Convenience Store Decisions November 2018 by WTWH Media LLC

Volume 29 • Number 11 • NOVEMBER 2018 Business Solutions for Retail Decision Makers

KWIK TRIP

2018 Chain of the Year

With its unsurpassed vertical integration and decades-long commitment to co-workers, guests and the communities it serves, the chain exempliﬁes what it means to be a “people company.”

INSIDE:

Cigars Light Up Category Navigating Food Waste

Digital Signage Costs Fade

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November 2018

Vol. 29 • No. 11

CONTENTS 36 COVER STORY

Kwik Trip: 2018 Chain of the Year

With its unsurpassed vertical integration and decades-long commitment to co-workers and the communities it serves, the chain exempliﬁes what it means to be a “people company.”

EDITOR'S MEMO 8 Building

an Entrepreneurial Culture

FRONT END 10 On Location: Par Mar Hitting Its Stride 16 CSD’s Quick Bites 18 Industry News

20 Gen Z Shopping Trends

22 Cool New Products at NACS

24 Convenience Store Solutions: Taking Theft Seriously 26 Chain of the Year Pictorial

CATEGORY MANAGEMENT 44 Packaged Beverages Climb 48 Beer Sales Bubble Over

OPERATIONS 80 Digital Signage Costs Fade

84 How to Ensure Talented Employees Won't Quit 88 Restrooms Sway Customer Experience

92 Preparing for Estate Planning

BACK END 96 Product Showcase

104 Quick Stop 105 Ad Index

106 Industry Perspective: Considering EMV Upgrades

52 Cigars Light Up Category

58 Meat Snacks Reign Supreme

FOODSERVICE 62 Proﬁtable Pizza Pairings 66 Navigating Food Waste

72 Creating a Coffee Destination

TECHNOLOGY 78 Column: New Technology Brings New Challenges

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THE CSD GROUP Convenience Store Decisions • Leading Through Innovation www.cstore de ci si ons.com Convenience Store Decisions

CStoreDecisions ecisions .com

EDITORIAL

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

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

OFFICE LOCATIONS

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

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Contributing Editors Mark Battersby Anne Baye Ericksen Pat Pape Brad Perkins Jeffrey Steele Lisa White Columnists Jenny Bullard Jim Callahan Mark Radosevich Production Manager Barbra Martin bmartin@csdecisions.com

ADVERTISING

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

Digital Operations Manager Nicole Lender nlender@csdecisions.com

NATIONAL ADVISORY GROUP (NAG) BOARD

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

SUBSCRIPTION INQUIRIES

To enter, change or cancel a subscription: Web (fastest service): www.ezsub.com/csd Phone: (844) 862-9286 (U.S. only, toll-free) Fax: (440) 333-1892 Mail: Convenience Store Decisions P.O. Box 986, Levittown, PA 19058 Copyright 2018, WTWH Media, LLC

YOUNG EXECUTIVES ORGANIZATION (YEO) BOARD

Bart Stransky, Board Chairman RaceTrac Petroleum Inc. • Atlanta Garet Bishop, Chief Financial Officer BFS Cos. • Morgantown, W.Va. Caroline Filchak, Director, Wholesale Ops Clipper Petroleum • Flowery Branch, Ga. Kalen Frese, Food Service Director Warrenton Oil Inc. • Warrenton, Mo. Alex Garoutte, Director of Marketing The Kent Cos. Inc. • Midland, Texas Sharif Jamal, Corporate Training Manager Chestnut Petroleum Inc. • New Paltz, N.Y. Lindsay Lyden, Vice President, Development Truenorth Energy • Brecksville, Ohio Jeremie Myhren, Vice President, IT Road Ranger • Rockford, Ill.

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

Convenience Store Decisions (ISSN 1054-7797) is published monthly by WTWH Media, 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. 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. CONVENIENCE STORE DECISIONS does not endorse any products, programs or services of advertisers or editorial contributors. Copyright© 2018 by WTWH Media, LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, or by recording, or by any information storage or retrieval system, without written permission from the publisher. Circulation audited by Business Publications Audit of Circulation, Inc.

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EDITOR’S

Memo

Building an Entrepreneurial Culture

T HAS BEEN A GREAT few months for all of us here at Convenience Store Decisions as we got to spend some time learning about Kwik Trip, the Wisconsin retailer who earned our 2018 Chain of the Year honors. The one thing that stands out at Kwik Trip is the caliber of its people. KT’s leadership group, headed by its prodigious founder and chairman Don Zietlow, strongly believes in rewarding co-workers for providing outstanding service. As such, the company shares 40% of its pretax profits with its 21,000 workers; offers health insurance and other medical benefits; provides a 401K savings plan; and gives a month-long sabbatical to coworkers celebrating their 20-year anniversaries. “We have to take care of our employees so that they can take care of our customers,” Zietlow said. It’s hard to argue with Zietlow’s strategy. The company is expected to grow to 700 stores by the end of 2019. Sales are at an all-time high and turnover is an industrylow 30%. The retailer teaches a lesson others can learn from regarding how it empowers its employees to be leaders.

Today’s companies must be nimble, “more innovative and more entrepreneurial, and all of this begins with your employees.

”

WORKING SMARTER Today’s companies must be nimble, more innovative and more entrepreneurial, and all of this begins with your employees. I think this part is clear. What the industry needs to work on is how to affect the culture change that needs to happen—especially when an organization is already set in its lumbering, bureaucratic ways. “The good news is there are some very specific steps you can take that will start the reaction shifts in your culture,” according to Michael Houlihan, author of The Entrepreneurial Culture. “It won’t happen overnight, but it will happen. You just have to take the right actions.” Houlihan, who also co-founded Barefoot Wine, offered tips for convenience stores on how to create engaged, empowered employees. Hire for hustle. A great way to separate the entrepreneurial thinkers from those who aren’t is to place a

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

special emphasis on hiring people with a sense of urgency—people who can and will move quickly and those who don’t always have to be told what to do next. In other words, don’t hire solely based on someone’s technical skill set. You can always teach that. You can’t teach the other stuff—things like exuding a positive, service-oriented temperament. That’s the difference between an average company and a great company. Don’t skimp on training. Many companies approach orientation like it’s a formality. New employees are ushered in, given a quick tour of the office and a rundown of the benefits offered, and then they’re expected to get right to work. This minimalist approach to training can have some counterproductive consequences, especially where judgment, relationships and potential are involved. Never waste a perfectly good mistake. Most leaders look at mistakes as something to be avoided, and as a result, they pass that sentiment down to their employees. But the most innovative, agile companies embrace mistakes. When you move from a culture that punishes mistakes to one that embraces them, your employees will have the freedom to take risks, and that’s where entrepreneurial thinking leads to great innovation. Say, “thank you.” Making gratitude part of your culture plays an essential role in creating employees who feel empowered and engaged. In truth, you should be saying thank you to everyone you come into contact with through your company. Everyone, from employees to colleagues to vendors, will respond positively when you say—or better yet, demonstrate—your thanks. “This is a time of extreme opportunity for companies that recognize the value of entrepreneurial thinking,” Houlihan said. “It is by far one of the greatest competitive advantages for companies today. When you get your employees to think like owners, it will solve the biggest problem in business right now: lack of engagement. Once they see the difference they can make, they will be excited to be part of the process.”

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FRONTEND

Profile

Par Mar Hitting Its Stride Marking its 51st year of serving customers, Par Mar Oil Co. is shoring up its market position with the recent opening of its 100th c-store. By David Bennett, Senior Editor

Par Mar Oil Co. recently opened its 100th Par Mar Stores convenience store. The retailer has more than doubled the size of its chain in the last 30 months, mostly through acquisitions. The company, which has stores in Ohio, West Virginia, Pennsylvania and one in Kentucky, plans to continue growing its footprint.

OCATED NEAR THE HEART OF the Ohio River, separating the neighbor cities of Parkersburg, W.Va. and Marietta, Ohio, Par Mar Oil Co. recently opened its 100th retail location. A benchmark by any business standards, it has been business as usual for the parent of Par Mar Stores convenience chain. A familiar retail presence in most of the communities where it operates, the Marietta-based c-store has been seeking out and capitalizing on more opportunities in the last two-and-a-half years. Par Mar Stores was a 49-location convenience store chain at the end of 2015. In the last 30 months, the retailer has more than doubled its size. By any industry standard, those are significant strides.

THE 3 P’s Brian Waugh, president of Par Mar Stores, said it attributes its progress to a few factors. No. 1 is its customers, 10 Convenience Store Decisions November 2018

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closely followed by “people, planning and partners.” “We couldn’t have reached 100 stores if it wasn’t for the work ethic of our people,” Waugh said. “We have a great blend of people who have been with us for more than 20 years, some that worked many years for other people who have now brought their talents to us, and of course some that are new to the industry. We also plan in advance to make sure all on the team are prepared for the new stores. Some new locations come on you pretty quickly though, so you still also have to be ready, when you need to be ready.” Lastly, “we couldn’t have gotten to where we are without the support and relationships that we have with all of our vendor partners, particularly our grocery supplier, the H.T. Hackney Co.,” added Waugh. The company’s expansion plans include its growing foray into West Virginia, marked by the opening of the c-store retailer’s 99th location—on Sissonville Drive in

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FRONTEND

Profile

Par Mar Stores has added 18 new c-store locations in 2018. This November, the chain is debuting its 101st store, which spans 3,200-square feet and features an expanded foodservice selection.

Charleston and its 100th location in the city of Bartow. The AT ITS ROOTS Par Mar Oil Co. was established in 1967 as a full-line two new store openings will make 18 locations that Par petroleum jobber by Joseph Grow of Parkersburg, W.Va. Mar has added in 2018. Broken down, the chain comprises 53 locations in West and James Hollister of Marietta, Ohio. In search of a name, Virginia, 26 in Ohio, 20 in Pennsylvania and one in Ken- Grow and Hollister decided on Par Mar—Par, an abbreviatucky. Par Mar Stores is an operating division of Par Mar tion connecting to the city of Parkersburg and Mar—for Oil Co. Pittsburgh-based Croton Holding Co. acquired Par Marietta. Waugh said there’s no mistake that the roots from which Mar Oil in 2016. In the beginning of November 2018, Par Mar Stores will the c-store company sprung have grown stronger throughbe operating 101 c-stores. Waugh’s team has been work- out the years. “The Parkersburg and Marietta communities are very iming on its newest 3,200-square-foot store for the last few months. The site offers more foodservice items than other portant to us, as that’s where our name comes from and Par Mar locations, including a Hunt Brothers Pizza offering, where a lot of our employees live as well,” Waugh said. a coffee/cappuccino program, a notable beverage foun- “At the same time, all of the communities in which we operate are important to us as we look to make a difference tain and Slush Puppie machines. Customers have come to expect more from the conve- and support our local schools and communities every day.” Looking ahead, the company will begin building a new nience chain, which has grown chiefly through acquisition. Many of the company’s c-stores have a unique identity, es- c-store with a quick-service restaurant that will open in pecially when it comes to food offerings that have come 2019. The company currently is a franchisee for 13 Subways, one Quiznos Restaurant and one A&W Restaurant. through those acquisitions. “We didn’t look to change them; we looked to build off what we acquired,” Waugh said. “We have many different LOYALTY FOLLOWS Not only is Par Mar Stores growing its operational footofferings, whether it’s a location that has a restaurant with a menu for made-in-house items, or locations that provide print, the chain is intent in growing its connection to cusfood throughout the day with their local specialties (supplied tomers. One way has been through its Par Mar Rewards by Brown Foodservice). We cut meat at some locations. We Card. The c-store uses the loyalty program to encourage team up with Hackney Foodservice, Hunt Brothers or Orion its customers to buy items that they are loyal to, running in some locations. One of our stores in Morgantown has a multiple “Buy 6, get the 7th free” campaigns throughout the calendar year. Par Mar Kitchen, with an ordering kiosk.” “We also have monitors at the front of our locations that That’s not to mention the company’s robust roller grill are constantly showing the customers the monthly promoprogram. 12 Convenience Store Decisions November 2018

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KWIK TRIP

Convenience Store Decisions 2018 Chain of the Year

Servicing: Philip Morris USA U.S. Smokeless Tobacco Company John Middleton Nu Mark Nat Sherman

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FRONTEND

Profile

Par Mar

at a glance

In Oct. 2017, Par Mar Oil Co. celebrated its 50th anniversary, which goes back to 1967 when the new company was launched as a full-line petroleum jobber by Joseph Grow of Parkersburg, W.Va. and James Hollister of Marietta, Ohio. The company opened its first c-store in 1979, initially doing business as Par Mar Shop N Save. It changed the name to Par Mar Stores eight years later. Operating 100 convenience sites today, the chain sells fuel under the BP, CITGO, Exxon Marathon, Shell, Sunoco and Valero brands. Pittsburgh-based Croton Holding Co. acquired Par Mar Oil in 2016.

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tions that we have,” Waugh said. “We team up with (area) grocery stores to reward both their and our customers.” Waugh said the retailer will be adding a company app, which will be introduced in early 2019. The app will allow users to quickly see daily promotions and special offerings, and enable the c-store to better engage with customers. Increasingly, Par Mar Stores is relying on social media to connect more with its customer base, as well as gaining additional insights on consumer preferences. “Facebook, Twitter and all of the review sites allow us to show what we have and also to change what needs to be changed based off the feedback that we receive,” Waugh said. “Our goal is to provide what our customers are looking for; we base what our offerings are on the feedback that we receive on what we offer, or what we need to offer.” As Par Mar Stores continues to cultivate a stronger following on both sides of the Ohio River and beyond, the future appears to be bright indeed. “If we grow the next ﬁve years, like we have the last two-and-a-half years, then it’s going to be a lot of fun,” Waugh said.

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QuickBites AMERICANS CELEBRATE

FALL WITH PUMPKINS

Artiﬁcial Intelligence (AI)

Marches Forward

plan to leverage 55% ofAI retailers within three years. retailers are currently using AI 7% asof digital assistants and chatbots. to implement AI as digital 48% plan assistants/chatbots within three

Average Price of Pumpkin in October 2018 $3.89

Percentage of Americans planning to carve pumpkins 45%

Number of Americans that plan to carve pumpkins as of Oct. 18, 2017 $147.9 Mil

Total jack-o-lantern expenditure $575.3 Mil

years.

Source: NPD Group’s 2017 Checkout, a receipt harvesting research service.

Source: finder.com, United States Department of Agriculture, U.S. Department of Commerce, National Retail Federation

HOW OFTEN DO YOU PURCHASE OPEN-LOOP GIFT CARDS?

WHICH BEST DESCRIBES WHY YOU BUY AN OPEN-LOOP GIFT CARD FOR YOURSELF?

9% - More than once 19% - About once a month 33% - About once every 3 mos. 24% - About once every 6 mos. 11% - About once a year 4% - Less often

47% - Convenience 47% - Money Management 14% - Security 12% - Alternative to traditional banking 6% - Anonymous Spending

WHY SELECT BRICK-AND-MORTAR STORES?

68% cited cost as the top factor 55% say proximity as the reason for picking a store 53% point to product selection 36% are swayed by online customer reviews or ratings 34% cite brand loyalty

Source: September 2018 Uberall poll of more than 1,000 customers.

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WHERE DO THEY WANT TO SHOP?

WHAT INFLUENCES GEN Z TO ADD ITEMS TO THEIR BASKET?

23%

prefer to shop online only

67%

said feelings at the time

42%

of adult Gen Z respondents prefer to shop in-stores vs online.

34%

Source: InComm’s “2018 Open-Loop Gift Card Study”

Customers Explain Open-Loop Gift Card Behavior

prefer to shop in-stores and online equally.

Dissecting Adult Gen Z Customers

33%

said online and in-store advertisements

(Ages 18-22)

46%

said browsing in stores

40%

said in-store displays

Source: Profitect Inc., “2018 Gen Z Retail Survey”

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CONGRATULATIONS

Convenience Store Decisions’ 2018 Chain of the Year Swedish Match North America is proud to be your partner, and we look forward to your continued success in the future.

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INDUSTRY

News

Altria Pulls Vape Products, Flavors In September, the U.S. Food and Drug Administration (FDA) asked several tobacco companies, including Altria, to provide plans to address underage use of e-vapor products. In response, Altria announced several steps in October. Its Nu Mark brand will remove from the market MarkTen Elite and Apex by MarkTen podbased products until these products receive a market order from the FDA or the youth issue is otherwise

addressed. For the remaining MarkTen and Green Smoke cig-a-like products, Nu Mark will sell only tobacco, menthol and mint varieties. Nu Mark will discontinue the sale of all other flavor variants of its ciga-like products until these products receive a market order from the FDA or the youth issue is otherwise addressed. Lastly, Altria will support federal legislation to establish 21 as the minimum age to purchase any tobacco product.

lower proxy costs or no proxy cost at all. The lawsuit alleges Exxon therefore deceived investors as to the company’s true financial exposure to increasing regulations and policies adopted to mitigate the effects of climate change. In a statement, Exxon responded to the lawsuit saying there is no evidence to support the allegations. “The New York Attorney General’s office doubled down on its tainted, meritless investigation by filing a complaint against ExxonMobil. These baseless allegations are a product of closed-door lobbying by special interests, political opportunism and the attorney general’s inability to admit that a three-year investigation has uncovered no wrongdoing.” Exxon added it “looks forward to refuting these claims as soon as possible and getting this meritless civil lawsuit dismissed.”

New York Sues Exxon Mobil

United Pacific Acquires 39 C-Stores

New York Attorney General Barbara Underwood is suing Exxon Mobil Corp., alleging it misled investors regarding the risk climate change regulations were expected to pose to its business. The complaint alleges that Exxon defrauded investors by assuring them, for years, that it was accounting for the likelihood of increasing regulation of greenhouse gas emissions by applying an escalating “proxy cost” of those emissions to its business planning and investment decisions. Yet, contrary to those representations, the complaint alleges Exxon frequently did not apply the proxy costs as represented in its business activities. Instead, in many cases Exxon applied much

United Pacific is buying 39 cstores from Macland Investments, growing its network to 365 companyoperated c-stores. The chain also has 55 fee-operated sites. According to a report by the Los Angeles Business Journal, Macland Investments, which operates sites throughout Southern California under the Chevron, 76 and Shell brands, divested the 39 stations to United Pacific, as well as seven car washes and five quick-service restaurants. Most of the properties are located in Los Angeles County.

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sends fueling trucks directly to customers to fill up their tanks. While it won’t send trucks to customers’ homes, it does aim to provide fill up service to large groups of customers at once in settings such as large parking lots or garages. According to a report by the Houston Chronicle, Shell is testing the program with Shell employees and other businesses, offering refueling in business parking lots. Shell plans to expand the service to all customers over time, allowing drivers to fuel up while grocery shopping or dining out. While new to the U.S. market, the “Shell TapUp” program began in the Netherlands. Shell is also launching a new electric charging pilot program in California that can charge an electric vehicle in five minutes, the Houston Chronicle reported. Shell has already launched electronic-vehicle charging programs across Europe and in China.

Parker’s Rolls Out Self-Checkout Technology Savannah, Ga.-based Parker’s has added new self-checkout technology to its high-volume c-store in Pooler, Ga., and expects to expand the technology across the chain’s 54-store footprint. Developed in conjunction with NCR, the new self-checkout technology speeds up transaction time and frees up cashiers to serve as in-store concierges, enabling them to focus on the total customer experience. “Our new self-checkout technology is designed to offer Parker’s customers a frictionless shopping experience,” said Parker’s Chief Operating Officer Jeff Bush.

