inc. Acquired

TPE, NATO Join Forces in 2018 NATO’s Industry Outlook and TPE 2018, the first big buying tradeshow of the year for the tobacco + industry, are combining their efforts in 2018 in Las Vegas. Known for offering insights on market trends and current legislation, the NATO Industry Outlook will now be co-located at TPE 2018, occurring on Jan. 30, 2018, the day before the show opens on Jan 31, 2018. This effectively transforms TPE 2018 into a three-day event, with industry leaders, buyers, sellers, manufacturers, distributors and media outlets gathering to learn, network and do business from Jan. 30 – Feb. 1, 2018.

Kroger Considers Selling C-Store Business

T h e K ro g e r C o . h a s announced its intention to explore strategic alternatives for its convenience store business, including a potential sale, as part of its Restock Kroger plan. This is the result of a review of assets that are potentially of more value outside of the company than as part of Kroger. Kroger’s convenience store business includes 784 c-stores located across 18 states. It includes 68 franchise operations. The stores employ 11,000 associates and operate under the following banner names: Turkey Hill Minit Markets, Loaf ‘N Jug, KwikShop, Tom Thumb and QuickStop. Neither Irving, Texas-based 7-Eleven Inc. supermarket fuel centers nor Turkey Hill Dairy is included in this review. announced that it is expanding its selection of private brand wines with the launch of two white wines. The Chardonnay and Pinot Grigio are the first 7-Eleven private brand wines to carry vintage dating and California appellations, designating Ewing, N.J.-based Hough Petroleum Corp. has that all the grapes were grown in announced the acquisition of Gordon Petroleum Corp.’s California and harvested the same wholesale dealer supply assets. The deal will add approxyear. According to Dennis Phelps, imately five million gallons annually to Hough’s fuel 7-Eleven vice president of vault, volume in New Jersey and New York. In addition, Hough is the move is intended to appeal to bringing on a new senior director of wholesale and retail “wine-loving Millennials” and their sales, Mike Kelly, who will help steer the new acquisition. desire for higher-quality wines. Kelly has more than 25 years of industry experience.

The sale of Honey Farms Inc. to Global Partners LP successfully closed in October. Headquartered in Worcester, Mass., the Iandoli family has owned Honey Farms since 1969, and the family’s retail food operations of delis and supermarkets spans back to the 1920s. Honey Farms has enjoyed a long-standing reputation of superior customer service and strong brand recognition in the New England market; operating 33 stores in Massachusetts and one in New Hampshire. Matrix Capital Markets Group Inc. provided merger and acquisition advisory services to Honey Farms.

7-Eleven Debuts New Wines

Hough Grows Northeast Footprint

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Changes to SNAP Helps C-Stores Final ruling changes the requirements of what retailers must stock to remain program-certified. By David Bennett, Senior Editor

HE SUPPLEMENTAL NUTRITION ASSISTANCE Program, or SNAP, is the largest program in the domestic hunger safety net. That net just became a little less tangled with a new final rule from program regulators, according to Eva Rigamonti, an associate at the international law firm Steptoe & Johnson LLP.

CHANGE FOR THE BETTER The provisions in the program require SNAP authorized retail establishments to offer a larger inventory and variety of healthy food options. During the recent NACS (National Association of Convenience Stores) Show 2017 in Chicago, Rigamonti explained that the final ruling from the USDA’s Food and Nutrition Service (FNS) is an improvement The proposed rule — released Feb. 17, 2016 — garnered significant criticism for drastically exceeding the requirements in statute and for placing undue burdens on convenience stores in particular. It’s estimated that at least 100,000 c-stores in the U.S. participate in SNAP. The SNAP retailer eligibility rule proposed last year included stocking requirements that would have made it difficult for many c-stores to meet—potentially pushing thousands of small retailers out of the program. “You would have literally had to become a grocery store to participate,” said Rigamonti. After protests from convenience retailers and input from NACS, the FNS lessened eligibility requirements in the form of a final rule released Oct. 16. Among the changes the rule would require SNAP-authorized food retailers to stock at least seven (up from three in years past) varieties of items in each of USDA’s four staple food categories— meat, poultry or fish; bread or cereals; vegetables or fruits; and dairy products—to include one perishable item in three of those categories. Some aspects of the eligibility requirements of the final rule are still under review—including the proposed definition of variety. Broken down, the final SNAP stocking policy states that in order for retailers to be remain SNAP-certified, they must offer no fewer than seven different varieties of food 22 Convenience Store Decisions

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items in each of the four staple food categories with a minimum depth of stock of three stocking units for each staple variety, Rigamonti explained. This means that, on any given day, a retailer should offer a total of 84 units for sale (three stocking units, seven staple varieties, four staple food categories, equaling 84 units). In addition, the FNS agreed that in defining staple foods, it would include multiple ingredient offerings as well as grab-and-go items. Another change in the final rule pertains to hot food service in c-stores and SNAP eligibility. Last year, the FNS had added in the proposed rule: retailers would be ineligible for the program if 15% of “total food sales” are items that are cooked or heated on site. The final rule changed this requirement, stating if 50% or more of a retailer’s total gross sales are of heated foods, that retailer is ineligible to be in the SNAP program. Changes to the definition of accessory foods ensure that stores are not able to participate in SNAP by selling primarily snack foods. At the same time, the definition of variety has been expanded to make it easier for stores to meet the new requirements mandated by the Agricultural Act of 2014. BEARING RESPONSIBILITY Rigamonti also explained to session attendees that retailers in the SNAP certification can remain in good standing by training employees on all the criteria of the final SNAP rule, calling it their “obligation.” In addition, retailers are also beholden to train staff on the repercussions if incidents of fraud occur in their stores in conjunction with the SNAP program. The final ruling helps reinforce a USDA’s report on SNAP purchases showing that there is plenty of work to be done to improve the diets of low-income Americans, particularly those who depend on SNAP. As other reports show that c-stores are essential resources in communities where grocery stores are scarce, their wide participation in SNAP is just as essential, many experts say. “Retailers are a very important partner is this program,” said Rigamonti. CStoreDecisions ecisions .com

10/26/17 11:59 AM

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Convenience Store Solutions

Controlling Your Stores Many store tasks can produce big headaches if they all come at once. By Jim Callahan

ANY YEARS AGO WHEN I was still fairly new to

the industry, I was tasked with dragging five utterly sorry convenience stores into compliance and profitability. I say with a wee touch of embarrassment that nothing in my career came as close to defeating me as those five troubled stores. The locations had been acquired in a buyout more than a year earlier. Previously, the son of the former owner had been chosen to run the operation. It’s fair to say the son’s talents lay elsewhere. WORKING AHEAD The stores were flat-out dirty. We tackled one category at a time, ensuring each was clean, properly set, scrutinized for “space to sales” effectiveness, and instituted and monitored “sell by” dates. I assigned and enforced cleaning duties, then carried those processes to the next category space. With things coming together in various sections, worker morale began to percolate. We tackled the cooler because it was by far the weakest part of the store, marked by blocked aisles, broken bottles, a filthy interior, unclear interior sets and so on. If you ever face a situation even remotely as bad, realize that you can’t obtain an accurate inventory count under these conditions. Shrink at these locations was three times the industry average. Instead, the norm in the group of stores was outages of Marlboro Reds and Blues two days a week for instance, along with many other popular items like Gatorade. Luckily, we found a small local wholesaler that delivered the missing products and again, morale rose. Using “build up” sheets or similar techniques is essential to controlling stock levels, including cigarettes, because they are expensive and easily concealed. Soon the staff was counting the cigarette inventory at shift change, then recounting until both shifts were in full agreement on the number. Theft and cash shortages were rampant. The climate proved the old adage that you should never hire out of desperation—in the long run it’s better to invest your own hours or pay the dreaded overtime than hire the wrong person. Managers were paid $255 for 54 or more hours of work per week. At the time, management didn’t understand that incentives should be attainable and sincere “atta boys” could 24 Convenience Store Decisions

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be given both out of fairness and as a means of improving morale. Rewards can be inexpensive. I constructed simple letters such as “Star of the Day” and “Life Saver” (for turning down underage sales). Other practices we implemented included investing in state-of-the-art video equipment, which paid for itself in mere months and continued to pay dividends afterward. Scanning the tape, I observed one of the cashiers would place a quarter in the cash register at the beginning of her shift to avoid using the “NO SALE” button, then making 13 one cent rings—her license to play in our money box. It doesn’t take a genius to realize we didn’t have one-cent products to sell. The video found her pilfering $20 bills on three different occasions. Another time I found two $4.25 rings in the beer category and realized we didn’t offer any priced items in that category. Going back to the video showed a cashier selling 18 packs to his fraternity brothers for $4.25 instead of the listed $13.99. When confronted, he explained “I wasn’t stealing, I was discounting.” He was still arguing the point even when handcuffed and on his way to jail. My advice then and now is to have a firm policy on theft and ensure your existing employees know it as well as all future hires. The proudest moment finally arrived after much sweat was spilled when we retained one of the original five managers who had struggled mightily with shift counting and recounting the tobacco category. With this achievement in hand, her confidence soared. MORAL OF THE STORY So what’s the moral of the story? No big one, really. The point is to recap what everyone in the business already knows: this industry is complex. To be able to wrap your head around all of the tasks and concerns that this business requires in a big job indeed. However if operators can identify the responsibilities that must be done, they can take better control of their stores—each and every day. Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on www.cstoredecisions.com. He can be reached at (678) 485-4773 or via e-mail at jfcallahan1160@gmail.com. CStoreDecisions ecisions .com

10/26/17 11:59 AM

ON WINNING CSD’S

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Sheetz Toasted as 2017 Chain of the Year Peers celebrate renowned family chain at the Crystal Gardens at Navy Pier in Chicago. By Erin Rigik Del Conte, Senior Editor

ONVENIENCE STORE DECISIONS (CSD) hon-

ored Sheetz Inc. as the 2017 Convenience Store Chain of the Year during a dinner held at The Crystal Gardens at Navy Pier in Chicago during the NACS Show that welcomed more than 200 attendees. “Over the past 28 Years, CSD has consistently honored convenience retailing excellence. And while there have been some companies gobbled up in acquisitions, the chains we have honored remain industry leaders, starting with Wawa, the first chain of the year winner in 1990,” said John Lofstock, editor-in-chief of CSD. Lofstock explained that Sheetz, based in Altoona, Pa., is the first company to be named a two-time winner of the prestigious Chain of the Year award. “This honor highlights remarkable consistency and a commitment to excellence—to customers as well as employees over a very long period of time, and I’m very proud to have been able to watch the chain soar to new heights over the past 20 years,” Lofstock said. CSD first honored the chain in 1994. As is tradition, the previous Chain of the Year award winner presents the trophy to the new awardee. Bob Graczyk, vice president of human resources of QuickChek Corp., 26 Convenience Store Decisions

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recognized in 2016, presented the award to Joe Sheetz, president and CEO of Sheetz. “Following the award last year we had our awards dinners, and at 16 different dinners Dean (Durling) carried this award with him, set it up on a table and told the team members what it meant to him and to them for the work they do with each other and for our customers,” Graczyk said. RECOGNIZING EXCELLENCE Durling, who is QuickChek’s CEO, was unable to attend the NACS Show this year, but he sent a special video of himself shopping at a Sheetz store with a personal message to Sheetz. “Congratulations to the entire Sheetz organization, the Sheetz family and the vendor community that help make Sheetz what it is today,” Durling said. “The Sheetz family business is one of the best, if not the best, model that our industry has to offer.” As he accepted the award, Sheetz noted how the company has evolved quite a bit since it first won the award in 1994. “First of all I wasn’t there in 1994. Back then, we had 167 stores and 3,700 employees. Today, we have 564 stores and over 18,000 employees.” Sheetz also pointed out that 320 employees who were with the chain in 1994 are still with the company today.

“I need to thank John and everyone on the CSD staff for this award. We’re very honored. I’d be remiss if I didn’t thank all of our supplier partners. A lot of you are in the room tonight. Thank you for helping us grow. Thank you for supporting us. I’d like to thank all of the other retailers here. I’m looking around and I’m really overwhelmed by how many of my friends in retail are here and that’s surprising and awesome,” Sheetz said. “The biggest thank you on behalf of my family and our executive committee has to go to our over 1,800 employees because they are the ones that make this happen. So thank you.” The family business was founded by Bob Sheetz in 1952 when he purchased one of his father’s five dairy stores in Altoona. In 1963 he opened his second store, and in 1968, a third. In 1969 Bob’s brother Steve joined the company as the general manager. The brothers began t o o p e n o n e s t o re per year until 1972, when they opened five stores. In 1973, Sheetz added selfservice gas pumps to its stores. CStoreDecisions ecisions .com

10/26/17 5:07 AM

CONGRATULATIONS

SHEETZ

Convenience Store Decisions 2017 Chain of the Year

CSD_Ad_Template.indd 49 7299 AGDC Retailer of the Year_CSD_Fullpg_MECH.indd 1

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Anne Feldman, of Convenience Store Decisionsâ&#x20AC;&#x2122; VirtualMart; Greg Ehrlich and Gregg Edwards of FriendShip Foods; and Brad Krumpak, of Swisher International.

The PepsiCo team: Marty Spanner, Abby Vedder, John Short, Bryan Morrow, Cyril Wallace, Chad Matthews and Abigail Hale.

Holly Phillips, of Farmer Brothers Coffee; Kathy Williams, of The Coca-Cola Co.; Dave Woodley, of Sheetz Inc.; and Glenn Plummer and Susan Gamberdellia, of The Coca-Cola Co.

Mark Brown, Kevin Clancy and Bradrick Bates, of Monster Energy.

Bill Nolan, Spiro Olympidis, Scott Jones, Clifton Dillman and Raphael Omerza, of Family Express Corp.

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Rob Easley, of QuickChek Corp.; John Schaninger, of The Schaninger Group; and Bob Graczyk, of QuickChek Corp.

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Scott Apter, of Apter Industries, with Stan and Carolyn Sheetz.

Michael Oâ&#x20AC;&#x2122;Brien, of Growth Energy; Brent Welch and Douglas Henderson, of PDI; and Sara Brenden, of Growth Energy.

Tom and Lynn Robinson, of Robinson Oil Co.; Jeff Miller, of Miller Oil Co., Richard Oneslager, of The Balmar Group; Mike Zielinski, of Retail Management Services; and Tim Storey, of Miller Oil Co.

Mike Clark, of Republic Tobacco; Jeff Flaig and Jim Donker, of Nestle Waters; and Steve Wegert, of Republic Tobacco.

30 Convenience Store Decisions

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Jim Wenner, of Sheetz Inc., is joined by Reginald Owens and Tony Vaccariello, of EST Group.

Josh Campbell, of Sheetz Inc., with Marty Spanner, of PepsiCo.

Marla Benson, Jim Dodge and Tracy Schmitt-Winters, of Mars Wrigley, are joined by Dave Woodley, of Sheetz Inc.

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Bob Graczyk, of QuickChek Corp., honors Sheetz as the 2017 Chain of the Year Award.

Joe Sheetz, of Sheetz Inc.; Bob Graczyk, of QuickChek Corp.; and John Lofstock; of Convenience Store Decisions, pose with the 2017 Chain of the Year trophy.

Joe Sheetz, of Sheetz Inc., accepts the Chain of the Year award and honors the Sheetz team.

Ashley Shimmel and Scott Bennett, of The Hershey Co., with Tom Rosenberger, of Sheetz Inc.

Eric Schoch, of NCR Corp., Douglas Henderson, of PDI; and Jim Wenner, of Sheetz.

The Sheetz team stands and is recognized for their hard work in winning the 2017 Chain of the Year Award in Chicago.

Steve Sheetz, Joe Sheetz and Stan Sheetz are joined by Convenience Store Decisions Editor John Lofstock following the 2017 Chain of the Year presentation.

