CStore Decisions August 2022 by WTWH Media LLC

CStoreDecisions Solutions for Convenience Retailers

Growing Gilligan’s The second-generation family business eyes expansion beyond its Montana and Arizona roots through acquisitions and new builds as it updates stores and elevates its foodservice offering.

INSIDE Go Time Offers Personal Service with a Small-Town Feel

Vape and Cigar Restrictions Tighten

Fry Cooks Up Innovation at Dandy’s

48 August 2022

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the CSD Group www.cstoredecisions.com

CStoreDecisions .com CStoreDecisions CStoreDecisions

nd Chain of the Year Award

Leading Through Innovation

EDITORIAL

LEADERSHIP TEAM

DIGITAL MARKETING

VICE PRESIDENT, EDITOR-IN-CHIEF John Lofstock jlofstock@wtwhmedia.co

MANAGING DIRECTOR Scott McCafferty smccafferty@wtwhmedia.com

VICE PRESIDENT, DIGITAL MARKETING Virginia Goulding vgoulding@wtwhmedia.com

EXECUTIVE EDITOR Erin Del Conte edelconte@wtwhmedia.com

CO/FOUNDER, VP SALES Mike Emich memich@wtwhmedia.com

DIGITAL MARKETING MANAGER Taylor Meade tmeade@wtwhmedia.com

EVP Marshall Matheson mmatheson@wtwhmedia.com

DIGITAL MARKETING SPECIALIST Olivia Boris oboris@wtwhmedia.com

CREATIVE SERVICES

WEBINAR COORDINATOR Halle Kirsh hkirsh@wtwhmedia.com

ASSOCIATE EDITOR Emily Boes eboes@wtwhmedia.com ASSOCIATE EDITOR Marilyn Odesser-Torpey EDITORIAL ASSISTANT/INTERN Kevin McIntyre CONTRIBUTING EDITORS Anne Baye Ericksen Howard Riell COLUMNISTS Mark Radosevich Dan Varroney

SALES TEAM PUBLISHER John Petersen jpetersen@wtwhmedia.com

(216) 346-8790

VICE PRESIDENT, SALES Tony Bolla tbolla@wtwhmedia.com

(773) 859-1107

REGIONAL SALES MANAGER Ashley Burk aburk@wtwhmedia.com

(737) 615-8452

REGIONAL SALES MANAGER Patrick McIntyre pmcintyre@wtwhmedia.com (216) 372-8112 REGIONAL SALES MANAGER Jake Bechtel jbechtel@wtwhmedia.com (216) 299-2281

CUSTOMER SERVICE

VICE PRESIDENT, CREATIVE SERVICES Mark Rook mrook@wtwhmedia.com CREATIVE DIRECTOR Erin Canetta ecanetta@wtwhmedia.com ART DIRECTOR Matthew Claney mclaney@wtwhmedia.com DIRECTOR, AUDIENCE DEVELOPMENT Bruce Sprague bsprague@wtwhmedia.com

EVENTS EVENTS MANAGER Jen Osborne josborne@wtwhmedia.com EVENTS MARKETING SPECIALIST Olivia Zemanek ozemanek@wtwhmedia.com

VIDEO PRODUCTION VIDEOGRAPHER Bradley Voyten bvoyten@wtwhmedia.com VIDEOGRAPHER Garrett McCafferty gmccafferty@wtwhmedia.com VIDEOGRAPHER Kara Singleton ksingleton@wtwhmedia.com

CUSTOMER SERVICE MANAGER Stephanie Hulett shulett@wtwhmedia.com

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

EDITORIAL ADVISORY BOARD Robert Buhler, President and CEO Open Pantry Food Marts • Pleasant Prairie, Wis. Lisa Dell’Alba, President and CEO Square One Markets • Bethlehem, Pa.

WEBINAR COORDINATOR Kim Dorsey kdorsey@wtwhmedia.com

Raymond Huff, President HJB Convenience Corp. • Lakewood, Colo.

DIGITAL DESIGN MANAGER Samantha King sking@wtwhmedia.com

Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas

MARKETING GRAPHIC DESIGNER Hannah Bragg hbragg@wtwhmedia.com

Patrick Lewis, Managing Partner Oasis Stop ‘N Go • Twin Falls, Idaho Reilly Robinson Musser, VP, Marketing & Merchandising Robinson Oil Corp. • Santa Clara, Calif.

WEB DEVELOPMENT

Bill Weigel, CEO Weigel’s Inc. • Knoxville, Tenn.

DEVELOPMENT MANAGER Dave Miyares dmiyares@wtwhmedia.com

NATIONAL ADVISORY GROUP (NAG) BOARD

SENIOR DIGITAL MEDIA MANAGER Pat Curran pcurran@wtwhmedia.com

Vernon Young (Board Chairman), President and CEO Young Oil Co. • Piedmont, Ala.

DIGITAL PRODUCTION MANAGER Reggie Hall rhall@wtwhmedia.com

Joy Almekies, Senior Director of Food Services Global Partners • Waltham, Mass. Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo.

DIGITAL PRODUCTION SPECIALIST Nicole Lender nlender@wtwhmedia.com

Greg Ehrlich, President Beck Suppliers Inc. • Fremont, Ohio

DIGITAL PRODUCTION SPECIALIST Nicole Johnson njohnson@wtwhmedia.com

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

VICE PRESIDENT, STRATEGIC INITIATIVES Jay Hopper jhopper@wtwhmedia.com

YOUNG EXECUTIVES ORGANIZATION (YEO) BOARD Kalen Frese (Board Chairman), Food Service Director Warrenton Oil Inc. • Warrenton, Mo.

WTWH MEDIA, LLC 1111 Superior Ave., 26th Floor, Cleveland, OH 44114 Ph: (888) 543-2447 EDITORIAL AND NAG 1420 Queen Anne Road, Suite 4, Teaneck, NJ 07666 Ph: (201) 321-5642

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SUBSCRIPTION INQUIRIES To enter, change or cancel a subscription, please go to: http://d3data.net/csd/indexnew.htm or email requests to: bsprague@wtwhmedia.com Copyright 2022, WTWH Media, LLC CStore Decisions (ISSN 1054-7797) is published monthly by WTWH Media, LLC., 1111 Superior Ave., Suite 2600, Cleveland, OH 44114, for petroleum company and convenience store operators, owners, managers. Qualified U.S. subscribers receive CStore 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 CStore Decisions, 1111 Superior Avenue, 26th Floor, Cleveland, OH 44114. GST #R126431964, Canadian Publication Sales Agreement No: #40026880. CSTORE DECISIONS does not endorse any products, programs or services of advertisers or editorial contributors. Copyright© 2022 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.

CSTORE DECISIONS •

Joe Hamza, Chief Operating Ofﬁcer Nouria Energy Corp. • Worcester, Mass. Brent Mouton, President and CEO Hit-N-Run Food Stores • Lafayette, La.

CUSTOMER SERVICE REPRESENTATIVE Jane Cooper jcooper@wtwhmedia.com

Derek Gaskins, Senior VP, Merchandising/Procurement Yesway • Des Moines, Iowa

August 2022

Jeff Carpenter, Director of Education and Training Cliff’s Local Market • Marcy, N.Y. Megan Chmura, Director of Center Store GetGo • Pittsburgh Ryan Faville, Director of Purchasing Stewart’s Shops Corp. • Saratoga Springs, N.Y. Caroline Filchak, Director, Wholesale Operations Clipper Petroleum • Flowery Branch, Ga. Cole Fountain, Director of Merchandise Gate Petroleum Co. • Jacksonville, Fla. Alex Garoutte, Director of Marketing The Kent Cos. Inc. • Midland, Texas Daillard Paris, Director of Petroleum Supply and Trading Sheetz Inc. • Altoona, Pa.

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CONTENTS August 2022

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Number 8 •

Volume 33

CStoreDecisions

EDITOR’S MEMO

8 NAG’s Continuing Support for Higher Education FRONT END

10 Go Time Offers Personal Service with a Small-Town Feel 16 Nouria Named CSD’s 2022 Chain of the Year 18 Quick Bites: Customer Purchase Behavior Shifts CATEGORY MANAGEMENT

30 Vape and Cigar Restrictions Tighten 36 Seven Ways to Grow Summer Beverage Sales 38 Bolstering Adult Beverage Sales FOODSERVICE

42 Driving Food Sales With Daypart Targeting 48 Chef’s Corner: Fry Cooks Up Innovation at Dandy’s

COVER STORY

OPERATIONS

Reinventing C-Store Supply Chains

TECHNOLOGY

54 Counting on Gift Cards 56 Contactless Payments Pave the Path Forward

42 BACK END 60 Product Showcase 65 Ad Index 66 Industry Perspective: Rising Interest Rates Present M&A Challenges, Opportunities

CSTORE DECISIONS •

August 2022

cstoredecisions.com

Editor’s Memo

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

NAG Scholarships Awarded to Member Companies The financial gap in paying for college is still apparent. In keeping with that theme, the National Advisory Group (NAG) and the Young Executives Organization (YEO) created a scholarship fund for employees and children of NAG member companies. The 2022 NAG Scholarship was renamed in honor of Ken McMullen, CEO of Weigel’s, who passed away in 2021. The Weigel’s team has been active in NAG for three decades. Ken’s affinity for, dedication to and support of NAG has been a key reason for our success. In showing our appreciation for Ken’s friendship and efforts, we are humbled that the 2022 scholarships were given in his honor. This year, four winners of the NAG/Ken McMullen Memorial Scholarship representing Clipper Petroleum, GetGo, Young Oil and Hit-n-Run Food Stores were awarded $1,000 scholarships. Ken began his career at Weigel’s in 1981 as operations manager. He was a driving force in the expansion and growth of the company with his innovative sprit, servant leadership and expertise. He was the first non-family member to serve as president when he took on the role in 2001. In 2017, the company promoted Ken to CEO. Through his leadership, drive and perceptive ability to see forthcoming trends, Weigel’s was named CStore Decisions’ 2019 Convenience Store Chain of the Year. Ken also helped propel Weigel’s charity efforts — specifically, the Weigel Family Christmas, through his dedication in wanting to make a difference in the lives of east Tennessee’s community. When Ken’s wife Lana passed away in 2019, the annual NAG Scholarship for 2020 was dedicated in her honor. “We are very honored to have this scholarship named after Ken,” said Bill Weigel, chairman of Weigel’s. “Ken was a great man who did great things in and outside of the convenience store industry. We are glad to present these scholarships to deserving individuals in his honor. Thank you, NAG, for giving these awards in Ken’s name.” Thanks to the generous contributions of NAG’s dues-paying members, we have a healthy scholarship fund to ensure the college-aged children of NAG member companies will receive financial assistance to pursue their goals of becoming the leaders of tomorrow. This program was started in the late 1990s and has distributed more than 130 scholarships totaling more than $150,000 to deserving students. 8