Shell Gets Creative

Shell is piloting its new “Shell TapUp” app-based program, which

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

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Gen Z Shopping Trends As Gen Z enters adulthood, c-store operators need to think differently about how to attract this new generation.

WHO ARE GEN Z SHOPPERS? Ages 14-25

86M, making up 27%

single

annually

Average HH income is

$53K

of the U.S. population.

Convenience is their top retail channel – they make

24% 16% 53% WHITE

AFRICAN HISPANIC AMERICAN

ASIAN

61%

80%

$44B on GROCERIES Spend

There are

7.8 TRIPS per month

4% OTHER

39%

male

female

MOST COMMON SHOPPING DAYS ARE SATURDAY & SUNDAY They are 6% more likely to make a trip on weekends than other shoppers

1 3

34% OF THEIR TRIPS occur between 5 P.M. AND 6 A.M., 21% more often than all other shoppers at this time

21% of convenience store shoppers are 16-24 YEARS OLD

HOW TO REACH THEM DELIVER ENGAGING IN-STORE EXPERIENCES Gen Z shoppers are MORE LIKELY to report their shopping experience on social media

11%

more likely to be motivated by a FUN SHOPPING EXPERIENCE

79% of their CR TRIPS

ARE FOR IMMEDIATE CONSUMPTION ITEMS

16%

more likely to BROWSE FOR INTERESTING ITEMS

63%

reported that they prefer stores that have a WIDE PRODUCT SELECTION

88%

Give them SOMETHING TO POST ABOUT with their shopping experience: • Provide RELEVANT, NEW AND FUN CONTENT • Create customized IN-STORE ACTIVATIONS

OFFER EASY & CONVENIENT SOLUTIONS

OFFER VARIETY

36%

of trips are grab-and-go

1 out of 3

Gen Z trips were five minutes or less

44% more likely to

BUY A MEAL OR SNACK TO EAT RIGHT AWAY

35% more likely to

BUY A BEVERAGE TO DRINK RIGHT AWAY

Provide AFFORDABLE, EASY MEAL AND BEVERAGE SOLUTIONS and HIGHLIGHT ONE-STOP SHOPPING

say PRODUCT SELECTION IMPACTS HOW SATISFIED THEY ARE with their trip

BECOME A DESTINATION for Gen Z shoppers to try NEW, INNOVATIVE PRODUCTS

LEVERAGE THE BEVERAGE TO DRIVE TRIPS Gen Z shoppers are more likely than others to purchase: • CSDS (8% more likely) • PACKAGED WATER (8% more likely) • RTD TEA & JUICE (27% more likely) • SPORTS DRINKS (73% more likely) • ENERGY DRINKS (40% more likely)

51%

2ND

most purchased basket item is CSDs (behind gas)

of all trips include at least one beverage, 16% more often than all shoppers

Focus on immediate consumption and UTILIZE BEVERAGES AS A TRAFFIC DRIVER Source: Infographic courtesy of The Coca-Cola Co.

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CHEERS TO YOU The Coca-Cola Company would like to express congratulations to Kwik Trip™ for being selected as the 2018 Convenience Store Decisions Chain of the Year.

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FRONTEND

News

Cool New Products at NACS NACS 2018 previewed some unique category products for visitors this year. By CSD Staff

Skippy Pop-Able Peanut Butter Bites

he Cool New Products Preview Room at this year’s NACS Show at the Las Vegas Convention Center closed out its 18th year by showcasing new products, flavors, packaging and innovation. Showcasing some 300 products to the c-store industry, the Cool New Products Preview Room even featured some products that hadn’t even been rolled out to the market yet, but all of them caught the curiosity of visitors.

Jack Link’s Ready-to-Eat Portable Meal Bowls 22 Convenience Store Decisions November 2018

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DaVinci Gourmet Cold Brew Concentrate

A handful of Cool New Products are included here: *Hormel-owned Skippy offered the portable, popable peanut butter bites packed with double the peanut buttery taste. *DaVinci Gourmet Cold Brew Concentrate features 100% Arabica Colombian & Brazilian beans. *Game Fuel (led by the flavors of Cherry Burst and Berry Blast) is the latest Mountain Dew variety released in stores this fall. In addition, *Jack Link’s this year

Calico Brands’ Scripto Ultima Designer Wraps

Game Fuel’s Mountain Dew variety

expanded into the protein meals category with a line of ready-to-eat portable meal bowls, featuring flavors such as cheeseburger and potato bites. *Calico Brands’ Scripto Ultima Designer Wraps are now available in new designs, and still offering 3,000 lights. Lastly, *Blue Monkey Tropical Collection is focused on its 2018-2019 trending Watermelon collection, still and sparkling juices and other innovations.

Blue Monkey Tropical Collection

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CONGRATULATIONS TO

CONVENIENCE STORE DECISIONS 2018 CHAIN OF THE YEAR

Building relationships. Building growth.

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10/24/18 5:21 PM

CONVENIENCE STORE SOLUTIONS

Taking Theft Seriously Theft in c-stores might be considered a three-pronged issue because there are three main groups that are often responsible: vendors, customers and employees. By Jim Callahan, Contributing Editor

HERE ARE IMPORTANT TOPICS IN convenience retail. Good customer service is an important one. So is implementing effective back-ofﬁce systems that can help with accounting. Inventory management systems that assist in optimizing inventory should be part of every c-store conversation. Then, there’s theft prevention. Preventing theft is as important today as it has ever been.

THREE-PRONG APPROACH Theft in c-stores might be considered a three-pronged issue because there are three main groups that are usually responsible: vendors, customers and employees. Of course, developing prevention programs that incorporate best practices for each respective group can go a long way in decreasing shrinkage and discouraging future theft incidents. Looking closer at these key groups can reveal some behaviors that retailers should look for. • Vendors. Unscrupulous vendors often steal when they have the opportunity. Like some employees, these individuals take advantage of your trust. As retailers, we allow those opportunities primarily when we don’t do a thorough job of checking in deliveries. You can’t check a vendor in while standing behind the counter. Touch and count every item and remind store managers of the critical byproduct of this responsibility: job security. Despite your regular store duties, you absolutely have to look up from whatever you’re doing and scan the store to see what your vendors—and customers—are doing. Here’s a case in point: Standing behind tinted glass, I once observed a beer driver bringing in 80 cases of product, part of a 100-case order, then take 20 cases of beer off a pre-existing display so the person checking the order in counted and approved the 100-case invoice. I took photos of the driver red-handed. Ultimately, we were reimbursed and the driver subsequently was ﬁred. After that, store employees reviewed procedures regarding when drivers failed to drop a delivery at a designated spot. Shifting from vendors to employees, the need to be vigilant and mindful that there are even more opportunities for worker theft is even more pressing. Here a few things to consider: • Employees. There are so many ways to steal from an employer. However, most experienced retailers have seen 24 Convenience Store Decisions November 2018

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

all the tricks to include ‘playing in the cash register’ such as manipulating “no sale” rings. Daily worksheet processes, camera systems and detection techniques for measuring sales, average sale per customer (ASPC) methods have improved dramatically. For example, at a store I once observed on video a cashier taking $40 out of the register for no good reason. The cashier, however, overheard the manager informing the assistant manager about it and secretly removed the video recording to hide evidence. The worker was fired and arrested before we learned about the stolen video and she actually invited friends to her police hearing before her case was heard—confident that she had outsmarted her employer. She was partially right, but when the store’s manager brought separate electronic equipment into the court, the manager was able to show the judge a separate video, clearly showing the cashier stealing the first video off the manager’s desk, you could have heard a pin drop before the judge sentenced the worker to jail time. • Customers. Again, the same vigilance and modern technology that can help a c-store owner and operator track the activities of employees can help monitor the activities of your customers. Not only can surveillance equipment detect illegal activity, it can also show incorrect transactions, if a customer received bad service, etc. Lastly, you can be doubly sure that the integrity of a store’s operation is being maintained by doing the following: • Always have someone else ring up your purchases. • If you work alone, hold the entire transaction up to the closest camera, receipt taped to the item which provides proof and another layer of accountability. • Make timely cash drops. Having too much money in cash registers is an invitation to robbery and disaster. Of course, a thief would prefer a $1,000 score over just getting away with $200. Remember the more money available to tempt a criminal, the bigger the invitation is for the same individual to try that same location again. Theft is a serious topic. Devising means to deter theft should be a serious matter. cstoredecisions.com

10/29/18 12:03 PM

Congratulations Convenience Store Decisions Chain of the Year!

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Chain of the Year Award

KWIK TRIP Honored as 2018 Chain of the Year The convenience store retailer celebrated with more than 300 retailers and suppliers at the Chain of the Year dinner in Las Vegas. By Erin Del Conte, Senior Editor

wik Trip was honored as The Kwik Trip team led by Chairman Don Zietlow (center) accepts the 2018 Convenience Convenience Store Decisions’ Store Chain of the Year award in Las Vegas, from Joe Sheetz, president and CEO of Sheetz 2018 Convenience Store Inc., the 2017 Chain of the Year winner. The Wisconsin retailer currently operates 630 Chain of the Year at a dinner at the convenience stores in three states and has plans to grow to 700 stores by the end of 2019. Stratosphere Theatre in Las Vegas on world-class facilities, they simply have stand if they do that everything else Oct. 8 during the NACS Show. La Crosse, Wis.-based Kwik Trip no weakness and it’s a pleasure to see will take care of itself. We’re honoring a very worthy recipient tonight.” is the 29th Chain of the Year and the them in action,” Lofstock said. Don Zietlow, Kwik Trip’s founder Joe Sheetz, president of Sheetz, second two-time winner. It was ﬁrst the winner of the 2017 Chain of the and CEO accepted the award. honored by CSD in 2004. “Thank you John for the evening, Founded in 1965, Kwik Trip is still Year award, presented the award to one of the fastest growing family- Kwik Trip. It is tradition for the previ- for our family it has been great. Our family is here tonight and our coowned and operated convenience ous winner to present the award. “They’re not just a family business workers are here,” Zietlow said. “I store chains. Today, Kwik Trip operates 630 stores in three states and at Kwik Trip,” Sheetz said. “They’re always tell our co-workers, our family should be close to 700 by the end of unbelievable retailers. They are a has to take care of our co-workers and 2019, noted John Lofstock, editor of great employer, and if you go there the co-workers have to take care of you’ll hear senior management talk our guests. If we do those two things Convenience Store Decisions. “In a convenience culture where over and over again about taking care well we’ll be very, very successful.” Please join Convenience Store Decustomers expect great service, qual- of their co-workers. You’ve got to get ity and a memorable shopping experi- that right. It’s their ‘co-workers’ that cisions in congratulating Kwik Trip as ence, Kwik Trip exceeds expectations they’re taking care of, and I respect the 2018 Convenience Store Chain of every day. From its employees to its that so much because they under- the Year. 26 Convenience Store Decisions November 2018

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29 Chain of the Year th

Chain of the Year Award

Don Zietlow (left), of Kwik Trip, with John Lofstock, of Convenience Store Decisions, and Joe Sheetz, of Sheetz Inc.

Tom McIntyre, group publisher for The Convenience Store Decisions Group, welcomes attendees, Las Vegas style.

Don Zietlow praised his Kwik Trip co-workers for their dedication to customer service and always going out of their way for customers. 28 Convenience Store Decisions November 2018

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The Zietlow family, which founded Kwik Trip in 1965, poses with the 2018 Chain of the Year trophy. The Chain of the Year award is the oldest and most prestigious award in the convenience store industry.

A Rat Pack tribute band featuring Sammy Davis Jr., Dean Martin and Frank Sinatra entertained attendees.

Joe Sheetz, president and CEO of Sheetz Inc., hailed Kwik Trip as an innovator and industry leader across the entire retail industry.

More than 300 people were on hand at the Stratosphere Theatre in Las Vegas to honor the Kwik Trip team as the 2018 Convenience Store Chain of the Year. The chain is a two-time winner of the award, first garnering top chain honors in 2004.

cstoredecisions.com

10/25/18 9:09 PM

ON WINNING CSD’S

CHAIN OF THE YEAR

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10/24/18 9/17/18 5:00 10:40PM AM

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Chain of the Year Award

Eric Kruse, Joe and Joni Hayes, of Kwik Trip, are joined by Jennifer Hermeier and Jason Link, of Jack Linkâ&#x20AC;&#x2122;s.

Wendy and Joe Sheetz, of Sheetz Inc., which earned Chain of the Year honors in 2017.

More than 25 supplier companies stepped up to honor Kwik Trip.

Tom Reinhart, of Kwik Trip (left); joins Scott Hill, of Jack Linkâ&#x20AC;&#x2122;s; and Mark Schneider, of Kwik Trip.

Bryan Bresnahan and Matt Kaplan, of Altria Group.

Marla Benson, of Mars (left), Joe and Kathleen Zietlow, of Kwik Trip; and Jim Dodge, of Mars.

Scott Falkenberg (left), of Kwik Trip, and Robert Sabini, of Stewart Shops, are entertained by a Vegas showgirl.

Over the past 29 Years, CSD has consistently honored convenience retailing excellence. While some companies have been acquired, the chains that have been honored remain distinguished industry leaders, starting with Wawa, the first Chain of the Year in 1990.

30 Convenience Store Decisions November 2018

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Chain of the Year Award

Greg and Lois Scriver, of Kwik Trip (left); and Matt Kaplan, of Altria; are joined by Amy and Bryan Anderson, of Old Dutch.

Bob Ayres and Ryan Yost, of Avery Dennison.

Tony Harris, of Cumberland Farms, enjoys a drink with Scott Bennett, of Hersheyâ&#x20AC;&#x2122;s.

Bob Presley, of Ruiz Foods; Micah Rupprecht,of Kwik Trip; and Greg Wendleton, of Ruiz Foods.

32 Convenience Store Decisions November 2018

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Matt Yoder, of Speedway (left); Scott Zietlow and Don Zietlow, of Kwik Trip; Tony Kenney and Glenn Plumby, of Speedway.

Steve Colnitis, of Kerry Convenience; Lois and Greg Scriver, of Kwik Trip; and Claudio Marasti, of Kerry Convenience.

The Zietlows celebrate the family-owned business on being named 2018 Convenience Store Chain of the Year. Hans Zietlow (left), is joined by Amy Zietlow, Luke Zietlow and Matt Zietlow.

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10/25/18 9:09 PM

AN ASSORTMENT OF CATEGORY-LEADING PRODUCTS CONSUMERS LOVE

50% market share of the Cookie category. 42% market share of the Cracker category.1 Highest buying rate in the Biscuit category.2

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1 Nielsen 52 W/E 2/14/18 Nielsen Homescan All Outlets 52 Weeks Ending 2/24/2018

10/25/18 3:57 PM

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Chain of the Year Award

Dan Werth, of Miller Coors; Will Churchill, of Kwik Trip and Andrew McGuire, of Miller Coors.

Brent Larson and Jon Bevins, of Monster Energy.

Joe and Allison Hamza, of Nouria Energy.

Jack Kofdarali (left), president of J&T Management, Tom Welch (left), of Maverik Inc., shares Chris Gheysens, president and CEO of Wawa Inc.; a laugh with Scott Apter, president of and Brad Call, president of Colour de Jour. Apter Industries.

Dean Durling, president and CEO of QuickChek, the 2016 Chain of the Year winner, with Jay Ellingson, of Kwik Trip.

34 Convenience Store Decisions November 2018

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Rhonda and Doug Yawberry and Ken McMullin, of Weigel’s; Bill Henry, of The Kellogg Co.; and Kurt Weigel, of Weigel’s.

Bruce Snyder, of Kwik Trip, with Jean Lane and Mark Schweinebaten, of NCR.

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R E N W O I O P INNOV T

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11/1/18 8:56 AM

Join the conversation:

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Cover Story

Kwik Trip

KWIK TRIP: 2018 Chain of the Year

With its unsurpassed vertical integration and decades-long commitment to co-workers, guests and the communities it serves, the chain exempliﬁes what it means to be a “people company.” By John Lofstock, Editor

onesty and integrity, respect, humility and innovation. These are the words that define Kwik Trip Inc.…and it shows. The La Crosse, Wis.-based convenience store chain exemplifies what it means to be a “people company.” It is fully committed to guests, co-workers and its vendor partners, not as a strategy to grow the business, but because it’s the right thing to do. When this is your core mission, greatness surely isn’t far behind. The chain serves as a shining example of how to serve others and for this reason Convenience Store Decisions is proud to honor Kwik Trip as the 2018 Convenience Store Chain of the Year. Kwik Trip is the 29th Chain of the Year and the second two-time winner of this prestigious award. It was first honored by CSD in 2004.This honor highlights remarkable consistency and a commitment to excellence—to customers as well as employees—over a very long period of time. “Our business model is pretty simple and boils down to two things: For Kwik Trip to be successful, we need to take care of our co-workers and our co-workers need to take care of our guests,” said Don Zietlow, Kwik Trip’s venerable founder and CEO. Kwik Trip takes its lead from Zietlow, whose boundless energy and passion for the convenience store business hasn’t slowed one bit even as he is in his 80s. Kwik Trip was molded after his core belief that when you take care of your people, the business will have a solid foundation to drive customer service. “We have a wonderful opportunity every day to make people happy. There is a lot of hard work that goes into this, but the very core of what we do is making people happy—that’s our co-workers and our guests,” Zietlow said. “In my earlier years, I spent a lot of hours at work thinking about what our business model should be and how we would grow the company. It always came back to taking care of people. When you do that, customers will be around for a long time.” Don Zietlow, Kwik Trip’s founder and CEO, This is such a core principle at Kwik Trip, Zietlow wrote it into the company’s believes if you take good care of co-workers mission statement: “To serve our customers and community more effectively they in turn take good care of c-store guests. than anyone else by treating our customers, co-workers and suppliers as we, 36 Convenience Store Decisions November 2018

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10/29/18 2:04 PM

th Chain of the Year Award

personally, would like to be treated and to make a difference in someone’s life.”

DYNAMIC OPERATIONS When one examines the workings of Kwik Trip, the first thing that comes to mind is the vastness of its operation. In a convenience culture, where customers demand great service, quality and a memorable shopping experience, Kwik Trip exceeds expectations every day. From its employees to its first-class facilities, it simply has no weakness. “I’ve always believed that competition makes us better and that we can learn a lot from other operators,” Zietlow said. “Since the 1960’s we have had great competition from folks like Speedway and Kroger, who are very good at what they do, so that was a challenge to us to be better. I don’t mind the competition. It’s part of the game in this area. When you look at Iowa, Minnesota and Wisconsin where we operate, there aren’t big population increases. So the new business cstoredecisions.com

36-42_CvrStory_Kwik Trip.indd 37

Additionally, Kwik Trip was an early that you get, you have to take away from someone else. It’s a tremendous adopter of selling and using comchallenge, but we also see it as a great pressed natural gas (CNG) in its own trucking fleet, which is operated by opportunity.” Kwik Trip remains one of the coun- its Convenience Transportation subtry’s fastest-growing family-owned and sidiary. The fleet delivers fuel and operated convenience store chains. products to stores daily and has subToday, it operates 640 stores in three stantially reduced greenhouse gas states and should get to 700 by the emissions every year since 2011. Supporting its 640 stores is a end of 2019. Its 22,000 employees serve about 1.2 million customers daily. 360,000-square-foot state-of-the-art Since it was founded in 1965, Kwik distribution center and commissary. Trip continues to grow and innovate. With its 450-plus employees, the With multiple generations of family hub delivers more than 6,000 prodownership, the chain continues to find ucts to every store in its network new ways to embrace and strengthen through its trucking division every sincommunities through a commitment gle day. Plus, the company operates a 176,000-square-foot dairy, also in to local sourcing and high standards. Over the years—and what makes Wisconsin, that produces proprietary the company stand apart from many ice cream, milk, juices and teas. After some smart investments, Kwik of its peers—is that it has evolved organically into a vertically integrated Trip is able to control every aspect of its company with unmatched operations operation, from the amount of flour that for a family-owned convenience store goes into each of the millions of pizzas it chain. The company’s production and makes and sells annually, to the healthtransportation divisions allow the chain care costs of its workforce. Another to provide quality products and keep attainable goal was bringing fresher products to its store shelves daily. costs low.