32 Convenience Store Decisions

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10/26/17 5:08 AM

CONGRATULATIONS TO CONVENIENCE STORE DECISIONS 2017 CHAIN OF THE YEAR

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COVER STORY

Sheetz Earnz 2017 Chain of the Year Honors The Pennsylvania chain has a decades-long commitment to employees, customers and the communities it serves, making it the first two-time Chain of the Year winner in the award’s 28-year history. By John Lofstock, Editor

T’S 6 A.M. MONDAY morning at the Sheetz store on Making magic at Sheetz is hardly William Penn Highway in Monroeville, Pa., and the the work of one person or one family, line is already forming for a cup of fresh-brewed Sheetz said Joe Sheetz, the second-generBros. coffee. Just to the left, a fresh display of Shweetz ation family member entrusted as Bakery pastries entices the next wave of customers as they president and CEO. Rather, it’s the wait in eager anticipation for their turn to customize the liq- byproduct of a culture that long precedes him and one that will continue uid energy that will help them kick off a new workweek. On this morning, it’s a typical scene that’s playing long after he retires. I asked a customer why he pre- Joe Sheetz, out across 564 Sheetz stores in six states. While there is a remarkable cadence and consistency unfolding as custom- fers Sheetz and his answer was pretty President and CEO ers and employees deftly move about the store, the amount straightforward. “The food is always of work that goes into serving the company’s 1.5 million fresh, the employees are great and I can get anything I want.” That’s a pretty solid recommendation before daybreak. daily customers is just as remarkable. “I get asked about the Sheetz culture and what makes us Behind the scenes operates a finely-tuned machine, which is the product of precise logistics, detailed planning, special all the time and it’s very hard to explain. It’s sometraining, hard work and a team of dedicated employees. thing that is better experienced,” said Sheetz, who took over 34 Convenience Store Decisions

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COVER STORY his current position in 2013 from his cousin, Stan Sheetz. Stan moved into the role of chairman, while Joe’s uncle, Steve Sheetz, vacated the chairman seat to fill the newly-created position of Family Council chairman. “More than anything, the Sheetz culture is a combination of creating a great Stan Sheetz, work environment that is supportive, Chaiman respectful and trusting of the people we have. We’ve learned to listen more than we talk. In our case that means listening to customers and to employees to make sure we always have our priorities straight.” Equally important is that the company is not content with being good; it’s goal is excellence every day— and it shows. With an unsurpassed commitment to foodservice and technology, a world-class distribution model for fuel and c-store products and a total commitment to its vast Steve Sheetz, employee base, Sheetz embodies Family Council the very best the convenience store Chairman industry has to offer. Over the past year, the Altoona, Pa.-based chain was recognized by Fortune as one of the 100 Best Companies to Work For, a Top 12 Best Places to Work for Women and Top 35 Best Workplaces for Millennials, along with announcing plans to hire 3,400 new employees. By fiscal year 2019, Sheetz is projected to grow to 600 stores with projected capital investment (including new and rebuilt unit growth) of approximately 6% annually. For some chains, that would be a full year. At Sheetz, it was just another day at the office. Also in the past year, the company initiated dozens of fundraisers aimed at helping kids, such as its partnerships with Special Olympics and the Make-A-Wish foundation. It overhauled its loyalty card program, professed its ongoing commitment to offering employees sustainable careers built on an inspiring culture and expanded community engagement. For its accomplishments and dedication to convenience retailing, Convenience Store Decisions is proud to name Sheetz Inc. the 2017 Convenience Store Chain of the Year, considered the gold standard in convenience retailing. Sheetz is the 28th Chain of the Year and the first two-time winner. The company was honored as Chain of the Year in 1994. “We are very proud to be recognized as the Convenience Store Chain of the Year because this recognition truly belongs to our employees and to the customers who have supported us for the past 65 years,” Sheetz said. “We would not be the company we are today without dedicated employees and loyal customers.” CStoreDecisions .com

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Founded in 1952 in Altoona, Pa., Sheetz is one of the country’s fastest-growing family-owned and operated convenience store chains, with nearly $6 billion in revenue and approximately 18,000 employees. The company operates throughout Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina. Sheetz remains a beacon of innovation that every convenience store chain can admire. It is a family-owned business that remains true to its employees and the communities it serves, and it’s doing so at a time when big corporations are trying to gain a larger foothold in the convenience store industry. LONG RETAIL HISTORY Bob Sheetz founded Sheetz 65 years ago when he purchased one of his father ’s five dairy stores located in Altoona, Pa. In 1961, Bob hired his brother Steve to work part-time at the store. It was not until 1963 that the second store was opened under the name “Sheetz Kwik Shopper.” It took another five years to open the third store. In 1969, Steve joined Bob in the business as general manager. The brothers planned to expand at the rate of one store per year with a target of seven stores by 1972. In 1972, the brothers literally doubled the size of the company, expanding from seven to 14 stores. One year later, Sheetz added gasoline pumps and introduced self-serve gasoline to central Pennsylvania.

Rooted in Altoona, Pa., the family business didn’t gain momentum until 1963, when the second store was opened under the name “Sheetz Kwik Shopper.” It took another five years to open the third store. Today, the company has 564 stores in six states. November 2017

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COVER STORY By 1983, Bob and Steve had opened 100 stores. The following year, Bob retired and handed over the leadership of the company to his trusted business partner Steve. In 1995, Stan Sheetz, Bob’s son, became president and Steve assumed the position of chairman of the board. Bob Sheetz, Stan led the company through new Founder periods of growth and innovation, introducing Sheetz fans to touchscreen ordering, Sheetz Bros. Coffeez, Made-To-Go foods and Shweetz Bakery products, while redefining the concept of getting quality food at a convenience store. STEADY GREATNESS When Convenience Store Decisions first honored Sheetz as Chain of the Year in 1994, Steve, Stan, Bob, Louie Sheetz, and Joe Sheetz Sr., were all involved in transforming the business after a rough period in the 1980s. Joe Sheetz and his brother Travis Sheetz wouldn’t join the company till a year later in 1995. CSD highlighted the chain’s remarkable turnaround thanks to several initiatives that resonated with customers. For example, though the Sheetz Total Customer Focus (TCF) initiative was in its relative nascency in 1994, it was having a transformative effect. Store customer counts had doubled from the previous 10 years and fuel gallons sold surged on average of 4,000 gallons per store per month. Also around this time, the company’s marketing efforts under Louie Sheetz expanded as did the emphasis on hiring and retaining great employees and the Made To Order (MTO) foodservice program. As with TCF, MTO was rolled out across the entire chain moving well beyond sandwiches and deli fare to encompass a wide variety of food items, specialty drinks and gourmet desserts. Today, the Sheetz Bros. Kitchen, a $46 million state-ofthe-art facility, also produces fresh, ready-to-eat products for all of the company’s stores. After 23 years, the company has not strayed from this winning formula. Rather, it has mastered it. For example, Sheetz senior management is required to cover a district’s worth of stores every six weeks. “That amounts to eight visits a year where they’re going to go to anywhere from seven to nine stores, based on how big the district is,” Joe Sheetz said. “The intent of these visits is not to be a store inspection, but rather to find out what is working well, what’s not going well and what we can be doing better at corporate to support the team out in the field.” As you would imagine, focusing on making improvements over such a long period of time has created a well-oiled machine. Furthermore, it’s become a part of the Sheetz culture and has empowered employees to speak up to help improve operations. “We take feedback from store employees very seriously. Sometimes they have questions about the 36 Convenience Store Decisions

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SHEETZ INC. SNAPSHOT • Headquartered in Altoona, Pa., the company has nearly 564 stores in six states (Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina) and 18,000 employees. • Serves 1.5 million customers per day. • Family owned and celebrating its 65th anniversary in 2017. • 40 new and rebuilt stores in 2017. • Total yearly sales of nearly $6 billion. • Employee bonuses paid in 2016: More than $53 million. • Listed in 2016 as a Fortune Best Workplace for Women (Top 12). • Selected by Fortune in 2016 as a Best Workplace for Millennials (Top 35) • Named by Fortune in 2016 as one of the Best Workplaces in Retail (Top 10) • Named one of the Best Places to Work in Pennsylvania, Maryland, Virginia, Ohio and North Carolina.

way things are done, which tells us we need to communicate with them a little better, but other times they drive a change in processes,” Sheetz said. “One of the agenda items at every senior management meeting is who had store visits last week and what do you want to share. Everyone takes notes from the field and we discuss it in person every week. It’s part of our continuous improvement process.” TAKING RISKS One area where Sheetz has refined its brand is foodservice. Convenience stores are increasingly taking a larger slice out of the quick-serve pie with fresh food offerings. At Sheetz, the company’s iconic MTO program has become the industry model many other operators are chasing. It has become such an integral part of the Sheetz brand that the company is introducing stores designed more as fast casual convenience restaurants without gas pumps. Two years ago, Sheetz unveiled a new fuel-free concept near the campuses of West Virginia University, Penn State CStoreDecisions .com

10/26/17 5:10 AM

S:7.75”

CONGRATULATIONS ON BEING A GREAT

PLACE TO WORK AND

S:10.5”

SHOP SINCE 1952.

Sheetz has been named Convenience Store Decisions 2017 Chain of the Year, sharing our passion for meeting the needs of customers on the go.

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COVER STORY The history of Sheetz is closely linked to the positive changes it has inspired within its own organization, the innovations it has brought to a willing industry and the faces of the many customers it serves daily. Boasting a pedigree of excellence that few chains can match, the family business is well-positioned for the future.

ics. For example, over the past year, Sheetz has rolled out a LiveWell menu of healthy items and a Classic Kidz menu aimed at younger consumers. “Foodservice is a growing category but it’s also a difficult category because of the diverse appetites of your customers,” Joe Sheetz said. “Our focus is on great food, served fresh and fast, but we also listen carefully to understand what the customers really want. This has helped move into areas like espresso-based beverages, healthier meal options and food items designed with kids in mind. It’s another part of the process that connects Sheetz with our customers.” This shift toward foodservice is very much part of the company’s culture and dairy roots which extend back to the early 1900s, and the results speak for themselves. Its annual foodservice sales at the MTO touchscreens alone exceed $1.5 million annually. THE PEOPLE ADVANTAGE Over the past year, Sheetz has received numerous accolades as an employer of choice nationally, but it was recognized as one of the Best Places to Work by state groups in Pennsylvania, Maryland, Virginia, Ohio and North Carolina. Sheetz aims to keep this momentum going by recently University, Indiana University of Pennsylvania (IUP) and the University of Virginia. These four locations focus more announcing plans to hire 8,000 new employees companyon fast-casual dining options with made-to-order foods, an wide and increase wages by $15 million over the next 12 expanded dining area and a beer cave. The fuel-free stores months. As part of this strategy, the company announced will account for only a small part of the brand’s expansion that salaried employees will earn a minimum base salary and will be concentrated in areas where market penetration of $47,500. For 2016, the company awarded employee bonuses of is difficult. It’s precisely this type of innovation and willingness to try something new that makes Sheetz the industry more than $53 million. leader it is today. “We are able to succeed in nontraditional areas because THE FAMILY LEADERSHIP ADVANTAGE Joe Sheetz said that the company is committed to investwe have outstanding employees with a commitment to Total Customer Focus and our Sheetz culture,” Joe Sheetz ing in its people, rewarding employees and attracting the said. “Our employees are dependable, positive, productive best talent for the job, whether it’s in the distribution centers, and friendly, which we believe is what keeps our custom- kitchens, corporate office, or at any one of its store locations. “As a family-owned business, we’re committed to attracters coming back. Our brand promise is that we give our customers what they want, how they want it, when they ing, retaining and developing the best people. We believe want it—24/7. This promise is what sets us apart from the that paying wages at the upper end of the retail scale is necessary to achieve that goal,” Joe Sheetz said. “In addition competition.” The brand’s array of MTO sandwiches, salads, burritos, to paying competitive wages, we provide our employees burgers, and more is the culmination of its long-standing with increases based upon tenure, access to health insurplan to deliver outstanding food, value and upscale loca- ance, quarterly bonuses, college tuition reimbursement, tions. Today, it continues to evolve beyond the menu items adoption assistance and paid time off, among many other themselves with online ordering and delivery available in benefits, continuing to prove that Sheetz strives to be a great place to work.” select markets. As a featured speaker at the 2017 National Advisory MTO also allows the company to target demograph38 Convenience Store Decisions

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COVER STORY REWARDING LOYALTY SHEETZ HAS MANY LOYAL, repeat customers. As a way to reward these customers, the company earlier this year felt the time was right to launch a loyalty card program worthy of the Sheetz brand. With the MySheetz loyalty program, cardholders receive points on nearly all in-store purchases and can choose customized rewards to get more of what they purchase most. Racking up points with every swipe of their MySheetz Card, customers can climb the Sheetz Rewardz ranks from Fan to Friend to Freak. Cardholders receive five points per dollar, and the more points earned, the better the reward. Points can also be redeemed on the new Sheetz app, which allows customers to make mobile payment, order food online and view nutrition information. Customers who register their MySheetz Card will also receive birthday rewards, surprise offers and random giveaways. “The No. 1 request from our customers has been to earn rewards on all of their purchases,” said Joe Sheetz, president and CEO of Sheetz Inc.“We heard them and responded with bigger, better and more rewards— it’s our way of showing the love to our most loyal customers.” Exclusive My Sheetz Card perks include:

• Gas Rewardz: Three cents off every gallon of gas every day. • Customized Rewardz: Customers choose what they want. • Tasty Treatz: Points can be redeemed for items ranging from free fountain drinks, MTO items, Sheetz Bros. Coffeez, Shweetz Bakery doughnuts and cookies. • On-the-Spot Savings: Special discounts and combo offers. • Sheetz Shwag: Free T-shirts, hats, mugs, cups and more.

“When I was a kid it felt like our business was four walls with decent people running the stores. It seemed all you had to do was pick the right stuff, load it, price it right, sell it and then do it again. So much of that has changed and that’s where consistency in leadership has helped,” Joe Sheetz said. “The business now is all about logistics—being your own supply chain, moving your own fuel, distributing your own groceries, centrally making your own foodservice products and delivering them on a daily basis, running your own maintenance crews so that things get fixed any hour of the day, any day of the week. This stuff didn’t exist when I was a kid. This business is a lot more complicated, but it also offers new opportunities to grow the business.” It also creates new opportunities for Sheetz family members. “Our family is getting bigger. It used to be if you really didn’t love retail then you probably needed to go work somewhere else,” Joe Sheetz said. “But as the company grows, we have new positions. If you’re an engineer, we have plenty of places for you. If you’re an architect, we’ve got positions. If you want to get into the supply chain, there are opportunities. Even if you’re a nurse, you can come and work at the wellness center. So the diversity of the people we employ is so much greater than it used to be, and I find that really cool and sometimes a little overwhelming.”

SHEETZ IN THE COMMUNITY As you would expect from a company that has such a heavy emphasis on employees, Sheetz is also a substantial supporter of numerous charities. The company has donated millions of dollars over the past 65 years to charities that the family holds dear. It has two corporate charities, the Sheetz Family Charities and Special Olympics. Every penny raised for Sheetz Family Charities goes to the For the Kidz Holiday Group (NAG) Conference in September, Joe Sheetz pointed Event and the Make-A-Wish Foundation. Sheetz For the Kidz, is a unique charitable organization out that the consistency in family leadership has been a major competitive advantage for providing an outstanding in that it is operated by Sheetz employees. In 2016, it, prowork environment. When your name is over the door, it’s vided $1.6 million to ensure 9,000 children in need had gifts different. Sheetz is still family owned, and this is the core at Christmas. The program has helped more than 100,000 of the company, but it’s not a given that because your last children since 1992 raising $22.9 million. Through Make-AWish, Sheetz sponsors approximately 50 family trips to Walt name is Sheetz you will obtain a leadership role. Today, three Sheetz family members currently hold exec- Disney World annually. Since 2005, it has been able to grant utive positions and all of them have worked their way up more than 450 wishes. In 2017, with the help of generous customers, the comthat ladder in a variety of positions after first earning their MBA and working away from the company for at least five- pany is on track to donate more than $650,000 to the Special years. That means when a family member does return home Olympics. Sheetz remains Pennsylvania’s largest contributo work for the family business, they are prepared. The tor to the organization and was an inductee into the Special result, Joe said, is that “we have a focused senior manage- Olympics Hall of Fame in 2000. In addition, Sheetz donates millions of dollars in cash ment team that genuinely understands, respects and cares and products to other community endeavors each year such about employees and customers.” While there are several other family members working as the Boy and Girl Scouts, libraries, education and youth their way through the pipeline, in the company’s 65 years, development and athletic and arts programs. Sheetz has never been afraid to take risks and dares to be just 12 family members have held executive positions. This reflects outstanding consistency in leadership, while also great. Please join us in saluting the 2017 Convenience Store Chain of the Year. CSD ensuring a steady stream of new ideas. 40 Convenience Store Decisions

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Sandwiches

Layer on Sales

Once a simple offering, sandwiches are proving to be a mainstay of c-store foodservice. By David Bennett, Senior Editor

PROCESSED HAM AND CHEESE

sandwich in a processed wedge container was once the normal offering in convenience stores. Coupled with a strong cup of coffee, it was a fast meal that kept c-store customers satisfied until they could get to their destination. Those days are becoming a distant memory. More and more, sandwich offerings are the meal. And, as retailers become adept at giving customers a wide selection, c-stores are expanding their food programs with hot and cold sandwiches that traverse different dayparts and flavor profiles. Recently the Chicago Tribune reported that the industry is taking the foodie movement beyond packaged foods, transforming America’s perception of what a c-store has to offer. Along those lines, the concept of what constitutes a typical c-store sandwich offering is changing as well. 42 Convenience Store Decisions

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Caldarola’s company includes the Food Training Group and provides ServSafe education and nutritional analyses of menu offerings in the restaurant and c-store arenas. The Nielsen Co. data Caldarola referenced, which was published in July 2017, noted while consumers still enjoy traditional lunch meat varieties for MEAT AND GREET “Everyone wants to look and feel their sandwiches, more are less-tradihealthy, and the majority of consumers tional selections that some consider a are following the trend of eating bet- cut above what they’ve eaten before. “Notably, specialty deli meats are ter and thinking about what they will be consuming,” said Nancy Caldarola, leading growth across multiple meat owner and general manager of types, with overall dollar sales increasConcept Associates Inc. “In the recent ing by more than 3% in the year ended Nielsen report on sandwich staples in Feb. 25, 2017,” the report stated. From overall grocery purchases and lunch a growth standpoint, chorizo is leading pail plans, we like our deli counter and the way with consumers with dollar make meats a part of our weekly pur- and volume sales increasing more than chases. But, today’s consumer is more 15% and 16%, respectively. Ann Golladay, senior project direcconcerned about where the meat is actually coming from not just that it is tor at Datassential, said the growing variety of sandwiches, that mark a processed commodity.” Millennials are propelling the segment’s growth as they seek fast, fresh and convenient meal options. As a result, sandwiches are made with fresher ingredients, various breads and a wider range that reflects the evolving gastronomic culture in the U.S.

