McLane Co.’s new Engage trade show offered a sneak peek at some of the new products and updates that will be unveiled in more detail during the NACS Show in October. And the volume of them suggests the supply chain-driven pauses in innovation caused by the pandemic are behind the industry.
Here’s a look at six product innovations that could drive convenience-store sales in the next year …
Reese’s Caramel Big Cup
Following on the success of Reese’s Peanut Butter Cups filled with Reese’s Puffs, potato chips and more, this year’s innovation from the Hershey Co. is the Caramel Big Cup. A formal rollout will come in time for the NACS Show in October. Also coming from Hershey Co., new variations on Kit Kat, Hershey’s and Cadbury chocolate bars, and Ice Breakers Ice Cubes gum.
Dave’s Killer Bread Organic Snack Bar
After giving organic whole-grain bread a cool makeover under the Dave’s Killer Bread brand, Flowers Food has extended the brand to a line of Organic Snack Bars, now sized for single-serve sales in 1.75-ounce packaging. The bars are available in three flavors: Cocoa Brownie Blitz, Oat-rageous Honey Almond and Trail Mix Crumble.
Deli Express XXL
E.A. Sween Co. has repackaged it Deli Express XXL line of sandwiches in kraft paper, making them ideal for merchandizing in a hot case or cold case. The line of 9-ounce-plus sandwiches is available in BBQ Rib, Chicken With Cheese and Char-Broil Burger With Cheese.
Chex Mix Remix
General Mills is putting a twist on Chex Mix with a new Remix line extension. Cheesy Pizza and Zesty Taco flavor profiles are coming to market nationwide late this summer. Meanwhile, the original Chex Mix brand gets a sweet turn with a new Muddy Buddies made with Funfetti frosting-coated Chex cereal.
Skippy P.B. Bites
Hormel Foods has partnered with the Girl Scouts of America to create three new flavors of its Skippy P.B. Bites based on popular girl Scout cookie flavors. Repackaged in stand-up pouches, the new flavors include Chocolate Peanut Butter, Coconut Caramel and Adventurefuls.
Spicy Meat Snacks
And on the heels of Jack Link’s success with its Doritos Spicy Sweet Chili beef jerky, watch for a variety of spicy takes on meat snacks. Among those being sampled during the McLane Engage trade show:
Jack Link’s Spicy Red Pepper Beef Jerky
Slim Jim Chile Limon
Country Archer Fuego Smoked Sausages
Kinder Chocolate
After years of primarily marketing Kinder products to children with toys and quirky packaging, Ferrero has released a more adult chocolate offering. Kinder Chocolate is a “milk-chocolate treat with chewy milky filling.” The new offer comes in 3.0-ounce and 1.8-ounce sizes of individual wrapped chocolate bars.
The dynamics of the convenience-store customer are back to pre-pandemic levels, with 84% of consumers visiting c-stores once a month and 63% once a week. And 60% enter the store nearly every time they purchase fuel, according to Technomic data.
Of those customers, 55% purchased packaged and prepared beverages once a week and 74% purchased them once a month.
There has also been an increase in female visitation to c-stores after the pandemic leveled out, said Donna Hood Crecca, principal at Technomic, Chicago, at CSP’s Outlook Leadership Conference in Rancho Palos Verdes, California.
Midyear 2023 data shows that energy drinks hold the top share of sales, at 35%. Carbonated soft drinks (25%), water (14%) and sports drinks (11%) are next in line. Volume did not increase as much due to inflation but spend is up, Crecca said.
“This is a category that’s just so vital to the health of the overall store, the total business, and we’re seeing consumers out and about again so that engagement and spend on beverages is definitely increasing,” she said.
Resist Channel Blurring
Competition is evolving, and it’s coming from a lot of sectors outside of the c-store industry, Crecca said.
Retail segments have increased their focus on single serve packaged beverages. Dollar stores, for example, are the fastest-growing channel within retail overall. Drug and grocery stores also offer cold beverages by the register.
Beyond dollar, drug and mass stores, other channels are going all-in on beverages.
“Wherever there’s an outlet next to a cash register, they’re probably going to put in a reach-in refrigerator for packaged beverages,” said Crecca.
Fast food locations are starting to have refrigerators for on-the-go packaged beverages. Even stores that aren’t beverage destinations, like Home Depot, are competition, she said.
“There was a time when convenience stores really owned single-serve beverages, but right now, we’ve got other types of retail that are gaining traction in this space, and you’ve got that channel blurring,” said Crecca.
The coffee/cafe segment overall was up 13.2% in sales last year, with Starbucks up 14.5% and Dunkin up 8.3% in total sales, all rebounding post-pandemic.
Don’t Knock the Drive Thru
Emerging quick-service drive thrus are a big disruptor, said Crecca, and they are becoming increasingly important. About 45% of consumers are more likely to visit a location with a drive thru for a beverage occasion, according to Technomic data. New stores are emerging that offer beverages as the main menu item.
Swig, a Saint George, Utah-based drive-thru soft drink quick-service restaurant (QSR), has 45 locations. The concept is a customizable combination of fountain soda, flavored syrup, cream and other toppings over pebble ice. It also offers energy soft drinks, refreshers, hot cocoa and snacks.
Swig’s sales were up 24% in 2022, and an 18% increase in unit count shows that the sales growth isn’t just from opening new locations.
Another chain entering the space is HTeaO, a Midland, Texas-based iced tea QSR that has 26 tea varieties, seasonal flavors, all-natural ingredients and its own water plant with a special filtration system. With 62 locations, 44 locations in the pipeline and franchise opportunities, “they are going to explode,” said Creed.
Even with the threat of these unique stores, “Convenience is the only channel that’s positioned to satisfy all consumer beverage need states,” said Crecca. “There’s an opportunity and an imperative here to strategically leverage both beverage formats so that you can be the beverage destination in your markets.”