November 2018 Convenience Store Decisions 37

10/29/18 2:42 PM

Cover Story

Kwik Trip

Kwik Trip At a Glance

Since 1965, Kwik Trip Inc. has operated friendly, family-owned convenience stores in communities throughout Wisconsin, Minnesota and Iowa. Today, the company has 22,000 co-workers serving guests at more than 640 stores. The chain, which shares 40% of its pretax profits with co-workers, is consistently ranked as a Top Workplace in each of the three states it operates. In 2005, Kwik Trip ﬁrst introduced open-air cases to showcase fresh food products, including packaged salads.

Headquarters: La Crosse, Wis. Store Count: 640, with plans to get to 700 by the end of 2019. Guest Count: More than 1.2 million customers daily. Markets of Operation: Wisconsin, Minnesota and Iowa Retail Brands: Kwik Trip, Kwik Star, Tobacco Outlet Plus Grocery Operations: In addition to c-stores, Kwik Trip company operates a 360,00-square-foot distribution center and a 176,000-square-foot dairy in Wisconsin, both of which make daily deliveries to every store in the network. It also operates a trucking fleet under the Convenience Transportation subsidiary, which handles the deliveries of store items and natural gas (CNG).

“We sell millions of gallons of milk and most of that comes from farms in southwest Wisconsin and southeast Minnesota,” said Steve Loehr, Kwik Trip’s vice president of operations support and a 30-year company veteran. Additionally, since 2005, stores began introducing a greater selection of foodservice items that are guaranteed to be fresh. For example, the chain currently sells 3.5 million doughnuts a week—approximately 800 per store per day, according to Zietlow. That same year, open-air cases were installed to showcase the fresh products, including packaged salads. Hot foods were ﬁrst introduced in 2003. Today, many hot foodservice menu options are prepared on site to fur-

The ﬁrst Kwik Trip store opened in Eau Claire, Wis.

GASOLINE SALES

Kwik Trip introduced gasoline sales at the Eau Claire store.

1970

1971

First La Crosse, Wis. store opened. Chain reached ﬁve stores.

OWNERSHIP POSITIONS

John Hansen and Don Zietlow established ownership positions.

38 Convenience Store Decisions November 2018

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1972

provide fresh meat and produce. We think of ourselves as grocers that sell gas rather than gas retailers that sell a few bananas,” Loehr said. The process of adding fresh items— and persuading customers to view Kwik Trip as a fresh-food retailer—was a gradual one. “It takes time for customers to be comfortable with buying more food from convenience stores,” Loehr said.

CORPORATE OFFICES

FIRST LA CROSSE, WI STORE

FIRST STORE OPENED

1965

ther ensure their freshness. Next was a broader array of bulk produce typically associated with grocery stores, such as loose potatoes. And of course, every store stocks a variety of fresh fruit, including cut and packaged varieties. Stores were even updated with refrigerated units to hold fresh cut steaks, pork chops and chicken. “People use their local Kwik Trip as their regular grocery store because we

50 STORES AND GROWING

Corporate offices opened in La Crosse. Warehouse delivery began.

1973

DAIRY PLANT OPENED

Dairy plant opened in Caledonia, Minn. Soda bottling plant began production.

1981

Chain grew to 50 stores. Corporate ofﬁces expanded for the third time.

1983

FIRST TRAVEL CENTER

First travel center opened in Tomah, Wis. with a Hearty Platter Restaurant. The Bakery was established.

1985

1986 WOLTER MINI MART

Kwik Trip purchased 17 Wolter Mini Marts in Iowa.

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R E N W O I O P INNOV T

THE

Join the conversation:

@HersheyCompany The-Hershey-Company

h the lts wit u s e r Drive ATIVE

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ols est to he lat egory— t s s e Acc r cat new w you to gro fits—at the om o s.c and pr lution

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10/25/18 9:09 AM

Cover Story

Kwik Trip

Kwik Trip is fully committed to taking care of its people. The chain shares 40% of pre-tax proﬁts with workers. Long-time workers can become equity owners of the company’s stores.

“It took a while for people to see the salads. It took visit after visit and seeing others eating them.”

PEOPLE COMPANY Kwik Trip’s commitment to its people drives its success. This commitment to retail excellence has also garnered national attention. So far in 2018 Kwik Trip was voted the No. 1 Top Workplace in Wisconsin by the Milwaukee Journal Sentinel. It also placed No. 65 on Forbes’ List of Best Places to Work in the U.S. Kwik Trip shares 40% of its pretax profits with workers and allows long-time workers to become equity owners of the company’s stores. The results speak for themselves: The company has a low turnover rate of just 30%. Corporate Support Center turnover rate is under 1%. Industrywide, the average turnover rate is 77%, according to The National Association of Convenience Stores (NACS). “When you look at our marketplace, we are different than New York, Chicago or Atlanta. We are primarily

DISTRIBUTION CENTER ADDITION

1987

Built 80,000-sq.-ft. addition to the distribution center. New milk cooler added to the Dairy.

KICKAPOO STORE PURCHASE

Kwik Trip purchased 54 Kickapoo stores. Photo Lab opened.

1988

KWIK CARD

1989

John Hansen and Don Zietlow became dual owners of Kwik Trip. 40% proﬁt sharing began.

KWIK STAR

Kwik Trip became Kwik Star in Iowa.

1993

250 STORES AND GROWING

The “Kwik Card” was introduced. A Communication Center was established at the Support Center in La Crosse.

PARTNERSHIP

40 Convenience Store Decisions November 2018

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While many retail businesses are in rural areas so to grow the business I knew that we would have to take care able to build big new stores and creof our co-workers and pay them well ate brand excitement, they often fail and have them share in the proﬁts if when it comes to delivering great serwe wanted them to support our mis- vice. Kwik Trip makes people a priority, sion to serve our customers,” Zietlow which has been a key distinction from said. “Once we knew we could pro- competitors. From modest beginnings vide great service, we decided to 53 years ago, Kwik Trip isn’t the mandrive our business with commodities ifestation of the entrepreneurial spirit like bread, milk, butter, eggs or what- that drives the convenience store ever customers needed. As we grew, industry, it is that entrepreneurial spirit, we could get our prices down and that but it’s also much more. Kwik Trip is allowed us to introduce foodservice innovative, generous and communityand some of the other products that minded, which is no doubt a product we have in Kwik Trip today. The model of Zietlow’s humble upbringing, in proved to work, but all of this began which he had to work for everything he earned. by taking care of our co-workers.”

1994 TRUCK SHOP

The new Truck Shop was built. A new 120,000-sq.ft. warehouse was constructed.

1995

Company grew to 250 c-stores and 25 tobacco outlet stores. 4,000 co-workers employed.

1997

SOLE OWNERSHIP

The Zietlow family purchased the Hansen family’s interest in KT .

2000

2001 DAIRY COOLER ADDITION

The Dairy added a 10,000-sq.-ft. cooler.

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CONGRATULATIONS TO 2018 CONVENIENCE STORE CHAIN OF THE YEAR

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©2018 McCain Foods USA, Inc. All rights reserved. The trademarks herein are owned or licensed by McCain Foods Limited or one of its subsidiaries. 1 NACS State of the Industry Annual Report 2016 Data; Nielsen TDLinx. *Based on merchandise profit margins averaging 27.8% in 2016, and foodservice prepared foods profit margins of 54.3% in 2016.

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Cover Story

Kwik Trip

Embracing Loyalty

Formally launched in Feb. 2018, Kwik Trip’s new Kwik Rewards loyalty program has reached two million members. Don Zietlow, founder and chairman of Kwik Trip said the c-store chain is doing more than eight million loyalty transactions per month. This explosive growth follows the loyalty program’s introduction of 15th visit rewards, punchcards, exclusive coupons and stackable fuel discounts with opportunity to upgrade to debit and credits options for an added bonus. The key to making it all work is the variety of rewards available, from long-time favorites like Nature’s Touch dairy products and Kwikery Bake Shop sweet goods to new and limited-edition vendor items. Rewards are always changing to keep things fresh and ensure there is always something for everyone. “The Kwik Rewards program has allowed us to engage with our guests in ways we’ve never been able to before. From visit rewards to fuel discounts, each member is able to find unique value with Kwik Rewards,” said David Jackson, digital marketing and loyalty manager. What’s even more impressive is that the chain built the loyalty program internally. “We have been working on this for three years. It’s not cheap and it’s hard to execute, but it’s an outstanding program that our customers want,” said Zietlow, who estimates that about 36% of his customers are now participating in Kwik Rewards.

out Hansen and acquired 100% of the often have to take great risks to have company. Then, Zietlow and his fam- great success. “Our mission statement says that ily assumed $280 million in debt, and borrowed $300 million from banks, we will treat others the way we would harboring little doubt that accomplish- like to be treated and that we will try ment would follow. That’s because he to make a difference in someone’s life,” believed in his people, himself and the Zietlow said. “Kwik Trip will persevere concept of doing things the right way. not because of great locations and So while people see the success good prices, but because our goal is to Kwik Trip has achieved, the company take care of our co-workers and make a itself is a constant reminder that you difference in people’s lives.” CSD

While he sits atop the Kwik Trip landscape today, Zietlow began his career in the industry as a truck driver on the midnight shift at a foodservice distribution company. His hard work and business acumen saw him rise to president of the company in the early 1960’s. He then teamed with John Hansen to launch the convenience business with a single store in Eau Claire, Wis. In 2000, the Zietlow family bought

HOT FOOD PROGRAM

Hot food program is rolled out to all of the 309 convenience stores. Glazers Donuts introduced.

2003

CHAIN OF THE YEAR

Convenience Store Decisions magazine named Kwik Trip Convenience Store Chain of the Year!

2004

RE-IMAGED

FRESH FOOD PROGRAM

2005

LEED CERTIFIED

New open-air cases installed for fresh food offerings. 7-days per week delivery program to all stores started.

KWIK TRIP KITCHENS

First LEED Certiﬁed store opened in Oshkosh, Wis. Palace Street Foods created.

2007

2008

EXPANSION

80,000-sq.-ft. Bakery expansion, Dairy re-model and store re-imaging began. The AV department created.

Kwik Trip Kitchens opened in the new 65,000-sq.-ft. facility. Food R&D department started.

Volume 29 • Number 11 • NOVEMBER 2018 Business Solutions for Retail Decision Makers

2018

Convenience Store Decisions’ Chain of the Year

2010

2011

DAIRY EXPANSION

Stores, restaurants and cafes were reimaged. Chain reached 384 stores and 10,135 co-workers. New bakery ofﬁces opened.

A 36,000-sq.-ft. Dairy expansion. 1st National Alternative Fuels/Compressed Natural Gas facility opened in La Crosse.

2012

2013 TOP 150 WORKPLACE

Kwik Trip was named the 21st Best Workplace on the Top 150 Workplaces in America. The 400th Kwik Trip Store opened in Chisago City, Minn.

KWIK TRIP

2018 Chain of the Year

With its unsurpassed vertical integration and decades-long commitment to co-workers, guests and the communities it serves, the chain exempliﬁes what it means to be a “people company.”

INSIDE:

Cigars Light Up Category Navigating Food Waste

Digital Signage Costs Fade

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42 Convenience Store Decisions November 2018

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Category Management

Packaged Beverages

Climb

Data shows customers are turning to still and sparkling water and ready-to-drink coffees over traditional soft drinks as beverage trends evolve. By Brad Perkins, Contributing Editor

here used to be only a few bev- ern New York. “They want more than just erage options in convenience something to drink; they want something stores: Coffee, tea, soda and water. they can feel good about drinking.” And the statistics back that up. A Variations included cream and sugar National Association of Convenience or Coke versus Pepsi. And nobody cared about ingredients. Stores (NACS) study showed that, in 2017, They simply wanted refreshment when packaged beverages represented 16% of they were thirsty and stopped in for some- sales contribution and 20% of gross proﬁt contribution across all convenience store thing cold or hot. “Beverages are often an impulse pur- channels, with sales of $128 million. And chase in many buying decisions, which their sales margin of 42% was higher than makes convenience stores a prime channel the 22% for beer and 14% for cigarettes. for them,” said Gary Hemphill, managing Among other convenience store segments, director of research at Beverage Marketing it trailed only health/beauty care, candy, snacks and ice cream. Corp. (BMC). One main reason is bottled water. It But like other sectors, tastes changed. People began to both demand more from is the top-selling beverage in the U.S., their beverages and move toward healthier with sales of 13.7 billion gallons in 2017, options. And that brought the introduction according to a BMC study. The study of new variations of packaged beverages: showed that bottled water sales increased Ready-to-drink (RTD) coffee, flavored 8.8% to $18.5 billion and per capita conwater, energy and sports drinks. With fruit sumption passed 42 gallons. “We continue to see healthy growth ﬂavors, vitamins and electrolytes enticing them to the cold vault, people began to in bottled water and many of the newer choose packaged beverages so often, the niche categories, while some of the tried category began to outpace many other and true traditional categories are struggling,” Hemphill said. “Sodas, coffee and categories. “I think customers are looking for health- water are all essential categories, but water ier options,” said Melissa McPherson, is performing the best.” Water, in fact, was one of the main category manager at NOCO Express, which operates 39 locations in west- drivers of a 5% growth in non-alcoholic 44 Convenience Store Decisions November 2018

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Fast Facts: » Customers want both variety and healthy beverages with clean labels. » Bottled water sales are growing. Beverage Marketing Corp. showed bottled water sales increased 8.8% to $18.5 billion in 2017. » Mintel showed RTD coffee is the fastest growing portion of the coffee industry, increasing 31% since 2016.

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Congratulations Kwik Trip Convenience Store Decisions 2018 Chain of the Year

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Category Management

Packaged Beverages

NOCO Express customers are demanding natural products, including still and sparkling water, and are reading labels as they seek out healthier drinks. They also want an energy boost. As a result, NOCO reimagined its cold vaults to add new emphasis on the products customers are seeking.

BodyArmor, which is not only a competitor of Gatorade— and its own Powerade—but touts having less sugar and more electrolytes than its more well-known competitors.

HAVE CAFFEINE? Not to be outdone by non-caffeinated beverages, cofbeverage sales from Labor Day 2017 through Labor Day fee’s appearance in the packaged beverages sector is 2018, according to Beverage Buzz Surveys. The other driv- also growing. While people still want fresh-brewed coffee, ready-to-drink (RTD) coffee drinks have increased in ers were energy and sports drinks. “There are a few trends we have been seeing,” options and consumption in recent years. A study by marMcPherson said. “First is growth with more natural prod- ket research firm Mintel showed that RTD coffee is the ucts. We have seen a shift toward bottled water—still and fastest growing portion of the coffee industry, increasing sparkling. Customers are reading labels and looking for 31% since 2016. With total U.S. coffee retail sales expected to pass $14 bilthe healthier options to what they had been drinking, like lion this year, RTD is a force. And it’s not just one company. BodyArmor versus Powerade.” “A lot of customers think Starbucks when they think iced BodyArmor’s brand has grown because of its healthy reputation. And even in water, brand recognition can coffee,” McPherson said. “And yes, Starbucks has always help. But so do taste and flavor. BMC data showed that been a leader in this segment, but they are starting to see value-added water grew 17% in 2017. And much of that is more competition. Dunkin’ and Caffe Monster are starting because of companies like LaCroix, Polar and Bubly add- to make a bit of noise.” That noise has led to year-over-year growth rates in ing innovative—and traditional—flavors to the market of the double digits for RTD coffee between fiscal years sparkling water. “In the sparkling segment, the name recognition of 2011-2016 and single-digit growth in 2017, according to brands like Polar, Poland Spring and Schweppes have Beverage Marketing Corp. And the new Cola Wars are helped,” McPherson said. “Bubly has had a bit slower sales, beginning to seep into the space, too. Coca-Cola recently purchased Costa Coffee, giving it inroads in European cofbut is starting to get some traction.” fee markets, but also increasing its RTD profile. But packaged beverages are not all about the national NEW COLA WARS Health-consciousness and providing an alternative to soda (or international) brands. With the popularity of the category is triggering something not seen since the 1980s: The Cola comes local options, too. As in other beverage categories, Wars. Call it Cola Wars Part 2: the healthier beverage edition. offering locally-made products can bring in customers. “We have added a locally-brewed Kombucha into several “Health and variety demands are the two most significant trends impacting people’s beverage choices today,” of locations and have a locally- produced sugar-cane soda available in some stores, McPherson said. “Keeping that Hemphill said. With BMC data showing year-over-year growth in vol- local connection is really important to us.” What is most important in this segment is customer ume for sports drinks of 1.78% in fiscal year 2017 and 7.25% for energy drinks, it’s no wonder the big companies desire. And it seems that customers’ desire for water, sports want a piece of the action. That has led Coca-Cola and drinks, energy drinks and coffee will continue their upward trend, providing many more options than previously were Pepsi to battle in water, energy drinks and sports drinks. “Energy is our best segment, [even though] our larg- available at a fast stop in the convenience store. “When we realized the shift in consumer habits, we reiest growth has been with the waters,” McPherson said. “Customers really need to have that burst of energy to keep magined our vaults to add emphasis on the growing segments,” McPherson said. “We decreased space that them going throughout the day.” Coca-Cola recently made a move to enhance its stand- was traditionally allocated to carbonated soft drinks. This ing against Pepsi-owned Gatorade. It purchased a stake in allowed us to add space to energy and water.” CSD 46 Convenience Store Decisions November 2018

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Category Management

Beer

Beer Sales

Bubble Over

Local and craft beers have gained positive momentum in c-stores, but they aren’t expected to replace domestic and import choices anytime soon. By Jeffrey Steele, Contributing Editor

Fast Facts: » Craft beers and imports increasingly are favorites in these markets: Big cities, resort areas and student hotbeds. » The record number of breweries now dotting the U.S. means you’ll ﬁnd local brewers enable c-stores to market local beers to customers in ways they can’t market, say, local produce. » More convenience retailers are growing growler/ crowler programs to provide suds from local breweries.

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or decades, America’s convenience retailers have relied on beer to provide a steady flow of revenue and profits. Today, the increasingly localized nature of beer production is helping c-stores brew up opportunities to lure new customers and ring up larger sales. One of today’s key trends in convenience store beer sales is the craft beer movement and its capacity to relate a local story. The record number of breweries now dotting the U.S. means you’ll find local brewers enable convenience stores to market local beers to customers in ways they can’t market, say, local produce.