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FOODSERVICE many U.S. restaurant menus, is trick- warma and lobster rolls. Bread and East to New England,” said Golladay. ling across to convenience retailers. other carriers increasing include naan, “One rising star is the Vietnamese banh mi, which has nearly quadrupled in Though grilled chicken, clubs and telera, brioche and pretzel. “Ten of the top 15 fastest-grow- penetration since 2012. Meanwhile, Italian subs are staple menu items, according to Datassential, a growing ing sandwich varieties on restaurant few traditional varieties have seen sigpool of sandwich options includes menus are ethnic or regional special- nificant menu growth over the past bahn mi, tortas, croque madame, shar- ties, from Southeast Asia to the Middle four years.”

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SIMPLER FARE Of course in Middle America, sandwiches still retain their traditional flavor, but retailers adapt to customers. Just ask Brian Unrue, director of operations of Clark’s Pump-N-Shop (PNS), part of Ashland, Ky.-based John Clark Oil Co. The chain comprises nearly 70 stores in Kentucky, Ohio, West Virginia and Florida. “In the metro areas we find this trend taking place we can sell the side salad or the cobb salad with an entrée,” said Unrue. “In our rural areas and I say this without trying to be funny, it is still about the grease and fried meat. We have tried yogurts, fruit cups and protein packs, and they will not move. Yet in the metro areas, these seem to be a lot stronger.” Despite this penchant for healthier items, when it comes to sandwiches, it seems the bigger, the better for many U.S. consumers. So it is with many patrons of Clark’s. “We will soon be opening a fresh deli location where the portions will be set at quarter-pound portions,” Unrue said. “This year we have even doubled the portions on fresh wedge sandwiches from four-ounce to eightounce. The saying ‘bigger is better’ has never been more true. I just believe the consumer wants a huge portion that is priced right.” LOCATING YOUR NICHE More chains such as Get Go, Wawa and Thorntons have designed kitchens in their stores to better meet the diverse demand of their customers, whether it’s healthier options or more authentic cuisine. Other retailers are taking it to the street. Food trucks have become more CStoreDecisions ecisions .com

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FOODSERVICE popular and not a bad concept to integrate to spice up your foodservice program, said Caldarola. So what can c-stores do to insert themselves into the hot sandwich conversation? “Talk up the street food idea,” said Caldarola. “It takes some creativity to come up with a program, but street is where it’s at. Street tacos, burritos, wraps and other Mexican breads make a difference, but the idea is to have many choices and then one can Source: Datassential ‘s “2017 Keynote Report: Sandwiches” buy many items to make a meal. For Middle Eastern and Mediterranean foods, choose a flatbread or cheesefilled bread that is used to fold around down-home appeal, an enticing sand- “Bundles work due to the price point foods. American choices can be thick wich program is hard to beat for first and you seem to be getting that bag lunch in one quick purchase. The slices of hearty breads that are used to bundling sales. “We run a monthly bundle on a consumer saves over a buck anytime make a monster sandwich, with houseselected sandwich, a bag of chips and a they take advantage of a bundle deal, made condiments.” Whether it has street cool or boasts 32-ounce fountain drink,” Unrue said. so they are popular.” CSD

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FOODSERVICE

Committing to Coffee Hot dispensed programs are growing along with changing consumer demands and tastes. By Erin Rigik Del Conte, Senior Editor

AKING A C-STORE COFFEE program to the next level can

mean a series of trial and error, careful branding, clear messaging, balancing simplicity with limited time offers and customization opportunities, while ensuring the area is clean and the brew consistent and fresh. In September, Salt Lake City-based Maverik Convenience Stores revamped its coffee program after significant research into consumer trends and desires, while keeping with its adventure theme. “You really enter a Maverik world when you enter one of our stores, and we wanted to continue that with our coffee, but also elevate the experience as well,” said Lauren Hancey, customer benefits manager, dispensed beverage at Maverik, which operates more than 275 c-stores across 10 western states. Previously, the coffee program was labeled ‘Bodacious Bean’ and cups featured a cartoon world with marshmallow clouds and a coffee stream, but surveys showed only a handful of customers recognized the brand and connected it with Maverik. Maverik scrapped the Bodacious Bean name and rebranded its brew as simply Maverick coffee. “The cups now are more realistic but still hold true to our adventure theme,” Hancey said. “We have different art work for small, medium and large cups and each one has an adventure picture.” The signage, urn wraps and branding across the coffee section are now crisp and clean, with blocks of color and simple flavors without descriptions. Simplicity is an intentional component in the rebranding. “Before there was a 48 Convenience Store Decisions

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lot coming at our customers and we tried to simplify that,” Hancey said. Along with the rebranding, Maverik slightly decreased the size of its cups. “We’re learning still from that and may make changes as we go,” she said. Maverik also reformulated all of its coffee blends and now offers a total of six different flavors and anywhere from 3-10 thermal coffee dispensers, depending on location. “We offer a house, obviously. We have a single-origin Columbian, a light Sumatra, a dark Brazilian, a decaf, and then we introduced a high caffeine option,” Hancey said. The chain partners with Boyd’s Coffee to supply coffee to all its stores. Ensuring coffee stays fresh is a team effort. “It’s something we really focus on with our store team,” Hancey said. A timer in the kitchen area that’s only visible to employees lets them know when it’s time to switch out the coffee. Employees are trained to refresh the coffee every two hours, especially during peak times, and to walk past the coffee section every 15 minutes to ensure it’s fully stocked with condiments and flavors. Going into the rebranding in September, Maverik researched customer demand and is now gaining feedback on the changes it made. “We’ve received really good feedback on the high caffeine variety. Customers also want to see a lot of condiment offerings,” said Hancey. “We see our customers come in and they have a very specific way that they want to make their beverage, and they want to make sure all those condiments are CStoreDecisions ecisions .com

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FOODSERVICE

“While we did not change the roaster or blends, we rebranded the program to ‘Mom’s Special Brew’ in all of our new builds and remodels. The new image ties in with our ‘Family Stores’ branding concept,” said Misty Steinhauer, purchasing and store branding director for J&H Family Stores. CINNAMON Because customization is such an important factor to HOLIDAY customers today, J&H also BLEND upgraded its condiment offering. “We added a cold well to SEASONAL BLEND offer 12-plus fresh creamer offerings, including all the favorite seasonal flavors like Family Stores Girl Scout Cookie and Pumpkin BE GROUNDED. Spice,” she said. LIKE YOUR COFFEE. J&H also added several other coffee drinks, including iced coffee from Goodwest, cappuccinos and frozen coffee drinks from Caribbean Crème. The hot coffee program consists of many flavors and bean varietals. “We select what we brew on a store-by-store basis determined by neighborhood, space, and trial and error. We currently are running Pumpkin Spice and Big Bold Trucker Blend,” Steinhauer said. It makes coffee a destination by serving a high-quality, fresh brew all day, at a competitive price. J&H partners with the Coffee Beanery to supply its coffee. “They also are a Michigan family-owned company, which is important to us,” Steinhauer said. Coffee is clearly a hit with customers. In its second Maverik’s new coffee cups proudly display the Maverik brand. While the quarter, J&H ranked among the top five coffee programs, graphics are now more realistic, they still fit the chain’s adventure theme. according to GasBuddy app users. Small, medium and large cups each display a different adventure. Cup J&H is currently testing the new Wilbur Curtis sizes have also been slightly decreased—a change Maverik is evaluating. IntelliFresh System, which allows the brewer to communicate with the satellite servers in order to monitor hold times and temperatures, so its always serving the freshest coffee, the program’s success. Overcoming perception was another, Steinhauer said. “It has a built-in self diagnostic system for as retraining customers to view convenience stores as des- detecting lime build-up inside of the water tank; this unit is tinations for prime beverages and food remains an ongoing engineered to alert you when it needs preventative maintenance.” challenge. A consistent ‘cup of joe’ is an For now, Maverik is putting the barista program on pause while it refocuses on its newly-improved self-serve important aspect of the coffee procoffee offering and building its food program. While the gram’s success, Steinhauer said. “Coffee is not the place to cut chain has no current plans to retest baristas, it could do so corners. We have too many new comat some point in the future. petitors, like coffeehouses and fast feeders trying to take our customMOM’S SPECIAL BREW J&H Family Stores, with more than 50 convenience store ers,” said Steinhauer. “Our mission Misty Steinhauer, locations in west Michigan, also recently rebranded its cof- at J&H Family Stores is to provide the purchasing and store fee program to bring the offering into alignment with the best retail experience to our customers branding director for by offering quality products, modern J&H Family Stores. chain’s overall messaging. offered. We offer a huge array of sugars and creamers, at no cost to them. We also make sure the coffee is fresh and hot.” Maverik rolled out its new coffee options slowly in September as it worked through its previous coffee inventory. Once the coffee offering was officially up and running, the chain ran a three-day flash sale where customers could purchase any size coffee for $1. The move helped alert customers to the updated offering. Last year, Maverik tested a barista program at its Base Camp headquarters store, but found it didn’t resonate with customers as much as expected. “Our Base Camp location is a tricky location. We don’t offer gas. It’s an urban setting. We are busy throughout the week, but way down (traffic-wise) over the weekend because it’s an office crowd,” Hancey said. Hancey said the location was a major factor that impacted

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FOODSERVICE

At QuikTrip, customization is an important consideration because the c-store chain knows all palates are different. Customers can choose from eight different coffee urns featuring four different flavors, as well as a cappuccino selection, in order to mix and match to create the perfect hot dispensed beverage. It’s not only the flavor variety, but the overall execution and consistency of the program that brings success.

facilities and charitable giving. When you’re here, you’re home. And that starts with your coffee in the morning.” JIVE WITH JAVA DRINKERS According to a recent GasBuddy footfall report, 56% of Americans who have visited a c-store in the past three months say convenience stores make coffee drinks as good as coffeehouses. In September, GasBuddy reported on the best gas station coffee by state. Buc-ee’s captured the highest ratings in the country. On the state level, Tulsa, Okla.-based QuikTrip captured the top spot in seven states; followed by Wawa with six states, and Framingham, Mass.-based Cumberland Farms with five states in the Northeast. Mike Thornbrugh, manager of public and government affairs for QuikTrip (QT), which operates 759 stores across 11 states, credits strong execution for giving it the edge against the competition. While the chain has always focused on providing a variety of coffee options, enticing coffee customers goes beyond just providing quality taste, good price and multiple options—although those are important. It also includes a consistently clean and inviting store with attractive signage and an overall quality presentation, Thornbrugh said. “We have really functional cups. It’s a really attractive cup and you can hold it with ease,” he said. “So that’s the sort of detail we look at beyond just having a good cup of coffee.” Making sure the coffee section is clean requires a cleaning schedule and training but math factors into it too, he pointed out. “We have a really good idea of how many cups of coffee are being sold and at what times they’re being sold,” said Thornbrugh. During especially busy times at the coffee bar, extra close monitoring is key. 52 Convenience Store Decisions

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At QT, limited time offers (LTOs) help add excitement. “We’re constantly bringing in something different, switching something out and then putting it back in. We try to give people as many options as we can,” Thornbrugh said. QT features eight different coffee urns depending on the store, with four different flavors. QT is offering pumpkin coffee for fall, but is also cross merchandising with pumpkin baked goods, such as a pumpkin pretzel and pumpkin pastries, to also drive coffee sales, using signage and its app. “Through the app, there will be coupons on various items, encouraging people to give it a shot,” he said. Customization is an important driver. “Everybody’s palate is different,” Thornbrugh said. Customers take advantage of the cappuccino selection, mixing and matching to create their perfect brew. “You’ve just got to stay on top of coffee—it’s a big, big driver for our business, for the industry. So you have to have a constant quality offer,” Thornbrugh added. BREWING UP SUCCESS Casey’s General Stores, which was voted best coffee in four states—South Dakota, North Dakota, Iowa and Arkansas—according to the Gas Buddy app, also makes LTO flavors a big part of its coffee business. Casey’s entices coffee customers with its quality brew made from 100% Arabica beans in four to six flavors, depending on location. Most locations feature flavored syrups and fresh creamer options. Casey’s rolled out a pumpkin spice creamer to all stores for the fall season and will introduce peppermint mocha creamer for the upcoming holiday season. All stores offer five cappuccino flavors, with several locations offering as many as eight options. “We rotate LTO items frequently throughout the year, with pumpkin spice being our current LTO,” said Kelli Reinhart, food service category manager for Casey’s, which has over 1,900 stores in 15 Midwest states. “This is a customer favorite and pairs well with our pumpkin cake donuts.” Sampling helps draw repeat customers. In September, Casey’s offered a 50 cents off coffee coupon for National Coffee Day through its app. “We promote digitally with coupons as well as bundling with our breakfast sandwiches and breakfast slices. We also promote (coffee) with our donuts and other bakery items,” Reinhart said. Casey’s mobile app has already surpassed one million downloads. Customers can order several foodservice items through the app, including whole pies, hot and cold sandwiches, cookies and other bakery items. While customers can’t pre-order coffee through the app, they just might decide to add a cup of coffee to their order when they arrive at the store to pick up their bakery items, which is a key way to grow incremental sales. CSD CStoreDecisions ecisions .com

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FOODSERVICE

Pizza, Roller Grill Satisfy Profits Pizza and roller grill sales are growing and, with the continual innovation of new and exciting products, are expected to continue their upward climb in the coming years. By Marilyn Odesser-Torpey, Associate Editor

Value is another sales booster for prepared foods such as INDING THE EXPECTED MIGHT seem boring for some, but many convenience store customers come in crav- pizza and roller grill items. Half of the survey respondents ing a hot dog or sausage served sizzling from the said that the most effective promotions for driving preroller grill or a just-from-the-oven slice of pizza with pared foods at c-stores are free samples and price discounts. Coupons (23%) and combos (17%) can also positively their favorite toppings. Despite the rise and popularity of made-to-order hot impact sales. Over the next three to five years, sales of foods that fit on and cold sandwiches on c-store menus, hot dogs, corn dogs, taquitos and other roller grill items are still carried the roller grill are expected to grow by 10%, Powell pointed by 71% of convenience stores and are among the top five out. Pizza sales are forecasted to increase by 12% over that sellers in the overall foodservice category, said Tim Powell, same period. vice president and senior analyst at Q1 Consulting LLC, a Chicago-based business research, strategy, planning and POWERING PROMOTIONS Although pizza and subs are usually the strongest foodmanagement firm. “Retailers offering prepared foods reported that 22% of service draws for Pump-N-Pantry, a Montrose, Pa.-based their sales come from roller grill items,” Powell quoted from chain which has 15 stores over six counties in the northeastern part of the Keystone State, Wade Robinson, the a research study conducted by Q1 last year. Pizza is also a top five c-store seller, carried by 47% of company’s food service supervisor/digital marketing manager, discovered last August how effective targeted operators. Portability was one reason why consumers in the Q1 sur- promotion can be to boosting roller grill sales. “We ran a sales contest in our stores in conjunction with vey choose roller grill items and pizza when looking for an on-the-go meal or snack. Sixty-five percent of respondents our local supplier, Kunzler, and achieved an increase of said that roller grill items travel the best (or are most porta- 45% in roller grill sales over the same time the prior year,” ble in their current packaging). Forty-five percent said the Robinson said. “One small store that usually doesn’t sell much saw a more than 200% increase in roller grill sales.” same for pizza. 54 Convenience Store Decisions

