What Kind of Deli Program Is Right for Your Stores?

Foodservice programs give convenience stores a competitive edge. Retailers must decide if a branded or proprietary offering is right for their chain.

Frank Beard • Director of Safe Shop and Special Products

Renowned character Clark

Griswold may not have held gas station sandwiches in high regard, but a lot has changed since he declared, “I’m so hungry I could eat a sandwich from a gas station,” in the 1983 movie “National Lampoon’s Vacation.”

Some 38 years later, many convenience stores are now held in high regard as destinations for on-the-go meals.

The past few years have seen additional shifts in consumer perceptions. As Datassential Trendologist Mike Kostyo shared during a recent webinar for the National Advisory Group’s (NAG) Spring Leadership Series, 33% of consumers reported that they have increased their purchases of convenience store food from 2019 to 2021. A whopping 91% said they are satisfied to some degree with the prepared food at convenience stores, and 22% reported that they are “extremely satisfied”— a five-point increase in two years.

But when retailers are considering deli programs, should they create their own or partner with an established brand?

WEIGHING THE TRADEOFFS

Any investment comes at a cost of time and company bandwidth, but this is especially true of foodservice.

“Having our own deli program requires constant price checking, menu development and more,’’ said Angelle Cloud, the foodservice compliance director and dietician at ShopRite, which operates nearly 60 c-stores in Louisiana, some of which include Bourbon Street Delis. “If you had a branded program, they would offer most of that upfront. They even set prices and provide marketing support.”

Challenges aside, Cloud does see benefits to creating a food program that is different and unique.

“It’s almost an issue of pride for our company. We’re able to buy from our communities and sell local food. All of our seafood is from Louisiana, and it becomes a marketing tool, as we can sell to people who respect local flavors,” Cloud said.

Dyson Williams agreed that today’s customers are looking for unique brands that can’t be found everywhere. As the director of foodservice at Dandy Mini Marts, which operates more than 60 locations in Pennsylvania and New York, Williams has experience with both branded and proprietary programs.

“We have multiple Subways that we got a few decades ago, and we worked with them because they were a big traffic driver,” said Williams. “They would pull drivers off the highway.”

But branded programs also come with challenges. One is giving up the control to set menu and pricing parameters. Some branded programs have raised prices in recent years, without increasing quality, causing customers to look to new brands and options. Still, the name-recognition from established brands can be an asset — especially in markets where it contributes to an immediate sense of trust. “Many of our stores are the only thing in town,” said Kalen Frese, the foodservice director for Warrenton Oil, which operates 36 FastLane convenience stores in Missouri. “For the longest time, I thought we needed to be different. But in our market, our stores are very rural and sell a lot of food from branded programs. They’ve been very well-received by customers, and they benefit us through ease of startup and ease of entry.”

According to Frese, branded doesn’t necessarily mean rigid or inflexible. In an effort to cut down on food waste and serve customers who pay with electronic benefit transfer (EBT), FastLane has been able to shred chicken that’s been in the display case too long and repurpose it into cold food that can be taken home.

THINKING TO THE FUTURE

Cloud cautioned retailers to be mindful of the challenges that come with scaling a deli program — especially when it comes to consistency. “That’s one of the biggest challenges we face,” Cloud noted. “The goal should be for every product to be made and taste exactly the same across the board. This means everything from how long you toast the bread to how the shrimp is battered and how the lettuce is cut. We even want the onions sliced the same. As convenience retailers, that’s one battle we have to fight that our quick-service restaurant competitors might have already figured out. But it’s an honorable fight, and it’s worth it.”

Whether branded or proprietary, Williams encouraged retailers to take action and not lose sight of the importance of foodservice to the overall channel. “Gas and cigarettes are going away eventually,” he said. “If you’re not in the foodservice game in some way, then you really need to consider being part of it. We truly believe in foodservice and understand that it’s where our growth will come from. You need to get your senior management, the leadership team and everyone in your stores behind it.

“Spend the time and energy on the front-end and get buy-in, good products, and invest in marketing,” added Williams. “Don’t just start out with a big program like we have. Think about what you want to be good at and what you want to be known for. What are the needs in your marketplace, and how can you meet them?” CSD

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