TAPPING LOCALITY This craft beer approach is winning fans at convenience stores across the country. Among the chains parlaying the strategy into greater profits is Ozark, Mo.-based Scrivener Oil Co., which runs 11 Signal Food Stores, in southwest Missouri. “Right now, we have a local brewery [providing product] called Mother’s out of Springfield, another regional beer called Boulevard out of Kansas City and we have Urban Chestnut out of St. Louis,” said Vice President Sean Bumgarner. “All these are craft beers. Those three names could change next week. Everyone wants to try something new. So our challenge is to bring in new things people will like. How do I find them? I try new beers whenever I can, and vendors are good sources. We listen to what the customers are saying they like, too.” To remain linked to local tastes, more convenience retailers are also growing growler/crowler programs to provide suds from local breweries. In addition, Signal Food Stores sell a lot of what Bumgarner calls “the old standbys.” Topping this list are 30-pack Keystone, 24-pack Busch and a lot of Bud Light. “Those are our mainstays still,” Bumgarner said, noting the standbys have a smaller presence in some of the chain’s locations nearer Springfield and the cstoredecisions.com

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Category Management

Beer

times. Depending on competition, we Ozarks, where larger populations and KEEPING IT FRESH greater student presence increase Because beer customers come in sometimes have to go lower.” interest in craft beers, seasonal and often, it’s important to prevent beer special editions. merchandising from growing stale, GEARING FOR BEER In Chicago, Foxtrot Market has Bumgarner said. Signal Food Stores tackAt Signal Food Stores, beer sales found there’s a drive to local items les major resets of its beer coolers twice a are consistent. But at Lawrence, Kan.across categories, and beer is no year, and the craft beer doors and import based Zarco USA stores, beer sales are exception. Dylan Melvin, the c-store’s doors are refreshed more often. expected to see a dramatic metamorbeverage director, said there seems “Anytime we think a current prod- phosis come April 2019. to be a pride in provenance and a uct has slowed down or run its course, “In Kansas we’re a 3.2 state,” said perception of quality when it comes we put something new in its place,” he Zarco USA CEO Scott Zaremba, referto its beer selection and customer reported. “We sell a lot of the tried- encing states where c-stores and grocery preferences. and-true like Bud Light, but we don’t stores are can only sell beer that is 3.2% Foxtrot Market currently operates really need to change that up, it kind alcohol by weight. “We are one of just four stores in the Chicago area. Its four states left. We’ve been working business model blends e-commerce, on passing legislation for 23 years, and on-demand delivery and a striking finally got it passed. Now we’re going to brick-and-mortar experience to meet single strength in April. Anything 6% or consumers’ shopping needs for quick, lower we’ll be able to sell in the state’s quality goods and foods. convenience and grocery stores.” The Chicago craft beer scene is Zaremba expects craft beers to as strong as ever, with not only an be “a huge market for us.” One store increase in quality, but the variety of features a proprietary barbecue operbrands and styles,” Melvin said. “At ation, Stanley James Smokehouse. It Foxtrot, we’ve been able to build relawill have beers on tap. tionships with local breweries over the “We’re going to expand the beer last few years to bring our customers a category probably four-fold at both fresh, curated mix of new and limited stores, in terms of the size of the disreleases to discover alongside their play, the facings we have in the cooler everyday staples.” and the number of skus we sell.” Growler/crowler programs can help c-stores However, domestic beer sales Noting nothing is set in stone as of appeal to beer customers seeking new flavor remain strong at the Illinois retailer. yet, Zaremba said there will likely be experiences from local breweries. “Yes, domestic beer isn’t going an enormous amount of education anywhere,” Melvin said. “Macro still and advertising about the change. dominates beer sales throughout the “We’ll be doing a lot of outreach to country, and is an important part of of sells itself. And a matter of fact, I’d customers ourselves, through social our beer program—not just ‘light’ like to put more of my effort behind media and on-site signage,” he added. beer, but items like PBR and Old the crafts and imports, where I’ll make Style still maintain popularity among more money.” WHAT’S AHEAD? Millennial shoppers.” Signal Food Stores launches Back at Signal Food Stores, The c-store channel is also seeing quarterly promotions, putting what Bumgarner is eyeing craft beers and strong import sales in the c-store chan- Bumgarner terms “excellent prices” imports as his future go-to beer catnel, as reflected at Signal Food Stores. on one or two of its old standbys. It egories. He also wants to sell more Import beers are also big sell- also places stickers on the door. singles. Noting, “that’s a weird thing,” ers in some of the chain’s locations, “There’s a lot of competition,” Bumgarner said he sometimes makes Bumgarner said. Mexican brews, Bumgarner said. “We have digital more profit off a 24-ounce single than including Corona, Modello and Dos marketing for all locations, and we’ll from a 12-pack. Equis are all favorites. put [promoted items] up there. We’ll The retailer makes up to 34% margin “Heineken does okay,” Bumgarner put up digital signage in store. And if on a single bottle or can, versus 5-12% said. “We recently pulled Amstel out we work better with a vendor, we’ll let on promotional 12-packs. “The sinof our last location that had it, because their brand have more digital signage gles drinker is more of a convenience it’s a poor seller for us. And Guinness space. If they give me a better deal, drinker,” Bumgarner said. “If they have sells well at certain times of the year, I’ll give them more space. I like to stay to pay a little more for the convenience, like St. Patrick’s Day.” at 5% or 10% margins on promoted they will.” CSD 50 Convenience Store Decisions November 2018

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Category Management

Cigars

Light Up Category Cigar sales continue to show positive traction in the c-store channel despite regulatory pressure. By Howard Riell, Associate Editor

opular-priced cigars remain the added advantage of being perstrong in c-stores, premium ceived as status symbols and premium cigars remain promising in products, which are saved for special at least some markets, and occasions,” Euromonitor continued. While cigars continued to record the threat of additional regulation—primarily impacting flavored positive steady volume growth over the review period, value growth has product—remains a looming threat. Americans still like to buy cigars accelerated in recent years, and is at c-stores. For the 52-week period expected to remain strong. ending Sept. 9, 2018, IRI scan data shows cigar category sales in conve- FUTURE QUESTION nience stores at just over $3.4 billion, “Singles cigars are big right now,” an increase of 12.96%. said Jon Fleck, merchandising manA c c o r d i n g t o E u r o m o n i t o r ager for Cenex Zip Trip, which owns International, cigars and cigarillos and operates about 70 convenience continue to grow, fueled in part by stores in Minnesota, Montana, North the increasingly heavier tax burden Dakota, South Dakota and Wyoming. imposed on cigarettes. Owned by St. Paul-based CHS Inc., “When it comes to cigarillos, their Cenex Zip Trip is part of a network lower cost is certainly a factor which of nearly 1,500 fueling stations in may attract cigarette smokers,” the 19 states. research firm stated. While the fed“By brand, Black & Mild has eight eral government imposes the same of our top 11 cigars by units sold. The tax on cigarillos that it does on ciga- multitude of flavors by the tobacco rettes, state governments can design companies is what is driving the cattheir own tax schedules, and are able egory. The consumers love them,” to assign lower tax rates than those on Fleck added. cigarettes. The realization, however, is that fla“Cigars, in some instances, benefit vored tobacco is potentially on the from the same relatively beneficial tax chopping block in many states, noted structure as cigarillos, but also have Fleck. 52 Convenience Store Decisions November 2018

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Fast Facts: » For the 52-week period ending Sept. 9, 2018, IRI scan data shows cigar category sales in convenience stores at just over $3.4 billion, an increase of 12.96%. » According to Euromonitor International, cigars and cigarillos continue to grow, fueled in part by the increasingly heavier tax burden imposed on cigarettes. » While cigars continued to record positive steady volume growth over the review period, value growth has accelerated in recent years, and is expected to remain strong, going forward.

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AVAILABLE IN 2 FOR 99¢, 2 FOR $1.49 AND SAVE ON 2 POUCHES F O R M O R E I N F O R M AT I O N CO N TAC T YO U R SW E D I S H M ATC H R E P R E S E N TAT I V E 8 0 0 -3 67-3 67 7 • C U STO M E R S E RV I C E @ S M N A .CO M

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Category Management

Cigars

If these changes are imple“mented it will derail the in-

creasing sales trend in flavored cigars, as well as vaping products and the overall cigar category. The thought is the flavors are what is drawing in the new users, but consumers should be given that option and the government should let the customers decide on what products to purchase.

”

–Jon Fleck, merchandising manager for Cenex Zip Trip

The future outlook of the cigar category hinges on legislative decisions. If the FDA restricts flavored cigars many fear it could discourage trial of new products.

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“If these changes are implemented it will derail the increasing sales trend in flavored cigars, as well as vaping products and the overall cigar category,” Fleck said. “The thought is the flavors are what is drawing in the new users, but consumers should be given that option and the government should let the customers decide what products to purchase.” Indeed, the future well-being of the category hinges, in large measure, on legislation, Fleck suggested. “If the ordinances don’t pass, and if voters strike down many states’ attempt to implement higher tobacco taxes, I see the category increasing with more innovative flavors.” The price range that works best at Zip Trip stores is up to $1, with 89 cents proving to be a popular price point. Singles continue to represent the majority of his chain’s sales, Fleck noted. “They are great for not only the daily cigar smokers, but also the occasional users.” Zip Trip stores do not carry much in the way of high-end cigars. “The highest retail cigars we carry are Backwoods, and they along with others in that price range are increasing big in our stores,” Fleck said. “The Millennials seem to be big on flavors, and I believe that has something to do with it.”

C o n v e n i e n c e re t a i l e r s m u s t develop a close relationship with vendors, Fleck suggested, so that they understand that there must be some give and take when it comes to sets, especially the ones that draw out the schematics. “Every product they carry isn’t the best in that category, and the good ones will make sure those products that are the best for us to have are in the sets,” Fleck said.

CIGAR HAVEN Other regions are racking up healthy cigar sales, including Texas. “Cigars do pretty good in some locations,” said Irfan Walimuhamad, a principal in Siran Investments Inc., which operates seven convenience stores around the Dallas-Fort Worth Metroplex including Seagoville Food Mart. “Not everywhere, but we have seen over the last five or so years that overall cigar sales have gone up by about 10-15%.” Walimuhamad credits economics, a combination of the high price of cigarettes— $6 or $7 per pack, and the low price—two for 99 cents; in some cases five for $1, for certain cigars. Walimuhamad said he sees a market for premium cigars in c-stores. He hasn’t explored it yet only because they have not found a local supplier

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Category Management

Cigars

that carries premium cigars, but added that when they do, they will. “Yes, I will try it in several of our locations.” Though he remains undaunted by anti-tobacco legislation, Walimuhamad feared that restricting flavored cigars, as many wish to do, would substantially discourage trial.

EXPANDING THE CONCEPT Ed Kashouty, the owner of a handful of Exxon-branded convenience stores in Brick Township, N.J., and cigar maker and retailer Hiram & Solomon Cigars, recently installed a walk-in humidor in one of his c-stores, with more to follow. “We are trying to expand the concept,” he said. Retailers need to realize that if executed right, this could be another potential revenue stream for them, Kashouty said. “It will not be the biggest-sold item in the store, but surely it will bring in customers that are willing to spend money on luxury items along with other stuff.” He called it a good match as long as it is positioned in the spot and executed the right way. “Let’s not forget that cigars are very delicate items, and extreme care is needed to ensure that the cigars are kept in their optimum status,” Kashouty said. “With that come sales of other related items, such as cutter holders and lighters.” For the last 10 years, premium cigar sales have seen annual increases, Kashouty pointed out, and will continue to do so for at least the next

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Arkansas Reg Reflects Local Push Many retailers can attest that the most progressive tobacco laws are proposed by local legislatures. For example, the Harrison City Council in Arkansas on Sept. 27 approved Ordinance No. 1441 unanimously. The law sets out that the sale or distribution of any tobacco product to a person under the age of 21 is prohibited. It shall be unlawful for any person to sell tobacco products, electronic cigarettes or tobacco product paraphernalia to a minor. Also the purchase or attempted purchase of any tobacco product by or on behalf of a person under the age of 21 is prohibited. The law was proposed by members of Ignite, a youth group supported by North Arkansas Partnership for Health Education and the Boone County Substance Abuse Prevention Coalition. Alathea Bright, Ignite chairman, explained to the Harrison Daily Times that Tobacco 21 is a nationwide effort to raise the age of buying tobacco and e-cigarettes to 21. The initiative is being proposed to local governments. “Individuals under the age of 21 who unlawfully purchase or attempt to purchase tobacco products may be subject to tobacco-related education classes, or diversion programs, community service, or other penalties the City of Harrison, Ark., believes will be appropriate and effective,” the ordinance reads.

decade as long as the FDA and other government agencies resist the temptation to interfere. C-store retailers who do best with premium cigars are those that invest in them, Kashouty said. “They need adequate space and an attractive humidor, fully stocked and with the right temperature, 70 degrees, and humidity, 70%. The one-stop factor plays the biggest role.”

C-store cigar customers are more inclined to smoke brand-name cigars, said Kashouty, as opposed to smokers who frequent cigar lounges, who are more inclined to look for new boutique cigars. The best-selling price point for premium cigars in a convenience store setting is $8-$10, he added. Raising a convenience store’s proﬁle among premium cigar smokers, said Kashouty, is a matter of adhering to basic retailing fundamentals: providing enough humidor space, and keeping it well-lit and well-taken care of. “It needs a decent variety that appeals to different-strength smokers, along with a nice price range,” Kashouty said. Higher-end cigars will continue to ﬂourish in 2019, he predicted. “It is a growing business that c-store owners need to pay attention to,” Kashouty said. “More consumers now are being introduced to the pleasures of smoking real premium cigars.”CSD cstoredecisions.com

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Category Management

Meat Snacks

Reign Supreme Meat snacks are evolving to accommodate consumers’ changing tastes and ingredient preferences. By Lisa White, Contributing Editor

Fast Facts: » In the 52 weeks ending Sept. 22, 2018, meat snack sales in convenience stores totaled over $1.5 billion, a 3.6% increase from the same period in 2017, according to New York Citybased research ﬁrm The Nielsen Co. » American households spend an average of $25.81 per year on meat snacks. » In the meat snacks category, North America is expected to record annual growth of 7.2% between 2018 and 2023, according to data provided by research ﬁrm Mordor Intelligence.

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eat snacks seem to be tailor-made for the convenience channel. This is a food that has widespread appeal, is satiating and easy to grab and eat on the go. Even with consumer tastes veering toward low-calorie, high-protein foods, meat snacks, and in particular jerky lines, fit the bill. Yet, despite the year-round popularity of these products, some retailers see sales spikes during certain times of the year. “Hunting season is our high point for meat snacks,” said William Baine, CEO of Des Moines, Iowa-based Git ‘N Go Market, which has about 40 stores in Iowa and Illinois. “We are running relevant promotions to target hunters during this time.” Meat snacks remain the top seller in c-store alternative snacks, with sales racking up more than double that of health, energy and protein bars. In the 52 weeks ending Sept. 22, 2018, meat snack sales in convenience stores totaled over $1.5 billion, a 3.6% increase from the same period in 2017, according to research firm The Nielsen Co. Unit volume during this period was just over 1 billion, almost a 2% drop from the prior year. Yet, in North America, this alternative snack category is expected to record a compound annual growth of 7.2% between 2018 and 2023, according to market research firm Mordor Intelligence. Jerky consumption is high among the developed markets, with U.S. beef jerky sales growing by nearly 7% in 2017. American households spend an average of $25.81 per year on meat snacks. Their per-trip spend on sticks and jerky at $7.42 is also about twice as much as it is on staples like potato chips, which is at $3.61, and popcorn, which totals $4.01, according to Nielsen. In terms of age groups, baby boomers are the biggest buyers, spending $28.48 per year, making them 10% more likely to buy meat snacks than the average shopper.

A GROWING CATEGORY A staple c-store category, meat snacks continues evolving, as consumers look to get more for their money with these products. “One trend that I’ve seen making waves are items that provide a value to the consumer,” said Joseph Bortner, category supervisor at York, Pa.-based Rutter’s, which has about 70 locations. “Larger pack types that showcase the products cstoredecisions.com

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Meat Snacks

have been a huge part of our success upscale,” Steingoltz said. She added in meat snacks. Consumers are willing that in the last couple of years, meat to spend more when there’s a value snacks are on promotion in c-stores in price per ounce. The days of large 25% of the time versus 50% in the gropackaging with 75% air are in the past. cery channel. “Consumers in c-stores are more Consumers know the game; they want impulse buyers, so promos are not to see and feel what they’re getting.” Although this mainstay segment used as much to incentivize purisn’t seeing much growth in year-over- chases,” said Steingoltz. Melissa McPherson, category year sales, meat sticks are seeing a greater increase that may be due to manager at Tonawanda, N.Y.-based NOCO Energy Corp., which operates new product development. “From a format standpoint, meat a 30-store chain, sees a number of sticks are growing more so compared trends in meat snacks. “First, you have people looking for to jerky,” said Maria Steingoltz, managing director at London-based L.E.K. more protein,” McPherson said. “Meat

MEAT SNACKS LEAD OVER OTHERS

In the alternative snacks segment, meat snack sales have continued to ascend in c-stores during the last three years. 52 Wks Ending 9/24/16

52 Wks Ending 9/23/17

52 Wks Ending 9/22/18

Alternative Snacks (Total)

$2.42B

$2.45B

$2.48B

Meat Snacks

$1.42B

$1.48B

$1.53B

Health Energy Protein Bars

$717M

$701M

$682M

Other Alternative Snacks

$176M

$175M

$172M

Granola Yogurt Bars

$110M

$102M

$97M

THREE YEAR $ SALES

Source: Nielsen Co., convenience store data, 2016-2018.

Consulting. “Jerky is primarily beef, but snacks are a perfect fit for these cusother proteins like chicken, higher- end tomers. Slim Jim Giants sticks have buffalo, venison and elk, are on the about six grams of protein and Jack rise. In the sticks format, even turkey is Link’s has around 11 grams.” As for NOCO’s top sellers, overall showing growth as well as bacon.” Manufacturers and retailers are see- sticks outperform the bags, with Slim ing added interest in hot and spicy Jim owning this segment as the chain’s number on selling item. With bagged flavors for both jerky and meat sticks. “On the flavor side, original jerky jerky, NOCO’s biggest mover is Jack from a volume standpoint has seen less Link’s Teriyaki. However, both brands growth, but pepper and spicier flavors are starting to see competition from like chili have had increased growth on Dukes, Lorrrisa’s and Oberto. Meat snack merchandising is pretty the jerky side,” said Steingoltz. Where in the past individually- straightforward at NOCO’s stores. “For the sticks, we utilize a lay-down wrapped sticks and jerky were top sellers in c-stores, the climate is shifting rack in the majority of the stores,” said to bulk offerings of weight-based meat McPherson. “This is a great way to merchandise the product. It shows snacks merchandised in bins or jars. “Yet, packaging for individually- customers the full length of the prodwrapped products has become more uct and is visually very appealing. Bags 60 Convenience Store Decisions November 2018

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of jerky and sticks are pegged over this for a clean, inviting look.”

