C-stores pursue sales gains with fresh, value-driven food offerings

Convenience stores are aggressively pursuing fast-food dollars with more freshly prepared foods and pastries, refrigerated meals, and coffee bars.

Foodservice specialist Diane Chiasson of Chiasson Consultants Inc. in Canada says many C-stores are building mini restaurants inside their stores that offer food at prices marginally lower than quick-service restaurants.

“More and more people are stopping at C-stores to not only fill up on gas and grab a coffee, but also to bring ready-made meals to take home to their families for dinner,” she says. “When I worked with Petro Canada’s Neighbours concept within the Petro Canada gas stations, they had hired a well-known chef and a string of consultants to develop an appropriate menu and a space with all the interior design elements put into a restaurant.”

Fresh-food trends in Canada, where Second 100-ranked C-store chain Circle K’s parent company is based, could become more apparent in U.S. markets as well.

Altoona, Pa.-based Sheetz Inc. this month debuted a $46 million kitchen facility in Claysburg, Pa., that makes cookies, doughnuts, cinnamon rolls, muffins and biscuits as well as rolls for the hamburgers, hot dogs and subs the 350-unit C-store chain sells. The 140,000-square-foot commissary, which was three years in the making, will ship fresh products daily to the Sheetz system in six states.

CONVENIENCE STORE CHAINS RANKED BY U.S. SYSTEMWIDE SALES*Actual results, estimates or projectionsSource: NRN research

Lou Sheetz, executive vice president of sales and marketing, says a large part of the decision to develop the kitchen was to simplify tasks for employees at the stores, allowing them more time to be on the floor, thus improving customer service. The chain’s freshly prepared subs, sandwiches and salads are ordered using touch-screen systems that have been in place since 1995.

“The industry has a history and a reputation for delivering food fast, but not fresh,” he says. “We compete mostly with QSR, so we have worked to change that perception. This facility will allow us to quickly produce fresh bakery and chilled products without compromising quality. It will take prep time away from staff who can in turn assist the customer faster.”

Sheetz says his units, like quick-service restaurants, are focused on value-based menus. Though the lion’s share of Sheetz’s business remains gasoline, at 70 percent, fully half of the remaining 30 percent share of sales comes from ready-to-eat-and-drink food and beverage items.

CONVENIENCE STORE CHAINS RANKED BY GROWTH IN U.S. SYSTEMWIDE SALES (Year-to-year percentage change)*Actual results, estimates or projectionsSource: NRN research

When Sheetz rolled out a new, $30 million specialty coffee and specialty frozen-drink program last spring, sales skyrocketed, Sheetz says. The coffee program includes a full-service espresso and smoothie bar staffed by a trained barista.

“Since we completed the install in April, our specialty coffee same-store sales are up 48 percent,” he says.

Since 1994, Top 100-ranked segment leader 7-Eleven, which operates, franchises or licenses more than 6,250 U.S. C-stores, has had a commissary and fresh bakery program that allows for third-party vendors to produce fresh products in the chain’s local markets. Most stores place orders daily via a companywide computer system.

CONVENIENCE STORE CHAINS RANKED BY NUMBER OF U.S. UNITS*Actual results, estimates or projectionsSource: NRN research

To change consumer misconceptions about fresh-food quality at convenience stores, all of 7-Eleven’s fresh foods are labeled with an expiration date within a day or two of the time they are produced. This year the chain is testing a hot-food program, designed to better compete with fast feeders, which will offer chicken wings, chicken tenders, churros and pepperoni pizza. Test marketing, which began in 50 Utah stores, has been expanded to about 100 7-Elevens in Virginia and North Carolina. Spokeswoman Margaret Chabris says the initiative is going well and will be expanded later this year.

7-Eleven also recently rolled out two new sandwiches nationally, including a turkey bacon ranch on white focaccia and turkey with dill havarti on wheat.

Ankeny, Iowa-based Casey’s General Store, operator or franchisor of more than 1,450 namesake units in nine Midwestern states, continues its goal of growing foodservice operations with higher gross-profit margins in mind.

Casey’s still offers the made-from-scratch pizzas it started with in 1984, but its growing menu now lists fresh sandwiches, pork and chicken fritters, chicken tenders, hamburgers, hot dogs, doughnuts, biscuits, and pastries. Sales of prepared-food and fountain items exceeded $301.6 million in the latest year, up 12.8 percent from fiscal 2007.

CONVENIENCE STORE CHAINS RANKED BY GROWTH IN NUMBER OF U.S. UNITS (Year-to-year percentage change)*Actual results, estimates or projectionsSource: NRN research

“This category continues to perform exceptionally well,” says Robert Myers, president and chief executive of Casey’s. “The strategic price increases we were able to take throughout the year and refinements to each store’s daily food production plans helped us extend our positive trends.”

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