Convenience-store chain Sheetz said it is improving its same-store food sales in this difficult economic environment with a nod to consumer fondness for grab-and-go options and heightened marketing of core value items.
The Altoona, Pa.-based chain that now fields 374 locations said it had foodservice sales of $359.5 million from 363 stores for its latest completed fiscal year ended in September 2009. That reflected a year-over-year sales increase of 7.73 percent from a 3.95-percent gain in average sales per unit, to $1.01 million, and a 3.71-percent rise in number of locations.
Sheetz’s menu is dominated by made-to-order foods ranging from fries and chicken strips, or Fryz and Chicken Stripz, as the chain likes to call them, to hot and cold Subz, deli sandwiches, Burgerz, grilled chicken sandwiches, Saladz, Fajitaz and Nachoz and breakfast items, as well as fountain and bottled soft drinks, chilled and warm espresso beverages and smoothies.
C-store operators with prepared foods and fountain programs proved to be among the best performers among the Top 200 chains ranked by latest-year U.S. foodservice sales in the 2010 Nation’s Restaurant News Top 100 and Second 100 reports.
Among Top 100 chains showcased in the June 28 issue of NRN, the C-store segment represented by 7-Eleven and WaWa had the second highest rate of year-over-year systemwide sales growth, up 4.20 percent, which was bested only by the 5.30-percent expansion of the bakery-cafe segment featuring Panera Bread Co. The Second 100 report in the upcoming July 26 issue of NRN, again will show C-stores, as a segment, to be among the top performing chains.
But none of the other C-sore chains in this year’s Top 100 or last year’s Second 100 report generate Sheetz's average unit foodservice volumes of over $1 million. While WaWa had estimated sales per unit of about $881,500 in its latest fiscal year, none of the other C-store players in current or past Top 200 reports has estimated sales per unit amounting to even a third of that associated with Sheetz.
Lou Sheetz, executive vice president of sales and marketing, said his group has carried its fiscal 2009 sales momentum into the current year. Same-store foodservice numbers, to date, are up about 8 percent, he said, not only from the positive reception of new items, such as the made-to-order $3.99 Mucho Burrito introduced by the chain in May, but also from its cold-case initiative and bolstered marketing of core value items.
“Our biggest category for growth in food and beverage has been our ready-to-eat line of chilled [commissary prepared] foods, including sandwiches, [wrap-like] Wrapz and parfaits,” Sheetz said of the grab-and-go stations that have been in stores systemwide for about 15 months. He said that category, fiscal year to date, has seen same-store sales improvements of more than 20 percent.
The grab-and-go cases, he said, generally have been placed in the entrance areas of the chain’s stores. They are stocked with proprietary foods created by the company’s two-year-old commissary, which Sheetz said has plenty of additional production capacity and also handles some research and development duties.
Sheetz noted that when “we introduced that [grab-and-go] line, we were afraid of cannibalization of made-to-order foods, but that [group] is performing in the plus numbers as well, with growth being driven by our [established] value line,” including $4 foot-long subs and hot dogs.
Subs, hot dogs and core menu items at the lower end of the chain’s price-point spectrum are being advertised more since the onset of the recession than in the recent past, such as through outdoor billboards, but at regular prices, not at a discount, Sheetz explained.
Among favorably received product tweaks in recent months, Sheetz said, was the development of long, skinny baguette-style cibatta and pretzel-bread rolls for sandwiches.
With the warmer summer weather, “smoothies are on fire,” he said, adding that specialty coffee drinks, including frozen mochas, are also doing well and that “bottled teas are hot this year.”
The battle between Starbucks and McDonald’s to win customers for their specialty coffee drinks doesn’t worry the Sheetz chain, the marketing executive said.
“We’ve always said, ‘The more marketing they do -- Starbucks and McDonald’s -- the more we benefit,” Sheetz said.
The conventional fresh brewed coffee business at Sheetz is a different story. Sheetz said that category “has been off for years,” thanks in no small part to heavy discounting by major fast-food chains, including McDonald’s.
Breakfast, too, “has been a casualty,” he reported, but he attributed declining sales in that daypart more to the economic downturn, in general, and consumers deciding that the morning meal or a prepared cup of coffee is something they can do without to keep expenses down.
Contact Alan J. Liddle at [email protected].