NEW OFFERINGS There have been a number of key developments in the meat snack segment recently, including acquisitions. In mid-April, Premium Brands Holdings Corp., Vancouver, B.C., reached an agreement to acquire the assets and operating divisions of Oberto Brands, the Kent, Wash.-based manufacturer of beef jerky. Financial terms were not disclosed. This follows Slim Jim maker ConAgra’s acquisition of Duke’s last summer and Hershey’s purchase of Krave, which was finalized in 2016. New product developments in the segment also have changed the landscape in c-stores. Much of the meat snack innovations has focused on new flavors and heathier ingredients. Although flavors like teriyaki, pepper and Tabasco always resonate with customers, McPherson sees flavors like ginger, peach and chorizo on the rise. “For years, our market had been dominated by Slim Jim and Jack Link’s,” she said. “These new players have been adding some new dynamics to things and have really been attracting new customers to this category. Lorrissa’s is really trying to appeal to the female shoppers, which I don’t think has been done before.” Earlier this year, Jack Link’s, Minong, Wis., added several products including three varieties of Lorissa’s Kitchen Beef Sticks in original, smoky sweet and jalapeño flavors, and Jack Link’s Cold Crafted, a new line of portable snacks with smoked meat sticks, and smoked meat sticks and cheese in the mix. Chef’s Cut Real Jerky this past summer unveiled its Korean BBQ Chicken Jerky. Other newer launches include both Pepperoni Snack Sticks and Mini Snack Sticks in a 0.5-ounce size. Some meat snacks aim to appeal with cleaner labels.“Duke’s and Lorrisa’s Kitchen have no added hormones or artificial preservatives,” said McPherson. “These have been gaining traction.” CSD

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Foodservice

Pizza

Profitable Pizza Pairings Any way you slice it, pizza remains a fast favorite for consumers and c-stores. Trendy toppings, saucier sauces and low-carbohydrate crusts challenge pepperoni’s dominance. By Anne Baye Ericksen, Contributing Editor

Now, prominent pizza restaurateurs a t e l a s t y e a r, t h e UN Educational, Scientific and include convenience chains. In a June Cultural Organization (UNESCO) 2018 article featuring the pizza offeradded Neapolitan pizza to its ing of Ankeny, Iowa-based Casey’s list of Intangible Cultural Heritage items General Store, Food & Wine, the confor its traditional Italian pizza-making temporary magazine for elite dining, method, including oven-fire prepara- had this to say: “Pizza in convenience stores is tion, dough spinning and twirling, and hardly unique, but for the most part, of course, toppings and ingredients. “It’s interesting because, while last it will tend to be the stuff of last resort. December more than 2 million Italians There’s something, however, about the petitioned UNESCO to grant the tradi- pizza at Casey’s that gets people talktional creation process for Neapolitan ing. Some Midwesterners will tell you pizza (what many consider the one, that Casey’s makes the greatest pizza true pizza) World Heritage status, U.S. around; others can’t believe that peopizza restaurateurs appear to be ﬁring ple are so excited by pizza from a gas back with as many new variations on station. Either way, so closely linked the traditional pie as they can inno- is Casey’s to its pizza; you’ll see many vate,” said Shelly Whitehead, editor stores classiﬁed as pizza restaurants in certain popular map searches.” for Pizzamarketplace.com.

Fast Facts: » 350 slices of pizza are eaten every second in the U.S. » Millennials average 7.5% of their spending on prepared foods. » According to the 2018 Pizza Power Report, the U.S. bakes up more than $45 billion in pizza sales annually. 62 Convenience Store Decisions November 2018

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That’s heady stuff for a channel that once considered a pre-prepared offering as falling somewhere between roller grill items and cold sandwiches.

RECIPE REDO Fresh, frozen or by the slice, pizza remains a favorite food in America. According to the “2018 Pizza Power Report,” the U.S. baked up more than $45 billion in pizza sales last year. Research firm Euromonitor International calculated that pizza’s North American market value rose 4.58%, and earlier this year, Technavio projected pizza would post a 3% compound annual growth rate between 2016 and 2020. Those numbers are good indicators of a healthy economic forecast, but don’t really reveal American’s obsession with pizza. Restaurant Manager reports that one in eight Americans eat pizza on any given day throughout the year. Another industry measurement concludes 93% of Americans over the age of two eat pizza at least once a month. And if those statistics weren’t mouth-watering enough for pizza producers and sellers, the trade publication states that 350 slices are eaten every second somewhere in the U.S. cstoredecisions.com

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Foodservice

Pizza

As these figures indicate, the ent types of squash and Italian dish continues to be an incred- seafood,” said Whitehead. ibly popular lunch, dinner and snack “The takeaway is if you’re In addition to national chains, c-stores choice. They’re also proof of why so serving pizza now, you’d compete with local independent pizzerias many c-store operators showcase it best keep it creative and for slice sales. Generally speaking, the Northeast is populated with the most pizzeamong their hot foodservice offerings. keep heeding your customrias whereas the South often has the fewest. For years, cheese, pepperoni and sau- ers’ ever-changing tastes.” While it appears virHere are the top and bottom state rankings. sage dominated c-store pizza menus, but as local pizzerias, national chains tually anything goes on and frozen pizza producers began to pizza nowadays, there defPIZZERIAS STORES PER experiment with flavor combinations, initely have been a few PER STATE 10,000 PEOPLE star performers. Starting so have convenience retailers. New Hampshire 3.58 “Our guests appreciate the variety at the bottom, crusts have Iowa 3.51 and innovation in our PJ Fresh pizza undergone a metamorPennsylvania 3.51 offerings, from breakfast pizza to buf- phosis. You can still find Massachusetts 3.50 falo chicken,” said Shannon Johnson, thin, hand-pressed and risConnecticut 3.45 vice president of foodservice innova- ing options, but now some Georgia 1.76 tion for Pilot Flying J. The company, pies include substances New Mexico 1.63 headquartered in Knoxville, Tenn., such as activated charcoal, Alabama 1.59 owns and operates more than 750 retail which gives the bread a Louisiana 1.51 sites in 44 states under the brands Pilot black hue. Hawaii 1.06 Gluten-free crusts and Flying J Travel Centers. Source: “The 2018 Pizza Power Report”: A State-of-the-Industry “For our traditional guest, the trend allow individuals with speAnalysis, PMQ Pizza Magazine, Oct. 21, 2018. of value, variety and abundance is our cific dietary needs to still focus. We have found [they] want high- indulge. And for those who quality toppings and the freshness of want their pizza pie without comproPlus there have been regional handcrafted pizza and 100% mozza- mising their commitment to healthier breakouts. Pizza aficionados no lonchoices, cauliflower seems to be a pre- ger have to drive to the Motor City rella cheese,” Johnson added. Creativity with ingredient combi- ferred additive. Some makers have even to bite into the crunchy, crisp cheesy crust of a Detroit Pie as pizzerias as far nations leads the way. At last month’s experimented adding quinoa. Sauces are getting mixed up, too. as San Francisco serve up the Midwest National Association of Convenience Stores (NACS) Show, pizza makers Joining the traditional tomato sauce squared classic. New York-style and showcased interesting components, are other fairly mainstream options, deep-dish Chicago have long been such as cauliflower, pork belly and such as white garlic, pesto and bar- sold nationwide. Other regional favorites gainbecue sauces. And apparently, Soppressata—an Italian dry salami. “This past year or more, we’ve been condiments aren’t just for burgers ing national attention, according seeing crusts made with pulverized and hot dogs anymore. As the “2018 to Thrillist.com, include Colorado cauliflower, pizza sauces and other Pizza Power Report” authors stated, Mountain Pie—a sweeter doughy dipping concoctions with exotic and “Millennials love their ranch.” Pizzas crust piled with toppings—and Indian often very spicy ingredients, and top- with a mustard-based sauce also have pizza, featuring traditional Indian dishes, such as saag paneer or tanpings of every variety you can imagine, gained a fanatical following. Of course, you’ll find the most doori chicken. That said, observers say from peaches and prosciutto to differvariety in toppings. In addition to a it’s important that c-stores still cater to plethora of meats, cheeses, includ- diehard pizza purists. “The demand for healthier options ing vegan options, people like to pile on the vegetables— from asparagus has yet to develop in this market,” to zucchini. But, there’s no rule saying said Sean Bumgarner, vice president pies have to be confined to the savory, for Ozark, Mo.-based Scrivener Oil Co., which operates about a dozen nor is pizza just for dinner anymore. “Breakfast pizza is one of our unique Signal Food Stores in Missouri, andofferings. Guests have really gravi- carries Papa John’s pizza. “One of our tated toward enjoying pizza during most successful limited-time offerings Pizza trends are showing more creativity from other dayparts, such as the mornings,” was the double-cheeseburger pizza, fruit or seafood toppings to califlower crust. which will soon be offered again.” CSD said Johnson.

State of Pizza in the U.S.

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10/26/18 1:03 PM

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Foodservice

Roller Grill

Navigating

Food Waste

The key to a successful roller grill or grab-and-go sandwich program is ensuring your offering is fresh and full at all times. By Erin Del Conte, Senior Editor

sk any veteran c-store foodservice retailer running a successful grab-and-go program and they’ll tell you food waste is a necessary expense. Too little waste when it comes to your roller grill program or grab-and-go sandwich offering is as much a sign of a problem as too much waste. Customers want to purchase sausages off a roller grill when that roller grill looks full and inviting. They are more likely to reach for a sandwich from the open-air cooler when it’s full of options and the expiration dates show those sandwiches are fresh. “If you’re looking at a roller grill and it looks beautiful with fresh, moist rolling food, and in the back right corner is that one hot dog nobody wanted to throw away when they should’ve, and now it looks like a stick of beef jerky, that’s what the consumer’s going to see,”Jerry Weiner, president, Jerry Weiner Consulting, and former foodservice director for York, Pa.-based Rutter’s, told CSD. “That will turn them off. Make sure that when your food is no longer salable, you get rid of it.” Accounting for necessary waste, however, can be easier said than done. It requires understanding from executive leaders all the way down to frontline employees, who sometimes cringe at the concept of throwing away food.

DETERMINING WASTE RATIOS Finding the correct waste ratio drives foodservice profitability, Jeff Keune, Yesway’s senior vice president of food service and innovation, told CSD. Des Moines, Iowa-based Yesway operates 150 locations in eight states. 66 Convenience Store Decisions November 2018

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“Too little waste is a bad thing if you are looking to grow overall sales and margin. If you are only working the percentages—going as low as possible on percentage waste and as high as possible on percentage margin—you might be missing big opportunities in sales,” he said. “Consumers don’t want to buy the last food item, and an appetizing food display means not looking too lean in your offering.” The ﬁrst step is determining the amount of spoilage that allows you to maximize sales. “A lot of people take spoilage as the way to get to a bottom line, and it actually isn’t. The way to get to a bottom line is maximize your sales. Spoilage is an expense of doing business, so it’s a cost that needs to be managed,” Weiner said. “You don’t drive the waste number, you drive the sales number and then manage the waste number.”

Fast Facts: » Finding the correct waste ratio is a key to foodservice proﬁtability. » The way to get to a bottom line is to maximize your sales. » Help operations supervisors understand how to determine food cost. cstoredecisions.com

10/25/18 9:16 PM

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Foodservice

Roller Grill

“

Managing waste is usually not an exact science— based on traffic flow some days will be better than others—so build your targets with a little room on either side to ensure you still hit your numbers.

”

–Jeff Keune, senior vice president of food service and innovation, Yesway.

“With too much spoilage, at least you know you’ve maximized your sales. You certainly are cutting away at your margins, but they can be managed,” Weiner said. “Too little spoilage really is a signal that you’re losing sales, and that could keep people from coming back.” Weiner suggested choosing a location with one of your best managers, who will report back to you accurately. Set food presentation standards and give them waste guidelines to test. This can help you determine what the program should deliver when it’s run properly. Even then, waste costs will vary depending on if you sell more lower cost or higher cost items, among other factors. “You have to give yourself that room. Once I have determined, when run properly, what the program should deliver, and that range of what the high end and the low end is given the items in the menu mix, that becomes the guideline,” Weiner said. Keune agreed. “Managing waste is usually not an exact science—based on traffic flow some days will be better than others—so build your targets with a little room on either side to ensure you still hit your numbers,” he said. Unfortunately, simply turning a guideline over to store managers won’t result in overnight success. First, operations supervisors need to be involved. “The best tool I found for getting operations involved was moving spoilage to an expense line because that got their attention,” Weiner said. “Those are the lines they manage and are responsible for, and so once it’s an expense line then they needed to know how to fix it.” Weiner also advised taking operations supervisors through a training process to help them understand how to determine food cost and why it’s a crucial figure to manage.

MATH MATTERS When you are deciding on the margin you want to achieve, include the percentage of expected waste in your cost calculation, Weiner advised. In other words, if an appropriate waste level is 12% on a hot case item, Weiner would include that expense into the total cost of an item. “This ensured that when I sell an item knowing I am

going to throw away that 12% cost, I will still make my target margin,” Weiner said. Waste will be different between sections, Weiner said. Cold grab-and-go sandwiches have a longer sell time, compared with roller grill items, for example. Commissary items might have a hold time of three to five days, compared to only one to three days for cold grab-and-go items and one to three hours for hot grab-and-go items. Typical waste ranges will also differ between foodservice sections. Weiner noted typical waste ranges for commissary items are 18-25%, cold grab-and-go items are 8-12% and hot grab-and-go items are 12-18%. All of these factors need to be considered in the calculations. Don’t forget to also track waste according to daypart. “That will help you determine what your policy needs to be on different items at different times of day,” Weiner said. It also differs between stores. Some c-stores may do a busy breakfast program while others have more traffic at lunch. Weiner estimated that it takes about three weeks to gather enough data to make clear determinations, and even then, “waste is a moving target.” “You must constantly monitor those numbers so you can adjust your production to accommodate and make sure you maximize your sales,” Weiner said. “New products should have a higher waste target as you are driving trial and adoption,” advised Keune. “Existing products should be easier to predict and manage, therefore allowing a lower target. Manage to the target, not to zero.” The more complex your offering, the harder it is to manage waste, Keune added. “Finding that balance between having a robust enough offering to drive sales and as lean as possible to ensure you are selling through to your waste target by item is the challenge that every category manager should take on,” Keune said. “The best practice is to do the math and ensure you are confident you have a realistic plan by item.” Keune has found it’s easier to manage the waste on higher volume items compared to lower volume items. Adjusting pricing or using promotions to increase movement on slow moving items can help with waste. Another option is to eliminate those slow movers from your offering.

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Foodservice

Roller Grill

The more complex your offering, the more difficult it can be to manage waste. Finding the balance between having enough variety to drive sales while also meeting your waste target is important for success.

understand that the worst move is leaving out food that is not salable.

REPURPOSING FOOD During an educational session at the National Association of Convenience Stores (NACS) Show in October, Heather Davis, director of foodservice, for Savannah, Ga.-based Parker’s and Ieva Grimm, president of SYNERGE, joined Weiner in a talk about foodservice waste. During the session, Davis pointed out that for companies doing fresh foodservice in-house in addition to hot and cold case grab-and-go items, it’s possible to repurpose items to make them last longer. “Minimize the number of items you are purchasing and “It sounds simple, but there is a tendency to push variety in hopes of driving sales and sometimes that will get you in select items with multiple purposes,” Davis said. “Too many unique items mean you’re going to have wasted products.” a tough position on waste,” Keune said. Developing recipes that help repurpose items can help The math is an important step in getting waste ratios right and in turn driving sales. Yesway makes it a point to reduce waste. For example, a fried chicken product in the do the math around how many SKUs to carry, as well as hot case only has a shelf life of a few hours, but once that the projected unit movement necessary to hit waste targets time expires you can use the chicken to make a salad or and determine what it will take to hit both topline and bot- chicken salad sandwich for the cold case. Grimm recommended using a simple form to show tom-line successes. “Knowing the math helps us make better decisions on employees how much of each particular food item should variety, price, promotions and innovation,” Keune said. “It be in the cooler, in the freezer and so on, so when the helps us focus on those things that are most likely to drive kitchen manager is not present, the correct amount of prodgrowth without risking losing margin with higher than tar- uct is still being pulled. Ask employees to write down when product is out or almost out. Remember too that often food geted waste.” is discarded without being recorded. “Just because waste isn’t showing up, doesn’t mean it’s FRONTLINE TRAINING Once the tests and the math are complete and the not there,” Grimm said. Some employees may be reluctant to throw away food, operations team is onboard, it’s time to train frontline staff in proper waste management. The biggest mistake is to so it’s necessary to talk to them about food waste and help assume simply alerting them to new practices will result in them understand why it’s so crucial to discard old items. One way to ensure employees are removing old food, is to overnight changes on waste management. Weiner estimated that even after communicating with consider a waste donation program, Grimm said. Some retailers worry that such programs come with liafrontline employees, it can take months to effectively change the operational mindset of the team. He rec- bilities or too much time and expense for c-store operators, ommended using a bonus program to reward frontline but that’s not always the case. Feeding America, for example, provides meals through employees, restock managers and store managers when 200 food banks, prides itself on being easy to operate, their locations meet their numbers on waste. What’s more, some companies make the mistake of tell- includes protection from liability, and requires only a miniing frontline employees, “you’ve got to get your waste mal investment. Some companies donate weekly, monthly down,” instead of sharing an easy-to-follow plan for man- and so on. Giving back to the community while inspiring frontline aging waste. C-store employees often respond by doing exactly what you don’t want—putting out less product, employees to keep only fresh items fully stocked? Now which results in diminished sales. Frontline staff needs to that’s a win-win. CSD 70 Convenience Store Decisions November 2018

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Foodservice

Hot Dispensed

Creating a

Coffee

Destination Customers might forgive a lot of things, but one thing they won’t forgive is a bad cup of coffee. They also remember the good ones, resulting in higher rings and repeat visits. By Marilyn Odesser-Torpey, Associate Editor

any customers see convenience stores as their destination of choice for a quality cup of coffee. In a survey released in September by GasBuddy, c-store customers voted coffee “the favorite food and beverage item in the gas station.” Fourteen million cups of coffee are purchased from a c-store every day in America. Of the stations in the U.S. that ever received a coffee review in the GasBuddy app, more than 75% received positive reviews. To compile that information, GasBuddy included more than three million coffee ratings covering more than 150,000 retail locations where gas is sold. In a report released in August, Datassential research firm found that, next to freshness and consistency, convenience, variety and customization were the most powerful draws for coffee-seeking consumers, “all of which convenience stores can readily deliver,” according to Mark DiDomenico, the company’s director of client solutions. “The biggest thing is the realm of additives and condiments such as a selection of creamers, including soy- and nut-based alternatives, and sweeteners such as turbinado sugar and agave syrup,” DiDomenico said. “Some consumers are also looking for additives that provide functional benefits such as extra caffeine or something like turmeric, which is reputed to provide anti-inflammatory benefits, and can be offered in powdered or liquid form at the coffee bar.” DiDomenico pointed out that limited time offers (LTOs) are also a proven way to expand variety and create excite72 Convenience Store Decisions November 2018

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ment in the category. When it comes to seasonal flavors, pumpkin may get all the press, but cinnamon scored much higher on Datassential’s August SCORES report, which tracks new item launches each month. But LTOs don’t have to be based on seasonality. They can also include brews from other countries and selections from the wide range of different flavors that are available from suppliers, DiDomenico said. And while it’s good to think outside the box when it comes to additives and LTOs, he emphasized that “consumers are especially finicky with their coffee” and “they are very habitual,” so it’s most important to do the basics well and “create craveability” for the store’s brand.