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Success is Simple

Americaâ&#x20AC;&#x2122;s largest branded pizza program in the c-store industry. Learn more. Download the Pizza Success Guide at huntbrotherspizza.com/CSD

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FOODSERVICE During the promotion the roller grill items were sold at full price. Robinson noted that the contest “energized” the staff because they could clearly see the results of paying attention to the roller grill and keeping it clean and full at all times. “It showed them that roller grill can still be an important part of the stores’ foodservice sales,” he explained. “I definitely want to do this contest again.” At any given time the roller grills, which are in 14 of the Pump-N-Pantry stores, feature 5:1 franks, a breakfast sausage and another kind of sausage such as hickory-smoked Bahama Mamas, jalapeño and cheddar or bacon and cheddar. Roundup grills are used in the stores because they don’t have “rollers” which can dry out the food. The Roundup components slide up and down, allowing the hot dogs to be basted with their own juices, Robinson explained. The stores’ roller grills at Pump-N-Pantry are full-service • Pizza and roller grill items remain strong sellers. and staffers walk customers down a behind-the-coun• Portability and value add to appeal. ter condiment bar as they would for a sub sandwich. Customers can choose from 12 different condiments, with • Promotions don’t have to be price-based. only chili and cheese costing extra. • New and LTO items attract attention. Bundle deals are also appealing to Pump-N-Pantry customers, Robinson said. Every day they can get two hot dogs and a 20-ounce soda for $4.99. At Coffee Cup Fuel Stops, with nine stores—seven in South Dakota, one in North Dakota and one in Wyoming— cheeseburger roller bite. “Our customers like spicy foods,” said Dudte. “So we’re roller grill items account for a relatively small percentage of overall foodservice sales, but many customers still expect always looking for items with bolder flavors.” In the newly-expanded kitchens in four of Duchess their hot dogs (4:1) and Cheddarwurst to be fresh and hot Shoppe’s stores, condiment bars offer nine items to gild the 24 hours a day. “Our customers are not necessarily looking for something grill items. America’s love affair with pizza keeps sales of whole pies different, but they do look to us for ordinary items done extraordinarily well,” said Tom Heinz, the company’s co- and slices rising in convenience stores. Pump-N-Pantry’s Robinson calls it “the heart of our foodservice program” founder and president. That means strictly disciplined hold times on the self-ser- and pointed out that during the summer of ’17 both breakvice grills and a fresh condiment bar with six different items fast and traditional pizza sales were stronger than ever. And to allow for creative customization. Rolls are also individu- now that the local schools are back in session, there’s a big uptick in the demand for slices. ally wrapped. All pizza varieties are available around the clock in the stores and breakfast pizza is becoming increasingly popular OPTIONS ENTICE Only 44 of the total 119 Duchess Shoppe convenience during the evening hours, Robinson noted. “We did some promotions for our breakfast pizza on stores primarily in Ohio and one in West Virginia have the space and sales to support roller grill programs. But in those Facebook and feature it on the digital menu board we just stores customers like variety and the stores offer plenty of it, completed,” he said. “Seven of our stores also have kiosks where we also promote it as well as offering customers the said Judy Dudte, director of food service for the chain. “In some of our stores, there are 10 different items on the opportunity to select from a wide variety of topping options.” Pizza is available in 13 Pump-N-Pantry stores. The comgrill at any given time,” said Dudte. That includes five or six flavors of tornados, egg rolls pany has been offering its proprietary fresh dough program and roller bites; breakfast sausage in the morning and hot for about 20 years. Robinson is particularly proud of the sauce the company dogs and sausages the rest of the day. Limited time offers (LTOs) introduced quarterly or twice a year as they catch uses, emphasizing that the tomatoes go from California field Dudte’s attention, keep the selection fresh and tempting. to can within 24 hours. On top of the sauce is sprinkled a halfOne recently introduced item that is doing well is a chipotle pound of proprietary cheese blend. The stores have stone

4 FOODSERVICE TIPS

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FOODSERVICE

C-stores with a pizza offering often have to refill the warmer display several times during the day. Hunt Brothers’ version of the slice, a one-quarter pie serving the company bills as Hunk A Pizza, does best as breakfast, lunch and afternoon snacks, while whole pies are often top sellers around dinner time.

“We’re baking pizza from 4 a.m. to 5:30 at night, Hyatt hearth ovens to give the pizzas an authentic crispy crust. “These ovens are not as fast as conveyor ovens—it said. “Half of my hot deli sales and 14-15% of my total takes about eight minutes to bake one of our pizzas,” said inside sales come from pizza.” While the breakfast pizza sells briskly in the morning, so Robinson. “But having a beautiful pizza gives us a major does pepperoni. The stores have to refill the warmer display competitive advantage.” A favorite pie is the chicken spiedie, topped with mari- with both varieties several times during the early hours. nated, grilled chicken strips that are a local specialty. Other Hunt Brothers’ version of the slice, a one-quarter pie serving popular variations include buffalo wing; chicken, bacon and the company bills as Hunk A Pizza, does best as breakfast, ranch and meat lovers. A pierogi pizza has also become a lunch and afternoon snacks, while whole pies are the best seasonal Lenten tradition. Pizza ingredients also do dou- sellers around dinner time. Hunt Brothers has been the featured pizza in the Anacoco ble-duty in the stores as the toppings are used to stuff Mercantile store since around 2001. It was already firmly strombolis made from the same pizza dough. To promote its pizza as a value purchase, Pump-N-Pantry established as the community’s go-to spot for pizza when offers a combo meal consisting of two slices of cheese or Hyatt bought the store in 2006. Last January, he also added pepperoni and a 20-ounce drink for $4. Whole pies are a the program to the menu at Tidbits and Tackle. One thing he particularly likes about Hunt Brothers is buy-one-get-one attraction on weekly “Two-fer Tuesdays.” the company’s regular introductions of limited time offer (LTO) pies to help him keep up with consumer taste for new PIZZA PLEASING Pizza is a dynamic category for Coffee Cup Fuel Stops, and bolder flavors. “When our customers really like an LTO—like a buffalo which the chain touts on billboards and in-store signage as well as sampling to customers and at community chicken pizza we featured—they wait for it to come back,” events. The company works with three branded concepts— Hyatt said. “They’ll start asking months in advance when Pizza Hut in three stores, Hot Stuff at five locations and a they’ll be able to get it again.” Customers also like to create their own combinations. Subway’s Pizza at one site. “We like to work with national and international brands With the Hunt Brothers program, they can add up to 10 topwith recognizable names and strong marketing support,” pings on an original or thin crust. Pizza, including Hunt Brothers in some of its stores, is the Heinz said. “They also make it possible for us to introduce No. 1 best-selling foodservice item at Duchess, according to new products to keep up with what our customers want.” One of the latest of these new products recently added to Dudte. In four of its units, Duchess offers a proprietary pie the menu in one of the stores is a nine-inch pie from Pizza as part of its overall expanded kitchen concept called “the Hut. Prior to that, the store sold only personal pan size. deli.” Two of the stores make pies to order by allowing cusCustomers like the larger size so much that it will be rolled tomers to choose their toppings at an ordering kiosk, while the other two are grab and go. out into the other two stores. To please a range of palates, Duchess offers eight variTo reduce cook time, Coffee Cup is installing new ovens that can bake a pizza in four minutes instead of the current eties of Hunt Brothers and proprietary pies including chicken bacon ranch and Hawaiian. LTOs are also availseven or eight minutes. Robert Hyatt sells so many pizzas at his two Louisiana able every quarter. In stores with smaller kitchens, a third stores—Anacoco Mercantile and Tidbits and Tackle 10 miles concept—a ready-to-bake Pirelle’s Pizza—fills the bill with four varieties. CSD west—that he has worn out and had to replace his ovens. 58 Convenience Store Decisions

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CATEGORYMANAGER’S NOTEBOOK

Cigar Category Skirts Regulation

While federal lawmakers don’t have cigars in their sights now, c-stores must still contend with state and local tobacco laws that threaten to stunt category sales. By David Bennett, Senior Editor

S MUCH ATTENTION HAS been paid to new regulatory policies targeting tobacco products, the cigar segment has been relatively immune to federal lawmakers’ sharpest knives. That’s good news for many convenience retailers that are often busy fending off local and state legislation. One example of how cigar sales are at risk is last year’s sweeping tobacco tax package Pennsylvania lawmakers passed that among other mandates, increased the price per-pack of cigarettes by $1. The cigarette tax increase that took effect last August makes Pennsylvania’s $2.60 levy the 10th highest in the nation. New Jersey’s $2.70 per pack is ninth. In Philadelphia, the tax now is $4.60 per pack, which includes a $2 surcharge added two years ago. The combined state and local tax makes Philadelphia’s rate the third highest among the nation’s big cities, after Chicago’s $6.16 per pack and New York’s $5.85. In addition, the new law will impose a floor-stocks tax on wholesalers and retailers that have in inventory cigarettes, tobacco products, electronic cigarettes and e-liquids. The only tobacco segment not affected by last year’s tobacco mandates was cigars. Alex Baloga, president and CEO of the Pennsylvania Food Merchants Association, said though Pennsylvania’s new tobacco law omits for now cigars, it is indirectly impacting cigar sales as Pennsylvania residents continue to seek cheaper tobacco products across state lines. “As Pennsylvania residents search elsewhere for less costly tobacco products, it affects the whole basket including cigars,” said Baloga. Pennsylvania does tax little cigars, part of a state law passed in 2009. 60 Convenience Store Decisions

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FEDERAL REVIEW This past July, the U.S. Food & Drug Administration (FDA) announced it will be unveiling a new comprehensive tobacco policy. As part of the policy beginning in 2018, the FDA will require premium cigar manufacturers and distributors to label their products with mandatory health warning statements similar to the wording of the statements already required on cigarette packaging. In addition, the FDA will delay the deadline for substantial equivalence from May 2018 until to Aug. 8, 2021. By definition, substantial equivalence is a pathway to seek permission to market a new tobacco product that involves comparing the new tobacco product to a legally-marketed predicate product. While the FDA’s Center for Tobacco Products (CTP) has announced it will issue much more detailed substantial equivalence in the future, it remains unclear when that guidance will come as the agency announced no specific dates other than the 2021 date and an Aug. 8, 2022 date for e-cigarettes and vapor products to submit for premarket tobacco product application (PMTA). The primary point of debate focuses on how consumers use cigars, the potential health effects of smoking cigars and how cigars should be tested for harmful and potentially harmful constituents (HPHCs). Darryl Jayson, chief operating officer for the Tobacco Merchants Association in Princeton, N.J., predicts mandated warning labels on cigars “will not have any profound effect on cigar/cigarillo sales at convenience stores.” However, other proposed changes might. “As cigars are now ‘deemed,’ meaning that, under the authority of the FDA-CTP, the CTP can issue any new regulations concerning the manufacture, sale and marketing of CStoreDecisions ecisions .com

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CATEGORYMANAGER’S NOTEBOOK

cigars,” Jayson said. “In the deeming regulations, the CTP did note that a prohibition on flavored cigars could occur in the future.” For now, the CTP announcement for facilitating a detailed substantial equivalence policy, accompanied by the deadline extension that is a few years away, provides suppliers and retailers time to better focus on the application process as a whole. “As the CTP extended the substantial equivalence deadline to August 2021, cigar makers are no longer faced with an August 2018 mandate to submit their paperwork,” said Jayson. “This should create a level of normalcy for the cigar market.” LOOKING LOCAL Though cigars aren’t under an intense microscope in terms of federal regulation, local lawmakers are chipping away at all tobacco categories, depending where c-stores operate. In New England and other parts of the East Coast, c-stores such as Cumberland Farms are inundated with local tobacco legislation—and cigars aren’t immune. Stephanie Martone, cate g o r y m a n a g e r- O T P f o r Cumberland Farms, said sales of little cigars and cigarillos have tapered off some this year at the Westborough, Mass.-based convenience chain primarily because of the litany of local ordinances targeting not only cigars, but other tobacco products (OTP). “Overall, little cigars are not as successful as they have been in years past,” Martone said. “Due to legislation in many of the towns where we operate and states with high taxes there is not enough of a gap between little cigar pricing and discount brand cigarettes.” Cumberland Farms operates more than 560 stores primarily in New York, New England and Florida. Like other convenience retailers, the Massachusettsbased chain is diligent when it comes to keeping up with proposed tobacco initiatives and stays in constant communication with local officials. However, the volume of regulations being passed is hard to track at times. “Because we operate a majority of our stores in 62 Convenience Store Decisions

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Massachusetts we have seen quite a bit of legislation on cigars coming through,” said Martone. “Much of this started a few years ago and continues to grow with minimum pricing and flavor restrictions. Recently, we have seen more coming out of towns in Rhode Island as well. I would fully expect this will continue to grow as boards consider these regulations.” MARKET MOMENTUM Another convenience community that does big cigar business, but is shielded mostly from the local and state tobacco ordinances that increasingly impact most c-store operations is the U.S. military’s retail market. Sheila Whitfield, senior buyer for the Army & Air Force Exchange Service (Exchange), purchases tobacco products for 495 store locations nationwide and abroad. She explained that so far in 2017, the Exchange has enjoyed a robust OTP category, including filtered cigars, which right now is limited in terms of selection. “We only have one filtered cigar SKU in the assortment.” Whitfield said. “The filtered cigar brand in the assortment is the Swisher Sweets Little Cigar. Sales on that SKU are up 17% over last year and units are up 8%.” Moving forward, filtered cigars could become a staple in the Exchange’s OTP sets. “We are seeing the momentum in the industry for filtered cigars growing in 2018,” said Whitfield. “This will be an opportunity to expand on our assortment.” For Martone, cigars still remain a robust opportunity for Cumberland Farms, despite the shadow of local and state regulatory policies. To gain more traction, the chain does promotions to capture consumer interest. “Promotions and limited times offers (LTOs) are very helpful throughout the year,” said Martone. “The LTOs help drive sales as customers come in looking for the newest flavor. Buydowns and pass-through promotions help along the way with getting customers to come in and see the next deal. We have had quite a bit of success with the different LTO flavors. Customers are definitely looking for the next, new exciting flavor.” CSD CStoreDecisions ecisions .com

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CATEGORYMANAGER’S NOTEBOOK

Beer Supplier Performance from the Retailer’s Perspective

Convenience retailers rate ‘understanding of the retailer’s category strategy and goals’ as the most important service provided by beverage alcohol suppliers. By CSD Staff

HE CM PROFIT GROUP Beverage Alcohol Category Partnering Study evaluates national accounts’ team performance through the eyes of the retailer. CM Profit often interviews more than 100 on- and off-premise retail chain decisions makers and asks them to rate the skills of their spirits, wine and beer suppliers in some 15 areas. The survey provides serviceable data for the beverage alcohol category that answers the following questions: • What supplier national account services do retailers value most? • How is supplier performance meeting retailer expectations? • Are suppliers performing best at the services retailers value most? • In what service area do retailers see room for greatest improvement? • How do retailer expectations change from year to year? • What services would benefit most from improved resources going forward? CM Profit Group also researches retailer expectations annually by conducting in-depth telephone interviews with chain beverage alcohol buyers and category managers across the country and across all retail channels. In addition, retailers rate select sales services and skills on their importance, and then rate suppliers on their ability to deliver these sales and services. Among some of the findings: 64 Convenience Store Decisions

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2017 Importantace vs Supplier Avg RaBng of Suppler NaBonal 2017 Importance vs Supplier Avg Rating of Supplier National Account Services/ Skills as Rated by Convenience Retailers Account Services/Skills as Rated by Convenience Retailers Understanding of Retailers' Category Strategy & Goals Business Decision Support Sales Process ObjecBvity Assortment AnalyBcs Space Planning Post-Program EvaluaBons Category/ Shopper Insights PromoBons Category Inﬂuencer Pricing AdmininstraBon

1 Importance Scale Importance Supplier Rating Scale Beer Supplier AVG

1 = Not at all Important

1.5

2.5

2 = Somewhat Important

3 =Important

1 = Does Not 2 = Close to Meeting Meet Expectations Expectations

3 =Meets Expectations

3.5

4 =Very Important

4 =Exceeds Retailer Expectations

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CATEGORYMANAGER’S NOTEBOOK In the current CM Profit Partnering Study, convenience retailers rated ‘understanding of the retailer’s category strategy and goals’ as the most important service provided by beverage alcohol suppliers. On average, however, the research shows that beer suppliers are not meeting retailer expectations in this performance area. The survey also provides evaluation of wine and spirts suppliers but highlights beer as it is the dominant segment in the convenience channel. The following direct quotes from convenience store retailers interviewed for the Partnering Study illustrate the value of this performance area to retailers: “XXXX* constantly checks in with us to start off most calls to make sure if any of our goals have changed.” “XXXX* has spent more time in our office, and their regional director is visible. This has added value in many aspects of our business.” The following quote illustrates the effects of poor supplier performance in this service area: “I once heard XXXX* executive say, “a retailer is not going to tell us how to run their business.” I have never forgotten this and I think this demonstrates their lack of understanding of my business needs and priorities.” Users of the Partnering Study take these retailer evaluations seriously. Meeting retailer needs and delivering on expectations drives efficiencies and synergies in supply chain management. The Partnering Study continues to grow as a valuable tool for improving national accounts supplier services. As the number of retailers participating in the survey increases, the mutual benefits of the supplier-retailer partnership are enhanced. Each c-store retailer provides an objective third-party interview where specific answers are anonymous, and is a valuable contribution to improving retailer/supplier partnerships. CSD 66 Convenience Store Decisions

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The services and skills evaluated in the Partnering Study were developed through analysis of national accounts processes and are summarized below: Understanding of Retailers' How well do your beverage alcohol suppliers Category Strategy & Goals understand your business and how important is that to you?

