Restaurant operators wondering where their customers have gone should step out of their half-empty dining rooms and into their local convenience store.
While traffic and sales still may be sluggish at restaurants, c-store traffic, sales and average visits increased in the second quarter of 2010, according to new convenience store market research from The NPD Group.
“Convenience stores were like a lot of American retailers in the last few years and definitely impacted by the recession,” said David Portalatin, industry analyst for NPD’s convenience store research. “What we are seeing now is that gas prices are more moderate, and traffic is returning to the convenience channel.”
C-store traffic rose 8 percent, and sales increased 11 percent in the quarter ended June 2010 compared with the same quarter a year ago, according to new NPD data. In addition, NPD’s Convenience Store Monitor — which tracks the consumer purchasing behavior of more than 49,000 convenience store shoppers in the United States — reports that consumers’ average number of visits to a c-store in an average 30-day period grew to 6.4 in the second quarter of 2010, up from 6.1 visits for the same quarter in 2009.
While 18- to 34-year-old blue-collar males are the c-store core shopper, the increase in traffic is broad-based, NPD found. As the traffic increases, there is more diversity, Portalatin said.
Tough economic times may mean that consumers have less money to spend on meals away from home, but they still need to eat out and want to do it conveniently and at a value. According to NPD’s recently released Food, Beverages and C-stores report, which combines the market research firm’s prepared foods, beverage and packaged snack foods consumption research with Convenience Store Monitor data, “convenient location” and “in-and-out quickly” continue to be the top two reasons consumers visit convenience stores.
“We are at the intersection of convenience and lower price at a time when consumers have economic hardship,” he said.
While convenience, speed of service and price value continue to motivate c-stores visits, Portalatin said the selection of products, including prepared foods, also is becoming more important to consumers.
According to the data, 7 percent of all convenience store transactions are prepared food. The average consumer ate prepared food from a c-store 90 times in the last year.
Not only are consumers increasingly visiting c-stores, but they also are choosing them over quick-service off-premise options, NPD found. In 2009, 56 percent of consumers surveyed said convenient location was the No. 1 reason they chose a c-store over other places considered, including quick-service off-premise, when prepared foods were purchased.
Just 40 percent of those surveyed said they chose a quick-service off-premise option for its convenient location. Twenty-five percent said they chose a c-store because they “always/regularly go there,” versus just 18 percent who chose a quick-service off-premise option for the same reason.
More consumers surveyed chose c-stores than quick-service off-premise when they were in a hurry or when they wanted a light meal. However, when it comes to the quality of food, special menu items, cravings or just liking the place, more consumers said they preferred quick-service off-premise to c-stores.
“The better convenience retailers are thinking hard about their offerings and trying to compete with quick-service,” Portalatin said. “If c-stores can solve the quality side of the equation, then they’ll be a force to be reckoned with.”
With consumers making more visits to convenience stores despite the still ailing economy, many operators are looking for ways to ensure they continue to visit often even after the economy improves.
Doin’ it for themselves
To meet consumers’ higher expectations for on-the-go meals and to better compete with quick-service outlets, many c-store chains have been adding or improving the quality of their prepared foods for some time. Not content to stock their shelves with prepared items by outside vendors, some progressive operators are not only serving fresh foods, but also making them in their own commissaries.
Among the DIY chains is Tulsa, Okla.-based QuikTrip, which has opened five commissaries. The commissaries make everything from deli sandwiches and salads to muffins and donuts and deliver them daily to the chain’s more than 560 stores in nine states.
“Fresh food — we’re convinced that is going to be our next growth [area],” said QuikTrip spokesman Mike Thornbrugh.
The majority of Dallas-based 7-Eleven’s 7,000-plus stores have a selection of sandwiches, salads and fruit prepared fresh at its regional commissaries and delivered daily. Recently, the chain began offering hot foods such as sliced and whole pizza, chicken wings and chicken tenders.
Also banking on the success of having a company-owned commissary is Altoona, Pa.-based Sheetz. Although Sheetz’s core menu is made-to-order fare like French fries, chicken strips, hot and cold sandwiches, burgers, salads and breakfast items, Lou Sheetz, executive vice president of sales and marketing for Sheetz, said the biggest growth in food and beverage is the chain’s ready-to-eat line of chilled foods.
The line includes sandwiches and parfaits prepared in the chain’s 2-year-old commissary and available in grab-and-go stations that the chain installed about 18 months ago.
Making change
Change, people say, is a good thing. And making big changes is what some operators are doing to meet the needs of consumers. For example, after 70 years in business, Northeast-based Cumberland Farms gave itself an extreme makeover last year. The family-run, 500-plus-unit chain freshened up its well-known tree logo, transforming it into a more a refined tree and using a more sophisticated color scheme, and then in March rolled out a store redesign that includes wider aisles, brighter lighting and decor featuring 1930s family photographs.
“It was time to update and re-image the company,” said Cumberland Farms spokeswoman Christen Graham. “One of the things we wanted to do was emphasize the family roots.”
As part of the update, the chain also revamped its menu, adding more freshly prepared foods and installing special ovens that deliver sandwiches much more rapidly.
Not your average Joe
C-stores historically have led the traditional coffee market, and a growing number of chains have been offering premium coffee selections and service. Among the biggest players to upgrade their coffee program is Wawa. This year, the 570-unit Wawa, Pa.-based c-store chain, embarked on a region-by-region revamp of its coffee stations that, in addition to making other improvements, includes swapping out the classic glass pots for energy-efficient thermal containers similar to those found at upscale coffeehouses.