CSTORE DECISIONS •

August 2022

THIS YEAR’S WINNERS ARE:

Elizabeth Hong is the daughter of Ed Hong, vice president of wholesale fuels for Clipper Petroleum in Flowery Branch, Ga. Elizabeth attends the Georgia Institute of Technology in Atlanta and is a computer science major. She will graduate in 2026. Clipper Petroleum operates 26 convenience stores and six restaurants in Georgia and South Carolina under the Clipper, Circle M, Subway, Auntie Anne’s, Cinnabon and Bojangles’ brands. Clipper also distributes fuel to independent dealers under the bp, Exxon, Mobil, Shell, Chevron, Texaco, CITGO and 76 brands in seven states. Jordan Keller is the daughter of Kathy Keller, a category manager for Giant Eagle’s GetGo in Pittsburgh. Jordan is a nursing perfusionist major at Ohio University in Athens, Ohio. She is projected as a 2027 graduate. Pittsburgh-based GetGo operates nearly 300 stores in Indiana, Maryland, Ohio, Pennsylvania and West Virginia. The company’s focus is on food made fresh to order, but it also offers an array of grab-and-go foods, surchargefree ATMs, free Wi-Fi, free air for tires and the fuelperks+ loyalty program. Hannah Lovett is the daughter of Tommy Lovett of Young Oil Co. in Piedmont, Ala. Hannah is a secondary education and mathematics major at Jacksonville State University in Jacksonville, Ala., and will graduate in 2023. Vernon Young, the president and CEO of Young Oil, which operates six Grub Mart stores, is the current NAG Board Chairman. Thomas Mouton is the son of Brent Mouton, president of Hit-n-Run Food Stores in Louisiana. Thomas is a ﬁnance major at Louisiana State University in Baton Rouge, La., and will graduate in 2023. Hit-n-Run operates 10 stores in Louisiana. Brent Mouton has been a NAG Board member since 2015. On behalf of the NAG Board, I would like to congratulate all of this year’s winners.

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FRONT END Profile

Go Time Offers Personal Service

with a Small-Town Feel

As the chain prepares to open new stores this month and in 2023, the owners have not lost sight of their initial goals and values. Kevin McIntryre • Editorial Assistant

Started in 2016 as a little country store in Slade, Ky., family-owned and -operated Go Time c-stores still give customers a personal, small-town feel throughout its seven locations in Kentucky, with an eighth site soon to come and a ninth store in the works for 2023. As foodservice flourishes throughout its stores, customers can also find convenient drivethroughs at almost all locations. 10

CSTORE DECISIONS •

August 2022

HUMBLE BEGINNINGS

Go Time got its start when owners Kim King and Scott King bought their first store in Slade, Ky., near Natural Bridge State Resort Park. “We’re partners by day and husband and wife by night,” said Kim King. Growing up in the retail world, Kim always had hopes to break off on her own and build something in the industry. “My dream was to always have my own convenience store, a brand-new store. So, we went to the Natural Bridge Slade area,” she said.

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FRONT END Profile

bought a little old wood store down there, tore it down and built our first store there and opened it in March of 2016.” Prior to this, Kim had over 20 years of c-store experience. Out of college, Kim worked for Fill Zone, which then was bought by Coleman Oil. After working there for a few years, Coleman Oil filed for bankruptcy, and Kim decided to use her time to take college classes and prepare for her future as a business owner. Soon after, the Go Time brand began, with its roots in a little wooden country store in Slade, Ky.

Scott and Kim King own seven locations in Kentucky, with two new Kentucky locations set to open soon.

GO TIME TODAY

Today, Go Time operates seven locations throughout Kentucky with a new location set to open later this month in Corbin, Ky., and another set to open in Hazard, Ky., next year. Kim and Scott, along with their daughter Lacey Dixon, who serves as marketing director, give much of the credit of their brand’s success to their employees.

“I have some wonderful people. I mean, my company wouldn’t be successful as we are today if it wasn’t for the people,” said Kim King. As the chain continues to grow, the stores follow suit. “They just kind of keep getting a little bit bigger, and I don’t know, I kind of feel like we get a little bit better with each design as we go,” said Scott King.

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January 2022

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FRONT END Profile

Each new Go Time store expands the chain’s growth, with design updates following suit. Although every store features Go Time’s signature orange and blue colors with the same brick, concrete and tile, each additional store gets a tweaked, more up-to-date design.

The first Go Time store stood at 3,000 square feet, and its upcoming site will measure 8,000 square feet. Featuring the chain’s signature orange and blue colors, and made of the same brick, concrete and tile, the stores sport a uniform look. Each one boasts a tower at the entrance with the Go Time sign overhead. “We have center islands for the coffee bar, and then along the walls in the stores Kim puts her fountains and her ICEE machines, freeze machines and ice cream machines, things like that,” Scott King said. Scott noted that all the stores are very similar, but are tweaked with each design, making the Corbin location the most up to date. When it comes to fuel sales, Go Time buys and sells independently.

Chester’s Chicken nearly tripled the sales for one location when it was added to that store. 14

CSTORE DECISIONS •

August 2022

“I still set my fuel prices daily. We dispatch the trucks. … We haul our own fuel. We bought (a fuel distribution company) about two years ago and that was a very smart decision on our part,” Kim King said. “We’re not branded, none of my stations are branded, so pulling our own fuel was just a big benefit for our company.” FOODSERVICE FLOURISHES

One key feature for Go Time is its ample foodservice selection. Ranging from Little Caesar’s and Hunt Brothers Pizza to Chester’s Chicken and Moe’s, customers can find a wide array of offerings at the stores. In addition to these foodservice options, the stores also feature proprietary full delis with Go Timebranded food. “We do hamburgers, we do chicken, we do a little bit of everything,” said Kim King. “We average around $50,000 or better a month in just our foodservice.” Kim also noted that the addition of Chester’s Chicken to one of the stores nearly tripled the sales for that location. Go Time was also the site of the first Little Caesar’s Express unit in Kentucky, which has been a staple in multiple Go Time locations.

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“Four of our locations have Little Caesar’s Express in them, and we do really well with them. Teaming up with them was something good for us,” said Kim King. The chain also offers Hunt Brothers Pizza at the stores that do not have Little Caesar’s Express units. Kim and Scott run the programs for each of these stores the way that they were taught, and they don’t vary from each brand’s operational standards or practices. LOYALTY PROGRAM

Go Time also offers a loyalty program that features deals on in-store products, gas and other products in the Go Time catalog. “We’ve had our loyalty program since 2018, and we have a point-based system. For every dollar customers buy in the store, they get so many points,” explained Dixon. “And we have a coupon program where they can cash their points in for coupons and purchase stuff in the store.” In addition to the loyalty program, the chain offers deals through its mobile app. These offerings, among other factors, have kept in-store sales steady during an unpredictable time for c-store retailers. The chain also provides seasonal promotions that are geared toward Go Time customers. “Right now, through our loyalty program, we’re doing a promotion with kayaks and we’re going to be giving away 14 kayaks in just a few days,” she said. “So, we try to do extra stuff with the loyalty to really promote it with our customers.”

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Another aspect of the stores that differentiates the chain from others is the option for drive-through convenience, which is available at every Go Time store, except for one. “We decided a long time ago that if you’ve got two kids in the car, it’s a lot easier to go through a drive-through than to try to haul them up in the stores,” Kim King said. This is one example of the community-minded thinking that comes from the owners and employees of Go Time. Even as it has grown, the brand has managed to maintain its personal, small-town feel across all stores. As the chain prepares to open its eighth location in late August and ninth in 2023, Kim noted that it may be time to stop expanding after that. “I feel like if we get too big, we can’t be as personable with (customers) as we are now,” said Kim King. “We take a lot of pride in what we do, and we care about our stores, we care about our employees and most of all, we care about the communities that we’re in.” cstoredecisions.com

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FRONT END News

Nouria Named CSD’s 2022 Chain of the Year The family-owned and -operated company has experienced remarkable growth over the past two years with four major acquisitions, as well as the rollout of two new-to-industry fully branded c-store and fuel stations, an upscale foodservice program and implementation of cutting-edge technology initiatives. A CSD Staff Report

Operational excellence; phenomenal leadership; a laser focus on its people, values and culture; and an ongoing commitment to investing in convenience retailing are what Nouria embodies and fully embraces. These are extremely important characteristics of the best convenience store chains in the industry, which is why CStore Decisions is proud to announce Nouria as the 2022 Convenience Store Chain of the Year. “The Chain of the Year Award recognizes retail excellence, and Nouria is deserving of its place in this rich tradition as the 33rd winner of this most prestigious industry honor,” said John Lofstock, vice president, and editorin-chief of CStore Decisions. “As many industry marketers are struggling to reinvent themselves and identify a strategy that will lead them into the future, Nouria has been able to develop a winning market strategy to become a powerful force in the competitive convenience store industry.” Founded in 1989 by Tony El-Nemr, Nouria is one of the fastest-growing family-owned c-store chains in the country. Today, the Worcester, Mass.-based company operates 170 stores (150 company-owned and -operated) in five New England states, 56 car washes, two lube centers, the award-winning Whately Diner and a successful wholesale business servicing over 300 locations in New England and New York. “We are honored and humbled to have been chosen by the industry elites for this prestigious award,” said Tony El-Nemr, founder and CEO of Nouria. “Personally, on behalf of my 2,000-strong team members and my family, I want to thank the selection committee and CStore Decisions for this honor.” 16