Other channels can’t offer one-stop-shopping, she said. Lean in on that.
When a consumer chooses to go to a c-store, they still have an abundance of stores to choose from. Creed recommends reassessing how these priorities are being met: convenience location, cleanliness, organized, beverage taste, overall value, competitive price, quality of beverages and variety of beverages.
Respect All Engagement
With the highest level of engagement in both formats of c-store beverage offerings, Gen Z is particularly important to beverage sales.
“The competition is just that much more intense for them,” said Crecca.
Earning their beverage loyalty will drive growth in the future, she said. Larger cup sizes, quality ice and customization options will increase their value perception. While Gen Z’s packaged and foodservice beverage purchases are both driven by cravings, foodservice beverages are more often an impulse buy for a treat.
Gen Z’s personal beverage portfolio is the most diverse across the generations, and the age group gravitates toward more unique beverages and those with functional benefits. They value nourishment, promoting wellness and energizing products instead of the concept of taking food and drink away.
“It’s important to engage them now so you can sharpen your competitive edge and continue to grow your sales through the future,” said Crecca.
Hispanic/Latinos are also frequent visitors to convenience stores with 60% purchasing nonalcohol beverages at c-stores once a month or more. Hispanic consumers over index on purchasing refreshing, flavorful and cultural beverages, according to Technomic, including juice-infused water, horchata, lemonade, plant-based milks, hot teas, frozen drinks, iced coffee and flavored regular hot coffee.
“They have this interest in flavored carbonated soft drinks,” said Crecca. “Is there opportunity to increase what you’re offering there?”
The Hispanic population is increasing across the country, and Crecca suggests understanding how operating markets are changing. Make sure you’re relevant, she said, with additions like bilingual signage.
Leverage Beverage Programs
Creativity within a beverage program might look different for everyone.
Savannah, Georgia-based Parker’s highlights what it’s known for in its beverage subscription-chewy ice.
Consumers also see value in bundles, Crecca said, so offering three-fors or two-fors can work and give consumers chances to try new flavors. Another idea is pairing a beverage with a signature foodservice item.
Loyalty programs are evolving to more engaging app-driven programs, and this could be an opportunity to offer exclusivity.
“Can [consumers] get a sample of a new flavor that’s coming out before everybody else does? Is there something exclusive on the beverage front that you can offer as a loyalty component?” said Crecca.
The Sweets & Snacks Expo in Chicago this May revealed trends in the form of merchandising strategies and innovative products. CSP found snack and candy companies combining flavors in new ways, expanding well-known products into new territories, mixing sweet and salty and more. Read on to find out what retailers can do to give consumers what they want.
Diversifying Sizes
In 2022, 48% of consumers said they were looking for snacks that came from multi- or variety packs, up eight points from the previous year, Sally Lyons Wyatt, executive vice president and practice leader at Chicago-based research firm Circana, said at the 2023 Sweets & Snacks Expo.
Multipacks’ higher price point may be more expensive up front but end up being cheaper when comparing price-per-serving to that of smaller sizes. If consumers can afford that initial expense, they are investing, said Wyatt. If not, smaller sizes need to be available for them because, for example, nonchocolate candy, potato chips and tortilla chips are telling a different story. In these categories, smaller sizes performed well.
“You need to have an entry point for consumers that cannot afford to buy the multipack,” said Wyatt. “Those entry points are what helped nonchocolate and potato chips [increase sales in smaller sizes].”
While novelty candy unit sales were up 29.1% in c-stores in 2022, according to Circana, the segment is also leveraging the strategy of reaching more shoppers.
CandyRific, for example, is trying to reach more consumers with lower priced items, said Jeff Greenwald, east regional sales director at CandyRific, Louisville, Kentucky. The brand’s new mini backpacks—offered in Disney, Avengers and Sweet Squad varieties—are priced around $3.99, cheaper than its fans and dispensers.
“You need to have an entry point for consumers that cannot afford to buy the multipack.”
Winning Flavors
The four flavor profiles with the most growth in unit sales in 2022 were sweet, tangy, blends and spicy, according to Circana data.
“Hot and spicy, for over a decade, continues to be a hot commodity,” said Wyatt. “But what has happened is, with more consumers snacking throughout the day, their palates are looking for a variety of different flavors of snacks. So when you try to do something a little different, you have a blank canvas.”
Furthermore, while boomers are more likely to practice planned purchasing, millennials and Gen Z are more adventurous, said Anne-Marie Roerink, president of 210 Analytics, San Antonio, Texas, in a Sweets & Snacks Expo education session. Younger individuals enjoy trying candy in flavors that are new to them, from brands they weren’t previously aware of and from countries across the globe.
“With more consumers snacking throughout the day, their palates are looking for a variety of different flavors of snacks.”
Products Tell the Story
Within these new flavor trends, one took the spotlight: cinnamon.
Cinnamon-flavored and -dusted snacks spotted at the Expo include the new Kit Kat Churro from The Hershey Co., Hershey, Pennsylvania, and Cinnamon Dunkaroos from Minneapolis-based General Mills. The Hershey Co. also created Dot’s Homestyle Cinnamon Sugar Pretzels to combine salty and sweet flavor profiles in a new way. And Apple Cinnamon Chunk Nibbles, a nut-free crunchy snack mix featuring freeze-dried cinnamon apples and cinnamon crumbles from Troy, Michigan-based Chunk Nibbles, won best in show in the Most Innovative New Product Awards by the National Confectioners Association, the host of the Sweets & Snacks Expo. Packaged popcorn was another hit this year. Consumers have left freshly popped popcorn for the movie theatre and placed value on packaged popcorn since the pandemic began, vying to enjoy the cinema experience at home.