Fast Facts: » Attention to the basics enhances “craveability” and resulting loyalty. » Additives make it easy for customers to create their perfect cup. » Good coffee yields higher ring with addition of food and snack items. cstoredecisions.com

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Foodservice

Hot Dispensed

The biggest thing is the realm of additives and condi“ ments such as a selection of creamers, including soy- and nut-based alternatives, and sweeteners such as turbinado sugar and agave syrup. Some consumers are also looking for additives that provide functional benefits such as extra caffeine or something like turmeric, which is reputed to provide anti-inflammatory benefits, and can be offered in powdered or liquid form at the coffee bar.

”

- Mark DiDomenico, director of client solutions, Datassential.

CUSTOMIZATION SELLS

“We see strong affinities with fresh bakery, hot breakfast Recently, RaceTrac rolled out machines that allow cus- sandwiches and packaged pastries,” Plemmons said. “It’s tomers to “be their own barista” by selecting their favorite not uncommon for a guest to pick up a hot dog, pizza or a coffee blends and watching the beans grind right before bag of chips with their morning coffee.” their eyes for its Crazy Good Coffee program now in its close to 500 stores in Georgia, Florida, Louisiana, Mississippi and LTOS ADD SPICE Texas, said Tiffany Plemmons, the chain’s senior manager of It takes a lot of work to maintain coffee sales in today’s dispensed beverage. The grind-to-order process takes less increasingly competitive market, but Kwik Trip and Kwik than 60 seconds. Star stores are willing to do whatever it takes, according “With our new Bean to Cup machines, our guests know to Paul Servais, retail director for the 630-unit chain with that they can stop in for Crazy Good Coffee anytime day or stores in Wisconsin, Minnesota and Iowa. Recently, that has night knowing they’ll get the freshest cup possible since it is meant permanently value-pricing a 12-ounce cup of probrewed on demand instead of sitting in an urn,” Plemmons prietary Café Karuba at 99 cents and kicking off an LTO said. “The technology has also eliminated the need for cof- program that offers a new variety every four months. fee urns, saving our store teams time.” The LTO is one of six varieties the company drip brews RaceTrac’s program offers six everyday blends of 100% every day at its self-service coffee bars. Arabica beans including hazelnut, regular, 100% Colombian, “Our LTOs have been very successful and have helped Rainforest Alliance Guatemalan and dark roast. LTOs, she generate interest in our coffee program,” Servais said. said, “drive excitement and buzz in the category” and can Another way the program has generated interest be a specific varietal, origin or flavor. this year is by partnering with the hometown National The Rainforest Alliance Guatemalan coffee, she said, Conference football team, becoming the Official Coffee of began as an LTO last January and was such a huge hit that the Green Bay Packers. The partnership has brought the it became a permanent item in the stores. Pumpkin spice brand to the field and concessions and is printed on all “is always a fan favorite each fall.” cups and signage. Customization is a key contributor to the success of RaceTrac’s Crazy Good Coffee. Guests can choose from a variety of creamers—including a seasonal selection such as pumpkin spice in the fall and Irish cream in the spring, sweeteners and toppings such as whipped cream. Beyond the customizable offers, cappuccinos and hot chocolate are dispensed from a self-serve machine “that is perfect for our guests that are on the go,” Plemmons said. Later this year, RaceTrac will introduce a new line of co-branded cappuccinos including Cinnabon Cinnamon Roll and Hershey York Peppermint Pattie as well as a Hershey’s Hot Chocolate. “We firmly believe this co-branding opportunity will resoKwik Trip and Kwik Star stores are permanently value-pricing 12-ounce nate with our guests,” Plemmons said. cups of their proprietary Café Karuba at 99 cents and kicking off an LTO Having a strong coffee platform helps drive sales and program that offers a new variety every four months. increase basket size, she added. 74 Convenience Store Decisions November 2018

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Foodservice

Hot Dispensed

Cenex Zip Trip recently changed its brewing system from thermal to the Intellifresh program, which keeps the coffee at a constant warm temperature while preserving its flavor. Chilled dispensers were also recently added to provide half-and-half and French vanilla creamer.

For the Café Karuba Gold freshly-brewed espressobased drinks such as cappuccinos, lattes and mochas, each store has a Franke FM850 machine, which grinds the beans to order, mixes the flavors and uses real milk. To promote the Karuba Gold line, Kwik Trip and Kwik Star extensively use social media and frequently link purchases to the company’s new Kwik Reward loyalty program. One week a month, the stores offer a Happy Hour price of 99 cents for a cup of Karuba Gold that usually sells for $2.49. And on National Coffee Day in September, customers who purchased two Karuba Gold coffees received a discount on gas. “For many customers, coffee is the destination item; a good cup of coffee can draw people to your store,” Servais said. “If you’re a gas station you sell gas; if you’re a convenience store you should sell a good cup of coffee. They’re the pillars of our business.” Servais stated that customers who come in for their morning coffee also usually purchase other items such as breakfast sandwiches and doughnuts. The stores also offer specially priced bundles of a 16-ounce coffee and breakfast sandwiches. Cenex Zip Trip, which has 34 stores in Montana, South Dakota, North Dakota, Minnesota and Wyoming, just changed its brewing system from thermal to the Intellifresh program, which keeps the coffee at a constant warm temperature while preserving its flavor. Chilled dispensers were also recently added to provide half-and-half and French vanilla creamer. Pump pots offer other flavors and sugar, sugar substitutes and powdered creamers allow customers

to create their perfect cup, said Jon Fleck, Zip Trip’s merchandising manager. The company also switched from serving its coffee in traditional paper cups with sleeves to double-walled cups. “Unlike Starbucks where the barista puts the sleeve on the cup, our customers did it themselves when they poured their coffee, but we found that half didn’t realize it and brought their coffee up without a sleeve via the ‘hot potato’ approach so it wouldn’t burn their hands,” Fleck said. “The double-walled cups took the sleeve out of the equation.” With the various brews and sizes available, Zip Trip stores have four-to-six different coffee offerings as well as a six-head cappuccino and hot chocolate machine. The Breakfast Blend is the top-selling coffee, with Hi-Rev running a close second. “Customers really like the high caffeine content,” Fleck said. LTOs have been mixed performers for Zip Trip. “In the past, we had LTOs that ran for two months and were either a big hit or we’d get stuck with cases we had preordered,” Fleck said. “We are now being more selective on those LTOs and will only do three or four a year.” Fleck pointed out that very rarely do customers purchase just a hot beverage. They usually add a muffin, pastry or breakfast sandwich to their order. Recently, Zip Trip began promoting its coffee program on TV monitors that show retail pricing and other information about the offerings. The company has also used pump toppers, billboards and radio spots to draw attention to its program. CSD

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10/25/18 4:00 PM

Technology

Column

New Technology Brings New Challenges Retailer perspectives are key when it comes to how technological devices best interface in a secure environment.

Jenny Bullard is manager of member engagement for Conexxus. A c-store technology veteran, Jenny has served as chief information officer of Flash Foods, and director of information technology at Circle K.

By Jenny Bullard

oday, most all convenience store retailers have a back-office interfaced to their point of sale (POS). With back-office software, retailers have the capability of capturing sales data by transaction, by item, deposits and credit card information, etc. This enables home-office enterprise systems to receive this information electronically and reconcile various accounts quickly and accurately. This process reduces the potential of theft or just general incorrect data flow. PCI data security introduced challenges for retailers in their efforts to secure back-office systems. In most cases back-office systems are part of the credit card environment; therefore retailers’ security teams must engage processes to securely encrypt any sensitive data or completely remove the back-office system from the PCI-scope environment. In most c-store environments, back-office software is interfaced to the POS, utilizing Conexxus POSBO standards. Many retailers are not aware that Conexxus standards are utilized by their back office or POS applications. These back-office and POS solution providers are members of Conexxus (formerly PCATS) and contribute their expertise and resources to enhancing and introducing new functionally for all the Conexxus standards. Today new challenges face retailers as to how data flows into a store’s back office with the introduction of handheld, cloud-based POS devices; and, also along those lines, scanbased checkout utilizing the customer’s handheld device. How do you capture these sales dollars and relieve product inventory from a location’s perpetual item inventory?

A NEW ROLE As a c-store technology executive working for Flash Foods and then Circle K, I actively participated in Conexxus since its conception. During that time I gained insight into the resources that Conexxus members dedicate to producing standards for the c-store industry. And while the solution providers do a great job of relating what is needed in the on-going standards development, there is an overall need for more retailer participation in these working committees. Retailers give a very important and sometimes different perspective to the functionality and data elements needed and how each device needs to interface/connect in a secure environment. Over the years that has been my mes78 Convenience Store Decisions November 2018

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sage to all technology friends and associates in the industry. In August of this year, I retired from Circle K. But because of my passion for this industry and my desire to stay connected with technology that impacts retailers, I accepted a part-time position with Conexxus as manager, member engagement. My goal in this position is to continue to carry the message to all Conexxus members to stay engaged and participate in all aspects of Conexxus. Conexxus is a non-profit, member-driven technology organization that is committed to the development and implementation of standards, technologies innovation and advocacy for the convenience store and petroleum market. Conexxus aims to solve unique technology challenges of retailers and businesses in the convenience and fuel industry by creating data exchange standards, fostering innovation, creating expert communities, leveraging industry knowledge and advocating for equal and open standards and practices. With 40-plus years in the industry as a technologist, I have seen retailers make phenomenal advancements in technology. Along the way, we have created data pools filled with data collected from all departments within a company. LEADING WITH TECH What would we do without that insight for merchandising and pricing products to increase sales and bottom line revenue? Inventory control gives us the ability to account for inventory dollars, as does introducing computer-assisted ordering based on inventory levels. Now with the introduction of IoT (the internet of things) we can add even more content to the data that we use today to manage our retail stores. IoT will enable the ability to connect devices that will take our industry to the next level. And with the introduction of AI (artificial intelligence) accessing that data we can learn more about our consumers and how to best distinguish our brand for their shopping experience. Conexxus is committed to the research and education for the benefit of the industry on these technologies. I encourage all retailers, suppliers and solution providers to be a part of Conexxus as we explore this new era of technology.

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Operations

Digital Signage

Photo Courtesy of CountryMark

Costs Fade By investing in more economical options, digital signage can be integrated into your everyday store operations to leverage your brand. By Pat Pape, Contributing Editor

ignage design is a vital part of any retailer’s business. It’s the first impression customers gather when entering a store location and is one of the most important sales tools c-stores can add to their promotional toolbox. Digital signs can be eye-catching advertising, using videos, high-resolution images and moving messages to talk to potential shoppers. By either replacing or augmenting paper ads and converting traditional panels to digital, c-store retailers today can display multiple high-quality dynamic ads in the same physical space. Loyalty increasingly is a value-added asset for retailers and more c-stores are integrating signage into their loyalty programs. Working with signage consulting firms or tackling such projects in-house, more retailers can determine what they want to promote and then create messaging. For c-stores with multiple locations hoping to get the best return on their investment, digital signage can be a feasible marketing component. If you have yet to buy your digital signage, remember that quality has a massive impact on not only your long- and short-term costs, but your overall results as well. With the way signage technology is advancing at a fast clip, it only makes sense that digital signage is becoming less expensive. And, it’s not just the price of signage that is decreasing, the same is true of installation costs. This means it’s easier for retailers to maximize their marketing and advertising dollars—and their investment by creating a more information-based, selling space for customers. While there is a cost to installing a digital signage network, industry experts emphasize more than ever that there’s a price to pay in forgoing digital signage, specifically, the ongoing costs and the inefficiency associated with maintaining your current method of advertising to attract tech-savvy patrons. In the end hardware and software costs are declining each year as competition between suppliers drives down prices.

INSIDE AND OUT Digital signage is not limited to the curbside or the forecourt. For several years, digital signs have been used in-store by chains, such as Wawa and Cumberland Farms, to showcase menus, promotions and special offers, and as stores offer more food items, they need effective ways to let customers know what’s available inside and outside their stores. 80 Convenience Store Decisions November 2018

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Fast Facts: » It’s easier for retailers to maximize their marketing and advertising dollars— and their investment by creating a more information-based, selling space for customers. » Signage isn’t just a way to communicate to customers, but is essential for shaping the overall customer experience. » Industry insiders expect digital signs to get wider and slimmer than they are now—making them easier to install—with higher resolution screens that are easier to read from greater distances.

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Operations

Digital Signage

“We’re seeing digital signs being used for menu areas in convenience stores,” said Joe Bona, president of Bona Design Lab, a New York City-based retail design and consulting ﬁrm. “A lot has to do with the increase in foodservice development. Menus are getting bigger, and there needs to be a better way to deliver messages about the offer. Digital is an easy way of facilitating that.” Digital signs also are effective near the beverage bar or beer cave to promote a c-store’s drink options. CountryMark, a fuel-coop with 100-plus store locations throughout Indiana, uses both exterior and interior electrical signs, including a bright 11-foot long LED display over the beer cooler in many of its locations. “The signs are easy to run, and it doesn’t take a lot of training,” said Gary Barrett, retail development manager for CountryMark. “It’s very self-explanatory.” Fastbreak convenience stores based in Klamath Falls, Ore., use digital signs above their hot cases that feature the Cooper’s chicken program. “The signs ﬂip from menu to specials to other information,” said Greg Brown, food and beverage manager for Fastbreak. “Some messages will stay up about 30 seconds and other are shorter.” Even though the signs are eye-catching and colorful, investing in digital signage is more “a function of need than a fun thing to have,” said Bona. “It’s a more effective way of delivering extended menus.”

Interested in Digital Signs? • If you see an outdoor sign you like, note the name of the manufacturer, which is usually visible on the front. • Today, sign buyers can get superior, higher resolution signage for about the same price as more traditional signs of a few years ago. • Keep your digital sign operating and the messages fresh. Otherwise, it will have the same effect and impression as a static sign.

COMMUNICATION TOOL Scott Zaremba, president of Zarco USA in Lawrence, Kan., “If you look at the number of impressions you get with worked for 10 years to get local restrictions against movingmessage signs reversed. His campaign was successful a year all the people driving down the street, you see its value,” ago, and this month, he plans to install a 16-foot-tall LED Zaremba said. “I’m extremely excited about it.” electronic sign in front of his convenience outlet that houses his Stanley James Smokehouse restaurant. SIGNS OF THE TIMES “I pursued this issue because this sign is the best comBefore digital signs, retailers often relied on analog video munication tool we have,” Zaremba said. “We sell fuel, messaging on video monitors to communicate with customright? The consumers are on the street driving by every day. ers, but once DVDs were created, digital signage became We have social media and all the other things, but there is a reality. Retailers adopted DVD players, some with Blu-ray nothing better than being able to see what offerings are high-definition discs. Flat-panel displays became more affordavailable when driving by.” able and sleek in the early years of the Millennium. Many The signage available today is highly improved over operators still use flat-panel displays but have exchanged what it was when Zaremba first began his push for the right DVDs and Blu-ray for computer-driven media players with to have a sign. “The pixels now available in LEDs are clear software that can update messaging in mere minutes and be and concise, and 10 years ago we didn’t have anything like programmed to perform months into the future. that,” he said. “Our [new] sign can change messages every Like other types of technology, digital signage continthree seconds, but we’ll have it sit longer than that. We’ll be ues to evolve with new advancements. Industry insiders promoting food and our car wash, and if the university bas- expect digital signs to get wider and slimmer than they are ketball team wins a game, we can post that information the now—making them easier to install—with higher resolution second the game’s over.” screens that are easier to read from greater distances. Plus, Messages can be updated in the store’s backroom or the price of displays and software will drop, making them from Zaremba’s cell phone or laptop when he’s away. more accessible. CSD 82 Convenience Store Decisions November 2018

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10/27/18 12:51 PM

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10/24/18 5:26 PM

Operations

HR Recruiting

How to Ensure Talented Employees Won’t Quit

Research shows that top people don’t quit a job, they often quit their boss. With the economy on a hot streak, employees have more choices. Are you doing enough to keep them happy? By CSD Staff

Fast Facts: » Bad and mediocre bosses usually have good intentions; they’re just poorly trained. » Becoming a great boss requires lots of hard work and a vast and diverse array of skills. » When you don’t deal with poor performers, it puts a lot of pressure on other team members.

hy do people leave their jobs? Study after study shows the main reason employees jump ship is a bad manager. And while you might think of a “bad boss” as one who has a hair-trigger temper, it’s rarely that extreme, said James Manktelow, coauthor along with Julian Birkinshaw of Mind Tools for Managers. Bad and mediocre bosses usually have good intentions; they’re just poorly trained. But in times like these, they can’t afford to stay that way. “Unemployment rates are incredibly low right now,” Manktelow said. “In a tight job market, you must do everything possible to create a company where employees want to stay. And you as a manager really do have a hand in almost every aspect of how your employees perceive their job—from how meaningful the work is to how stressed out they are to how supported and appreciated they feel.” In other words, being a good boss is a tall order. Manktelow said management is an “unnatural act” because it requires us to behave in a way that goes against our innate desire to be in control and the center of attention. Doing a good job of it requires good training, the right tools and lots of feedback—and very few managers get these things. Furthermore, Manktelow makes it clear that there’s no quick ﬁx. Becoming a great boss requires lots of hard work and a vast and diverse array of skills. Here are a few tips for what convenience stores can do to create the kind of workplace culture that will attract the best and brightest—and just as important, keep them from leaving. Work effectively with people from different generations. While you shouldn’t overemphasize the differences between baby boomers, Generation X and Millennials neither is it a good idea to ignore them. For instance, if you are a baby boomer managing a group of Millennials, don’t resist their preference for working virtually or through

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10/29/18 7:14 AM

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10/25/18 9:04 AM

Operations

HR Recruiting

Active listening, where you hear not just the words but the message an employee is sending, is one of the most important methods you can use to understand and motivate people.

microblogging sites (they think email is very old school), and be more proactive in giving recognition and praise. Learn to listen carefully and intensely to employees. In their survey of more than 15,000 managers and professionals worldwide, the authors found that 65.9% of managers think careful listening is one of the most important methods you can use to understand and motivate people. It helps you understand what upsets the people who work for you so you can help clear these things away. It also helps you appreciate what excites and energizes them so you can help them shape their work in this direction. Active listening—where you make a conscious effort to hear not only the words another person is saying, but to understand the complete message being sent—helps make employees feel heard. “Being a good listener to your employees doesn’t just happen,” Birkinshaw said. “You have to structure opportunities for this into the day.” Give effective praise and recognition. The authors discovered that 54.8% of survey responders see giving praise as one of the most important ways of getting the best from their people. They also point out that research firm Gallup has identified significant increases in helpfulness, cooperation, punctuality, attendance and length of service associated with receiving regular praise. Visit stores looking for opportunities to give praise. Be specific about what you’re praising and do it in an appropriate way—some people love public praise while others are embarrassed by it. And be sure that praise is honest and proportionate. Insincere praise will weaken trust. Help people develop self-confidence. People want to feel good about themselves and their abilities, and they want to be successful at work. When you build your employees’ self-confidence, you’ll help them achieve both goals. “One good strategy is to create ‘mastery experiences’ for them.” Birkinshaw said. “You set small goals for employees that allow them to demonstrate to you and themselves that they have mastered a skill—then you can move on to set progressively harder challenges. Learn how to give good feedback. In the authors’ survey, they found that 66.9% of respondents believe giving high-quality feedback is the most important thing you 86 Convenience Store Decisions November 2018