Business Decision Support Business decision support is understand-

able and verifiable data supports business decisions.

Sales Process Sales process is the way in which the supplier rep structures the call. A good sales process makes the call an interactive conversation about the retailer’s business. The rep asks good questions that uncover the retailer’s needs. Most importantly, the rep listens and acts on the retailer’s answers.

Objectivity Many retailers doubt that suppliers can be

objective but their responses indicate that some suppliers are better about it than others and rate this as more important than many other services. This is because it is difficult to value services like assortment analytics and space planning if the retailer cannot trust the objectivity of the supplier offering those services.

Assortment Analytics Assortment Analytics is the data and the data

models that suppliers use to support their assortment and new item recommendations. Surprisingly, some reps still ask for new items without any supporting data. This is the “please put this in because I ask nicely” approach.

Space Planning Not only are category captain services sur-

veyed, but also the extent to which suppliers offer consulting space planning information.

Post-Program Evaluations This is a service that is fairly highly valued

by retailers who rate suppliers fairly low at performing.

Category/ Shopper Insights Suppliers are evaluated for the applicability of

their Shopper Insights not only for the amount.

Promotions Promotions are evaluated for their creativity, customization and ability to drive traffic.

Category Influencer Category influencers are those suppliers

that bring category and industry information and insights that can potentially impact a retailer’s business strategically and long term, global trends that will impact the category in the next three to five years.

Pricing Administration Pricing administration is judged as not very

important because many retailers do not expect pricing services from suppliers and will only accept pricing from distributors. For those who expect pricing recaps from suppliers the criteria for performance are accuracy and timeliness and completeness. CStoreDecisions ecisions .com

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CATEGORYMANAGER’S NOTEBOOK

Meat Snacks Meet Expectations While traditional snacking profiles still sway the meat snack category, America’s propensity for different options is spurring more variety. By Jeffrey Steele, Contributing Editor

T WASN’T THAT LONG ago that offers of meat snacks

didn’t have a lot of variety to choose from—making for a category without much spice. That can make for a static category. However, as snack manufacturers are launching new flavors and product lines to capture consumers’ imagination convenience stores are capturing more meat snack sales. The average U.S. consumer enjoys meat snacks about 10 times a year—significantly more than the eight times that consumers were purchasing meat snacks in 2012, said Darren Seifer, food and beverage industry analyst for the NPD Group, a Port Washington, N.Y.-based market research firm. “That increase actually makes it one of the fastest-growing savory snacks out there,” said Seifer. “Savory snack Tim Cote, Plaid Pantry’s vice president of marketing. “The consumer profile varies a bit by brand,” said Cote. foods are growing as consumers become increasingly con“Many of the newer entries into the market have flavor procerned about their sugar consumption.” Meat snacks fit well within that trend, including the pop- files and bite types that appeal to a broader base of customers than the more established brands. Many of the older bands ularity of such brands as Slim Jim and Jack Link’s. Consumer research firm Mintel Group Ltd. found one of are more male dominated. And while they pull sales from all the most notable innovations in the category is the launch of age groups, the newer brands do skew a bit younger.” Seifer agreed that meat snack purveyors are responding higher-quality meat snacks in response to customer interest. A Mintel survey conducted this past summer indicated to snack fans’ desire to try something new. “Consumers are always asking, ‘What else do you have 41% of consumers would like to see more meat snacks made from premium meat cuts. Twenty-eight percent of those for me?’” said Seifer. “So it’s not a surprise more flavors polled found appealing the idea of grass-fed meat snacks are being introduced. While the traditional flavor was cured and almost as high a percentage—26%—like the notion of beef, now we’re seeing habanero and sriracha. A lot of the preservative-free products. Along with these trends has new flavors I’m seeing are about spiciness and boldness, come growth in the number of meat snacks free of additives and giving the snack a new kick.” Mintel found that if only two meat snack types were like hormones, and the number claiming humanely-raised available to customers, almost two-thirds (65%) would be ingredients. Another noteworthy trend is that more than a quarter attracted to either spicy flavors or meat snacks from prime of consumers surveyed (27%) expressed an interest in pur- cuts. If only three meat snack types were available, nearly three-quarters (74%) would find either spicy flavors or meat chasing meat snack bars, according to Mintel. snacks made from prime cuts or variety packs appealing. The quest for what Mintel calls “new meat snack forCUSTOMER PREFERENCE While traditional meat snack offerings still have the mats” is largely driven by younger buyers, who also are upper hand at Portland, Ore.-based Plaid Pantry, the more likely to buy meat snacks in general than older buyers. growth of new meat snack options has been steady, said Among those aged 18-34, 32% express an interest in pur68 Convenience Store Decisions

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CATEGORYMANAGER’S NOTEBOOK

chasing meat snack bars, while 29% are intrigued by meat snack trail mixes. Younger buyers are also more inclined toward what might be called socially-conscious meat snacks. Nearly a third (32%) show interest in grass-fed meat snacks and 28% appear up for humanely-raised meat snacks. Increasingly, Americans are seeking some sort of health benefit in the snacks they select, Seifer said. “Protein is something consumers want, one of the few things they’re demanding more of,” Seifer added. “And we’re seeing the avoidance of sugar doesn’t appear to be a flash in the pan. It will be around for a while. The consumer mindset has shifted in terms of what we should be avoiding, and meat snacks fit with that avoidance.” Above all, the fact that meat snacks are among the fastest-growing snack offerings should keep retailers on their toes, Seifer said. “It would behoove retailers to ensure [meat snacks are] easy to find in store,” said Seifer. “Whether that be at checkout, or popping off the shelves more visibly, retailers should ensure they’re not losing out on a sale that otherwise would take place.” LURED BY FLAVOR At 109-store Plaid Pantry chain, newer meat snack flavors sell well. But the market is still dominated by what Cote calls “the big three,” a trio consisting of original, peppered and teriyaki. “Sriracha may be a bit post peak,” said Cote. “Habanero and Hatch Chili have shown promise.” Cote said meat sticks sell most productively from the front counter, while bags fare best on an end cap or in line. He also believes meat snacks are very good candidates for promotions, noting they “drive huge lift at higher-thanaverage retails.” Asked when changes he’d like to see from meat snack purveyors, he didn’t mince words. “Introducing a new flavor is fine; putting more effort into the maturation process for these flavors is important,” he said. “Working items into off-shelf display and clip strip offerings would be a start.” LOCAL VARIETY At Team Oil Travel Center, a convenience retailer based in Spring Valley, Wis., retail manager Jesse Streater reported meat snacks have been growing more popular, and that’s led to increased product stocking. “We’ve just been getting more of everything, at different price points,” Streater said. “We have a bunch of Jack Link’s products, and we also have Kickass Snacks. We carry their jerky and meat snacks. We also have a local meat producer who makes his own jerky and meat sticks and strips himself . . . it’s very popular with the hunters around here. This time of year, we sell a lot more meat snack products, including 70 Convenience Store Decisions

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INDULGENT VERSUS HEALTHY DESPITE THE PROPENSITY TO indulge, health plays a key role in the types of snacks consumers eat. One third (32%) of consumers said the majority of snacks they eat are healthy and over one quarter (28%) said they are snacking on healthier foods this year compared to 2016. In fact, snacks with health-related claims are among the fastest growing snack launches, with low/no/reduced allergen claims accounting for 46% of total new snack product launches in the U.S. in 2017, an increase of 30% over 2013, according to Mintel Global New Products Database.

jerky and meat sticks they can take with them.” Meat snacks are merchandised with other salty snacks at Team Oil, but get their own section within that area. The local meat producer’s product must be refrigerated. “So we keep them in the cooler, but half of one of our cooler doors is dedicated to those products,” said Streater. When it comes to flavor preferences, the Team Oil customer base may be bucking the trend toward more flavor experimentation. The store got a shipper once with what Streater calls “odd flavors,” but there was no reorder. “We sell more of the beef sticks, teriyaki and peppered, the classics,” she said. Summer with its family road trips, and fall with its hunting expeditions tend to bring out the greatest meat snack sales, she added. But throughout the year, the meat snack category is simply becoming a bigger and bigger phenomenon at Team Oil. “It has gotten more popular, we’re definitely selling more of it and dedicating more space to it,” said Streater. CSD CStoreDecisions ecisions .com

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C O N G R AT U L AT I O N S

SHEETZ 2017

CHAIN OF THE YEAR C o n ve n i e n c e S t o re D e c i s i o n s

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CATEGORYMANAGER’S NOTEBOOK

Packaged to Sell Where carbonated soft drinks are slipping, RTD coffees and sparkling water are picking up the slack. By Anne Baye Ericksen, Contributing Editor

CCORDING TO NATIONAL ASSOCIATION of Convenience

Stores (NACS) data released this summer, carbonated soft drinks (CSDs), energy and sports drinks, water, juices and teas, accounted for about 15% of total in-store sales for convenience stores in 2016. “Beverage sales are often impulse purchases so store traffic is one of the keys to improving packaged beverage performance,” said Gary Hemphill, managing director of research for the Beverage Marketing Corp.

(RTD) coffee, tea [and] enhanced/ sparkling waters.”

achieving, said Hemphill. “In general, niche categories are outperforming traditional mass market categories,” Hemphill said. “Two of the hotter categories right now are sparkling water and ready-to-drink packaged coffee.” According to Mintel research, coffee is the fastest growing segment of beverages in all retail channels. What’s more, analysts expect it to grow by 67% over the next five years. Interestingly, coffee shop traffic isn’t what’s driving the high returns. Mintel set expectations for coffee shop sales growth at only 2.17%—the slowest rate in six years. The Wells Fargo Securities Beverage Buzz Labor Day Retailer Survey, for which approximately 15,000 c-stores were surveyed, shows RTD coffee sales jumped 8% for the third quarter. Another reason this subcategory is perking up is the growing popularity of cold-brew coffee. The cold-brew process typically takes longer than most traditional drip or single-cup brewing methods. Because of that time commitment, consumers are less likely to concoct the coffee at home and are more willing to pay for the convenience of picking up a single serving from c-store cold vaults. Not only has the niche mushroomed 460% between 2015 and 2017, Mintel estimated the chugging market could earn more than $38 million by year’s end.

WATER LEVELS UP Earlier this year, bottled water sales set a new record when it surpassed soda for the first time as Americans’ top beverage of choice. Indeed, the subcategory has been consistently producing healthy volume gains for the past several years. Ironically, yearover-year comparison indicates a blip this summer when growth slowed substantially between June and August, only to rebound in September. For the four-week period leadSLIDING SODA SALES The demise of carbonated soft ing up to Oct. 7. Nestlé Pure Life and drinks cannot be solely attributed to Dasani each registered 9.9% gains in sugary drink taxes—only a handful unit sales and Aquafina jumped 8.1%. of cities currently have enacted them. Of the three brands, which repreRather, sales have been on a down- sent the majority of the market share, ward trajectory for the last few years only Nestlé posted growth (0.5%) for as consumers are turning to healthier the 12-week period while sales for beverage options to satisfy their thirst. Aquafina and Dasani dropped 1.1% CSDs lost 3.3% in unit sales in all and 2.7%, respectively. Looking at c-store rings, sparkling retail channels for the four-week period ending Oct. 7, according to Nielson water appears to be faring much better. La Croix and Sparkling Ice each research, reported by Wells Fargo claim slightly more than one-fifth of Securities. Even new CSD product offerings the dollar share, but La Croix outsold have struggled to make an impact, its competitor in unit sales for the foursuch as the super soda Monster weeks ending Oct. 7 with a 51% gain Mutant, a collaborative venture compared with 1.4% for Sparkling Ice, according to Wells Fargo Securities. between Monster and Coke. “ I t h a s b e e n s l o w t o g a i n Dasani’s sparkling flavored water also momentum,” said Mike Nelson, cat- posted impressive gains of nearly 45%. egory manager for Plaid Pantry. The Beaverton, Ore.-based company COFFEE BREAKS AWAY Packaged beverages in general have NEW PRODUCTS BOOM operates 110 stores in Oregon and Even with such a strong presence, Washington State. “We plan to address dipped slightly, at least during the first RTD coffees aren’t in the position to the CSD decline issue with expanding half of this year. However, a few segments are over- grab cold vault space away from carother categories such as ready-to-drink 72 Convenience Store Decisions

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CATEGORYMANAGER’S NOTEBOOK bonated soft drinks or bottled water just yet, though category managers may be open to different offerings to compensate for slipping soda sales. “We are seeing more operators embrace more better-for-you offerings because this is where the greatest growth is today,” said Hemphill. It’s also where beverage producers are focusing efforts, from Coca-Cola’s new television campaign touting its non-soda products to startups on display at the Natural Products Expos East 2017, held in September. The industry event featured a sampling of new products including purple teas, yapoun tea and YOOT-brand tea, which produces three SKUs: Licorice Root, Dandelion Root and Prickly Ash. “We are seeing new products come into the market, especially more healthier energy drinks,” said

SPARKLING FLAVORED WATER SALES UP Brand

Dollar Share %

EQ EQ Unit Sales y/y Dollar Sales y/y Share % (4-weeks ending Oct. 7) (4-weeks ending Oct. 7)

La Croix

22.0%

21.5%

51.0%

48.4%

Sparkling Ice

21.2%

12.6%

1.4%

0.6%

Perrier

7.1%

3.2%

21.8%

28.7%

Polar

6.3%

7.6%

10.3%

14.8%

Dasani

2.9%

2.7%

44.7%

45.4%

Schweppes

2.2%

2.0%

-18.1%

-5.0%

Source: Nielsen Total US xAC including Convenience Database and Wells Fargo Securities LLC, reported on Oct. 17, 2017.

flavors. Sold at 7-Eleven stores, the Hemphill. PepsiCo introduced the AMP 12-ounce cans are priced at $1.99 or Energy Organic brand in August, try- two for $3. While category managers and ing to capitalize on health-conscious consumers who want an energy drink c-store owners will experiment with different product mixes, sodas remain with more natural ingredients. It’s available in citrus, pineap- a significant profit generator, and probple coconut, grape and tropical burst ably will for the foreseeable future. CSD

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COLUMN TECHNOLOGY

The Expanding Back Office Cloud and mobile are among the technologies pushing the envelope of internal store systems. By Ed Collupy

ECENT STORE VISITS HAVE often allowed me to spend time in the ‘back office’ and have reaffirmed for me that retail store managers have a lot going on. There are people interactions, printed and posted operational & marketing directives, compliance forms to be completed, cash to be deposited, technology to interact with, and more. And then there have been interactions with backoffice providers that have confirmed, just what I saw at stores; the back office isn’t in the back—it can be anywhere, even away from the store, which happens far more often than it used to. As business models in the c-store/ re t a i l p e t ro leum industry have changed, their needs with back-office systems “are dramatically different,” said Ken Piddington, chief information officer at MRE Consulting and formerly at Global Partners, told me during a recent conversation. He sees retailers and wholesale fuel distributors using several back-office solutions. Although traditional back-office solutions have been extended either through development efforts or by acquiring others “there isn’t one that does everything,” Piddington shared. He highlighted the need to be sure there’s a solid plan to integrate systems so each system can get to the other and share data.