Nine out of 10 brands in the popcorn category saw sales increase in 2022, according to Snac International’s 2023 State of the Industry Report. Seven out of 10 experienced a double-digit hike, ringing in an overall 13.1% growth for the $1.7 billion market.
Drizzled popcorn was around every corner, with Reese’s Popcorn from Hershey, featuring peanut butter and chocolate drizzle. Snax-Sational’s Cookie, Candy and Cereal Pop affixes classic treats, such as Oreo, Chips Ahoy!, M&M’s, Twix, Snickers, Sour Patch Kids, Nutter Butter, Cocoa Pebbles and Fruity Pebbles atop the salty snack. Drizzilicious, a drizzled popcorn brand made by Snack Innovations Inc., Piscataway, New Jersey, is expanding the offerings in this space by launching two new flavors, Cookies & Cream and Chocolate Chip.
Nonchocolate chewy candy was down 1.4% in convenience-store unit sales in 2022, according to Circana year-end data.
One of the only four brands with growth in the space was Ferrara’s SweeTarts, up 6.5%. During the trade show, Ferrara debuted its new Sweetarts Mega Ropes, chewy candy ropes with a tart filling.
Other bite-and-tear, rope-shaped gummy snacks include Mike and Ike Filled Ropes, Hot Tamales Filled Licorice Ropes and Peeps Filled Ropes, all from Just Born, Bethlehem, Pennsylvania.
The Shopping Experience
Products that lend well to at-home merchandising have become attractive.
“People want to have experiences that they used to have outside of the home, inside of the home,” said Leigh O’Donnell, head of shopper and category insights and solutions at London-based market research firm Kantar at the trade show.
The Reese’s pantry pack, for example, is a pack of individually wrapped Reese’s made with several access points, ideal for easy access in the refrigerator, countertops or pantry.
Ferrara debuted flexible packaging for its SweeTarts Ropes that can be displayed horizontally or vertically.
Tech accessories, wellness products and more trends in the category
Looking beyond the data, retailers as well as suppliers agree on certain trends, strategies and seasonal opportunities in the general merchandise category. Read on to find out what they are from experts at Pilot Co., Parkland USA and more.
Switch Into Summer Mode
With more travel and outdoor activities starting up with the changing of the seasons, Pilot focuses on products that go hand-in-hand with what people are doing.
Sunglasses, sunscreen, umbrellas and other outdoor-related items perform well as people start to venture outdoors after winter, says Reising.
With so many products to keep track of, “it’s important for retailers to make sure they have a program supported by field service representatives to keep the right styles and products in stock to meet consumer demand,” says Hayley Fry, senior director of marketing at Lil’ Drug Store Products.
Reps visit stores at regular intervals to organize and clean up displays, check in on product assortments and place orders for low inventory items for each individual store based on what is selling well, Reising says.
Multiply Merchandising
Having secondary, temporary displays is essential for keeping popular items in stock during their peak season and raising awareness among consumers that the products are available, says Reising.
“Sunglasses, for example, can have their permanent racks, as well as temporary displays on the counter during the summer months,” he says. “This is also a great vehicle for trendier styles. We are launching a temporary display with the trendy, retro ‘90s-style glasses that are popular with younger consumers this summer.”
Parkland utilizes spinner racks for “those in-and-out items that change seasonally,” Sullenger says.
General merchandise supply has had “huge improvements in international shipping compared to the past few years,” says Fry. “Supply continues to be a concern, but manufacturers everywhere are finally starting to catch up. Over the counter drug manufacturers have invested in a more robust supply chain, and we see a much more positive outlook in the second half of 2023.”
“Having secondary, temporary displays is essential for keeping popular items in stock during their peak season.”
Work on Wellness
Consumers are becoming increasingly proactive about their health, says Fry, of Lil’ Drug Store Products, but wellness products are being underserved in the convenience channel.
Lil’ Drug Store Products has excitement toward Olly—a gummy vitamin brand that aims to help with the mental health struggles of young people.
“We’re working with them to bring on-the-go sized packs of their top products to c-store, with supplements for sleep, stress and immunity in convenient sizes and c-store friendly price points,” Fry says.
Similarly, Sullenger has seen growth in supplements for energy, rather than a pure vitamin supplement.
Dollar stores show legs with cigarettes, mass merchandisers grow cigars sales
When it comes to satisfying a nicotine craving, convenience stores are still the leading sellers by a wide margin, but data analysts say other channels may be capturing some shoppers and poised to pick up some additional volume.
“We’re seeing some tobacco growth in dollar stores, and it appears to us that dollar stores have refined their product selection to appeal to shoppers most interested in the low-priced items in the category, such as deep-discount cigarettes and the deep-discount moist categories,” said Don Burke, senior vice president of Pittsburgh-based Management Sciences Associates, a data analysis firm that tracks manufacturer shipments.
He also sees consumers challenged by inflation and higher gasoline prices, turning to tobacco outlets that typically sell products at a lower price.
“But convenience-gas continues to do OK because there are so many convenience stores and it’s easy to pop into one to purchase tobacco,” he said.
Smokers Seeking Alternatives
Modern oral nicotine (MON) is a potential growth opportunity for tobacco outlets, Burke said, as many have not yet added the segment. When c-stores were adding modern-oral products, the increased distribution drove category growth at a remarkable rate. Those numbers have attenuated.
“Today, when we look at same-store modern-oral performance in the convenience channel, there continues to be solid growth, although typically more in the single-digit range,” he said. “When you’re building distribution in a trade channel, there is often very strong growth levels.” Burke concludes it is likely the companies that manufacture MON products will begin to build distribution in other trade channels to again achieve strong gains in their business.
Many smokers have been seeking alternatives for years, and it’s no surprise that other tobacco products (OTP) are getting traction.