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can do to develop good people. Yet it’s very easy to give feedback badly. If you do, it can backfire and damage your relationship with the people you are managing. The authors say you need to give feedback often—vastly preferable to saving it all for an annual review—and give more positive feedback than negative. With negative feedback, stick to hard facts and don’t generalize or you can leave an employee feeling aggrieved and angry. Engage employee passion with transformational leadership. To get the very best work from someone, you must engage their passion and sense of meaning in life. This is what truly keeps people at their jobs. Birkinshaw cites the concept of transformational leadership, first introduced by James MacGregor Burns in his 1978 book, “Leadership.” He defined transformational leadership as a process where “leaders and their followers raise one another to higher levels of morality and motivation.” Manktelow and Birkinshaw recommended four main directives for becoming a transformational leader: lead by example, stimulate people intellectually, help your people grow as individuals and inspire them with a compelling vision of the future. Handle poor performance right away. Don’t let it fester. When you don’t deal with poor performers, it puts a lot of pressure on other team members. This can cause high performers to leave. No wonder the authors’ survey found that 57.7% of managers see dealing with poor performance effectively as a highly important management skill. Poor performance has two basic sources: low motivation and low ability. There are many ways to deal with the former, including smart job structuring, support, feedback and coaching. “The same skills that collectively make a person a great boss also create a deeply engaging culture that nurtures and excites employees,” Manktelow said. “You might even call it an unquittable culture. This is the Holy Grail for any company and not just during times when a talent war is heating up. No company can outperform competitors if its employees just don’t want to be there.” CSD

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Operations

Restrooms

Sway Customer Experience If store cleanliness is becoming an overarching concept in convenience retailing, it’s imperative to an operation’s success that the concept of cleanliness extends to the restrooms. By David Bennett Senior Editor

“Prior to the surge in digital connectedness, consumer ccording to GasBuddy’s 2018 summer travel survey released this past May, 37% of respondents said that expectation was generally driven by people’s preconceived one of their worst fears is being unsure of where to ideas regarding goods and services; however, c-stores in recent years have expanded their digital footprint stop for a clean restroom while on a road trip. That’s probably why more people are turning to QuikTrip reaching a larger consumer base, thus creating a more competitive landscape for in-store experiences,” Nader for peace of mind. For the second consecutive year QuikTrip took top rest- said. “Competition breeds innovation, and innovation has room honors in seven states in the latest ranking from expanded the brand experience to encompass a c-store GasBuddy. The Tulsa, Okla.-based convenience chain space that ranks highly in shaping customer satisfaction nabbed top honors in more states than any other c-store. and that is the ‘branded restroom experience.’” Wawa came in second with the highest-rated restrooms in six states, followed by Chevron, Cumberland Farms, Kum & ADA MANDATES Go and Maverik each topping the list in three states. While businesses are required to provide restroom facilOf course, the linkage between store cleanliness and ities for their employees, not every business is required quality foodservice is unmistakable. QuikTrip over the to allow customers to use these restrooms. If a company last several years has expanded its QT Kitchen concept chooses to allow public access, they must ensure the faciliin which customers can order made-to-order sandwiches, ﬂatbreads, pizzas, pretzels, smoothies and coffee drinks. Just as unmistakable is that concept of cleanliness extends to a store’s restrooms, said Mike Thornbrugh, QuikTrip’s manager of public and government affairs. » For the second consecutive year QuikTrip “With more and more companies entering the fresh took top restroom honors in seven states in food offer, in our opinion, a clean, well-stocked restroom is the latest ranking from GasBuddy. extremely important,” Thornbrugh said. QuikTrip operates more than 700 convenience stores across 11 states » Convenience stores can differentiate them-

Fast Facts:

QUITE THE EXPERIENCE Jeffrey Nader, project director at api (+), a Tampa, Fla.based architectural ﬁrm that specializes in retail design, said experience has become the gauge by which consumers retain brand loyalty. Factors such as ease of ﬂow, customer service and fast check-out have become an integral part of the c-store shopping experience. 88 Convenience Store Decisions November 2018

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selves from their competitors with unique restroom design.

» Companies must ensure the facilities conform to local plumbing codes and to the Americans with Disabilities Act. cstoredecisions.com

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Operations

Restrooms

ties conform to local plumbing codes and to the Americans with Disabilities Act. Nader said “accessibility” is an overarching concept that continues to challenge store designers, including the convenience channel. “C-store brands that recognized the vast needs of the accessible landscape have set in place brand specific adjustments that build and expand on the Americans with Disabilities Act that was revised in 2010,” Nader said. “Such embellishments include more spacious stalls, in-stall informatics and communication technologies, and a new shift in robotic assistance to give more leverage and mobility.”

IN THE LOOP Pervez Pir, chief operating ofﬁcer of the Fremont, Calif.based Loop Neighborhood convenience chain that is part of Vintners Distributors, said the progressive chain offers its customers a singular shopping experience, offering a variety of products including fresh organic fruits, customized salads, fresh sandwiches, sushi and even a wine station at many of its California locations. The executive team behind Loop chose to highlight

Hygiene Heads-Up Since convenience stores are usually located in high-traffic areas, it’s important that customers and staff have easy access to hand hygiene and are encouraged to wash their hands. Recent survey results from Tork, a brand of Essity, a global hygiene and health company, highlight the importance of handwashing for creating a healthier environment for employees and customers alike. Among the findings: • Implementing hand washing routines can increase customer loyalty. Noticing that store employees have clear routines for hand washing makes almost one in two (47%) more willing to eat there again. • Clean hands can increase well-being of people around you. If everyone washed their hands properly, people would feel: 1) more comfortable (43%); 2) more secure (34%); 3) more satisfied (31%); and 4) happier (23%). • Implementing hand washing routines can boost employee satisfaction. Knowing that everyone at work washes their hands properly would have a positive impact on the well-being of almost eight in 10 full-time employees. 90 Convenience Store Decisions November 2018

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“

We have hundreds of customers stopping by our locations to use the restroom and if we can give them a good experience they will also trust the food and other offerings. It shouldn’t be a choice but the standard.”

”

- Pervez Pir, Chief Operating Ofﬁcer, Loop Neighborhood

modern store design, featuring dramatic differences for customers—different from the usual convenience stores to which they are accustomed. From the moment patrons walk through the door to the moment they leave, c-stores customers are assessing core factors such value, quality, affordability—and cleanliness. “Clean restrooms are very important in our business since c-stores saturate the landscape. We have hundreds of customers stopping by our locations to use the restroom and if we can give them a good experience they will also trust the food and other offerings. It shouldn’t be a choice but the standard,” Pir said. Something that is a choice among c-store chains, but is becoming more a standard is the installation of modern restroom equipment that not only appeals to customers, but requires less maintenance and manpower to clean. Loop, when designing a new store or remodeling an existing site within its 28-store chain, offers user-friendly urinals, hand dryers and automatic ﬂushing toilets. “We try to make sure the restroom is hands free or ecofriendly,” Pir said. “We know that people don’t like touching toilet ﬂushers and towels dispensers, so why not make it automated so they get in and out. The more sanitary it is the more likely a customer is going to shop for food at our locations. Raising the bar on our cleanliness standards also tells the customer we have the same standards on our food offerings.” QuikTrip’s Thornbrugh agreed that providing an inviting and sparkling restroom for customers is essential and a cornerstone of the chain’s service model. “QT has always placed restroom cleanliness as critical to our overall success; nothing has changed that,” he said. CSD cstoredecisions.com

10/29/18 12:04 PM

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Operations

Estate Planning

Preparing for

Estate Planning Arranging to hand over the business and establishing a sound succession plan is beneﬁcial for most c-store business owners. By Mark Battersby, Contributing Editor

Fast Facts: » At its most basic, a succession plan is a documented road map to be followed in the event of the owner, partner or shareholder’s death, disability or retirement. » There are a number of methods for calculating the value of a business, methods that may or may not reﬂect the reality of the market place or be acceptable to the IRS. » A buy-sell agreement is a legal contract that prearranges the sale of a business interest between a seller and a willing buyer.

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or those who own a closely- tion is $11.18 million ($10 million held or family convenience adjusted for inflation). Leaving an estate of $15 million in store business, retirement can be anticipated and 2018 and not having given any taxexpected, or the unexpected result able gifts, mean only $3.82 million will be subject to that 40% estate tax. of illness or other events. In addition to ensuring there will What’s more, the estate exclusion is be enough money to retire, c-store per person not per couple. Obviously, in order to predict the owners, shareholders and partners must ensure any unanticipated exit potential bite of estate taxes, it’s necessary to know what the c-store doesn’t leave them high and dry. While for many, retirement may business is worth. Fortunately, there appear as a distant speck on the are a number of methods for calhorizon, planning to hand over the culating the value of a business, business and establishing a sound methods that may or may not reflect succession plan is beneficial for the reality of the marketplace or be most c-store business owners and acceptable to the IRS. Once a dollar value for the busiabsolutely necessary in the event of something unanticipated. At its ness has been determined, usually most basic, a succession plan is a by a qualified appraiser, life insurdocumented road map to be fol- ance can be purchased on all of lowed in the event of the owner, those involved in the business. partner or shareholder’s death, dis- Then, in the event that a partner or shareholder passes on, the insurability or retirement. ance proceeds will be used to buy out the deceased partner or shareESTATE TAXES A key component of every plan holder’s interest in the business is the estate tax. However, while and distribute it equally among the current estate tax is a whop- those remaining. Insurance can also be used to ping 40%, thanks to the Tax Cuts and Jobs Act enacted in 2018, the finance two basic arrangements amount that can be ignored or used by many c-store owners, partexcluded from that tax computa- ners and shareholders known as cstoredecisions.com

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Operations

Estate Planning

can defer capital-gains taxes by investing the proceeds in Qualified Replacement Property (QRP) such as stocks, bonds and certain retirement accounts to help provide income during retirement.

“cross-purchase agreements” and “entity-purchase agreements.” While both ultimately serve the same purpose, they are used in different situations. Cross-purchase agreements are structured so each partner buys and owns a policy on each of the other partners in the business. Each partner functions as both owner and beneficiary on the same policy, with each other partner being the insured; therefore, when one partner dies, the face value of each policy on the deceased partner is paid out to the survivors, who will then use the policy proceeds to buy the deceased partner’s share of the business at a previously agreed-upon price. With a far less complicated entity-purchase agreement the c-store business itself purchases a single policy on each partner and becomes both the policy owner and beneficiary. Upon the death of any partner or owner, the business will use the policy proceeds to purchase the deceased person’s share of the business. The cost of each policy is generally deductible by the business.

A buy-sell agreement, often called a “business prenup” is a legal contract that prearranges the sale of a business interest between a seller and a willing buyer. A buy-sell agreement allows the seller to keep control of his or her interest until an event specified in the agreement occurs, such as the seller’s retirement, disability or death. Other events such as divorce can also be included as triggering events under a buy-sell agreement. The time to sell is optional—now, at retirement, at death, or anytime in between. As long as the sale is for the full fair market value (FMV) of the business, it isn’t subject to gift tax or estate tax. Of course, a sale that occurs before the seller’s death may be subject to capital gains tax.

EXIT STRATEGIES

SUCCESSFULLY PLANNING

SELLING OUT

There are a number of strategies for exiting a conveWhere does the succession planning process start? The nience store business. One strategy, the Family Limited first step involves clearly establishing the c-store owner/ Partnership (FLP) has, over the years, proven itself an shareholder/partner’s goals and objectives, keeping in extremely valuable tool for both succession and estate mind the operation’s current human and financial resources. planning. After all, what other tool can ease or even elimOther questions might include the following: How much inate the tax bite often associated with transferring the control of the business is desirable? Is there someone capac-store business—or its income—to family members, all the ble of running the business once you step down? Are there while keeping the owner’s current tax bills to a minimum? key employees who must be retained? Are there sufficient Typically, a FLP is formed by the older generation, usu- assets to pay the estate tax, equalize the estate and keep ally the parents, who contribute assets to the partnership the business? How much money is needed to reach the in return for both general partnership units and limited owner’s financial goals? partnership units. The parents can then embark on a plan And don’t forget: While clarifying those goals and of giving unlimited partnership units to their children and wishes is important, it’s not enough. The business owner grandchildren while retaining the general partnership units also needs to communicate his or her vision with family, that actually control the partnership. business partners and key employees. Thus, the parents might retain control of the business; Developing a succession plan is a multi-phase process draw a salary or wages from it, all the while sharing the outlining, in detail the, who, what, when, why and how profits with other family members who are taxed on those changes in ownership and management of the c-store busiprofits at a tax rate that is usually lower than that of the ness is to be executed. At a minimum, a good plan should parents/owners. help accomplish the following: Selling the c-store business to its employees using an • Transfer control according to the wishes of the operaEmployee Stock Ownership Plan (ESOP) allows the sale tion’s owner, shareholder or partner; proceeds to be rolled over on a tax-deferred basis. In addi• Carry out the succession of the business in an orderly tion to being an excellent exit strategy with significant tax fashion; savings for the owners, shareholders and partners, ESOPs • Minimize the tax liability of all involved; are great for motivating and rewarding employees, and for • Provide economic well-being after the owner, partner taking advantage of incentives to borrow money for acquiror shareholder steps aside. ing new assets in pretax dollars. Obviously, business owners seeking a smooth and equiThe ESOP can borrow money to buy out the owner’s table transition of their interests should seek competent, stake in the business. If, after the stock purchase, the ESOP experienced advisors to assist them in this matter. After all, holds more than 30% of the business’s shares, the owner the taxes saved may be yours or your heirs’. CSD 94 Convenience Store Decisions November 2018

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PRODUCTShowcase Pipe Tobacco Cigars Swedish Match North America is introducing the latest innovation from the makers of White Owl, Night Owl Pipe tobacco cigars. Night Owl brings you a tipped cigar that’s crafted with the ﬁnest pipe tobacco and always ready for what’s next, in a resealable FoilFresh pouch. Choose the taste that’s unforgettable and the aroma that pleases the senses – choose Night Owl. Available ﬂavors include: Classic, Wine, Tropical and Black Cherry. On Jan. 3, 2019 this new Night Owl brand offering will began shipping. Night Owl is available in “two for 99 cents,” “Save on two” and four- pack formats.

Company: Swedish Match North America

(800) 367-3677 • customer.service@smna.com

Strawberry Soda Push Beverages is debuting its new Push Strawberry Soda to convenience stores. The strawberry flavor joins its many other fruit-flavored sodas including pineapple, peach, orange, grape and diet orange, as well as their traditional flavors like cola, ginger ale and root beer. The company was receiving requests for years for a strawberry soda flavor and finally created a formulation it was happy with. It took 27 formula revisions to get the targeted flavor profile, which beats the previously held record by its Push Peach Soda. The Push Strawberry soda is naturally and artificially flavored and is gluten free and kosher. At 270 calories per 20-ounce bottle, the calorie count is significantly lower than most other strawberry sodas on the market. The entire first batch has sold out already before samples have even gone out.

Company: PUSH Beverages www.pushbeverages.com

Fresh-Brewed Rebrand TEAZZERS, a national supplier of fresh-brewed teas, is introducing a rebrand that communicates a fresher, playful, more premium image that is in line with the company’s high quality products and cutting edge brewing technology. The rebranding has beneﬁts to retailers as well, as it provides for more attractive merchandising and point-of-sale displays that really “pop” and draw the consumer in by highlighting the fresh and refreshing nature of TEAZZERS’ offerings. The rebrand encompasses everything from a website update (still in progress), a new social media presence and a change to all visual assets— logo, colors, urn wraps, product labels and more.

Company: TEAZZERS www.teazzers.com

Bluetooth-Connected POS Casio America Inc. is introducing its connected cash registers, the PCR-T540 and PCR-T2500, to the U.S. market. Designed for businesses, medium and small, Casio’s new PCR-T540 and PCR-T2500 are equipped with Bluetooth connectivity to Android/iOS smart phones/tablets and a variety of support tools to keep tabs on real-time reporting and manage efﬁciency via the cloud. The PCR-T540 and PCR-T2500 offer Bluetooth communications capabilities, which eliminate the need for extra cabling and allow the terminals to be a placed in a location that best suits the needs of the business. Via the CASIO CONNECT App running on Android/iOS devices, users can easily set up, transfer program data to the cash register and execute daily reports via the Bluetooth connection, and transfer sale totals automatically to a remote Cloud server at no additional expense. The new terminals boast an ergonomically-designed cabinet and pedestal with a durable metal outer frame. They are equipped with a new 10-line LCD adjustable operator display with a blue back light, a built-in thermal printer that churns out 20 lines per second, and an easy to view, pop-up swivel rear customer display.

Company: Casio America Inc. www.casio4business.com

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NAG 2019

The National Advisory Group (NAG) is an association of small to mid-size and family-owned 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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September 8th - 11th

For more information: RETAILERS should contact John Lofstock at 201.837.2177 jlofstock@csdecisions.com SUPPLIERS should contact John Petersen at 440.250.1583 info@nagconvenience.com

Committed ommitted to building relationships and profits!

2019

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PRODUCTShowcase JUUL Authorized Retailers JUUL is perfect for adult smokers looking to switch from cigarettes. JUUL offers an assortment of ﬂavors including ﬂavors in 5% nicotine strength (Virginia Tobacco, Mint, Creme, Mango and Fruit) and in 3% nicotine strength (Virginia Tobacco and Mint)**. Order today or and learn more about becoming a JUUL authorized retailer at www.juul.com/retail/wholesale.

Company: JUUL www.juul.com **Availability of these and additional products may vary by location.

Protein & Energy Rockin’ Protein by Shamrock Farms is introducing its latest product innovation: Rockin’ Protein Energy. Rockin’ Protein Energy combines the naturally-occurring caffeine from coffee with a whopping 30 grams of high-quality protein for a powerful one-two punch ideal for sustained energy. Rockin’ Protein Energy is made with real Shamrock Farms’ milk so it’s a great source of protein and nutrients, while still low in calories, low-carb, lactose free and has no added sugar. Rockin’ Protein Energy will be available in convenience stores nationwide this January in three delicious ﬂavors – café latte, mocha latte and caramel latte.

Company: Shamrock Farms lindsey_thompson@ shamrockfoods.com

Tyson Foods Inc. is launching Jimmy Dean Stuffed Hash Browns in the convenience store channel for retailers looking to meet the needs of consumers craving on-the-go breakfast. A warm and crispy, real-potato hash brown stuffed with savory breakfast ingredients, Jimmy Dean Stuffed Hash Browns provide options for a breakfast meal or snack. Stuffed with high-quality, popular breakfast ingredients, Jimmy Dean Stuffed Hash Browns are a convenient, grab-and-go option for all-day consumption and sales.

Company: Tyson Foods Inc. www.tysonfoods.com

Private Label Pizza McLane Co. Inc., a supply chain services company providing grocery and foodservice supply chain solutions, has introduced a new brand: Fly Guys Pizza. The brand launched at the McLane National Tradeshow through its private label subsidiary, Consumer Value Products (CVP), in coordination with McLane’s foodservice-at-retail program, McLane Kitchen. Made with premium toppings on a self-rising crust, Fly Guys Pizza arrives frozen and fully packaged for retailers to serve hot by the slice or by the 12-inch pizza, or the 12-inch pizzas can be merchandised for retail sale in the frozen section for consumers to bake at home. Fly Guys combines great taste with incredible value and is offered in three delicious ﬂavors: pepperoni, ﬁve-meat and breakfast. The brand was conceived with a unique story of two Italian skydivers. Legend has it that Luciano Rosso and Frederico Moretti had a shared passion for pizza AND skydiving, and they decided mid-air to join forces to share their love of Italian pies with the world. Thus, Fly Guys Pizza was born. McLane Kitchen and CVP offer customers Fly Guys-branded packaging including pizza boxes and slice trays, equipment ranging from pizza ovens to serving utensils, as well as signage such as posters, menu boards and banners.