BRAINS OF THE BUSINESS In those back offices I visited, managers were not only downloading their price book and uploading sales data from the point-of-sale system to the back-office system, but they were using the data to evaluate their own store’s per76 Convenience Store Decisions

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formance, benchmark themselves against their peers and set a plan for their day on the sales floor with customers. Matthew Webb, operations manager at Webb’s Auto & Truck Services, operates a Circle K/76 store in Bell Gardens, Calif., and refers to his back-office systems as the “brains of the business.” A back-office capability he uses is a Transaction Analysis tool that lets him analyze trends like average fuel fills and customer transactions to see if his “customer base is growing or shrinking.” Webb, when I spoke with him was in his ‘back office’ using another back-office system to prepare his payroll using a cloud-based solution. And he’s been ready to adopt other early on ‘back office’ solutions for his business. He has participated in beta tests with an automated promotions platform Circle K was bringing to their franchisees, that to Piddington’s point is integrated to his traditional backoffice price book module, and is currently piloting a Virtual Inventory system. GROWING CAPABILITIES Mark Jordan, President of South Carolinabased Refuel Inc., refers to his back-office system as “a platform” he uses beyond price book and standardized reporting. Being able to perform analysis on what happened last week, track down a transaction tying a receipt and video clip together, and customize reporting around sales and purchases helps in not only a new concept store with wine tasting, but in his other four locations. Jordan also said his alternative payment and discount fuel program has CStoreDecisions ecisions .com

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COLUMN TECHNOLOGY MIRABITO IMPROVES ITS CONNECTIONS MIRABITO ENERGY PRODUCTS, HEADQUARTERED in Binghamton, N.Y., operates 101 convenience stores and recently partnered with Barcoding Inc. to solve connectivity challenges at its c-stores. The chain was using broadband internet as its only data source, and periodically the stores would experience network outages, during which time the stores could not connect and the credit card network would go down. The company knew it needed to enhance its in-store connectivity so it could continue to operate, even if the internet went down. Mirabito turned to Verizon Wireless to set up a new supporting cellular network system. Verizon Wireless introduced Mirabito to Barcoding Inc., which set up Mirabito stores with Cradlepoint AER1600 Series Routers and implemented Cradlepoint’s NetCould Enterprise Cloud Manager, so each device could be managed remotely. Barcoding Inc. also performed the device staging services, providing the SIM insertion and creating the consolidated IMEI / SIM / MAC / SN Log for immediate activation with Verizon Wireless. What was the result? With the new cellular network backup in place, Mirabito now has a second level of internet connectivity that also provides the c-store chain with 24/7 metrics and reports. “By recognizing and addressing the connectivity needs of our convenience stores, we have effectively heightened productivity, increased overall revenue and enhanced the experience of our employees and customers,” said Eric Bunts, Mirabito’s chief information officer.

‘back-office’ capabilities; providing “insights into customers such as what they are buying and then customize offers to customers.” At Tooley Oil based in Sacramento, Calif., David Tooley, vice president of marketing, worked with his solution provider to extend the ‘back office’ to what his customers were buying and now is conducting market basket analyses. He has been able to “place items and lay out the store, evaluate cross promotions, and know what items customers are more apt to buy with one another.” The fuel side of the business also has back-office solutions for inventory monitoring, problem alerting and end-to-end pricing. Tooley Oil also has a wholesale fuel business and relies on a couple of back-office point solutions with features and functions specific to managing the wet stock part of their business and the retailers they supply. Meanwhile, at West Des Moines-based Kum & Go, general managers begin “a circle” with competitive price input to a back-office fuel pricing system that is sent to centralized systems where pricing and other fuel data can be “mined, analyzed and modeled” before its sent back to the store for the “manager to act on it and then generate more data,” Matt Spackman, vice president fuels at Kum & Go told me. To help with communications and execution the Kum & Go team uses a homegrown system that helps their store employees manage tasks and notify other back-office users of them being complete. MEATY ISSUES With foodservice becoming so prevalent throughout the c-store industry the traditional back-office solution provid78 Convenience Store Decisions

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ers continue to improve their software by adding important elements to their software. One group of back-office users recently learned about a feature in their provider’s system where, to help with inventory control, you can print scanable shelf labels for items not sold individually, like a bin of cut vegetables or mashed potatoes. They also learned that in the latest software release nutrition facts and cooking unit of measures are features that will provide additional backoffice capabilities. “We didn’t understand foodservice food costs at all in the beginning,” Jordan said. He attributes using the foodservice module of his ‘back-office’ system, which allows him “to calculate item costs by drilling down into component costs,” to its success today. Labor continues to drive c-store operators to find ways to control costs. Many cloud-based labor management systems rely on back-office data to make its own back-office solution. Fuel tank levels, from the underground storage tank, can move from the store’s Automatic Tank Gauge to a shared ‘back office’ where data can be accessed away from the store on a mobile device. In today’s world of retail technology, the cloud and mobile are now part of the back office, allowing it to be anywhere and anything. So a good question you might ask is, “Where and what’s in my back office?” Ed Collupy, executive consultant at W. Capra Consulting Group can be reached at ecollupy@wcapra.com and be sure to visit www.capraplus.com for more retail technology and business insights. Collupy has IT leadership and business team experience providing strategic, operational, and project leadership to retailers, emerging businesses, and technology companies. CStoreDecisions ecisions .com

10/26/17 5:32 AM

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OPERATIONS

Clean Restrooms Are Good Business

For most patrons, the convenience store restroom is far from an afterthought. By Brad Perkins, Contributing Editor

O MATTER WHETHER IT’S professional drivers or can be and get better at cleaning restrooms.” With 759 stores across 11 states, maintaining a higher those who are just driving from point A to point B, choosing where to stop to use the restroom often standard of cleanliness can be a challenge, but QuikTrip is follows the same logic as where to get a snack or up to the task. “We do millions of transactions a week,” Thornbrugh buy gas: Is it convenient, clean and safe? “In our industry, the core customer is someone who’s in said. “Not that many people use the restroom each week, the car all day long, so we’re their public restroom,” said but it’s a lot, and it’s the difference between keeping or losMike Thornbrugh, manager of public and government ing customers. We prefer to keep the customer.” And the customers have responded. QuikTrip has been affairs for QuikTrip Corp. “They want to get in and out consistently rated in the top five in restroom cleanliness quickly, just like when they’re buying gas.” Speed is important, but when choosing where to stop nationally. In its “2017 Top Rated Restrooms in the U.S.” to use the restroom, the decision is much closer to that report, GasBuddy named QuikTrip the cleanest restroom of choosing where to eat or buy a snack. Cleanliness and overall and tops in nine of its 11 states. The survey rated appearance are vital to the restroom. Having clean hands chains with more than 20 locations, but the results are interand not worrying about what is OK to touch is as important esting for stores of any size because clean restrooms can be a source of pride for many. in restroom usage as it is in foodservice and preparation. Its reputation for spotless facilities is more than just put“We entered the fresh foods space around 10-11 years ago and one aspect of it being successful is not only having a ting cleaning on the schedule and checking a box. It is the clean store, but having a clean restroom,” Thornbrugh said. constant reviewing, maintaining and improving in a location “We emphasize to our employees that for us to be success- where even a questionable odor can drive customers from ful in our food offerings, we have to be the best we possibly the store. 80 Convenience Store Decisions

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OPERATIONS “WE OFFER HANDS-FREE FIXTURES IN THE RESTROOMS, INCLUDING AUTOMATIC FLUSH TOILETS, SINKS AND HAND DRYERS. OUR NEWEST STORE DESIGN FEATURES MANY UPSCALE FINISHES NOT TYPICALLY SEEN IN A CONVENIENCE STORE. THIS INCLUDES QUARTZ COUNTERTOPS, STYLISH LIGHT FIXTURES AND A SOLID WOOD DOOR WITH INDUSTRIAL HANDLES.” – KRISTIE BELL, COMMUNICATIONS DIRECTOR, KUM & GO

“To help ensure the restrooms at our nearly 8,000 Chevronand Texaco-branded locations are clean and well-stocked, we perform regular evaluations, surprise and scheduled facility evaluations and regular customer surveys,” said Desmond Johnson, Chevron Image Standards specialist. And it’s also cleaning, restocking and double-checking when needed. “Bathroom deep-cleans and hourly checks are a part of our normal daily checklist for each shift, however because of the importance of bathroom cleanliness, it’s an area that will take priority for cleaning outside the normal routine if necessary,” said Kristie Bell, communications director at Kum & Go, which had the cleanest restrooms in Colorado in the GasBuddy survey. RESTROOMS OF THE FUTURE In GasBuddy’s listing of clean retailer restrooms, it also asked respondents what troubled them most about traveling. Sixty-four percent of respondents feared having to stop at a restroom and being unsure where the closest one is. And 69% indicated they wouldn’t stop at a restroom with a rating lower than three stars. Ratings and feedback are vital to any business and addressing complaints is a key consideration. To maintain an edge, aesthetics are starting to go hand-in-hand with cleanliness. Designing a sleek and clean environment has

Retailers such as QuikTrip and Kum & Go are elevating the customer experience with restrooms that eclipse the normal threshold found throughout most of the industry.

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earned interest from convenience stores in recent years. “We have gotten a lot of great feedback from customers about our restrooms—especially those in our new Marketplace store design,” Bell said. “They appreciate the upgraded finishes, as well as amenities like touchfree sinks and hand dryers in addition to paper towels. We offer hands-free fixtures in the restrooms, including automatic flush toilets, sinks and hand dryers. Our newest store design features many upscale finishes not typically seen in a convenience store. This includes quartz countertops, stylish light fixtures and a solid wood door with industrial handles.” And while there is not necessarily a silver bullet for every store, studies—like one recently commissioned by Cintas Corp. and conducted online by Harris Poll earlier this year— show that customers prefer both hands-free faucets and paper towels, so they don’t have to touch germs on doorknobs or spread bacteria using air dryers. The Harris Poll showed that 70% of people preferred paper towels, both because they dry hands better (70%) and faster (69%), but also because customers had concerns about dryers blowing existing bacteria around the area (24%), while some found them loud (22%). Responders also showed a preference for soap dispensers, auto-flush toilets and other touchless elements as well as the ability to use a paper towel to open the door. STOCKING,TESTING AND TWEAKING Keeping restrooms stocked with the right supplies will also improve ratings and the desire to return. Even if a restroom is aesthetically pleasing, not having enough toilet paper, soap or paper towels will sour the customer experience as much as bad smells or dirty floors. As in foodservice, gas and other service areas, knowing what your customers want is key. And just like in foodservice, some things work better than others. “We’re always testing different things to see if there a better way to go. Some work, some don’t,” Thornbrugh said. “You see all kinds of different things and techniques, but first the consumer has to embrace it and use it, and that doesn’t happen a lot.” QuikTrip tests items for its restrooms before putting them in the stores so they are able to evaluate tiles, fixtures and other items to know when to replace worn items. CSD CStoreDecisions ecisions .com

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OPERATIONS

Keeping Pace with

Modern Culture Evolving workplace culture to appeal to younger generations is a key consideration in staying competitive in changing times. By Erin Rigik Del Conte, Senior Editor

HANGE CONTINUES TO COME rapidly as the acquisition strategy and began making changes, from broadMillennial generation becomes the largest genera- ening how it recruits and engages with potential candidates tion in the workforce and Gen Z comes of age. This to making sure the benefits package is relevant. For instance, shift is bringing huge changes, both to modern cul- Gen X might care about a 401k while younger employees might want to hear about education reimbursement. ture as well as to workplace culture. The c-store chain noted expectations have changed, In an educational session titled “Making the Gig Economy Work for You: Attract, Incent and Retain Gig Employees in particularly from its customers. “We thought employees the Age of Uber,” at the National Association of Convenience wanted very clean cut employees, but those expectations Stores (NACS) Show last month, attendees learned how they have changed and they’re more open to employees demoncan evolve their business to fit with the current social culture strating their uniqueness in the workplace,” she said. Upshaw noted Atlanta-based RaceTrac used to control and better attract and retain employees. The panel of speakers included Nichole Upshaw, executive how employees dressed down to their belt color. The condirector of HR for RaceTrac Petroleum Inc., Danielle Mattiussi, versation on mindset spurred RaceTrac to relax its policy vice president of operations for Maverik Inc.; Emily Sheetz, around tattoos, shorts and hair colors. Employees were director of talent development for Sheetz; and Matt Thornhill, enthusiastic about the changes, and not one guest complained. “If a policy is not there to keep your team members managing partner, SIR’s Institute for Tomorrow. As demographics shift, Thornhill said, competition for or guests safe, rethink it,” Upshaw said. Thornhill said as c-stores compete with other channels younger workers is set to intensify—as there will be fewer of them—and we’ll have more workers over 55 than ever before. for fewer 16-24 year olds in the future, relaxing dress codes is an important consideration. Some 40% of Millennials have tattoos, and more schools are relaxing hair color rules. CHANGING TIMES How are things changing? The gig economy is real. One in three Millennials freelance, 34% of the workforce has a ADDRESSING TODAY’S ISSUES Mattiussi said Maverik has had a big technological push second job and 91% of Millennials report they don’t plan to stay in their current jobs more than three years. While in 2017. Among many changes, the Utah-based chain began boomers and Gen X want to make a living, Millennials want doing exit interviews, and found 47% of employees were let to make a difference. Everything that was once private is go due to a ‘no call, no show.’ Meanwhile, those with mulbecoming more open and transparent, and companies need tiple gigs couldn’t get enough hours. Maverik added a new management software available to be transparent too. Also, Millennials are hyper-connected to each other and via an app. Now, schedules can be planned two weeks in they care about community. All of these changes in mod- advance and store directors can post available shifts and ern culture are impacting work culture, which needs to be employees can opt in. Maverik is currently working on an employee-pooling feature where employees can pick up updated to compete as the modern culture changes. While the old culture of yesteryear involved command shifts at multiple stores. Employees today are thinking in a more short-term way and control, fixed rules and regulations, employees who look up for information, and a hierarchy with a chain of about employment. While controlling turnover is important, command, the new culture is about consensus building and “how do we first make this a great place to work for people collaboration. Flexibility is valued and people look out— who are here today,” Upshaw suggested asking. RaceTrac requests feedback and makes adjustments. “When the 4,000 such as to the internet—for information. Sheetz explained how the Altoona, Pa.-based company people a year leave us to do something else we want them recognized five years ago it needed to reinvest in its talent to be brand ambassadors,” she said. CSD 84 Convenience Store Decisions

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OPERATIONS

Marketing at the

Pump By utilizing a savvy forecourt strategy, which includes messaging on dispensers, c-stores can push up in-store sales. By Howard Riell, Associate Editor

“That said,” Rodgers added, “the marketing needs to EDIA AT THE PUMP—FROM digital gas-pump television advertising to pump-nozzle probe relevant and timely to the individual guests. At Pilot motions—enable c-stores to gain in-store lift, Flying J, we see significant innovation opportunities in this differentiate their brands, build customer loy- area.” This new technology offers the opportunity to deliver directly to the consumer, both on the gas and diesel sides of alty and even take food orders. Advances in technology continue to draw customers the business, through its app. Tyler Tanaka, Pilot Flying J’s director of digital innovainto stores. For example, Gilbarco’s Applause TV promotes retailer-specific products and services with large color tion, lauded Convenience Store Decisions’ 2017 Chain of the screens in the gas pump. It’s a turnkey digital marketing Year award recipient, Sheetz, for doing a nice job with its solution designed to entertain and engage customers while forecourts. “Good creative, and (it is) changed by daypart and season.” The biggest mistake that Pilot Flying J’s mandriving them into the store. Customers can also select from a condensed food-order- agement sees convenience stores making with forecourt ing menu and pick up their items inside. The company cites marketing is that marketing initiatives are not dynamic research showing that the medium drove customers into enough to really grab the attention of the consumer, he said “In the near-future,” Rodgers said, “we believe personc-stores and generated additional purchases with up to a alization via interface with the consumer through app and 39% increase on promoted items. beacon technology will have a large influence on forecourt marketing.” In addition, he sees auto start pumps activated RELEVANT DATA “Getting the gas customer, both four-wheel guests and by the car itself playing a role. “Connected vehicles with apps professional drivers, from the pump into the store pres- built into the dash from the factory, personalizing the mesents a huge opportunity for retailers,” said Mike Rodgers, sages at the pump with relevant ads and content will help.” Other c-stores that are using technology to their advansenior vice president, chief strategy and information officer for Pilot Flying J Travel Centers in Knoxville, Tenn. “The tage are growing. For example: • Last November, BP rolled out an interactive gas pump four-wheel guest is less likely to enter the store than profescalled Miles, which offers voice instructions for activsional drivers.” ities such as listening to tunes, social media sharing, Operating stores and travel centers nationwide, Pilot video ecards and trivia. Flying J uses interactive technology built into the pumps • Columbia, Mo.-based MFA Oil Co. recently installed that can interface with the personal devices of its guests. outdoor payment terminals in each of its 73 Break Time This presents what executives view as a tremendous opporconvenience stores. The multimedia solution, designed tunity to drive traffic into the store. 86 Convenience Store Decisions

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OPERATIONS for outdoor fuel retailing, supports a wide range of payment options including debit, credit, “tap and go,” vouchers and coupons, along with loyalty programs. • Moyle Petroleum Co. in Rapid City, S.D., which operates 41 corporate c-store locations in the western U.S. under the Common Cents brand, recently standardized its c-store forecourt infrastructure with Gilbarco Veeder-Root’s EMV and Applause TV media solutions to increase store traffic and mitigate fraudulent transactions at the dispenser. • Forward Corp. in Standish, Mich., which has 30 convenience stores across a 12-county area in northeast Michigan, started a rewards program less than a year ago through which they target fuel-only customers who have been to their pumps but not inside the store in the previous two months with a promotion for a free beverage in the store each day for 30 days. The program includes features such as email marketing, phone number lookup at the point of sale (POS), customer-selected rewards and paperless coupons, as well as a branded mobile app. It appears to be working: the company reported a 184% increase in spending from those customers.