“Both retailers and the tobacco industry are facing similar moments of disruption,” said Sam Dashiell, senior specialist, U.S. communications for New York-based Philip Morris International. “Today, there are a growing number of new alternatives on store shelves and more innovations on the way for America’s 31 million adult smokers—from nicotine pouches to e-vapor and others—that are better options than continuing to smoke.”
Billy Colemire, director of marketing for Stinker Stores, agrees. “The bright spot for us is OTP,” he said. Traditional tobacco and cigarette sales have continued to decline, he said, with high gasoline prices being an added blow for consumers. “People have less disposable income, and we lost some customers to smoke shops,” he said.
The 110-store Stinker Stores chain based in Boise, Idaho, has seen a lot of success with flavored vapes, as well as higher margins by working with brands that are not part of major tobacco companies. In May 2022, he said, “we launched a lot of new flavored vapes working through some brands that you don’t usually see in a lot of convenience stores.”
Stinker Stores Inc. is No. 69 on CSP’s 2023 Top 202 list of the largest c-store chains in the country. Lassus Bros. Oil is No. 185.
By partnering with national distributor C-Store Master of Huntsville, Alabama, the chain can pivot quickly as flavor preferences change. “Something that was hot last quarter might not be as hot next quarter,” he said. Using C-Store Master’s scan-based inventory system, the retailer can avoid tying up capital in inventory or distribution tracking.
“We’re starting to see a lot of customers shift more into that flavored-vape space because they know you can get more puffs out of that compared to those traditional sticks,” Colemire said. His newest stores also have space for a 15-foot back bar, so he can dedicate a 3-foot section separate from Big Tobacco contracts.
Colemire said his goal was to sell $1 million worth of products in the first year across all stores. “And we’re closing in on $2 million in sales with a month and a half to the year mark,” he said. “So, we’re outpacing what we thought we would do.”
‘Cigarettes Just Keep Shrinking’
Missy Holley is also seeing growth in vapor, as well as nicotine pouches. “It’s a hard industry right now, for sure,” she said. “Cigarettes just keep shrinking and almost everything else keeps growing.”
The tobacco category manager of Fort Wayne, Indiana-based Lassus Bros. said she isn’t concerned about competition from other channels in her market. Dollar stores, especially, she said “are just a whole different customer.” And as Burke notes, the sheer number of convenience stores vs. other channels keeps c-stores top of mind with tobacco consumers.
“We’re up 7% in vapor and almost 12% in other tobacco products,” Holley said, with cigarette packs down 12% over prior year. She said cigarette sales have not returned to pre-pandemic levels, and “I don’t know that we ever will.” But vapor sales have more than doubled at her stores since 2019, and other products are up 50% versus 2019. Still, she said, cigarette sales are four times those two categories together.
In his remarks during Altria’s Investor Day in March, Scott Myers, president and chief executive officer Altria Group Distribution Co., Richmond, Virginia, offered reinforcement of the dominance of convenience stores in the tobacco category.
There are approximately 25 million tobacco transactions at retail each day, he said, and “75% of tobacco consumers purchase their products at a single preferred store, with most transactions taking place in convenience stores.” His comments to investors did not single out any other channel of trade.
In developing his strategy for vape products, Colemire said most retailers are afraid the FDA or local entities could enact a complete flavor ban.
“Everybody was almost paralyzed with fear of getting stuck with a bunch of products,” he said. He told his team at Stinker they would find a different distribution strategy and put that burden on someone else.
That move has allowed Colemire to turn the tables on other retail channels.
“That’s allowed us to move into spaces that other competitors have in our market,” he said. “And if anything, we’re more in the smoke-shop radar. They took our traditional tobacco business, and now we’re starting to take some of their flavored-vape business.”
Study considers micro-evaluations inside the brain, such as mood, what others will think and healthy eating
A new study revealed that Reese’s, Lay’s and Hershey’s were among the top snacking brands based on psychological measurements of the top 50 snacks, taking into account consumer behavior, trajectory and emotional response while purchasing snacks. Reflected in the top brands, top performers included chocolate, chips and cookies, while bottom performers were meat snacks, mixed nuts and pretzels.
The study was performed by Alpha-Diver, a Cincinnati, Ohio-based market research firm that applies neuroscience to understand marketplace behavior and the Food Institute, a Pine Brook, New Jersey-based news source that provides insights on the food industry.
With food purchases at every location, micro-transactions happen inside consumers’ brains, such as questioning mood, who they will be snacking with, what others will think of the snack choice and interest level in healthy eating. The Snack 50 ranking took these decisions into account.
“It’s the industry’s first measure of the psychological drivers of real-world consumer behavior [as it relates to snacking],” said Hunter Thurman, president of Alpha-Diver.
Collectively, the list covered more than $50 billion in snacking sales last year, 12 categories and a neuroscience workup based on more than 100 psychological metrics. The average test-taking consumer was 45 years old, and the average household income was $50,000.
The top 10 snack brands are:
Nearly half of American consumers snack three times or more every day, a figure up 8% in the past two years, according to Circana Group, a Chicago-based market research firm, and reported by The Wall Street Journal, New York. Last year, U.S. snack sales soared to over $180 billion, up 11% from the previous year.
The report showed that retailers are catering to snackers with large-volume boxes of snacks at 24-36 per box. Cereal companies are selling Saturday morning favorites as single-serve pouches, combining Fruity Pebbles, say, with popcorn. Salty is tangoing with sweet, spicy butting in with savory.
Thurman described four mental lenses his company uses to help assess why and how people snack the way they do. The drivers are Rational (“this snack will be good for me”); Experiential (“I want to try this snack”); Tribal (“This is how we snack”); and Instinctual (“This snack speaks to me”). The top snack brands within these categories are:
The top three snacking brands with rising momentum were all private-label brands: Aplenty, Favorite Day and Happy Belly.
Thurman claimed that private-label brands suffer from a misperception that their quality is inferior and private-label purchases constitute economic and flavorful compromises. Instead, the market is proving the opposite true, and purchases are more emotional, he said.