CSTORE DECISIONS •

August 2022

What makes Nouria special is that it continues to cement its presence as a retail leader by evolving to exceed its guests’ expectations with an upscale foodservice program and technology initiatives, all while expanding to become one of the top 10 car wash operators in the country. Combined with vibrant team member and community outreach programs, Nouria boasts exceptional leadership and guest service to rank the chain with the absolute best the c-store industry has to offer. “This award is a testament to the incredible work, dedication and commitment our front-line heroes have for delivering on our mission to serve and delight our loyal guests every day,” remarked Joe Hamza, chief operating officer for Nouria. “To be considered for this award is rather gratifying but to win it is nothing short of exhilarating.” Over the past two years alone, Nouria has had four acquisitions across three states, including New England Farms (five stores in Massachusetts), Verc Enterprises (17 stores and two car washes in Massachusetts and New Hampshire), Mega X (five stores in New Hampshire) and Mulligan’s (one store in Maine). During that time, it has increased its loyalty membership an extraordinary 60%. While Tony El-Nemr remains active in day-to-day operations, the second generation is also hard at work learning the family business. Tony’s two sons Fouad El-Nemr and Badih El-Nemr serve as executive vice presidents. Please join us in honoring Nouria on Oct. 2 at Encore at Wynn in Las Vegas. For seating information to the Nouria Convenience Store Chain of the Year award ceremony, retailers can contact John Lofstock, editorin-chief of CStore Decisions, at jlofstock@wtwhmedia. com. Supplier companies interested in sponsorship opportunities should contact John Petersen, publisher of The Convenience Store Decisions Group, at jpetersen@ wtwhmedia.com. Or visit CStoreDecisions.com/2022chain-of-the-year for additional registration information.

cstoredecisions.com

Congratulations! CStore Decisions honors Nouria as the 2022 Chain of the Year! With 170 stores in ﬁve New England states, Nouria Energy is one of the fastest-growing family-owned convenience store chains in the country. What makes Nouria special is that it continues to cement its presence as a retail leader by evolving to exceed customers’ expectations with its upscale foodservice program and technology initiatives, all while expanding to become one of the top 10 car wash operators in the country. Combined with vibrant community outreach programs, Nouria boasts the exceptional leadership and customer service to rank the chain with the very best the convenience store industry has to offer. The Chain of the Year Award embodies retail excellence and Nouria is deserving of its place in this rich tradition as the 33rd winner of this most prestigious industry honor. As many industry marketers are struggling to reinvent themselves and to identify a strategy that will lead them into the future, Nouria has been able to develop winning market strategy to become a powerful force in the competitive convenience store industry.

Join us for the live celebration! Sunday, October 2, 2022 6:00 - 9:00 PM Encore at Wynn Las Vegas, Nevada

For sponsorship information, contact: John Petersen jpetersen@wtwhmedia.com

quickBites CUSTOMER PURCHASE BEHAVIOR SHIFTS Digital technology, growing prices due to inflation and generational preferences are driving changes in customer shopping habits.

INFLATION CONCERNS MOUNT

Some 89% of customers are concerned about inﬂation and eight in 10 customers have adjusted their shopping budget and purchasing behavior due to inﬂation.

What concerns customers most about inﬂation?

What are consumers spending less on due to inﬂation?

68% said the potential for everyday items to skyrocket in price.

Restaurant takeout (52%)

43% pointed to limited supply making it difficult to shop for quality items.

Clothing (45%)

42% said they don’t make enough money to afford the high prices.

Gas (43%)

Source: Smarty, a cash-back shopping portal, surveyed 1,000 U.S. customers between March 22-24, 2022

BRAND LOYALTY DIPS

MILLENNIALS AND BOOMERS COPE DIFFERENTLY • Millennials are less likely to sacriﬁce their shopping habits compared to baby boomers.

Some 59% of consumers are buying less expensive brands to cut costs, causing brand loyalty to suffer.

• Baby boomers are nearly twice as likely as millennials to go without some products.

• 48% of consumers are more likely to shop for a brand that has consistently lower prices.

• Only 35% of millenials would buy a less expensive brand.

• Customer willingness to switch to a new brand that is more affordable rose 12% quarter-over-quarter.

• Baby boomers are more likely to shop in-store to avoid paying for shipping.

Source: Jungle Scout’s “Q2 2022 Consumer Trends Report,” an anonymous survey conducted between May 6 -10, 2022, among 1,000 U.S. consumers in 48 U.S. states; all genders, and ages 18 to 75-plus, as well as varying employment types and income levels

DELIVERY TRENDS EVOLVE

GEN Z HABITS DIFFER

Compared to other generations Gen Z is more likely to:

• Dine out for an evening or late-night snack. • Use drive-through and delivery as modes of dining. • Place their takeout order through the restaurant’s mobile app.

33% of all orders were received digitally in March 2022.

55% of all digital orders were for takeout as opposed to delivery or curbside pickup in March 2022.

42% dip in dine-in sales in January 2022 compared to January 2020.

Source: Paytronix, The Order & Delivery Report, 2022

CSTORE DECISIONS • August 2022

• Use in-restaurant digital tablets when dining in. • Make dining decisions spur-of-the-moment. • Be motivated by food indulgence and less by convenience when dining out.

• Be influenced by budget when choosing a specific outlet.

• Order beverages that are seen as treats, including iced coffee, regular sparkling soft drinks, milkshakes and slushies.

Source: Coca-Cola DINE360, Total U.S., Annual 2021

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Gilligan’s Retail

CSTORE DECISIONS •

February 2022

cstoredecisions.com

GROWING GILLIGAN’S The second-generation family business eyes expansion beyond its Montana and Arizona roots through acquisitions and new builds as it updates stores and elevates its foodservice offering. Erin Del Conte • Executive Editor

Gilligan’s Retail, a second-generation family business, has been busy elevating its proprietary foodservice offering, rolling out new equipment including bean-to-cup coffee machines and remodeling stores. The eight-year-old company owns and operates 10 Gilligan’s sites in Arizona and two stores in Montana under the banner ‘The Welcome Stop.’ Now, the Scottsdale, Ariz.-based chain is set to design its first new-to-industry store, as it looks to grow into new market areas through acquisitions and new builds. As it expands, Gilligan’s prides itself on bringing a country-store environment to its customer base. FIRST STEPS

Gilligan’s Retail can trace its roots to 2014. An oil boom sent a large influx of people looking to work in the oil field to Montana and North Dakota. A housing shortage followed, and John Gilligan Sr., a developer, moved to Montana to build apartment complexes. When a convenience store went up for sale in a small town called Banville, Mont., on the northeastern side of the state, he bought it. The Gilligan family: (from left) John Gilligan Jr., director of operations; Kathy Gilligan, compliance officer; John Gilligan Sr., president and founder; and Mike Gillian, vice president.

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“We still have that store today,” explained Mike Gilligan, vice president of Gilligan’s Retail, and John Sr.’s son. “The first store he bought was called The Welcome Stop. We just left the name. Everyone knew the store, so we didn’t want to change it.” Mike Gilligan and his older brother, John Gilligan Jr., soon followed their father to Montana to work in the oil field. In 2017, John Sr. purchased a second c-store in Plentywood, Mont., near the Canadian border. He also named it The Welcome Stop. Around the same time, Mike left the oil business and joined his father’s c-store business at the age of 24. “We’re all originally from Scottsdale, Ariz. In 2018, as our family started to grow — my brother and I started to have some kids — we decided to move back to our home state of Arizona, and so we started looking for stores down here,” Gilligan said. The Gilligan family bought two stores, one in Chandler, Ariz., and one in Phoenix, and started Gilligan’s Retail, naming the stores Gilligan’s. Soon after, John Jr. also quit the oil field and moved his family back to Arizona to join the family business. Over the next four years, the family grew the business via acquisitions, expanding by two to three stores per year. The Gilligan family worked to bring the community country-store mentality from its Montana locations to its Arizona stores. August 2022 • CSTORE DECISIONS

Gilligan’s Retail

Gilligan’s stores measure 2,000 to 3,000 square feet and feature a maroon, tan and yellow color scheme.

NAVIGATING A FAMILY BUSINESS

Today, John Sr. helms Gilligan’s Retail as the president of the company. His wife, Kathy Gilligan, acts as compliance officer, managing state licensing and insurance. John Jr. is vice president of operations. As a vice president, Mike oversees the office, including the accounting staff, finances and accounts payable, as well as vendor relations, promotions and contracts. “I negotiate a lot of our pricing for all of our chain,” he said. While both Mike and John Jr. manage the dayto-day operations, John Jr. manages the store look, design, products and employees. “He really focuses on what the stores look like, what products are they carrying and placement of the products. He graduated with a marketing degree from college, so he focuses on that,” Gilligan noted. As many retailers well know, managing the intricacies of a family business comes with both rewards and unique issues. “If you like your family, it’s fun to work with them. We’re super fortunate. We all get along really well. We have a great family dynamic,” Gilligan said. In some ways, it’s not so different from any other corporate role. Even if you’re reporting to a family member, Gilligan pointed out, it’s important to still be accountable for actions and decisions the same as in any other business. But there are challenges unique to being the second generation in a family business as well. In a corporate job, for example, there are awards and 22

CSTORE DECISIONS •

August 2022

accolades for a job well done. Whereas in a family business, perhaps because of the comfort level, family members are often quick to point out mistakes. “With the family business, it’s important to be able to separate, at the end of the day, the family from the business,” he advised. “Sometimes you have to focus on the business, and then still be able at the end of the day to sit down and go to dinner with your family.” GILLIGAN’S RETAIL DESIGN

When Gilligan’s Retail opened its Gilligan’s stores in Arizona, it kept the same color scheme as The Welcome Stop — maroon, tan and yellow. Because Gilligan’s has grown through acquisitions, it’s limited as far as architecture, but it uses signage and color scheme to tie the stores together. The buildings are light tan with red trim and usually measure between 2,000 to 3,000 square feet. The chain includes one 8,000 square-foot store that features a large grocery section, fresh meat market and a café. Gilligan’s partners with five gas brands in its various forecourts, including Chevron (its biggest partner), 76, ARCO and Shell. It also operates Gilligan’s branded stations. Gilligan’s is now looking to build its first new-toindustry location. “We do have some land on the outside of Phoenix that we’re looking to start building on,” said Gilligan. “We’re pretty excited about that. That would be our first store we’re going to build from the ground up.” The chain is currently remodeling its Conococstoredecisions.com

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Gilligan’s Retail

Gilligan’s is remodeling its Chevron sites, refreshing the paint, updating countertops and flooring, revamping the bathrooms and adding new equipment. It’s also rearranging stores to assist with the flow of traffic.