Advances in technology continue to draw customers into stores. For example, Gilbarco’s Applause TV promotes retailer-specific products and services with large color screens in the gas pump. It’s a turnkey digital marketing solution designed to engage customers, driving them into the store.

“That’s about the only thing we actually do out at the SCANNING THE AIRWAVES Companies like Gas Station TV—the largest national pumps at this point,” said Tabor. He agrees that customers in the act of fueling are ripe for video network reaching active consumers, with a mass audience of 75 million monthly unique viewers, or one-third of nearly any type of marketing message. “I think it’s a great American adults – are providing national and regional mar- time because it’s a boring situation when you’re out at the keters with access to attentive consumers. Founded in 2006, pumps. They’ll read anything that can occupy them. That’s Gas Station TV pumps short video segments from ESPN, why we’re counting on them to read those pump toppers, CNN and Accuweather interspersed with ads to more than because they are bored.” Pak-A-Sak is currently in the process of wrapping up its 5,000 stations across the U.S. “What we are seeing trend-wise is that more and more program of changing out gas pumps, and the idea of using folks are utilizing convenience stores anyway as part of video monitors, Tabor confirmed, has not been brought up, a more convenient way to do some shopping,” said Joel but that doesn’t mean they wouldn’t consider using them in Eisfelder, director of sales development for Minneapolis- the future. “I will tell you that there are not too many (conbased AllOver Media Inc., an advertising services provider venience stores) doing it in our market. In fact, I can’t recall that provides 100 video displays for c-store in Los Angeles. seeing any. I’ve seen it out of state several times, but not Beyond the marketing videos, Eisfelder said, the technology around here. I would say it is not in our immediate future.” Joe Paclebar, communications manager for CEFCO that is driving sales at the pump involves customer tracking Convenience Stores, based in Temple, Texas, said the c-store via transactional data in the store or by credit card usage. chain also opts for pump toppers, though the company might be interested in exploring video technology in the future. COMPETING FOR THE FUTURE “We know that it got popular starting about 10 or 15 years A majority of c-store operators still believe the time is not yet right for marketing via digital technology at the pump. ago,” said Paclebar. “It didn’t do much, and now I guess it’s Many realize that consumers are surrounded by screens, coming back again. I don’t believe we have any plans to test it.” Forecourt marketing is also a good way to tie into a comeach competing for their attention in a battle for share of mind. Those screens that consumers select—tablet, phone pany’s loyalty platform. “From a technology standpoint, Kum & Go focuses more or laptop—will always have an advantage over screens of our digital efforts on our &Rewards program and digidesigned to grab patrons’ attention. Gary Tabor, marketing and sales manager for Jay tal app,” said Kristie Bell, director of communications. “We Petroleum Inc. in Portland, Ind., which operates 35 Pak-A- take a more low-tech approach at the pump, employing Sak convenience stores, said his chain’s forecourt marketing pumptoppers, and bollard and door signs to entice customers inside the store.” CSD consists of traditional pump toppers. 88 Convenience Store Decisions

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Tax Planning C-Stores Can Do Now The sooner convenience retailers start planning, the smaller impact the new proposed tax changes will have on their day-to-day operations—if and when they are implemented. By Mark Battersby, Contributing Editor

A convenience store business also has the option of HE U.S. SUPREME COURT has ruled that striving for the lowest possible tax bill is perfectly legal. Thus, plan- claiming a first-year “bonus” depreciation allowance for ning to produce the lowest possible tax bill should be purchases of qualifying new (not used) equipment and software put to use before year-end. The 50% bonus deprethe goal of every convenience store operator. Accomplishing that goal year-after-year, usually involves ciation is on top of any allowable Section 179 deduction. In shifting income and deductions around to tax years where 2018, the bonus phases down to 40%, and 30% in 2019. Real property expenditures now qualify for Section 179 they will be the most productive. For those convenience store operations whose tax rates deductions and, best of all, the exception is now permanent will potentially be lower next year, end of the year tax plan- meaning that every convenience store business can expense ning is very simple: defer any income possible, pushing it up to $500,000 for expenditures for the following types of into the lower tax rate of next year. In addition to deferring property: 1. Certain improvements to interiors of leased nonresiincome until next year, looming tax reform might make it dential buildings. more valuable to accelerate deduc2. Certain restaurant buildings or tions into the current tax year “PRESIDENT TRUMP’S PLAN improvements to such buildings. offsetting the current tax rates that 3. Certain improvements to interiwill, no doubt, be higher than next PROPOSES A NEW TAX RATE ors of retail buildings. year’s. OF 25% FOR THE PASSNew guidelines for differentiating MAJOR MANEUVERS THROUGH INCOME OF SMALL depreciable capital improvements from the immediately deductible repairs Under any new law, depreciaAND FAMILY-OWNED BUSIkicked in last year. Today, thanks to tion could largely be a concept of a de minimis safe harbor deduction the past. Most of the reforms pro- NESSES CURRENTLY CLAIMED for material and supplies has been posed would allow convenience ON INDIVIDUAL RETURNS.” increased to $2,500 from $500 for busistores to immediately write off (i.e., nesses that don’t have an applicable expense) the cost of new investfinancial statement. Essentially, qualiments in depreciable assets other than structures, for at least five years if this reform proposal fying for the de minimis safe harbor deduction means your item can be entered as an expense and not an asset. becomes a reality. With a financial statement the convenience store business In the meantime, Section 179, the first-year expensing allowance continues as an option. Under the Section 179 can label costs up to $5,000 per invoice as materials or supplies first-year expensing option, a convenience store is allowed without questions from the IRS. The IRS can, and will, challenge salary amounts they to expense as much as $500,000 in new equipment purchases. The write-off is reduced if Section 179 property deem to be “unreasonable.” While the factors used by the in excess of the $2 million (increased by inflation) limit is IRS and the courts to determine reasonable compensation exceeded. Making this election accelerates the write-off, cre- vary, the IRS typically looks at training and experience, duties and responsibilities, time and effort devoted to the ating an immediate tax benefit for outlays. 90 Convenience Store Decisions

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OPERATIONS

business and more. The courts generally look at amounts paid by comparable businesses for similar services, the use of a bonus formula and the importance of the role played by the compensated individual. MOVING INCOME Many small convenience store operations are permitted to use the cash-method of accounting for tax purposes. Those that do, can micromanage the operation’s taxable income to minimize taxes this year and in 2018. Expecting a lower tax bill next year? Consider these strategies: • Prepayments: So long as the economic benefit does not extend beyond one year, pre-paid expenses are usually acceptable. The complex rules allow a convenience store to claim 2017 deductions for prepaying the first three months of next year’s rent or prepaying the premium for property insurance coverage for the first half of next year. •Bonuses: If possible pay any year-end bonuses prior to the operation’s last payroll. Paying bonuses early or creating a separate bonus payroll will make is easier on the bookkeeper or the payroll processing company. • Carry overs and Carry-forwards: Certain credits and deductions have limits that prevent them from being used in full in the current tax year but could be carried over to future years. Net operating losses (NOLs) or non-capital losses occur when the convenience store business’s expenses exceed its income. NOLs can be used to offset income in any given tax year, can be carried back three years or carried forward for up to seven years. It may make sense to carry any NOL back to recover income taxes already paid. Or, it can be carried forward to offset an anticipated larger tax bill down the line (but remember the possibility of lower tax rates). PROPOSALS AND PASS-THROUGHS Under most proposals for reforming our tax laws, the estate tax would be eliminated—a boon to wealthy individuals who inherit businesses, investments and real estate. As mentioned, deductions and credits would be repealed under the latest proposal, the domestic production activities deduction would no longer be necessary but the research tax credit would be retained. Closer to home, incorporated convenience store businesses would see their top tax rate cut from 35% to as low 92 Convenience Store Decisions

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as 20% under the president’s proposal. The taxation of the roughly 95% of American businesses that are not incorporated, but rather, pass-through businesses, such as sole proprietorships, limited liability companies and partnerships, is more questionable. President Trump’s plan proposes a new tax rate of 25% for the pass-through income of small and familyowned businesses currently claimed on individual returns. That is, it “passes through” to the business owners and is taxed at the owners’ individual tax rate (the same rates applying to wages and salaries). These businesses already have the advantage of being exempt from the corporate tax on profits and taxes on dividends. The problem, according to the critics, is that financial entities such as private equity, venture-capital and hedge funds are all partnerships whose wealthy partners would see substantial tax savings on large portions of their income unless—as is hoped—lawmakers find a way to exclude them. MORE PROPOSED REFORMS The Trump-proposed tax reform for businesses would: • Reduce regular, “C” corporation tax rates to 20%. • Eliminate the net investment income tax, which is an additional 3.8% tax on high-income shareholders pay on distributions. • Create a new 25% tax rate for income passed through from a business for all but “service” pass-throughs. While good tax planning is based on current versus future tax rates, the significance of looming tax reform can’t be ignored. The potential of tax reform next year makes tax deferral even more valuable, especially for really profitable convenience store businesses or those subject to the highest marginal tax rate. In addition to deferring income until next year when tax rates may be lower, the possibility of tax reform would also make it more valuable to accelerate deductions into the current year. After all, if next year’s tax rates will be lower than this year’s rates, then tax deductions will be less valuable next year than in this year. Will profits be greater next year, will tax rates finally come down, will deductions be limited? Making these decisions and more, as well as planning to reap tax savings year after year, requires professional assistance now, not just as the tax returns are being prepared. CSD CStoreDecisions ecisions .com

10/26/17 5:36 AM

2018

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Line up for NAG 2018 at the beautiful Ponte Vedra Inn & Club September 9th thru 12th II Ponte Vedra Beach, FL Committed to building relationships and profits! The National Advisory Group (NAG) is an association of small to mid-size and familyowned chains and the executives that run them. This group convenes at an annual conference to exchange ideas with the motivation to improve their business performance and ultimately their bottom line. The setting of this conference encourages an extremely educational, yet highly social environment. The schedule consists of top notch speakers, retail information exchanges, opportunities to address burning issues within your business, a chance to get to know your peers in similar size operations and much more!

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NEWSTUFF Creations & Innovations to Convenience Products and Services

QUALITY AIR FRESHENER SCENT DADDY is a highly-concentrated, oil-based air freshener that promises up to 48 hours of Fresh. Its array of scents provides perfect quality and smells to satisfy even the pickiest of noses. Choose from Apple Martini, Cherry Crush, Malibu Breeze, So Fresh, Coconut Beach or Mango Tango. New single-unit packaging allows customer to grab their favorite scent and GO. If your customers are looking for a cost effective, great quality air freshener, they can look no further. SCENT DADDY-customers will be asking for it by name. This product is ideal for bedrooms, bathrooms, living rooms, kitchens, office spaces and cars. It is proudly made in the USA with all-natural ingredients. SCENT DADDY is exclusive to Max Distributing. Max Distributing was founded on innovation and has since proudly provided excellent customer service and effective, high profit margin products.

VEGGIE SNACKS Gaea, the Greek food company specializing in authentic Mediterranean products, has unveiled its new line of Veggie Snacks, the first shelf-stable, on-the-go vegetable snacks on the market. Launching in fall 2017, the new product line debuts with three savory varieties: Carrot, Cauliflower and Gherkin. Building on the healthy snacking trend and popularity of Gaea’s Olive Snack Packs, the new Veggie Snacks are designed with convenience in mind and made with all natural ingredients and zero preservatives, and all three varieties are also vegan and gluten free. The perfect choice for healthy snacking on the go, Gaea Veggie Snacks feature a handy re-sealable package, without liquid, allowing the convenience of snacking now and later.

For More Information From Gaea www.gaeaus.com

For More Information From Max Distributing www.maxdelivers.com

INTRODUCING KAKE CHIPS Snack cake brand Tastykake is introducing Kake Chips, a new product that combines the crunch of a chip with the sweetness of cake. Available in two delectable flavors, Birthday Kake and Salted Caramel, the new offering began hitting retail shelves across the country on Sept. 25. Made with zero grams of trans fat per serving, Kake Chips have no artificial flavoring or preservatives. The melt-in-your-mouth morsels of cake baked to a crunch are sweet additions to any pantry, while the portable packaging makes them ideal for on-the-go lifestyles. The multipack bags are also resealable, specifically designed to maintain freshness and ensure the last Kake Chip is just as delicious as the first. Tastykake’s Birthday Kake Kake Chips feature a birthday cake flavored crisp complete with colorful sprinkles, and the Salted Caramel Kake Chips deliver a rush of sweet caramel flavor with a deliciously balanced salty zing. Kake Chips are available everywhere Tastykake is sold for $2.99 per bag.

For More Information From Tastykake www.tastykake.com 94

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EMERGENCY SPILL CENTER MasonWays’ Emergency Spill Center is designed for rapid response clean ups. The cabinet is clearly labeled and keeps equipment for dangerous oil spills in one convenient location. Unit only takes up 20 inches x 22 inches x 51 inches of space at the pump. The locked cabinet has pre-packed safety equipment, absorbent materials and cleanup tools. The unit is resistant to chemicals and the environment. It provides easy access to 12 orange cones, caution tape, vests, disposable safety gloves, glasses and dust masks. Spill Center has loose absorbent along with a dust pan, brush and disposable bags to remove hazardous materials. Absorbent must be disposed of properly as required by law. Be prepared to quickly clean up oil & gas spills. Get fuel islands back up in business and running fast.

For More Information From MasonWays Indestructible Plastics LLC (800) 837-2881 www.masonways.com

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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. We use the latest media technology, delivering content the way you want it: print issues, digital issues, enewsletters, and videos.

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10/26/17 10:53 AM

NEWSTUFF Creations & Innovations to Convenience Products and Services

MANGO CIGARILLOS

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Mangos just became a little sweeter with the limited edition twist on Swisher Sweets’ classic mango cigarillos. Swisher Sweets Limited Edition Boozy Mango cigarillos pair the ever-popular mango with the tropical sweetness of guava. Swisher Sweets Boozy Mango is available for a limited time in a resealable two-count pouch with the “Sealed Fresh” guarantee and is ready for shipment to stores nationwide. It is offered in “Save on 2,”“2 for 99 cents” and “2 for $1.49” options. Limited edition blends continue to be customer favorites and this season they won’t be able to resist the smooth, sweet taste of Boozy Mango.

Introducing the one and only matcha mix for the masses – MATCHAAH! H2-go.Bursting with fresh fruit flavor, MATCHAAH! H2-go Instant Stick Packs take water flavoring to the next level. Simply add to water, shake and enjoy. Made with premium Japanese matcha tea, and with only 10 calories, the instant mix is made with good taste and good health in mind. Bottled water sales are up double digits. Matcha tea is showing triple-digit growth. Offer a solution that satisfies both expanding markets. Loaded with flavor and packed with antioxidants, they are available in Raspberry, Lemon and Peach. Instant Stick Packs is one of the fastest growing segments in beverages. Finally, a refreshing and convenient way for everyone to enjoy the ancient benefits of matcha tea on-the-go.

For More Information From Swisher Sweets

For More Information From Matchaah! sales@matchaah.com

(800) 874-9720 http://trade.swishersweets.com/boozymango

PRESSURE SMOKER Broaster Co. is introducing its latest portfolio addition, Smokaroma Inc. Smokaroma joins Broaster’s already superior lineup of high-quality branded food programs and foodservice equipment. The Smokaroma and Instant Burger units were unveiled as part of the Broaster Co. family of quality equipment at the National Association of Convenience Stores (NACS) Show in October. Smokaroma has a nearly 60 year history of manufacturing quality, high-speed pressure smokers, producing smoked meats, cheeses and other food products for a variety of foodservice establishments, such as restaurants, convenience stores and other food outlets. Rubs and sauces are also a part of the Smokaroma offering. Instant Burger, also part of Broaster’s Smokaroma acquisition, is a countertop unit which cooks great tasting hamburgers, hot dogs, chicken fillets and other meats in less than a minute.