“If these brands offer ‘safe choice’ equity for consumers, how do you argue with that?” Thurman said. “Instead, brands should be asking ‘what is the opportunity to innovate and capture new markets?’”
Here are more top brands, considering additional reasons for purchasing.
Price: Jack Link’s, Blue Diamond Almonds, Planters
Time: Aldi, Happy Belly, Aplenty
Social: Great Value, Popcorners, Favorite Day
Physical: APlenty, Snickers, Dot’s Pretzels
Emotional: Oreo, Kirkland, Airheads
“Context is king and queen; context matters,” Thurman said. “Think about yourself and your life, whether you’re at work, at home with friends and family, or on a weekend. You’re not a different person, but there are three different contexts, and what drives your decisions varies wildly. The same is true with snacks.”
Consumer demand outside home is huge; retailers must stay up on challenges, dynamics and trends of overall industry.
Foodservice is poised for growth.
These words of hope were from Donna Hood Crecca, principal at CSP sister research firm Technomic, who spoke at the CSP C-Store Foodservice Forum on June 7 in Rosemont, Illinois.
“This category is unique in your stores,” Crecca said. “It satisfies different needs.”
As a whole, the foodservice industry has recovered from the pandemic, though inflationary factors are still a consideration. “There is momentum, and consumers are engaging with foodservice,” Crecca said. “The industry is on a good trajectory.”
Crecca said Techonmic projects that overall foodservice sales this year for the first time will top $1 trillion, of which convenience stores account for 3%. Despite this small share, c-stores are considered a growth channel for foodservice. And because c-store foodservice is part of a large industry, retailers must stay informed of the trends, dynamics and challenges.
“Consumer demand away from home is huge,” she said. “It’s a solution, part of their lifestyle, and they’re willing to spend. The industry is resilient.”
“Consumer demand away from home is huge.”
That resiliency was seen in 2022, when c-store foodservice category sales exceeded pre-pandemic levels and outperformed the growth rate of quick-service restaurants, which had “an advantage of a well-developed drive-through and delivery systems,” she said.
However, despite the growth, 79% of c-store foodservice operators agree that competition from other types of operators—fast food, fast casual coffee cafes and grocery store foodservice—is increasing.
To be victors in this battle, c-stores must develop a winning strategy, which Crecca said involves understanding consumers and being relevant to their needs, then meeting or exceeding their expectations with a differentiated, well-executed offering that drives value.
“It’s a tall order,” Crecca said.
Know Customer
Part of tackling this challenge is knowing who today’s c-store customer is. One stat she presented is that 53% of c-store customers buy prepared food offerings, with millennials buying the most. In addition, customers are increasingly diverse, with white (non-Hispanic/Latino) down from 56% in 2017 to 48% in second-quarter 2023. Meanwhile, Hispanic/Latino, Black/African American, and Asian all are buying more frequently.
In commuting, nearly seven in 10 are traveling to work at least a few days weekly, and six in 10 enter a c-store every or nearly every time they visit for fuel/charge.
“Food and beverages are the number-one thing they buy when they come in the store,” Crecca said. And when customers do enter a location, the top factor in whether they make a foodservice purchase is store cleanliness. “This is the only channel where cleanliness is number one. If bathrooms are not clean, you just cut in about half the likelihood they’ll buy foodservice.”
“Consumers are really looking for value.”
When customers do buy food c-store food, 61% say it’s primarily eaten in their car, which makes packaging crucial to winning the occasion, Crecca said; however, despite this popularity, don’t dismiss the importance of “fork and knife” items like mac and cheese, salads and bowls because the dinner daypart is growing.
Regarding inflation, 34% of c-store foodservice buyers in 2023’s second quarter were ordering less per visit, and 40% were seeking deals and promotions and/or using coupons more often. This second stat is up from 31% in fourth-quarter 2022.
Seeking Value
“Consumers are really looking for value,” which can be delivered via combo meals, a fuel discount with a purchase, and receiving loyalty points with a purchase, Crecca said.
Another way to attract customers is by offering healthy foodservice items. Crecca said 33% of all consumers, and 42% of 18- to 34-year-olds, surveyed earlier this year said that in the past year their interest in buying healthy items from c-stores has grown.
“Showcasing ‘fresh’ is going to be most effective in heightening the health perception of foodservice items,” Crecca said, noting high protein, low or no sugar, unprocessed and high fiber as key attributes in foodservice, and no artificial ingredients, high protein, low/no sugar and immunity-boosting being key to beverages.
Elsewhere, Crecca said:
18% of consumers overall, and 28% of Gen Zers and 24% of millennials, have changed the types of restaurants they patronize due to higher menu prices. “Convenience is in a prime position to steal a share of stomach from QSRs,” Crecca said
Quality coffee is the gateway to boosting foodservice sales. Among consumers who report increased engagement with c-store foodservice, nearly half are visiting coffee- or beverage-focused restaurants less often and are shifting those purchases to c-stores. This is a hike of 17 percentage points from 2019
58% of those surveyed said c-stores can compete with restaurants on freshness, quality and value to win the breakfast daypart, and 55% said c-store breakfast items are a better value than at restaurants
42% of c-store foodservice patrons say the availability of a drive-thru would increase their visitation, but only 15% of c-stores offer one
22% of all c-store consumers, and 30% of those 18 to 34, say frictionless payment options would increase patronage. “Our data finds 23% of c-store operators plan to install such systems in the next two years,” Crecca said
Consumer expectations of c-store foodservice offerings are elevated, but so are perceptions, Crecca said.
“Innovate menu items with fresh and better-for-you to resonate,” she said. “Optimize the menu. You need the right number of the right items, and that requires a lot of analysis of what the consumer is most likely to buy.”