Phillips 76 and Chevron-branded stations. Anytime a fuel supplier offers a refresh program, Gilligan’s takes advantage of the opportunity. “They usually allow us some sort of price match, so we try to use that for our big remodel,” he said. The Chevron sites are receiving new paint, updated countertops and flooring, remodeled bathrooms and new equipment, while the 76 sites are now boasting bright new digital gas signs and trim for the canopies. “As we update, we’re taking out some of our shelving,” Gilligan said. “We’re putting in more islands to expand our coffee program and our beverage and hot food.” Gilligan’s stores are also being rearranged to assist the flow of traffic. “At the end of the day, we’re trying to make it more appealing to the customer’s eyes, and help the customer get in and get out and have an easy experience,” he said. In Q1, Gilligan’s remodeled its two The Welcome Stop sites in Montana, including all new lighting inside and out, fresh paint and equipment updates. Earlier this year, Gilligan’s tested bean-to-cup coffee at a pilot location. The program worked well and cut down on waste. It also provided the fresh aroma of coffee beans for customers as they walked in the door. “Once the customer’s inside, you really want to target their senses,” he said. Now Gilligan’s is switching out its coffee equipment at all stores and replacing it with bean-to-cup coffee machines. The fountain section is also getting a facelift. In Arizona the temperature can soar to 120 degrees in 24

CSTORE DECISIONS •

August 2022

the summer, so the chain offers a large fountain drink and cold beverage area. To meet demand, it’s adding a new ice slushy program at all its locations and increasing its iced coffee selection, which is a big hit in its stores. PROPRIETARY FOODSERVICE

Like many c-stores, Gilligan’s saw foodservice demand escalate during the pandemic. “Foodservice was huge,” said Gilligan. “It didn’t used to be like that for convenience stores, but now it’s a must have.” All stores feature a hot box with grab-and-go options that include breakfast sandwiches, burritos and chicken, depending on the location. Six of Gilligan’s stores feature full kitchens. “Most of them we inherited,” Gilligan explained. “When we bought the stores, they already had kitchens in them. But we kept them going. We expanded our menus.” Stores with kitchens also feature Gilligan’s proprietary, fresh-prepared, made-to-order food, including sandwiches, burgers and pizza, as well as specialty dishes at various locations. “We really focus on being like a little café. That kind of came from our ﬁrst store in Montana. Being in a small town, there’s not a lot of options, there’s not a lot of businesses,” Gilligan said. The ﬁrst The Welcome Stop was not only a c-store with gas and grocery items, but it was also the only place to eat in town. Gilligan’s Retail continued to apply that one-stop shop mentality as it grew its stores in Arizona as well. cstoredecisions.com

Six Gilligan’s stores feature kitchens with made-to-order proprietary foodservice. Menus include items such as sandwiches, burgers and pizza as well as specialty meals at various locations.

“We really look at the community we’re in and see what their need is, and then tailor our food offering to that community,” he said. One store it acquired in Phoenix was long known for its carne asada burritos. “When we bought it, we kept that going. We brought in our own cook. And we really encourage all our cooks to explore, and if they have a good recipe, we encourage them to try it,” Gilligan said. “It gives each of our stores that homemade, homecooked meal.” A store in Spring Valley, Ariz., is situated near a high school. “We do a huge pizza business there. We’ll do pizzas for school teams, for just the town too,” he said. Its largest store with the grocery section has more of a country-market vibe and features a full seating area. In addition to burgers, sandwiches and pizza, it offers dinners such as chicken-fried steak and mashed potatoes. “There’s been a lot of times where customers have said, ‘I love this food. I can’t find it anywhere.’ And if our cook knows the recipe, we’ll whip it up for them,” he said. While none of Gilligan’s current stores feature a drive-through, the chain has plans to add drive-throughs to any new builds, including the one set to open next year in Phoenix. “All future stores that we build will definitely have a drive-through, and if we can on the existing stores — if we can get permitted and if there’s room — we would definitely add a drive-through,” Gilligan said. “One thing we learned that came out of the pandemic is that drive-through is huge, and it adds to the cstoredecisions.com

convenience for the customer too.” For now, customers can take advantage of Gilligan’s to-go menu and call for order ahead. “We do a lot of order ahead, so people call, we make it, and they come pick it up,” he said. Gilligan’s kitchen stores also offer food delivery through third-party delivery apps including Uber Eats, Grubhub and DoorDash. As it works to be the local community store, Gilligan’s takes community support seriously and pours money and personal involvement back into the communities it serves through support for local fundraisers, hospitals, schools, churches and civic organizations. GROWTH ON THE HORIZON

Gilligan’s is now looking toward expansion, starting with larger acquisitions. “We’re currently looking at a 10-store deal, and we’re not just looking at Arizona,”

August 2022 • CSTORE DECISIONS

Gilligan’s Retail

Gilligan’s is looking to grow beyond Arizona and Montana, and expand its store count into the triple digits in the next ﬁve to 10 years through acquisitions and new builds.

NEXT-GENERATION PERSPECTIVE

said Gilligan. “We’re trying to expand it in different states.” In the next five to 10 years, the chain aspires to push its store count into the triple digits, mainly through acquisitions, while simultaneously building new-toindustry sites when the opportunity is right. Gilligan’s is currently working with an architect as it begins the permitting process for its first ground-up build that is expected to open in 2023. Harkening back to its Montana roots, Gilligan’s plans to incorporate an inviting country-store look and feel as a central element of the design, while continuing to feature the current color scheme of maroon, yellow and tan. The new build is expected to measure about 5,500 square feet to fit a kitchen and a grocery area, as the site is in a food desert. Additional new builds are also a part of Gilligan’s growth plan. “We love the opportunity to design on our own, start fresh and put all of our personality into each store. So, yeah, absolutely, if there’s an opportunity to build, we would definitely jump on it,” Gilligan said. As it expands, the chain is also looking at developing its internal programs. “We don’t do a lot of technology,” he said. “That’s probably one of our biggest goals in the future is to get more into technology.” “What we’re currently working on is our loyalty program,” he added. “We’re very community oriented, but we do like to have a uniformity in each store with our promotions.” A loyalty program would allow customers to travel to different Gilligan’s stores and redeem points for purchases. For now, he is working with the chain’s coffee vendor on a punch-card coffee program as it rolls out the bean-to-cup machines. 26

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August 2022

As family businesses like Gilligan’s look to grow, next-generation leaders can bring important viewpoints to the company. “There’s definitely a perspective with each generation that is a little different,” Gilligan said. Young executives bring an awareness of how their generation thinks, acts and shops. “Older generations, at times, may not be so flexible to change and to adapt, and I think a lot of times you get the response that it’s always been done, it works this way, let’s keep on doing it this way,” Gilligan said. “Maybe it’s the way we grew up or the experiences that we’ve had over the last 20 to 30 years, but I think our generation is very good at being able to adapt. We change a lot. And change is not a bad thing.” Next-generation leaders also tend to be technology driven and help encourage innovation at their family business. He advised other next-generation leaders entering the family business that it’s important to differentiate between work and family, and to have patience and a thick skin. “Your parents, they’ve been parenting you your whole life, so they’ll definitely come down harder on you than they would maybe someone else,” he said. “At the end of the day, you hope the business is there forever, and that’s why you go into the family business. You hope it goes on from generation to generation, but at the end of the day, the only thing that truly is going to be forever is family,” he added. He urged all young executives to stop thinking about being young as a disadvantage. While experience and wisdom are important, he encouraged young workers to bring ideas and back them up with facts. “Don’t wait 10 or 15 years till you have the age and the experience to start being aggressive in whatever business you’re in, because that’s just a waste of time,” he said. “You need to start while you’re young and really be aggressive with your ideas and learn from your mistakes. Use these young years to really make a place for yourself at the table.” CSD cstoredecisions.com

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WEDNESDAY, SEPTEMBER. 7, 2022 8:00 AM – 4:00 PM:

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9:15 AM – 9:30 AM:

9:30 AM – 10:45 AM:

10:45 - 11:15 AM: 11:15 AM – 12:00 PM:

12:00 PM – 1:00 PM: 1 PM – 2:15 PM:

Nouria Energy Headquarters Arrivals: 326 Clark St, Worcester, MA 01606. Light Breakfast Will Be Served Welcome and Introductions, John Lofstock, Executive Director, National Advisory Group (NAG) and Kalen Frese, Warrenton Oil, YEO Board Chairman

* Operations/HR: The labor shortage shows no signs of abating and supply chain issues will persist for the next 12-18 months. In this session, learn what other retailers are doing to attract new employees and overcome stafﬁng issues. Plus, discuss how you can avoid out-ofstocks and supply shortages for products on the shelves and the items needed to execute a successful foodservice program. 4:30 PM: 6:00 PM – 9:00 PM:

Wrap Up/Hotel Check In Dinner Off Site

FRIDAY, SEPTEMBER 9, 2022 7:45 AM:

Shuttles Depart Hotel

8:00 AM:

Breakfast at Nouria

8:30 AM – 9:30 AM:

YEO Workshop: General Session: Diversity, Equity and Inclusion in the C-Store Industry. Jayson Council, Principal, Adjaycent Consulting

9:30 AM:

Store Tours: A tour of top convenience stores in the Boston market including Nouria Energy, Alltown Fresh, Seasons

Break

1:00 PM:

Return and Wrap Up

General Session: Integrating Technology into Labor Management, Jeff Carpenter, Director of Education and Training, Cliff's Local Markets

1:15 PM:

Depart

Nouria Energy Overview and Outlook, Joe Hamza, Chief Operating Ofﬁcer, Nouria Energy YEO Workshop: Perfecting Your Retail Brand, Ernie Harker, President, Ernburn Brands

Lunch Onsite at Nouria YEO Workshop: Building Leadership, Management and Accountability Systems: Tom Bandy, Founder and CEO, BandyWorks

2:15 PM - 3:45 PM:

Break

2:45 PM – 4:15 PM:

YEO Information Exchanges

* Foodservice: As gas prices stay elevated and tobacco remains under ﬁre, foodservice remains the industry's biggest in-store attraction. Discuss what you are doing and benchmark your results with others in the industry. Plus, glean new ideas on how to perfect your menu and overcome stafﬁng issues by utilizing the proper foodservice equipment.