For More Information From Broaster Co.

CONTROL LABEL DRINKS Berner Food & Beverage LLC (Berner), a private-label and contract manufacturing supplier of quality food and beverage products, can help convenience retailers win in the beverage aisle with its new ‘Dakota’ line of control label drinks. Retailers who want the same great profit as a store brand, but prefer the ease of an existing format, will find Berner’s control brand Dakota beverages are the perfect solution. The Dakota line eliminates developmental costs, so convenience retailers can sell a great tasting national brand equivalent product that has the same quality consumers expect. Berner also offers convenience retailers a full line of milk-based ready-to-drink (RTD) coffee, protein, teas and other low-acid beverages. Its new and improved state-of-the-art manufacturing facilities are SQF Level III-certified and offer processing capabilities to deliver a large variety of retort can and glass RTD beverages to meet the demanding standards of virtually every major retailer and brand in North America.

For More Information From Berner Food & Beverage

www.broaster.com

www.bernerfoods.com

Convenience Store Decisions

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STUFFED BREAD SNACK

PACKAGING REFRESH ONE Brands, the maker of protein bar ONE, is debuting a sleek packaging refresh. While the delicious recipes that make ONE Bar so crave-worthy will stay the same, ONE packaging will now feature new mouthwatering photography, engaging tag lines and disruptive color schemes to delight old and new fans alike. ONE Brands unveiled the brand-new look at the National Association of Convenience Stores (NACS) Show in October. ONE’s guilt-free, yet indulgent, bars are available in flavors including Birthday Cake, Cinnamon Roll, Chocolate Chip Cookie Dough, Peanut Butter Pie and more. SRP of $2.49-$2.79.

For More Information From ONE Brands www.one1brands.com

CHICKEN SKEWERS ProSticks, the latest creation from Expresco Foods, is the optimal snack on the go and now includes sauce pairings. Crafted with 21 grams of protein, these tasty grilled chicken-on-a-stick refrigerated snacks with sauce packs define convenience. ProSticks are hand-made, grilled to perfection and provide the ultimate in portability. At 115 grams and a suggested retail price of $2.99, they are a protein-packed snack full of quality consumers can trust. Street food-inspired skewer flavors and sauce pairings include: Mediterranean with Sweet Teriyaki sauce, Sweet Sriracha with Sriracha sauce and Chipotle with Chipotle BBQ sauce.This new product is currently available in Sobeys in Canada with rollout to the U.S. market set for 2018.

For More Information From Expresco Foods www.exprescoprosticks.com

Cole’s Quality Foods Inc. has introduced Middles, a stuffed bread that combines delicious, decadent, savory, salty and sweet flavors into one revolutionary snack concept. Middles are now available in the freezer section at convenience stores nationwide for a suggested retail price of $3.99 per 10.8-ounce box. Each box contains eight tasty bread bites. Inspired by the much-celebrated combination of bread and cheese, Middles advances the concept by featuring the soft “middle” section of popular bakery staples, including bagel, Italian and pretzel breads. They are then stuffed with savory and sweet centers and can be prepared in either microwave or conventional ovens in just seven to nine minutes. Middles are available in six different varieties, including: Plain Bread stuffed with 5 Cheese; Plain Bread stuffed with Mac And Cheese; Plain Bread stuffed with Plain Cream Cheese; French Toast Bagel stuffed with Sweet Cream Cheese; Everything Bagel stuffed with Plain Cream Cheese; and Pretzel Bread stuffed with Beer Cheese.

For More Information From Cole’s Quality Foods www.tastymiddles.com

CHEESE DIPPERS The Laughing Cow has introduced two new flavors to its portable, individuallyportioned snack line – Cheese Dippers. The new Cheese Dippers flavors now include Creamy Swiss Garlic & Herb and Creamy White Cheddar cheeses. The deliciously rich, creamy cheese is now paired with new crunchy whole grain breadsticks, making this on-the-go snack a great choice to enjoy any time, anywhere. Each serving provides an excellent source of calcium, delivers four grams of protein, and contains no artificial flavors, colors or preservatives. The new flavors are currently rolling out in stores and will join the existing flavors of Cheese Dippers – Creamy Swiss with Classic Breadsticks and Creamy Swiss with Tomato & Herb Breadsticks. Cheese Dippers will be sold as both individual single-serve packs and five-pack boxes.

For More Information From Bel Brands USA www.thelaughingcow.com

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NEWSTUFF Creations & Innovations to Convenience Products and Services

CRUNCHY COOKIE CUP

VITAMIX VITA-PREP 3

Reese’s has launched the Reese’s Crunchy Cookie Cup. It’s a Reese’s Peanut Butter Cup with crunchy, chocolate cookie.The new product is available now in both standard two-cup size 1.4-ounce (SRP $1.09) and king two-cup Big Cup size 2.68-ounce (SRP $1.79).

The new Vitamix Vita-Prep 3 prepares every dish to perfection with sturdy, intuitive controls, an improved motor and a bold, fresh look. A newly-designed 3-peak output HP motor features improved thermal capabilities, providing the power and dependability required in the most demanding commercial kitchens. Robust, easy-touse controls minimize training time, improve grip and stand up to back-to-back blends. The Vita-Prep 3 now features a start/stop switch that automatically returns to a neutral position, helping prevent unintentional startups. The machine’s Variable Speed Control delivers a full range of precise textures and its advanced cooling fan provides optimum reliability during peak hours of operation. It is now available in a black shell with an updated, red-face plate.The Vita-Prep 3 is the ideal tool to support the demands of high-volume kitchens and adventurous menu expansion.

For More Information From The Hershey Co. www.hersheys.com/cstore

For More Information From Vitamix (800) 437-4654

COLD BREW ESPRESSO SHOTS Harmonies Brew is launching its newest product line: Java Shots. Java Shots are 100% Natural and Organic Cold Brew Coffee shots that are equivalent to a double espresso, making them a great natural and convenient energy booster. Harmonies Brew gathers premium coffee beans from around the world and utilizes a unique brewing process to extract their natural flavors and caffeine to create a drink with a smooth, delightful taste. They have incorporated the brew into great tasting ready-to-drink (RTD) coffee beverages, starting with the Java Shots, which launch in Nov. 2017. The shots will be available in four delicious flavors: Coconut, Butter Rum, Amaretto, and Chocolate Parfait. Suggested retail price is $2.99 for a single Java Shot or $31.08 for a case of 12, which is equivalent to $2.59 per bottle.

For More Information From Harmonies Brew

www.vitamix.com

ORGANIC ENERGY DRINKS For the past 16 years, AMP ENERGY has delivered great-tasting energy drinks. Now it is introducing a new organic energy drink lineup: AMP ENERGY Organic, for consumers who want the energy boost and great taste of AMP ENERGY, but with simpler, organic ingredients. AMP ENERGY Organic became exclusively available at 7-Eleven stores nationwide on Aug. 28, but is set to expand to additional retailers across the U.S. in early 2018. AMP ENERGY Organic, which is USDA-certified organic, comes in four flavors—Citrus, Pineapple Coconut, Grape and Tropical Burst—all which boast just five simple ingredients: organic cane sugar, organic caffeine from green coffee beans, carbonated water, citric acid and natural flavors. The ingredient list is not the only thing getting an update; the new AMP ENERGY Organic will feature a newly designed 12-ounce can with imagery that evokes refreshing, organic energy in four colorways to reflect the unique and delicious flavors. SRP of $1.99.

For More Information From AMP ENERGY

www.javashots.coffee

www.ampenergy.com 98

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Access Point Inc. .........................29 www.accesspointinc.com

Farmer Brothers ....................39 www.farmerbros.com

North American Bancard ..............99 866.481.4604 / www.nynab.com

Altria Group Distribution Co. ...............27 800.221.1690

Gilbarco Veeder-Root .....................71 www.gilbarco.com

Pepsico ..........................................47 www.pepsico.com

Apter Industries ........................11 800.441.7146 / www.apterindustries.com

Gulfcoast Software Solutions, Inc. ....3 727.449.2296 / www.gulfcoastsoftware.com

POSA Tech ..................................100 888.491.4006 x203 / www.posatech.com

BIC ...............................................25 www.BICLighter.com

Hershey ...........................15 www.thehersheycompany.com

Premier Nutrition ..................................21 www.premiernutrition.com

Blu ............................................85 www.blucigs.com

Home Market Foods .................43 800.367.8325 / www.rollerbites.com

Cash Depot ........................................16 800.776.8834 / www.cdlatm.com

Hoshizaki America .....................75 www.hoshizakiamerica.com

R.J. Reynolds www.rjrt.com .......................................33 www.americansnuffco.com ................103

CB Distributors ..............................73 888.824.3256 / www.cbdistributorsinc.com

Hunt Brothers Pizza ......................55 www.HuntBrothersPizza.com/CSD

Cheyenne International ......................77 704.937.7200 / www.cheyenneintl.com

Kerry ................................41 www.kerry.com/convenience

Stout Brewing Company ........................67 800.746.3419 www.StoutBrewingCompany.com

Coca-Cola .................................7 www.cokesolutions.com/retail

Kretek International ..............................9 www.djarumcigar.com

Subway ...................................44 203.877.4281 / www.subway.com

Danone Wave .................................45 www.whitewave.com

KT&G ..................................57,59 www.ktngusa.com

Swedish Match ....................................63 www.swedishmatch.com

Dawn Foods ..................................23 800.248.1144 / www.dawnfoods.com

Liggett Vector Brands .................83 877.415.4100

Del Monte Fresh .............................53 800.950.3683 / www.freshdelmonte.com

Mars Wrigley ..............................19 www.mars.com

Swisher International 800.874.9720 www.swisher.com ...............................61 www.experienceacid.com ...................104

Dr. Pepper / Snapple Group ................17 www.drpeppersnapplegroup.com

MasonWays ......................100 800.837.2881 / www.masonways.com

Dyson ................................87 855.720.6169 / www.dyson.com

McLane Company ........................5 www.mclane.com/goto/produce

E-Alternative Solutions ...............79 800.377.7709 / www.cuevapor.com

Mondelez ..................................37 www.mondelezinternational.com

E&J Gallo ..................................65 www.darkhorsewine.com

Monster Energy ...........................69 www.monsterenergy.com

EST Group ....................................51 www.est-grp.com

NCR ..........................................49 www.ncr.com

Excel Dryer .........................................81 877.661.3972 / www.exceldryer.com

Nestle Water N.A. ........................13 www.nestle-watersna.com

ClassifiedAds

ADVERTISER INDEX

2018 Southeast Petro-Food Marketing Expo .....................................74 www.sepetro.org

2018 Tobacco Plus Expo ...................91 www.tobaccoplusexpo.com U.S. Smokeless Tobacco Company ........2 www.freshscope.com Wenzelâ&#x20AC;&#x2122;s Farm, LLC ......................12 800.336.6328 / www.wenzelsfarm.com Wex, Inc. ............................................31 www.wexinc.com Winter Gardens ...........................46 www.wintergardens.com

Statement of Ownership, Management and Circulation of Convenience Store Decisions Publication Title: Convenience Store Decisions Publication Number: 1054-7797 Date of filing: October 1, 2017 Frequency of issue: Monthly Number of Issues Published Annually: 12 Annual Subscription Price: Controlled; if purchased $75 per year Complete Mailing Address of Known Office of Publication: Harbor Communications,LLC, 19111 Detroit Rd., Ste. 201, Rocky River, OH, 44116 Complete Mailing Address of Headquarters or General Business Office of Publisher: Harbor Communications, LLC, 19111Detroit Rd., Ste. 201, Rocky River, OH, 44116 Publisher: John Petersen, Harbor Communications,LLC, 19111 Detroit Rd., Ste. 201, Rocky River, OH, 44116 Editor: John Lofstock, Harbor Communications, LLC, 19111 Detroit Rd., Ste. 201, Rocky River, OH, 44116 CStoreDecisions ecisions .com

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Managing Editor: David Bennet, Harbor Communications, LLC, 19111 Detroit Rd., Ste. 201, Rocky River, OH, 44116 Owner: Harbor Communications, LLC, 19111 Detroit Rd., Ste. 201, Rocky River, OH, 44116 Issue Date for Circulation Data: September, 2017 Net press run: Average, 44,507; last issue, 44,295 Outside County Paid/Requested Mail Subscriptions: Average, 36,759; last issue, 37,055 Sales Through Dealers and Carriers, Street Vendors, Counter Sales, and Other Paid or Re-quested Distribution Outside USPSÂŽ: Average, 495; last issue, 537 Total Paid and/or Requested Distribution: Average, 37,254, last issue, 37,592 Nonrequested distribution by mail outside county: Average, 6,553; last issue 6,089

Nonrequested distribution outside the mail: Average 175, last issue, 350 Total Nonrequested Distribution: Average 6,728, last issue, 6,439 Total Distribution: Average, 43,982; last issue, 44,031 Copies not Distributed: Average, 525; last issue, 264 Total: Average, 44,507; last issue, 44,295 Percent Paid and/or Requested Circulation: Average, 84.70%; last issue, 85.38% I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fi nes and imprisonment) and/ or civil sanctions (including civil penalties). John Petersen, Publisher November 2017

Convenience Store Decisions 101

10/26/17 12:57 PM

INDUSTRYPERSPECTIVES

Conducting a Foodservice Focus Group Gaining knowledge of what distinguishes your foodservice program requires due diligence and asking some questions. By John Matthews

ONVENIENCE STORE OPERA- tomer view sandwiches, pizza, and ing additional customers. Questions TORS CONTINUE to plunge chicken, etc. all the same? Also: should probe around the initial • Do they go to any of these places into foodservice with the attraction as well as how the interacfor lunch, dinner or both? hopes of stemming the tide tion has progressed over time: • Do they prefer one brand or catof lower margins with high-margin • Where was the initial encounter— egory vs. other fast food or quick foodservice offerings. what city or location? service? While the degrees of foodservice • How was your foodservice offering • What are the perceived “advancan vary greatly from chain to chain, introduced? When? tages” of each competitor versus the approach to introducing bet• What were some of the first impresyour foodservice brand? ter foodservice into your operation sions from the customers? should not be left to chance. Gaining • What is the relationship like today? a better understanding of your food- ASSOCIATIVE DATA How is it different than during that There are some that feel carryservice customer can sometimes be initial introductory stage? the difference between making your ing a Starbuck’s cup down the street • What types of advertising or comstore profitable and just wallowing in says more about the consumer than munications do they recall? the actual product. With that in mind, a “me-too” foodservice program. One way to gain valuable insights ask your customers the following: FOODSERVICE EULOGY EXERCISE • What does being consumer of into your customers is to conduct a Lastly, have your customer focus your foodservice brand say about group describe your brand as focus group with some of your core him or her? customers. This is your chance to though they were writing a eulogy. • What does it say to friends/ hear first-hand what your patrons This exercise will help crystallize the neighbors/colleagues? have to say. core attributes of your brand. • How does that identifier compare In summary, conducting a foodwith other quick-service restau- service focus group helps capture CUSTOMER-FOCUSED PERSPECTIVE rants or other foodservice brands? real feedback from an outside perWhen starting your focus group, Next, probe into the underlying spective. All too often, chains develop gaining a better understanding of the foodservice industry is a great aspects of perception or imagery. their foodservice offerings in a vacplace to start. Ask your customer the This is an interesting perspective in uum without asking the customer kind of places they go for lunch and/ that it makes the customer articulate what they like/dislike about the offeror dinner. Do they generally obtain your brand with an unrelated object: ing. Focus groups can cut to the core • If the foodservice brand were a their meals through eat-in dining, and provide clear guidance for your car, what kind of car would it be foodservice brand in the eyes of the take out or delivery? and why? Next, have them assess the overconsumer. Lastly, probe your customers with all foodservice landscape. Some questions regarding a time contin- John Matthews is the founder and presirelated questions should include: uum for your foodservice brand—has dent of Gray Cat Enterprises Inc., a stra• What is the frequency in which it changed over time and if so, what tegic planning, operations and marketing they visit? have been the implications? • Which places do they visit most services firm that specializes in helping often? businesses grow in the restaurant, conveYOUR FOODSERVICE BRAND • Are there advantages/disadvannience and general retail industries. With Understanding how the customer more than 25 years of senior-level experitages of each? Lastly, get a feel for the preferred first encountered your foodservice ence in retail, he is also a speaker at retail foodservice category. Does your cus- brand can shed insights into attract- group events throughout the U.S. 102 Convenience Store Decisions

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