When it comes to establishing effective strategies that increase basket sizes and store sales, merchandising should be at the top of your list. By offering popular snacks throughout your shopper’s purchasing journey, creating bundling options, placing the right products in the right places, and promoting those products across the c-store environment, you can enhance your shopper’s in-store experience and position your store for success.
1. Embrace your shopper’s purchasing journey
The idea is simple – you are more likely to increase sales by placing and promoting your products where your shoppers shop. And, knowing that the average c-store visit lasts 3 minutes, you only have so much time to guide shoppers to snacks they really want1. But, where do your shoppers actually look for their favorite snacks?
Outside the aisle
When thinking through a shopper’s purchasing journey, there are only three guaranteed touchpoints: entering the store, checking out, and leaving. This leads to high amounts of traffic in general store areas, but only 25% of shoppers venture out of these high-traffic areas and walk down the aisles to find their favorite snacks.2
This means that strategically placed merchandising around the perimeter of the store, like end-caps and wire basket racks, can drive incremental sales and impulse purchases through visibility alone.
At checkout
The ability to increase basket sizes does not end once a shopper decides to check out. Since the majority of c-store snacking purchases are impulsive, capturing a shopper at checkout is a prime opportunity to encourage a shopper to add another item to their purchase.3
By placing core snack items along and below the checkout counter, you can reinforce snacks that shoppers may have missed during their initial trips around your store and provide a compelling reason to follow through with their purchase as they reach for their favorite snacks.
2. Bundling increases purchase opportunities
You can continue to drive their basket size with bundling opportunities that offer popular pairings for their favorite snacks.
There are few different ways to approach bundling. Some of the most popular bundling strategies include mix-and-match bundles, where shoppers choose from a limited selection of snacks for a set price, cross-sell bundles, where a complementary product is sold as an add-on to a popular item, and BOGO bundles, where shoppers can get multiple products for the price of one.4
Bundling creates opportunities to drive cross-category sales, as many shoppers will look for additional snacks and products that complement their primary purchases. Kellogg’s® Rice Krispies Treats® and Pop-Tarts® offer great pairings across categories, since 20% of baskets that include Rice Krispies Treats® also include single serve snacks and chips, while 14% of baskets that include Pop-Tarts® also include packaged bakery items.5
And, since over a quarter of shoppers say that bundling opportunities play an important role in selecting their c-store of choice, proper bundling has the potential to drive new customers to your store.2
3. Shelf placement matters
As shoppers continue their journeys throughout your store, they might venture down your snack aisles. During this point in their journey, you, as the retailer, can influence their final purchasing decisions based on where you choose to place craveable items.
There’s a popular saying, “eye-level is buy level” – basically meaning that shoppers will reach for the items they can see. They tend to avoid searching for items that are placed too low to the ground given the extra effort to scan the shelf, and are much more likely to buy ones directly in their eyesight.6
In order to maximize aisle sales, you should prioritize items you know will turn more in this prime location. For example, Pringles® is kept top-of-mind for shoppers – as the #1 salty snack on social media7 and the share growth leader (+0.8pts) in c-stores8 – so you’re likely to see more growth by featuring a top brand like this on-shelf at eye-level.
Proper shelf placement can be the difference between increasing shoppers’ basket sizes or allowing them to pass through empty handed.
Understanding how your shoppers move through your store can go a long way in capturing their attention. By employing merchandising strategies, you can intercept shoppers along their purchasing journeys, promote core snack items, and drive sales throughout your store.
For more information on merchandising strategies and tools, please visit KelloggsAwayFromHome.com or contact your Kellogg’s® Sales Representative.
Sources: CSP
Video Mining, Shopper confidence chasing away C-store “blues”, Sept 2021
NACs SOTI Report 2021
Chain Storage Age, Physical Stores Dominate Impulse Purchases, Oct 2022
Don’t underestimate the economy’s effects when trying to predict what consumers will value.
The shift to online ordering that took off during the COID-19 period is likely to have staying power, but demand for delivery is starting to decline as consumers place more orders for takeout food in part to save money, as tipping is down.
These two insights are explained in retail-tech firm Paytronix’ just-released “Online-Ordering Report: 2023,” which pulls together data from the retail-tech company’s work with restaurants and convenience stores, particularly those with foodservice operations.
The insights don’t surprise Gray Taylor, executive director of Conexxus, an Alexandria, Virginia-based technology-focused nonprofit business organization serving the convenience-store and fueling industries by providing technology standards, innovation and advocacy.
Many of the items convenience stores sell aren’t pricey enough to justify paying $6 for delivery, Taylor told CSP Daily News. The trend away from delivery should be good news for convenience retailers, who are strategically located to provide convenience to a community and passersby.
As more people get back to life as usual after COVID, they’re more likely to be out and about and shopping at convenience stores, so they less likely to need delivery, Taylor said.
Many consumers also won’t want to pay for delivery in an inflationary period when most items also cost more. Paytronix’ research shows the customer segment fueling the upward spending and generous tips in 2022 was older than many marketers were aiming at. Baby Boomers over 65 place delivery orders more frequently and give larger tips than younger adults, who might be feeling inflation’s pinch, the report suggested.
Young adults also are less likely to plan ahead than older adults. Less than 10% of Gen Z and Younger Millennials placed orders in advance, Paytronix said, compared with 17% of Baby Boomers. With the COVID-19 period declared over, demand for delivery from convenience stores is expected to decline, Taylor said.
A point of differentiation might become more important for convenience-store operators as new competitors emerge with the growth of electric-vehicle charging. While convenience stores are entering the EV charging space, this won’t stop other retailers and local governments from also offering charging ports. Home charging also is expected to rise.
To remain top of mind as EVs gain market share, convenience stores will have to strengthen their brands in a new way, suggests a report from St. Louis-based retail tech firm Rovertown, which works with Newton, Massachusetts-based Paytronix and other loyalty-program providers serving the convenience-store industry.