Category Management | Va p e & C i g a r s

VAPE AND CIGAR

RESTRICTIONS TIGHTEN FDA continues to regulate the tobacco industry, particularly the vape and cigar segments, with its decisions regarding Juul being the most recent cause for concern for c-store retailers. Emily Boes • Associate Editor

With the tobacco category under continuous scrutiny by the Food and Drug Administration (FDA), c-store retailers must consider how they need to respond, especially with the vape and cigar segments. 30

CSTORE DECISIONS •

August 2022

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Category Management | Vape & Cigars

Vape sales increased by 3.5% in Q2 2022 compared to Q2 2021, whereas cigar sales decreased by 3% for the same period, according to store data from National Retail Solutions (NRS). RETAILER RESPONSE TO JUUL DECISION

On June 23, the FDA issued marketing denial orders (MDOs) to Juul Labs for all its products marketed in the U.S. The Juul device and four types of Juul pods — Virginia tobacco flavored pods and menthol flavored pods, both at nicotine concentrations of 5% and 3% — are among those prohibited from distribution. A temporary administrative stay of the MDO for Juul was granted on June 24 by the U.S. Court of Appeals for the D.C. Circuit. On July 5, the FDA administratively stayed the MDO, but did not rescind it. According to the FDA, scientific issues unique to Juul’s application warrant further review. “My personal plea to retailers is to sell what your customers want,” said Greg Conley, president of the American Vaping Association, a pro-vaping advocacy organization. “These are products that are popular with consumers and demand isn’t going to go away. If you don’t sell these products, someone in your town is going to, and chances are, the FDA’s not going to knock down their doors with guns drawn.” In New York, Juul products have been popular in recent years, along with other vaping products. “While I am uncertain of the exact market share Juul comprises, it is my understanding these products sell regularly and quickly,” said Kent Sopris, president of the New York Association of Convenience Stores (NYACS). Whereas some stores have chosen to sell down their products since the FDA ruling, he said, others have decided to continue selling a large amount of Juul products. “Regardless of the final outcome, c-stores are

highly adaptable and will continue to find ways to serve their customers by offering safe and legal products,” Sopris continued. Prior to the ruling on July 5, Omaha, Neb.based Cubby’s, which owns and operates 40-plus convenience stores, supermarkets and quick-service restaurants in Nebraska, Iowa and South Dakota, kept Juul products on the shelf but removed the ability to order from the store level, choosing to manage its inventory from its Support Center.

Vape Sales Rise as Cigar Sales Slow Vape sales increased by 3.5% while cigar sales decreased by 3% during Q2 2022 compared to Q2 2021, according to National Retail Solutions (NRS). Cigarettes and soft drinks remain steady secondary purchases for both categories.

$ % Chg

Avg SKUs per Store Chg vs LY

Unit % Chg

Units per Store per Week Chg

% of Times Purchased Only Within Category

Top Purchase #1

Top Purchase #2

Top Purchase #3

Cigars

-3.0%

1.2

1.9%

1.5

59.9%

Cigarettes

Beer

Soft Drinks

Vape

3.5%

0.5

-3.3%

(1.5)

74.9%

Energy Beverages

Cigarettes

Soft Drinks

Category

$ % Chg

Avg SKUs per Store Chg vs LY

Unit % Chg

Units per Store per Week Chg

% of Times Purchased Only Within Category

Top Purchase #1

Top Purchase #2

Top Purchase #3

Prepared Cocktails

40%

8.3

32%

3.6

37.2%

Beer

FMB/Cider

Cigarettes

Source: National Retail Solutions (NRS) scan data of 2,785 stores selling non-alcoholic beverages. All change mesasures are same-store sales (1,641 stores) April 1, 2022-June 30, 2022 vs. April 1, 2021-June 30, 2021

However, he said, “they have definitely earned their position in our sets.” Although Rutter’s can only sell RTD cocktails in some of its stores due to state laws, Pfeiff believes that as more beer drinkers migrate to this segment, the potential could be substantial. “If they can get even a sliver of the beer business, that would be huge,” he said. According to NielsenIQ’s total U.S. convenience store data for the 52 weeks ending June 18, 2022, RTD cocktail sales soared 78.4% to close to $180 million. Wine, beer and hard seltzer were flat or slightly down, but still contributed close to $1.5 billion, $19 billion and $1.7 billion respectively. INNOVATION PUSHES GROWTH

Like Rutter’s, QuikTrip stores saw a shift to larger packages and increased basket rings in the adult beverage category during the pandemic restaurant and bar shutdown, said Aisha Jefferson-Smith, corporate communications manager for QuikTrip, which operates 950 stores in 16 states. “All sub-categories showed growth, but out-ofstocks limited some of the growth potential,” she

fast facts: • To grow adult beverage sales, focus on assortment, presentation and pricing. • Flavored malt beverages (FMBs) are hot. • Ready-to-drink cocktail sales rose 78.4% in cstores for the 52 weeks ending June 18, 2022, per NielsenIQ.

CSTORE DECISIONS •

August 2022

said. “If we could get it in stock it sold.” Since on-premise establishments have come back online, the growth in this category has begun to stabilize, though RTD cocktails, hard seltzer and imported beer have continued to increase in sales over the past year, she added. “Innovation, adventurous flavors and betterfor-you options will continue to provide growth opportunities,” said Jefferson-Smith. “We expect wines and spirit-based seltzers to perform well.” To ensure that each store has the correct product mix, sales managers make the selections based on their expertise about the specific preferences and trends in their regions of the country. Their insights are particularly helpful when it comes to selecting craft beers, Jefferson-Smith noted. One trend that the stores are seeing, she explained, is the increasing popularity of sweeter and lighter-tasting adult beverages. CSD

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Foodservice | Daypart

Driving Food Sales With

DAYPART TARGETING Retailers are building their foodservice business daypart by daypart, using what they learn from one to grow the others. Marilyn Odesser-Torpey • Associate Editor

Breakfast has long been the strongest daypart for foodservice at Duchess convenience stores. Now, according to Nathan Arnold, director of marketing for Duchess, which operates 120 units in Ohio and West Virginia, the chain is focusing on the afternoon between-meal daypart with an updating of its cold beverage fountain areas and attention to core food items. 42

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August 2022

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Foodservice | Daypart

Duchess is introducing a Super Stuffer with more ﬁlling in more ﬂavors for the snack daypart, including the Berry Super Stuffer, a sweet version that can also double as a dessert.

“Coming to Duchess for morning coffee is part of the daily morning routine for many of our guests and, while they are here, they often purchase food from our grab-and-go case to go with it,” Arnold explained. “For the past 18 months, we have been working to establish the same association with our fountain beverages and hot foodservice snacks.” Among the hot food items that have tested well are soft pretzels and buffalo poppers. Next up for introduction is a pepperoni roll. A Duchess signature item has long been the Stuffer, a warm biscuit with different ﬁllings such as

CSTORE DECISIONS •

August 2022

pizza and cheeseburger. For the snack daypart, the company is introducing a Super Stuffer with more ﬁlling in more ﬂavors, including a sweet version that can also double as a dessert, Arnold said. “We’re open 24/7 and want our customers to know that we have hot and cold foodservice available to them whatever the daypart,” he noted. TAKE-HOME MEALS

Kwik Trip and Kwik Star stores, with more than 800 locations in Wisconsin, Minnesota, Iowa, Illinois and soon Michigan, have traditionally been a destination for breakfast and lunch, said Paul Servais, retail food service director for Kwik Trip. Since 2020, the company has been targeting the dinner daypart for growth with the introduction of fried chicken and takehome meals. While two- and three-piece fresh fried chicken meals work well for the lunch daypart, he noted, guests are looking for familysized meals for dinner. The stores now offer four- and eight-piece meals, which are catching on slowly, he said. Most popular are the eightpiece fresh fried chicken, eight-piece chicken tenders and rotisserie-style whole birds. They are accompanied by family-sized sides of mashed potatoes, mac and cheese or wafﬂe fries. cstoredecisions.com

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Foodservice | Daypart

Take-home meals such as the best-selling Chicken Alfredo, Chicken Bacon Mac ‘n Cheese and Beef Stroganoff are freshly prepared and purchased cold for heating at home. Whole pizzas, either take-and-bake or fresh and ready-to-eat from the stores’ Hot Spot, are also a hit on the dinner menu. “We are constantly rolling in and out limited-time offers in the pizza and take-home meal categories,” Servais pointed out. To promote their dinner selections, the stores frequently do food sampling during that daypart. The company’s marketing team promotes the dinner offerings in television and radio ads and on social media. Kwik Trip/Kwik Star has made substantial investments in its dinner program, Servais said. To prepare the take-home meals, the company built a dedicated plant in La Crosse, Wis. All the stores installed new fryers for the chicken, ovens to cook whole birds and refrigerated display cases for the take-home meals. BREAKFAST IN DEMAND

At B-Quik’s three stores in Baton Rouge, La., attempts to build the lunch and dinner business segments yielded the surprise finding that the customers really wanted breakfast, according to David Schumaker, the company’s general manager. 46

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August 2022

“Breakfast took off like a rocket, doing double and even triple lunch in terms of dollars,” he emphasized. “We thought it would be the opposite.” Egg, meat and cheese sandwiches on biscuits or croissants are the fastest movers in the breakfast arena. Specialty sandwiches such as those using French toast or waffles as the carriers or a biscuit-wrapped sausage “pig in a blanket” rotate in for evaluation, he noted. “We like to give new items at least three and usually more like six months to prove themselves,” he said. “The ones that do well get a permanent place on the menu.” Also popular is the breakfast bowl layering grits, sausage, bacon, an egg patty and a slice of cheese. Area construction workers will call at least once a week and order 30 of the bowls at a time, he noted. CSD

fast facts:

• S ome retailers are succeeding with take-home meals during the dinner daypart. • Breakfast remains a popular daypart at convenience stores. • A strong beverage program can help build foodservice sales.

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Foodservice | Chef’s Corner

FRY COOKS UP Innovation at Dandy’s

James Fry, foodservice director for Dandy Mini Marts, talks must-have equipment, pizza program success and his path to convenience store food. Erin Del Conte • Executive Editor

James Fry

Convenience stores continue to elevate their foodservice programs, bringing in chefs to tempt customers with menu offerings that rival those from fast-food restaurants. CStore Decisions caught up with Chef James Fry, foodservice director for Dandy Mini Marts, which operates 66 stores in Pennsylvania and New York. Sixtythree of those locations offer a foodservice program. Fry, who grew up in the restaurant business and ran his own fine-dining establishment, is now translating his expertise to the complex world of c-store foodservice. 48

CSTORE DECISIONS •

August 2022

CStore Decisions (CSD): How long have you been the food service director at Dandy Mini Marts and what attracted you to the position? James Fry (JF): I’ve been a food service director at Dandy for four years. Funny story: I was attending a regional food show, and I ran into Duane Phillips, Dandy’s general manager. I had known Duane for many

cstoredecisions.com

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Pizza is the largest foodservice driver for Dandy. It offers 16-inch pies and full-sheet pizzas cut into 32 squares.

lead Dandy to grow our foodservice segment through new and flavorful offerings.