Company: McLane www.cvpproducts.com

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Stuffed Hash Browns

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

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

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PRODUCTShowcase Whipped Topping Bringing exciting flavors to the very vanilla dairy whipped topping category, Kraft Heinz is partnering with The Hershey Co. to launch Hershey’s Milk Chocolate and Reese’s Peanut Butter Cup Dairy Whipped Toppings. The two products are already appearing in select retailers. National distribution began in October. H e r s h e y ’s and Reese’s are two of A m e r i c a ’s most-loved chocolate b r a n d s , which make them perfect partners for long-time whipped topping manufacturer Kraft Heinz. Hershey’s Milk Chocolate and Reese’s Peanut Butter Cup Dairy Whipped Toppings offer flavors the whole family can enjoy. Both whipped topping flavors are made with 100% real cream from cows not treated with rBST growth hormone, and without high-fructose corn syrup, oil ingredients, and artificial sweeteners or flavors. They are available in sevenounce cans in the refrigerated dairy aisle, retailing for $2.99–$3.99 a can.

Pumpkin Spice Coffee Dunkin’ Donuts is introducing new bottled Pumpkin Spice Iced Coffee. The latest addition to Dunkin’ Donuts’ fast-growing line of readyto-drink (RTD) iced coffee beverages is available for a limited time at grocery, drug, convenience stores and mass merchandisers nationwide beginning Sept. 10. Made according to Dunkin’ Donuts’ specifications with high-quality Arabica coffee blends and real milk and sugar, Pumpkin Spice bottled iced coffee delivers the quality and great taste that millions of guests have come to expect from Dunkin’ Donuts’ signature iced coffee served at its restaurants worldwide. Dunkin’ Donuts also offers Pumpkin flavored K-Cup pods and Pumpkin flavored bagged coffee where groceries are sold. Manufactured and distributed by the Coca-Cola Co. and its bottling partners since 2017, the Dunkin’ Donuts bottled Iced Coffee beverages are already available in Original, Mocha, Espresso, French Vanilla and Cookies & Cream.

Company: Coca-Cola Co. www.dunkinanytime.com

Car Wash Foam “Gentle Foam,” a new category of ultra-soft, high-quality foam by Erie Brush, is designed to help automated conveyor and rollover car wash owners eliminate damage claims and leave cars shinier. Unlike typical foam, which is usually offered at standard levels of softness, Gentle Foam is designed to be soft and stretchable so it does not catch on mirrors, antennas, license plates, or loose moldings like cloth. Because of Gentle Foam’s composition, it better polishes vehicle surfaces without scratching, snagging or damage. Its softness enables it to clean difﬁcult to reach areas, which helps to optimize the wash. To increase gentle foam’s longevity and resist tearing, the material varies in density and comes in thicknesses from about 1/8-inch to ¾-inch. Gentle Foam mounts on a rotating core and is used in top, side, or wrap around equipment like cloth, ﬁlament or regular foam. Installation is streamlined to install in seconds as one piece.

Company: ERIE

(800) 711-3743

sales@eriebrush.com

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Undercounter Refrigerator Hoshizaki America Inc. has enhanced its popular HR24A compact undercounter refrigerator to the HR24B. Hoshizaki’s signature stainless-steel construction and one-piece ABS interior liner are enhanced by the new bright interior LED light. The shorter 31.5-inch-tall cabinet allows it to be compliant with the Americans with Disabilities Act (ADA). Cooled with a natural refrigerant, R600a, that is energy efficient and earth friendly. The HR24B is the perfect fit for any in-cabinet installation with 3.7 cubic feet of interior storage, a field reversible stainless-steel door with a lock, and comes standard with three adjustable epoxy coated shelves. This compact refrigerator is UL approved for outdoor use and includes stainless- steel louver top trim panels. You can rest assured that the HR24B will seamlessly fit any inside breakroom or outside kitchen cabinetry.

Company: Hoshizaki America Inc. www.hoshizakiamerica.com

cstoredecisions.com

10/25/18 9:21 PM

CStoreDecisions ecisions .com

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

Thank you to our Key Partners:

We use the latest media technology, delivering content the way you want it: print issues, digital issues, enewsletters, and videos. Use CStoreDecisions.com to help you strengthen your peer network with social engagement through Twitter, LinkedIn, Facebook, YouTube, Pinterest, and Google+. Browse, bookmark, share and interact with the most relevant industry content and people in the market.

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PRODUCTShowcase Fruit Infusions Koia, the 100% plant-based protein drink, is launching Fruit Infusions. The new product line includes three fruitbased varieties: Chocolate Banana, Mango Crème and Strawberry Crème. Available now in select retailers, Fruit Infusions are the first Koia flavors to integrate real fruit with the benefits of a superfood in each variety. Koia’s Fruit Infusions are made with wholesome ingredients that consumers can see and recognize to provide one of the cleanest, low-sugar protein options on the market. With only six grams of sugar per bottle, Fruit Infusions have almost nine times less the sugar than competitors. SRP: $3.99. All of Koia’s varieties are vegan, Non-GMO Project Verified, and free of dairy, soy and gluten.

Cold Sore Treatment Merix Pharmaceutical Corp. has introduced RELEEV 1 Day Cold Sore Treatment in convenience stores, including 7-Eleven and soon in Circle K in the U.S. RELEEV 1 Day Cold Sore Symptom Treatment, provides fast relief to those with painful cold sores. RELEEV contains VIRACEA, a proprietary botanical extract formula. Merix’ patented Echinacea Extract with the FDA approved OTC antimicrobial antiseptic Benzalkonium Chloride is the fastest healing treatment for cold sores known. RELEEV eases the pain of cold sores in just three to 10 minutes, relieves other symptoms within 24 hours, and stops skin irritation after application. Those with cold sore symptoms using RELEEV can expect fast and complete cold sore symptom and fever blister relief. Easily used at home or on the go, RELEEV provides convenient relief for cold sore sufferers anywhere.

Company: Merix Pharmaceutical Corp. www.releev.com

Company: Koia www.drinkkoia.com

Flavorful Meat Sticks As the beef jerky market grows, so do the offerings from Red Truck Beef Jerky. Along with its incredible line of beef jerky and Steak Bites—which includes: Grill Mates, Montreal Steak, Brown Sugar Bourbon, Smokehouse Maple and Old Bay—Red Truck has now launched a complete line of one-ounce meat sticks. The new oneounce meat sticks will feature the world-famous flavor of a Grill Mates Montreal Steak seasoned meat stick in Original, Teriyaki and Atomic Hot varieties to start. Stepping out of the bag sector and moving horizontally into the stick market was a good move, which will increase Red Truck Beef Jerky’s footprint and expand its market share, according to Richard Cresswell of Red Truck Beef Jerky. Plan to see more exciting flavor profiles in 2019.

Company: Red Truck Beef Jerky

(727) 742-6351 • richardc@redtruckbeefjerky.com

New Margarita Flavor RITAS, the Anheuser Busch line of flavored, sparkling margaritas, is targeting football fans this season with its newest flavor, Berry-A-Rita. Recognizing that nearly half of the NFL audience is female and as this segment continues to grow, the brand has decided to show up where its fans are. Ahead of the 2018 NFL season, RITAS launched a series of campaigns across TV, digital and social channels to elevate the tailgating and viewing party occasions with more flavor as well as play in the popular football pool culture for a chance for super fans to win season and playoff tickets. RITAS teamed up with former NFL quarterback, Matt Leinart to announce the brand’s new limited-edition fall flavor, Berry-A-Rita. The spot opened in a backyard with Matt and The Ritas, introduced earlier in the year as legendary ladies who have lived life and know how to have a good time, drinking RITAS. Known for his career touchdown passes and pass completions, the Ritas showed Matt how to ‘Hail Berry’, a fun play on the Hail Mary pass. The spot ran across NBC, FOX, CBS and NFL Network during NFL programming from Sept. 6-30 and was supported through additional paid social media and earned media campaigns.

Company: Anheuser Busch www.anheuser-busch.com

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PRODUCTShowcase Lemon-Flavored Shake

Aloe Supplement Shot Detoxwater, the prebiotic aloe-infused water brand, is launching Veralixir by Detoxwater, a ﬁrst of its kind aloe supplement shot containing 1.7 ﬂuid ounces of highly-concentrated aloe vera extract. Vegan, gluten-free and dairy-free with zero calories and using clinically-proven ACTIValoe, Veralixir by Detoxwater is recommended to be taken once per day before or after a meal to promote digestive health, skin elasticity, nutrient absorption and immune health.

As winter approaches, f’real foods is gearing up to launch a limited-edition flavor like no other; Yellow Snow Lemon Sherbet Shake. The refreshing lemony blend is sure to spark consumer curiosity with its unique name and winterthemed packaging. Consumers will be able to try the sherbet shake at convenience stores across the nation, starting at the end of October and available through the end of the year. To find a f’real location near you, check out the f’real finder at https://www.freal.com/finder/. Or if you are interested in selling f’real milkshakes, smoothies and frozen blended coffee at your store, please visit the f’real website below.

Company: Detoxwater www.detoxwater.com

Company: f’real foods https://retailers.freal.com/self-serve

Locking Outdoor Cabinet MasonWays Locking Outdoor Cabinets have increased impulse sales at the front of stores, pump islands and forecourt for several c-store chains, supermarkets and fuel retailers. The cabinet allows retailers to present, merchandise and sell where they may not have before. Rock salt, water, windshield washer fluid, soda and other seasonal products are now available at the point of purchase to encourage sales. The cabinet allows products to stay in place securely overnight with locking doors. 24/7 operations can purchase units without doors to keep products dry and free from snow. Create sales for motorist filling up or entering stores. Ring up more profits!

Company: MasonWays

(800) 837-2881 info@masonways.com

www.masonways.com cstoredecisions.com

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Bundled Premium Cigars Arango Cigar Co. recently introduced value-priced NICARANGO Cigars at the 2018 International Premium Cigar and Pipe Retailers trade show to rave reviews. This exclusive Nicaraguan hand-made cigar is a new addition to Arango’s extensive line of premium cigars, briar pipes, pipe tobaccos and accessories. NICARANGO is a mellowbodied yet robust and fullflavored cigar that is consistently well-constructed. This affordable bundle of 20 boasts a creamy smooth flavor that appeals to all smokers. The two sizes offered are Supremo (61/4 x 45, a Churchill size) and Toro (6 x 50). The wrapper is available in Ecuadorian Sumatra (Natural) and Connecticut Broadleaf (Maduro). Both cigars share an Ecuadorian Sumatra binder and Nicaraguan filler. The cigars are individually cello-wrapped. NICARANGO Toro has a wholesale cost of $1.06 per cigar, while Supremo wholesales for $1.12 per cigar. Their price and quality, as well as the eye-catching, attractive packaging, make this handsome cigar quite desirable. Arango has the line available for immediate purchase.

Company: Arango Cigar Co.

(800) 222-4427

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Classifieds /Ad Index ADD Systems www.go.addsys.com/choice

Altria Group Distribution Co. www.altria.com

Avery Dennison www.freshmarx.com

BIC www.BICLighter.com

Blu www.blucigs.com

Cash Depot 800.776.8834 / www.cdlatm.com

Coca Cola 800-241-COKE / www.cokesolutions.com

Del Monte Fresh 800.950.3683 / www.freshdelmonte.com Dr. Pepper / Snapple Group www.drpeppersnapplegroup.com

69 45

E & J Gallo Winery www.gallo.com

E-Alternative Solutions 888.727.1841 / www.LeapVapor.com Fiji Water 888.426.3454

85 51

Gulfcoast Software Solutions, Inc. 727.449.2296 / www.gulfcoastsoftware.com Hershey www.hersheysolutions.com

Home Market Foods 800.367.8325 / www.rollerbites.com

3 39 67

Hoshizaki www.hoshizakiamerica.com

Hunt Bros. 63 800-453-3675 / www.huntbrotherspizza.com/CSD Iowa Rotocast Plastics 800.553.0050 / www.irpinc.com

ITG Brands www.itgbrands.com

Kerry Convenience www.kerry.com/convenience

Krispy Krunchy 800.290.6097 / www.krispykrunchy.com KT&G www.ktngusa.com

71 5,7,9

Lancer 87 877.734.2194 / www.lancercorp.com/twinpour Liggett Vector Brands 877.415.4100

Mars Wrigley Confectionary www.mars.com

MasonWays 800.837.2881 / www.masonways.com

27 105

McCain Foodservice www.McCainUSAFoodservice.com

McLane Company www.mclaneco.com/coldchain

Mondelez International www.mondelezinternational.com

Monster Energy www.monsterenergy.com

Nat Sherman www.natsherman.com NCR www.ncr.com

Nestle Waters N.A. www.nestle-watersna.com/en

cstoredecisions.com

North American Bancard 866.481.4604 / www.nynab.com

105_Ad index.indd 105

11 104

Old Dutch Foods www.olddutchfoods.com

Old Wisconsin Foods www.oldwisconsin.com

Pierce Chicken 800.336.9876 / www.poultry.com R. J. Reynolds www.EngageTradePartners.com

65 23, 107

Save-A-Lot 314.592.9350 / www.savealot.com/own

Stryve www.stryvebiltong.com

Swedish Match 800.367.3677 www.smna.com www.gamecigars.com

Swisher International 800.874.9720 / www.swishersweets.com

17, 89 53 108

2019 Tobacco Plus Expo www.tobaccoplusexpo.com

Tyson Convenience 31, 75 800.682.7272/www.tysonconvenience.com

AS SEEN AT

Sales Through Dealers and Carriers, Street Vendors, Counter Sales, and Other Paid or Re-quested Distribution Outside USPSÂŽ: Average, 515; last issue, 438 Total Paid and/or Requested Distribution: Average, 37,036, last issue, 36,998 Nonrequested distribution by mail outside county: Average, 6,555; last issue 6,518 Nonrequested distribution outside the mail: Average 411, last issue, 452 Total Nonrequested Distribution: Average 6,966, last issue, 6,970 Total Distribution: Average, 44,002; last issue, 43,968 Copies not Distributed: Average, 262; last issue, 262 Total: Average, 44,264; last issue, 44,230 Percent Paid and/or Requested Circulation: Average, 84.20%; last issue, 84.1%

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Statement of Ownership, Management and Circulation of Convenience Store Decisions Publication Title: Convenience Store Decisions Publication Number: 1054-7797 Date of filing: October 1, 2018 Frequency of issue: Monthly Number of Issues Published Annually: 12 Annual Subscription Price: Controlled; if purchased $75 per year Complete Mailing Address of Known Officeof Publication: Harbor Communications,LLC, 19111 Detroit Rd., Ste. 201, Rocky River, OH, 44116 Complete Mailing Address of Headquartersor 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 Managing Editor: David Bennett, 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, 2018 Net press run: Average, 44,264; last issue, 44,230 Outside County Paid/Requested Mail Subscriptions: Average, 36,521; last issue, 36,560

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November 2018 Convenience Store Decisions 105

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INDUSTRY

Perspective

Considering EMV Upgrades If E15 becomes the norm, EMV-compliant dispensers meeting current E10 standards will be inadequate. By Mark Radosevich

he approaching deadline for retail forecourt EMV (Europay, Mastercard and VISA) compliance has been a front burner item for many store operators and fuel marketers. Upgrades range from around $15,000 for new fuel dispensers to $6,000 for card reader upgrade kits. Compliance must be attained by October 2020 to avoid liability under the new credit card chip reader rules. After recently attending the Motor Fuels committee meeting at the Petroleum Marketers Association of America (PMAA) Fall Conference, I think there are some factors that must be considered before dispenser investments in the industry are initiated.

HIGH-EFFICIENCY ENGINES Illusive and seemingly unattainable Corporate Average Fuel Economy (CAFE) mandates have prompted original equipment manufacturers (OEM) to meet the new miles per gallon targets by seeking a higher gasoline octane grade; 95RON. Without going into the complexities of this new fuel, the key take away is that if mandated, it will require dispenser upgrades to prevent mis-fueling by motorists attempting to dispense lower gasoline grades into new vehicles, just a few years after the EMV deadline had passed. This higher octane blend has the renewable fuels folks giddy over the prospect that the higher octane boost could be provided by ethanol and as a result spur universal E15 adoption. Current dispensing equipment is not rated to accept ethanol blends beyond E10 and liability from equipment failure and related environmental consequences from usage of E15 falls on the retail operator or the fuel marketer. Thus, if E15 become the norm, EMV compliant dispensers meeting current E10 standards will be inadequate. The current solution is to invest an added $7,000 for new flex fuel equipment bringing the cost of a new dispenser to around $22,000. DEALER BRANDING After considering these potential post-EMV compliance investments, marketers would be wise to take a pragmatic, longer term assessment when deciding to brand average to marginal dealer sites. A closer view of a site’s competitive situation and market trends should be made to ascertain whether the store will be viable through the 106 Convenience Store Decisions November 2018

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Mark Radosevich is a strong industry advocate and 38-year petroleum professional. He is president of PetroActive Real Estate Services. Contact him at mark@petroactive.net or call (423) 442-1327. His professional bio and other company info can be found at www.petroactive.net.

term of the supply agreement. Mid-stream failure due to these costly compliance items will result in marketer assumption of unamortized brand monies and other related expenses. Here’s another interesting tidbit that came out of the Motor Fuels committee meeting that should set marketers’ heads a spinning. In an effort to meet the aforementioned CAFE mileage standards and reduced emission levels, various automobile OEM’s have developed Gasoline Direct Injection (GDI) engines. With a GDI engine, the fuel is injected directly into the compression chamber below the valves. As such, the valves are not the beneficiary of the marvelous fuel additives that our petroleum suppliers have perfected to deliver tremendous cleansing benefits. In other words, the best formulations of gasoline ever developed are wasted because the fuel never touches the areas needing to be cleaned. As a result, widespread engine problems are cropping up once new GDI vehicles hit the 30,000 to 60,000 mile mark, whereupon the check engine light comes on, alerting the owner that there is an issue with their engine’s performance. To further highlight the disconnect between oil suppliers and the auto industry, GDI manufacturers now recommend changing the vehicle’s oil on a more frequent basis, despite the effort that lubricant manufacturers have made over the years to perfect revolutionary longer-life engine oils. However, research indicates that more frequent oil changes does not rectify the problem. (Google the subject for a deeper dive into this unreal situation and for a listing of affected vehicles.) The primary take-away for retail petroleum operators is to understand the condition and be able to explain it to disgruntled customers blaming a store’s gasoline for causing their engine problems. These unique and costly issues highlight the importance of active membership with one’s state petroleum marketers association (and through them the PMAA). They are your first line of defense against illogical and misguided governmental legislative and regulatory interference destined to harm your business. Please feel free to email me if you’re interested in learning more and I’ll connect you with your appropriate state association leadership.

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10/25/18 9:22 PM

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