Historically, consumers have been willing to pay more for national brands, like Starbucks or Domino’s Pizza, both of which have proven brick-and-mortar retailers can be in the forefront of mobile and online ordering, notes the Rovertown report, “Convenience Store of the Future.”
The drop in fuel demand that convenience stores felt in 2020 is an indicator of what could happen if EV transportation picks up momentum and the convenience industry isn’t prepared to meet the growing demand for EV charging, Rovertown said. The headwinds c-stores faced from lower fuel demand during the COVID-19 shutdown “should impress upon retailers the necessity of creating a convenience retailing model that’s capable of driving traffic to the store with or without fuel pumps,” according to Rovertown. Businesses must give consumers a compelling reason to visit them online.
For many convenience stores with kitchens, the reason might be new menu items.
Both Rovertown and Paytronix are optimistic that demand for online ordering will grow in the convenience industry. Digital orders rose from 9% of total orders in November 2019 to 31% in November 2022, according to Paytronix.
But consumers are cutting back where they can. As inflation pushes up the prices of individual items, guests chose not to significantly change their order basket sizes, Paytronix said.
The average item price rose about 15% from $11.30 in January 2021 to $12.61 at the end of 2022, while the average subtotal rose by about 13% to $37.87 over the same period, suggesting consumers aren’t drastically decreasing order sizes to compensate for higher prices, Paytronix said.
They’re having to spend more because products cost more, and they are trimming their budgets in other areas, such as on delivery charges and tips.
Inflation has resulted in less frequent trips to convenience retailers and restaurants as consumers wait longer between visits, Paytronix said.“The rising costs of dining at a favorite restaurant or grabbing a coffee at the closest convenience store has a cascading effect on a number of other, related categories. Most predictably, the number of days between orders increases as guests visit their favorite brands less often,” Paytronix said. “In addition, they cut their gratuities, a reversal from the rising tips of the pandemic era.”
It seemed more like old times in foodservice and dispensed beverages in 2022.
Talks with finalists for CSP’s 2023 Category Manager of the Year Awards showed optimism and desire for innovation.
“We’re seeing more and more guests transfer over to the food world, whether it’s cold-case items or our prepared items,” said CMOY winner Savannah Johnson, manager, category-food at Knoxville, Tennessee-based Pilot Co. “Based on trends we’re seeing, customers are going to gravitate toward those areas a bit more than they have in the last few years.”
This means customers are buying more of Pilot’s hot foods, soup, pizza and grill items—and cold foods such as fresh sandwiches, salads and fruit, Johnson said.
“But selections also consist of pre-packaged items, so Lunchables, pickles, things like that,” she said, adding that this is the most exciting time to be in the food industry.
And the key to success, Johnson said, is understanding the guest experience in food and beverage.
“Consumers have evolved so much over the last few years, changing the dining experience in the convenience world by positioning food and beverage as a primary traffic driver for the future,” Johnson said. “A greater emphasis on food and beverage this year allows us to be more creative on new [limited time offers] and guest comfort food.”
Pilot Co. has been intentional about making food the star of the show through its “food forward” concept.
“We position food and beverage up front and in view so it’s the first thing you experience when you walk in a store,” she said.
Breakfast was one of the brighter spots at Pilot in 2022, exceeding expectations, Johnson said, with offerings like the Honey Maple Chicken Waffler LTO, expanding on Pilot’s successful 2021 chicken sandwich campaign.
Hot Case Happenings
Donna Hood Crecca, principal at CSP sister research firm Technomic, said she’s seeing a post-pandemic return to innovation and menu development among foodservice-forward retailers.
“One area of innovation is around the hot case,” Crecca said, adding that Technomic data shows one-fifth of operators in late 2022 increased the number of SKUs in the warm grab-and-go case, compared to pre-coronavirus pandemic. In addition, about two-fifths increased SKUs on the roller grill.
There’s also innovation in dispensed beverages, particularly coffee, spurred by retailers feeling the need to differentiate offerings in an increasingly competitive landscape, she said. “Coffee is really competitive right now, c-store to c-store and also with coffee cafes and fast-food restaurants,” she said. “They have to innovate to differentiate—and meet the needs of their specific consumer.”
Drew Whitefield, category manager, hot and iced coffee, at Irving, Texas-based 7-Eleven, said he’s working on several new coffees for 2023.
“They are well balanced and taste great,” Whitefield said. “Two I’m really excited about are a new Central American blend coming this summer and a Caramel Macchiato later this year.”
Whitefield echoed Crecca’s comment about meeting customers’ tastes, saying he watches flavor trends and looks for innovative and craveable ideas to keep customers returning. Later this year, 7-Eleven will roll out Pinky’s Strawberry White Chocolate—and bring back its fall staple, Pumpkin Spice.
At GPM Investments, dispensed beverages category manager CMOY winner Jim Rastetter is excited about the Richmond, Virginia-based chain continuing to expand bean-to-cup coffee after launching it in more than 550 stores in 2022. In addition, the chain, whose brands include Fas Mart, Shore Stop, Scotchman, BreadBox and Young’s, is looking forward to more innovation in frozen dispensed, he said.
GPM has a partnership with Frazil, Salt Lake City, Utah, which continues to innovate with items like new frozen energy drinks, Rastetter said.
Rastetter said the industry experienced sharp declines during the pandemic in the dispensed category, and it has taken time for customers to return. “Fortunately, it looks like 2023 is going to be a great year and customers appear excited to get back out and shop their favorite beverage,” he said.
Crazy for Customization
Charleston, South Carolina-based Parkland USA, owner of On the Run c-stores, aims to lure customers into stores by adding flavor shots to boost the customization possibilities in hot and cold dispensed drinks, said Jarrod Morrill, category manager for foodservice and dispensed beverages.