years in a different capacity. After a quick discussion about c-store foodservice, Duane said, “I might have a position for you.” After a couple weeks of interviews, I took a newly created food service director role at Dandy. It really fell into my lap! CSD: What’s your favorite thing about overseeing foodservice for a convenience store platform? JF: My favorite part of working in this industry, which is also often the most challenging, is that every day brings new challenges, especially during and post-COVID. CSD: Tell me about your background in foodservice and as a chef. How does that background serve you in a c-store setting? JF: I grew up in my family’s restaurant business, Fry Bros. Turkey Ranch. I always enjoyed cooking and working in the kitchen, but I decided to get a business degree to start my career. I quickly felt unfulfilled, so I enrolled in culinary school at Baltimore International Culinary College (BICC). I came back to the family’s business and set up a catering operation. After my father passed away, I struck out on my own and opened a fine dining restaurant — The Wren’s Nest, in Mansfield, Pa. I operated The Wren’s Nest for 10 years. After a couple of foodservice jobs in between, I started with Dandy in 2018. C-store food offerings have come a long way from their meager beginnings of self-serve hot dogs and frozen pizza. C-stores now compete with quick-service restaurants (QSRs) and even some entry-level family dining restaurants. That said, I believe my experiences in catering and family and fine dining have given me the tools and a foundation in the food arena to help 50

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August 2022

CSD: Tell me about the food offering at Dandy. What are some noteworthy meal options? JF: Dandy’s food program is proprietary, but we do have a few stores with Subways. Our program is a made-to-order concept. Plus, we have a pizza program that is very close to pizza-shop quality, but we don’t toss the dough in the air. Our noteworthy meal options, I would have to say, are our pizzas. We offer 16-inch pies and, in many stores, we offer full-sheet pizzas cut into 32 squares. Pizza is our largest dollar driver in our food segment. CSD: Are you adding anything new to the foodservice offering? JF: This quarter we launched a new concept, Flatbread Melts. We have seven different melts: Italian Job, Wishbone, Mamma Mia, Hail Caesar, Wing It, Big Beef and Say Cheese. It was a big rollout for us, as it coincided with an equally large rollout of new rapid-cook ovens. Marrying these rollouts together was perfect timing because our customers were offered a fresh new concept from Dandy, and the newer equipment made our employees’ lives easier in the kitchen, especially when handling a brand-new menu item. CSD: What are the biggest challenges when cooking/ preparing food in a convenience store? JF: The biggest challenge we face is training, which is the keystone to consistency. When facing any amount of employee turnover, it’s a challenge to consistently keep our standards high and to meet our customers’ expectations. CSD: In your opinion, what are some of the musthave kinds of equipment for a c-store foodservice program and why? JF: “Must have” equipment will, of course, be determined by the food concept you choose for your operation. For Dandy’s customer base, my go-to equipment list is a deep fryer (open vat or ventless), a rapid-cook oven and a conveyor pizza oven. We certainly test and introduce healthy options, and signature salads move

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Recently, Dandy introduced Flatbread Melts in seven varieties. The launch coincided with an equally large rollout of new rapid-cook ovens.

well, but fried food is still always a hit with Dandy customers from entrees to appetizers. The rapid-cook oven is becoming a mainstay because of its versatility, consistency and faster cook times, while keeping a modest footprint in the kitchen. Because pizza is the largest driver of our food program, we find that the conveyor pizza oven produces the best, most consistent finished product. CSD: What are some of the things you look for in convenience store foodservice equipment? JF: The features I look for in equipment are size, reliability and the full spectrum of capabilities relevant to our operations. CSD: What do you wish you had known when you were first getting started in c-store foodservice?

JF: C-store foodservice operations are complex! We serve so many customer segments and keeping things fresh and consistent with limited kitchen space is always an exciting task. Dallas Tunnicliff, former Dandy’s food service director, played a large role in mentoring me as I started in c-stores. He developed Dandy’s pizza program back in the ‘90s and really put together Dandy’s original food foundation. He taught me a lot about the business. I want to build on that foundation and take Dandy’s food program to the next level. CSD

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Operations Column | Supply Chain

Reinventing C-Store

SUPPLY CHAINS Alliances across trade organizations can help bridge supply chain cracks. Dan Varroney • Potomac Core

The magnitude of supply challenges is far too complex for any one company to address on its own. Interestingly enough, supply chain cracks existed before COVID-19. Yet, many of us were not aware of the extent of these fissures until the pandemic took hold. Between 80-90% of the world’s goods travel by ship at some point in their supply chain journey. As demand far exceeds supply, issues abound from shipping container shortages to port bottlenecks. On top of these difficulties are rising energy costs and labor costs, which means it’s a lot more expensive to ship goods to convenience stores today. COVID-19 disrupted markets and supply chains, and it also accelerated new thinking. For c-stores it’s an opportune time to reimagine supply chains and build a long-term, more durable strategy. It starts by moving away from a “just in time” approach to new thinking that incorporates “just in case” strategies. These are best leveraged by 52

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August 2022

bringing all aspects of the c-store supply chain together to collaborate and innovate more durable solutions. This approach can help c-stores identify points of failure throughout their supply chain and help determine pre-competitive solutions. STRATEGIC PARTNERSHIPS

Forming strategic partnerships between industry trade associations is one of the more compelling pathways forward. Since the pandemic, trade associations have demonstrated considerable leadership potential. These organizations are adapting and, in several cases, positioned as strategic business units of the industries they serve. In each case they are neutral integrators including all companies, and they can collect information on points of failure in the supply chain. The trade associations then build advocacy strategies that shape a far more favorable business environment that leads to resilient supply chains. One of the more successful partnerships occurred in the baking industry through the American Bakers Association (ABA). ABA is a wellknown, established force that leads and convenes

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the industry and effectively delivers advocacy strategies that shape a more favorable business environment and, in many cases, help the industry manage its costs. Most importantly, ABA plays an increasingly critical role in helping its industry address challenges in a unified manner and, over time, helping to position bakers and suppliers for growth. Led by Robb MacKie, president and CEO, ABA builds successful industry partnerships wherever possible to far extend the reach of its industry. One of its more successful endeavors is its partnership with the Food and Beverage Issue Alliance (FBIA), where the two organizations work to achieve supply chain alignment. FBIA represents trade associations throughout the food, beverage and agriculture ecosystem. This partnership successfully expands levers of industry influence to shape the complex business and regulatory environment for a much larger industry ecosystem. For example, in a national emergency this alliance answered a clarion call. At lockdown, strategic partnerships in the food industry mattered: Designated as critical infrastructure, the alliance helped keep plants and factories open, and they worked with regulators to design effective worker safety protocols. The FBIA partnership would prove its value throughout the pandemic. Two bakers approached MacKie with safety concerns. Route sales representatives and merchandisers were in the store at the same time customers were and it heightened anxiety. MacKie reached out to peers representing the food retailers — Leslie Sarasin, president and CEO of the Food Marketing Institute; and Greg Ferrara, president and CEO of the National Grocers Association. He asked, “Is there any way that you all could communicate out to your members to try to move perishable direct-store-delivery windows to non-business hours? Our bakers will figure out when, or you just tell them when, so that we can cut down on that.” Although it took several weeks, the situation improved. Throughout the pandemic the FBIA acted collaboratively and quickly to maintain food supplies for the country’s hungry and anxious consumers. ABA helped keep companies open during the initial lockdown and prevented the state of New cstoredecisions.com

Jersey from limiting independent distributors from getting their products to the marketplace. ABA is a highly regarded strategic partner because it achieves successful policy and regulatory outcomes for the baking industry. C-STORE ECOSYSTEM

Moving forward, the c-store industry can build its own ecosystem similar to what the baking industry developed. Trade associations will be an essential component for the industry’s ability to reinvent supply chains. Think of it as a pre-competitive strategic industry planning effort focused on the development of fail-safe options. These potential outcomes might include built-in redundancies throughout the production process to ensure supply chain resilience, which leads to fail-safe contingencies. These incorporate unified and effective advocacy strategies that will help the industry create a business environment favorable to all c-stores, suppliers and logistics companies. Better maintaining global supply chains is a must, and these strategic partnerships can develop options and alternatives that don’t exist for c-stores today. Other possibilities include redundancies at different levels in the production process that will bring about supply chain resilience and even failsafe contingencies. These outcomes are much more likely to happen because trade association strategic partnerships unite the supply chains and deliver effective advocacy strategies. C-stores have reached an inflection point and returning to timely product availability is a must. CEOs and all decision makers need something to help transition their thinking from a “just in time” approach all the way to “just in case” strategies. Building these strategic partnerships sends a clear message to the industry, its suppliers and also to its customers that it’s time to reinvent convenience store supply chains. Dan Varroney is the president and CEO of Potomac Core, a strategic consulting firm that specializes in association transformation and industry-focused strategic partnerships. He is the author of the groundbreaking new book, “Reimagining Industry Growth: Strategic Partnership Strategies in an Era of Uncertainty.” August 2022 • CSTORE DECISIONS

Technology | Gift Cards

COUNTING ON

GIFT CARDS Strong through the pandemic, gift cards now help cushion the impact of inflation for consumers and retailers. Anne Baye Ericksen • Contributing Editor

The events of the past few years have pushed convenience stores to rethink traditional category management strategies. Once steady, reliable product families were shaken by the drastic changes ushered in by the COVID-19 pandemic. When in-store traffic dropped off early on, many categories suffered the consequences, except for gift cards. Throughout the past three years, gift cards have been a consistent performer for the convenience store industry. Why has this product segment performed so well while other c-store staples were significantly impacted? Simply put, the gift card category has three factors that have helped immunize it from an unsteady pandemic economy. First, the sector enjoyed notable upticks prior to COVID, which provided a firm foundation. Already a perennial favorite to mark occasions, especially holidays, graduations and birthdays, people continued to celebrate special days with gift cards throughout the pandemic. During the end-of-year holiday season last year, combined sales of physical and digital gift cards saw double-digit increases, according to Blackhawk Network’s “2021 Post-Holiday Shopping” study. Forecasts for the upcoming holiday season have yet to be released; however, industry watchers are optimistic, especially after reports for the first half of 2022 show gains. “The use of gift cards as a whole continues to grow, and savvy retailers are finding new use cases, such as charitable giving and employee incentives, to get the most out of gift cards at their businesses,” said Tom Niedbalski, vice president of gift solutions for Fiserv, 54

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August 2022

which provides financial technology services to clients across the financial services sector. For Kwik Trip Inc., the La Crosse, Wis.-based familyowned company that runs more than 800 stores in the Midwest, sales of gift cards in 2022 have outpaced the previous two years. “Over the first nine periods of our fiscal year, gift cards sold at the stores have increased 42% in 2022 versus the first nine periods of our fiscal 2021. Our online/Scrip gift card sales are running 23% higher in fiscal 2022 compared to fiscal 2021 and 35% higher than the first nine periods of fiscal 2020,” said David Wagner, controller for Kwik Trip. Through the Scrip program, non-profit organizations purchase cards at a discount to resell them for fundraising purposes at a higher price with the proceeds going to the organization. “The discount is typically 5%, but we offer higher discounts at certain times of the year,” said Wagner. “We believe this is a great way to help the non-profit organizations in the communities we serve, while at the same time driving additional guest traffic to our stores.” Plus, employers are purchasing c-store branded cards to reward employees. Again, this trend bodes well for convenience stores because such programs occur yearround and, according to Blackhawk Network, nearly half of recipients expect to spend more than the card’s value.

CONVENIENT GIVING

Another factor keeping the gift card category resilient is convenience. Cards are easy for the giver and offer recipients a freedom to shop for items they truly desire. Now, another convenience has emerged. “In recent months, with inflation tightening purse strings for many consumers, we have also seen growing demand for store-branded gift cards for retail locations where consumers make everyday purchases, such as big box stores, grocery stores and c-stores/gas stations,” said Niedbalski. While this has been a well-grounded practice for openloop cards that can be reloaded with funds, as measured by sales quantity, they far trail behind closed-loop options. “According to our recent consumer research, only 20% of consumers will purchase an open-loop prepaid card when giving a gift, with the other 80% turning to storebranded cards,” said Niedbalski. If inflation continues, individuals may regard gift cards as a convenient way to support family and friends. Additionally, the Retail Gift Card Association (RGCA) stated cards are being used for government-funded and nonprofit assistance programs and are a preferred system for the un- or under-banked. “Since gift cards are both popular for gifting and serve as versatile payment tools, physical and digital cards are both in high demand, and we expect consumers to continue using both depending on their personal preferences,” said Kim Sobasky, a RGCA spokeswoman. FINANCIAL FLEXIBILITY

The third factor buoying the category is that consumers value the option of either physical or digital forms and the fact that funds from both can be transferred to mobile wallets. However, it appears people enjoy having the card in hand. “While digital commerce is on the rise globally, physical gift cards are still more preferred than digital cards, according to Fiserv’s ‘19th Annual Prepaid Consumer Insights Survey.’ This is in line with recent industry research indicating that market share for digital prepaid cards has stabilized in recent years, holding around 38%,” said Niedbalski. But new types of currency also have convenience store owners weighing how to smartly and cost-effectively incorporate more variety in ﬁnancial products offered to customers. Retailers have long featured debit machines at store locations. Some sites offer check cashing or bill paying services, which can be critical for individuals who ﬁnd themselves un- and under-banked. Could cryptocurrency in c-stores be the next stage? It is for Kwik Trip. By next month, the chain hopes to roll out bitcoin ATMs. Only time will tell if the public will view such access as another convenience and motivation to visit c-stores. CSD August 2022 • CSTORE DECISIONS

Technology | Contactless Payments

CONTACTLESS PAYMENTS PAVE THE PATH FORWARD As contactless payments increase in popularity, retailers should consider which form of technology might be right for their stores and how best to preserve data security. Emily Boes • Associate Editor

Contactless payments are becoming mainstream in the convenience store industry, as more retailers upgrade to offer the service. As c-store operators consider how they might like to implement new technology, they also need to determine how it might impact data security. During the height of the pandemic, customers wanted to avoid touching possibly contaminated surfaces, and the use of contactless payments accelerated. Contactless payments can range from tapping credit cards on the screen as opposed to handing them to a cashier to mobile payments and scan-and-go checkout. 56

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“It is important for retailers to have the tools and process in place to accept contactless payments,” said Perry Kramer, managing partner at Retail Consulting Partners. He noted that transactions are faster with contactless payments, reducing payroll spent at the point of sale (POS). “In order of priority, enabling contactless payments for all of the major card brands should be table stakes. It needs to be strongly considered during any type of payments,” Kramer said. According to Linda Toth, managing director at Conexxus, contactless cards have become more popular since the pandemic, as have mobile wallet payments. “I know that we’ve seen increases quarter over quarter with contactless acceptance and

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Technology | Contactless Payments

folks that are consumers that are paying with contactless payment. It’s been very popular in Europe for a long time, and I think we’re finally starting to get some momentum on it,” said Toth.

lishments,” continued Cahoon. “Remote ordering, personal shopping, curbside pickup and home delivery are all pieces of this change.”

SELF-CHECKOUT SOARS IN C-STORES

With multiple contactless payment options emerging on the market, retailers need to be vigilant about how the new systems may impact data security. Luckily, the contactless payments movement should make existing systems more secure, according to Kramer. “A basic requirement needs to be to include the use of encryption of all payment transactions and the tokenization of any payment information stored,” he said. Kramer noted this is important when considering a mobile application that enables customer payments. “Additionally, retailers need to maintain their due diligence in checking daily for the installation of skimmers,” he continued. Skimmers are devices used by thieves to steal credit card data. In another move to help reduce the risk of fraud, retailers over the years have been making their stores EMV compliant, which has garnered them substantial savings. Kramer noted that retailers who have not installed EMV at the pump are seeing significant chargebacks. Toth believes EMV is a step in the right direction to eliminate fraud. “We have, in general, seen fraud go down in stores that have implemented EMV,” said Toth. “I think that’s true for contactless EMV. We have seen fraud trending upward on magnetic stripe contactless.” Holiday Oil and Pete’s don’t anticipate any data security concerns due to the addition of self-checkout. “We do not store any credit card data. It is processed by our CC (credit card) processor,” Elsworth said. CSD

As retailers look to accommodate contact-free payment transactions, many are turning to selfcheckout options. Located in Utah, Holiday Oil, which recently opened its 68th site, recently adopted Express Lane self-checkout in all stores. “We compared different self-checkout options and found that Express Lane provided a superior guest experience with a competitive combination of up-front and long-term costs,” said Jay Cahoon, fuel systems director at Holiday Oil. With the self-checkout in place, the chain’s associates will be able to use their skills on more complex tasks and customers will have a speedier, more convenient checkout experience. Cahoon shared that although the self-checkout implementation represents a significant investment, the addition is worth easing the burden placed on associates by current labor conditions. Pete’s Convenient Stores — which operates 50 stores in Missouri, Kansas and Oklahoma — also adopted Express Lane self-checkout in all stores, as it was integrated with the c-store’s current POS. Pete’s also offers scan-and-go technology for customers who prefer to pay via mobile app. With Express Lane, the customer scans the product and uses cash or card for payment, said Brenda Elsworth, chief operating officer of Pete’s Convenient Stores. Pete’s loyalty is integrated into the register, allowing customers to experience loyalty offers. The self-checkout is set up alongside the store’s POS, which also provides Pete’s with a console to monitor self-checkout transactions. “The Express Lane/Self-Checkout and/or scan-andgo will become part of the retail experience. With customers’ expectation of speed and choice, the retail industry is tasked with meeting this demand,” said Elsworth. Cahoon also foresees a shift to contactless payments as the norm in the future, with self-checkout being Holiday Oil’s gateway method. “Over time I see the customer experience continuing to transition toward a completely contactless model. Self-checkout and other contactless checkout options will become the norm inside retail estab58

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PROTECTING DATA SECURITY

fast facts: • Contactless cards have become more popular since the pandemic arrived. • In general, Conexxus has seen fraud decrease in stores that are EMV compliant. • Retailers are adding self-checkout, scan-and-go and other contactless options to meet consumer demand.

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CStoreDecisions .com Making Connections that Drive Business

CStoreDecisions.com is geared toward C-Store retailers, convenience store suppliers, and distributors looking to stay abreast of industry trends, new product oﬀerings and category management best practices. We use the latest media technology, delivering content the way you want it: print issues, digital issues, enewsletters, and videos. 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.

PRODUCTShowcase

Fruit-Flavored Kids Drinks Goya has added a new line of kids drinks that the whole family can enjoy. Goya Kids Drinks are high in vitamin C, gluten free, fat free and contain zero grams of trans fat. The drink comes in 6.76-ounce juice boxes with eight individual items in each package. Available in convenience and grocery stores, the beverage comes in ﬂavors like Mango Nectar, Apple Juice, Guava Nectar and Passion Fruit with a suggested retail price of $3.69.

Goya Foods

www.goya.com

Technologically Advanced Fuel Dispensers

Mini Pineapples Fresh Del Monte has launched its Mini Honeyglow pineapple in North America. The newest addition to its high-quality fresh and freshcut fruit, the Mini Honeyglow Pineapple brings the same quality and sweetness of the Honeyglow pineapple but is now available in a miniature size. Each pineapple is left to mature naturally on the plant for a few extra days and then hand selected to ensure a high shell color. Fresh Del Monte’s new, smaller pineapple is currently retailing at under $3 per pineapple in most markets.

Fresh Del Monte Produce

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Dover Fueling Solutions (DFS) announced the launch of two new fuel dispenser models in the Wayne Helix and Wayne Century fuel dispenser series. The new releases include the Wayne Helix 6000 II and Wayne Century 3 fuel dispenser models. The Wayne Helix 6000 II features integrated monitoring and remote management capabilities through the DFS DXTM connected solutions platform and is configurable to dispense up to five fuel grades per side. The Wayne Century 3 offers a robust framework, strong corrosion protection, quality components and full configuration modularity.

Dover Fueling Solutions

www.doverfuelingsolutions.com

Change-Saving Service Koin Keepr offers a service that enables retailers to offer their cash-paying customers the option of accumulating the value of their change in a Koin Keepr personal account, which keeps track of coin ﬂow and stores physical coins as digital in-store credits and can be used for future purchases. This service can beneﬁt retailers during a national coin shortage, and it can also enhance the customer experience if change is in short supply. Customers can add store credit to their personal account simply by scanning a barcode.

Koin Keepr

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CSTORE DECISIONS • August 2022

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PRODUCTShowcase

Spicy Honey Garlic Fried Chicken Chester’s Chicken has added the Honey Stung Chicken Sandwich and Honey Stung Chicken Bites to its menu for a limited time this summer. The sandwich and bites feature Chester’s signature specially marinated, double-breaded and fried fresh chicken with Frank’s RedHot Stingin’ Honey Garlic Sauce. Honey Stung Chicken follows the spring rollout of Chester’s new Hot N Spicy Poultry Rub which, when paired with Chester’s Hot N Spicy Breading, increases heat and ﬂavor on its Bone-In Chicken and Super Tenders. The new ﬂavor will be available at all Chester’s locations.

Chester’s Chicken

www.chesterschicken.com

CBD SoftGels for Sleep Recently, Floyd’s of Leadville introduced its newest full-spectrum SoftGel. Floyd’s Sleep Formula capsules are made with CBD, two milligrams of CBN and one milligram of CBG, as well as other terpenes, to create a new bedtime companion. Like Floyd’s entire line, Sleep Formula contains CBD from hemp that is organically grown in the U.S. and lab tested for quality. It has a suggested retail price of $75 and contains 50 milligrams of full-spectrum, organic CBD.

Floyd’s of Leadville

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Tropical Coconut Juice Vita Coco has introduced Vita Coco Coconut Juice, a refreshing beverage with a blend of coconut water and a burst of tropical ﬂavor. Vita Coco Coconut Juice is available in two bold ﬂavors — Original with Pulp and Mango. The gluten-free and non-GMO drinks contain 50 calories and 10 grams of sugar for Original with Pulp and 80 calories with 17 grams of sugar for Mango. Vita Coco Coconut Juice is sold in 16.9-ounce aluminum cans for an SRP of $2.49 per unit.

Vita Coco

www.vitacoco.com

Mountain Dew Summer Flavors Mtn Dew Baja Blast is adding two new flavors: Baja Mango Gem and pineapple-flavored Baja Gold. The Baja Blast flavor is also available as an energy drink with the launch of Mtn Dew Energy Baja Blast, with added benefits of citicoline and caffeine, all with zero added sugar. The company is also giving customers a chance to win a case of the unreleased Mtn Dew Baja Deep Dive. Customers can win the flavor through the Lost Treasure of Baja Island Sweepstakes, where only 18,000 cases of the flavor will be available.

PepsiCo

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August 2022 • CSTORE DECISIONS

PRODUCTShowcase

Sweet and Spicy Peanuts Planters is adding to its line of peanuts with Planters Sweet and Spicy Dry Roasted Peanuts. This is the ﬁrst innovation from the brand since joining globally branded food company Hormel Foods in 2021. This snack is dry roasted with honey and dried red chili peppers then seasoned with salt for a crunchy and satisfying taste. Planters Sweet and Spicy Peanuts are available in 16-ounce bottles at grocery stores, and 1.75-ounce sizes can be found in convenience stores across the nation.

Hormel Foods

www.hormelfoods.com

Ready-to-Drink Nitrous Oxide-Infused Cold Brew Monster Energy has introduced its new Java Monster Cold Brew, which is infused with nitrous oxide and rich coffee flavors. The product comes in two bold flavors — Latte and Sweet Black. Java Monster Cold Brew contains 200 milligrams of caffeine in every serving, and both flavors are a medium roast with zero added sugar and just a touch of sweetness and reduced fat milk. Sure to offer a caffeine boost in the morning, the ready-to-drink Java Monster Cold Brew is available in stores now.

Naturally Smoked Meat Sticks

Monster Energy

www.monsterenergy.com

Wenzel’s Farm’s naturally smoked snack sticks come in 10 different two-ounce flavors and 13 different eight-ounce flavors and are all gluten free, MSG free and have no artificial flavors, fillers, binders or corn syrup. Some flavors include Jalapeño Cheddar, the original Beef, Teriyaki and Mango Habanero. Each Wenzel’s Snack Stick is made using premium cuts of beef, which are then seasoned and naturally smoked. Wenzel’s uses its family recipe to provide customers with these quality meat snacks.

Retailers can add their stores to the f’real milkshake finder, a service which allows customers to seek out f’real’s milkshakes. With demand for customizable milkshakes at an all-time high, f’real’s self-service program, which lets consumers blend their own milkshakes and smoothies, is an easy and effective way for retailers to save time, labor and costs. Retailers simply need to stock the freezer with f’real’s variety of popular, ready-to-blend flavors, which includes the new salty and creamy Snickers milkshake flavor. After blending, the blender rinses for safety and quality and self-sanitizes every 24 hours. The machine also features eyecatching screen content and is designed to attract more repeat customers.

Wenzel’s Farm

f’real

www.wenzelsfarm.com 62

Blend-Your-Own Snickers Milkshake

www.freal.com

CSTORE DECISIONS • August 2022

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PRODUCTShowcase

Pocket-Sized CBD Balm CBD Move Free launched CBD Move Free 350mg, a new product to provide right-priced relief. CBD Move Free 350mg, priced at $19.95, is a two-ounce pocket-sized balm that soothes sore muscles and general aches. Designed to be retail-friendly, the convenient size and affordable price point of this balm are great for anyone. Crafted from a proprietary formula that taps the healing agents of CBD, this on-the-go balm can be easily applied and absorbed deep into the body to keep one going all day long.

CBD Move Free

www.cbdmovefree.com

High-Capacity Tissue Dispenser CFS brands has introduced the Carousel Bath Tissue Dispenser R3900, a high-capacity tissue dispenser. The efﬁcient dispenser holds four universal standard bath tissue rolls and is designed to dispense each individual roll before moving on to the next, which minimizes waste. The anti-advancement lever that is located within the dispenser also deters tissue roll advancement prior to roll use. The product reduces maintenance needs and is built to last with resistant plastic.

CFS Brands

https://www.cfsbrands.com

Bite-Sized ConfettiFlavored Cookies General Mills has launched its new ﬂavor of Pillsbury Mini Soft-Baked Cookies — Confetti. This bite-sized cookie gives customers a new option, in addition to existing ﬂavors Chocolate Chip and Double Chocolate Chip. The snacks are individually wrapped and convenient for on the go. The cookies are available in bulk, in units of nine boxes with six packages each of three-ounce bags. The product has a suggested retail price of $1.69.

General Mills

www.generalmills.com

Crunchy and Nacho Cheese-Flavored Snacks Hershey is launching two new flavors of Pirate’s Booty snacks — Pirate’s Booty Crunch Attack and Pirate’s Booty Spicy Nacho. Made with real cheese, Pirate’s Booty Crunch Attack is a crunchy snack with the same white cheddar that is used in the original flavor, but with a new form and crunchy texture. Pirate’s Booty Spicy Nacho is the same puff as the original flavor, but with spicy nacho cheese seasoning in every bite. Both flavors are always baked and not fried and are completely gluten free.

The Hershey Co.

www.thehersheycompany.com

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GSK C-Store

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Copenhagen Snuff Fintech

Hoshizaki

Hussmann

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Swedish Match

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Swisher International

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Trion Industries, Inc.

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VLN

Liggett Vector Brands

Loomis U.S.

11 Cover

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877.415.4100

713.435.6700 / sales@us.loomis.com / www.loomis.us

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cstoredecisions.com

August 2022 • CSTORE DECISIONS

IndustryPerspective

Rising Interest Rates

Present M&A Challenges, Opportunities Interest rates may reduce merger and acquisition activity, but growth-oriented small and mid-sized retailers may benefit from more traditional purchase multiples. Mark Radosevich • PetroActive Services

As we enter the second half of 2022, the petro mergers and acquisitions (M&A) environment remains positive for both retail and commercial acquisitions. However, current actions by the Fed to counter inflation by raising interest rates and the resultant cost of money may begin to dampen M&A enthusiasm, while moderating cash flow valuation multiples and corresponding deal values. Store buyers will be hit with a double whammy in the areas of higher mortgage interest rates and rent/lease capitalization rates (cap rates). Real estate portfolio buyers will face higher mortgage payments and equity contributions, as loan-to-value leverage amounts may also increase due to higher lender loan security concerns. Correspondingly, buyand-lease store operators will face a combination of lower post-closing sale-leaseback proceeds and higher rent expenses due to higher cap rates. Large publicly traded c-store chains enjoy “credit tenant” designations generally superior to other retail or quick-service restaurant companies. This is partially the result of the resiliency our industry demonstrated during the pandemic and the strength of the underlying real estate. Despite recent interest rate increases, credit tenant cap rate values remain in the 4% range, as leases were negotiated prior to rate movements. They will move higher as future deals are consummated within the higher interest rate environment. 66

CSTORE DECISIONS • August 2022

Many former marketers entered into long-term leases with these large national chains to forestall the tax consequences of an outright real estate sale. They will unfortunately see the underlying value of their leases diminished as cap rates increase. A currently leased site that earns $45,000 in annual rent at a 4.5% cap rate would be valued at $1 million ($45,000/.045 = $1 million). Assuming the cap rate for the same c-store operator/tenant increases from 4.5% to 5.5% due to rising interest rates, the underlying value of the same lease would be $818,182 ($45,000/.055 = $818,182) or $181,818 less, if the marketer decided to sell that lease. For those that hold leases on multiple sites, the value impairment would be significant, if the initial exit plan entailed flipping the leases. This secondary, post-closing cash tranche from a lease sale is what drove many deal values to historic highs. This value impairment only affects those that planned on selling the lease(s) prior to their termination. For those that plan on holding the leases for the long haul, there’s no harm, no foul, beyond their rental income being less than it would be under a new lease with the sale tenant. On the commercial side, rising interest rates, combined with the increased cost of fuel is a twoedged sword. To manage monthly receivables and credit float, smaller fuel and lubricants distributors will be challenged by higher levels of lender credit requirements and guarantees.

Those that can’t contend will be forced to limit operations or exit the industry. Conversely, well-heeled operators will experience previously unavailable acquisition candidates and opportunities. TACTICAL GROWTH PLAN

If there is anything good to come out of this Biden administrationinspired inflation mess, it is that small and mid-sized marketers may finally be able to make an acquisition at more traditional purchase multiples. For the growth oriented, it’s time to create (or dust off) a tactical growth plan that includes: • Create a profile of a preferred acquisition candidate and geographic area. • Develop a target list of candidates and contact each to establish an early dialog. Become the top-of-mind buyer candidate in the event one decides to sell. • Amass and segregate available equity for when an opportunity arises. • Enlist reliable lender partners. Jointly pre-determine your optimal deal capacity. Growth-oriented marketers should “keep their powder dry” and be prepared to pull the trigger when an appropriate acquisition arises. Rest assured that opportunities will be plentiful over the months to come. Mark Radosevich is a strong industry advocate, recognized petroleum veteran and president of PetroActive Services (Petroactiveservices.com). Reach him at mark@petroactive.net or (423) 442-1327.

cstoredecisions.com

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CStore Decisions August 2022

Articles inside

Industry Perspective: Rising Interest Rates Present M&A Challenges, Opportunities

Contactless Payments Pave the Path Forward

Reinventing C-Store Supply Chains

Bolstering Adult Beverage Sales

Quick Bites: Customer Purchase Behavior Shifts

Chef’s Corner: Fry Cooks Up Innovation at Dandy’s

Vape and Cigar Restrictions Tighten

Nouria Named CSD’s 2022 Chain of the Year

Counting on Gift Cards

Seven Ways to Grow Summer Beverage Sales