Technomic data supports this strategy, with a recent survey showing 64% of c-store customers expect a coffee counter where drinks can be made to order today, with the remaining 36% expecting this in a couple of years.
Trends Morrill is watching include keeping an eye on soda-fountain shops such as Fizz and Swig. In markets where Parkland has c-stores, particularly locations with drive-thrus, they have begun offering similar offerings to compete.
In addition, Morrill said frozen dispensed has performed well in the last year. “Frazil has done well for us,” he said. “It’s quite easy to roll out and consumers love it.”
Another way of differentiating and spurring excitement is promoting recipe hacks, which Whitefield said help customers create new tastes from existing flavors in stores, such as the popular Coffee with Cream and Lavender Honey Syrup. Hacks coming later this year include Espresso Soda and Turtle Mocha.
Wills Group-owned Dash In stores, La Plata, Maryland, is going beyond a new recipe and introducing a new menu and format at its c-stores, said Ben Lucky, senior category manager, foodservice. The new format debuted at the company’s first third-generation c-store, which opened March 3 in Chantilly, Virginia. The format will expand from there.
“We’re going to be doing griddle-pressed burgers, fried in-house miniature donuts and our own in-house potato chips we’ll fry and season in front of the guests,” Lucky said. Four seasonings will be used, he said, including an Old Bay flavor, popular in the Mid-Atlantic area.
“We’re trying to change the foodservice landscape,” said Lucky, noting another new item resembling a taco he calls “a rib of tortilla.”
“You can turn your head a little bit sideways, and the ingredients aren’t going to be falling out,” he said.
For breakfast, Dash In has Impossible breakfast sausage items at the Chantilly location. They’re also selling Impossible burgers.
Plant-Based Possibilities
These offerings align with a recent Technomic report revealing 37% of c-store customers expect plant-based alternative proteins be available today at their favorite c-store, with 63% expecting them in a couple of years.
On the beverage side of things, Lucky said there are new in-house Refresco beverages, non-carbonated beverages in bubbler machines. “We worked with some designers out of Chicago to come up with our own flavor profiles,” he said. “One might be a strawberry hibiscus tea.”
Dash In also is introducing six versions of yuzu, a cold, non-carbonated beverage “new to the American palette but not unfamiliar to most people around the world, especially in both Latin America and Asia,” Lucky said. “It’s a somewhat peachy, pear-y kind of a flavor with citrus notes.”
Kate Weisman also has been watching trending flavors. “There are more hot-and-spicy flavors, kind of a con queso flavor profile,” said the category manager for roller grill, fruit and floral and franchise brands at EG America, Westborough, Massachusetts, whose brands include Cumberland Farms, Certified Oil, Fastrac and Kwik Shop.
In addition to flavors, EG America, like the third-generation Dash In’s new menu, is in middle of rebranding its entire food category offerings, Weisman said. Called Farmhouse Kitchen, it features a new color palette on packaging for sandwiches, roller-grill items, bakery, pizza and more. It’ll also be on window signs, Weisman said.
When it comes to the roller grill, she said she loves this mature category.
“I can shake it up,” she said. “It’s kind of the same old thing that’s always on there, so I love the fact that I can put new products. If they win, they win. If they fail, at least I tried.”
Weisman also is playing to the trend of people snacking more and eating fewer full meals. She currently is testing what customers are more apt to choose for a grab-and-go option: two roller bites in a sleeve in the hot slide marketed more as a snack versus the items available individually on the roller grill. She’s looking forward to seeing the data to see which is more popular.
Technomic data supports the attention given to warm self-serve formats. Compared to pre-pandemic, operators in a recent survey reported a net increase in the number of items they offer via these formats: 37% said they offer a greater number of roller-grill items versus 14% offering a smaller selection; 40% said they offer a similar selection, and 9% said they didn’t offer roller-grill before the pandemic.
“I’m looking forward to all the innovation in 2023,” Weisman said. “I’ve recently heard from all my vendors about how they’re ready to try new things. I’m looking forward to seeing how some of our more fun, out-there LTOs perform.”
With a resume that includes stints with Juul Labs, PepsiCo, The Coca-Cola Co. and Keurig Dr Pepper, Aubrey Thornock, a senior category manager for Maverik Inc., is well-versed in consumer packaged goods (CPG) marketing and retailing in convenience stores, from both sides of the equation—supplier and seller.
At the Salt Lake City-based chain of nearly 400 stores in 12 western and southwestern states, for more than two years she Thornock been responsible for identifying and capitalizing on emerging market trends and revenue opportunities in categories including cigarettes, tobacco and kratom. She works closely with vendor partners and category captains to execute formal schematics for her categories.
In general merchandise, which Thornock says offers “continuous change,” one physical area of the store that is always challenging is the counter.
Thornock works with Maverik’s merchandising and space planning team “to create a unique shopping experience at each register with the impulse purchase items, currently spread out across the counter, into one display at each register,” she says.
In terms of selecting product assortment, she and her teams at Maverik “must be proactive in most cases to ensure the least amount of disruption to our flow of operations.”
Products include lighters, energy shots and other general merchandise items that reside on the counters.
She is also completely redoing the cigarette and tobacco fixtures to maximize space within the fixture for a consistent flow of categories, she says.
Among Thornock’s goals for 2023 is to align the variety of store layouts Maverik has with consistent planograms for a much easier shopping experience for the customer when shopping in her categories, she says. “This has allowed me to provide adequate space to the categories that are growing and bring in additional items that we were not previously able to carry due to space constraints,” she says.
Merch Madness
C-store retailers continue to capitalize on the cache of their own brands and through local partnerships. 7-Eleven, Stewart’s Shops and Jacksons Food Stores are among the chains with recent rollouts.
Irving, Texas-based 7-Eleven in December debuted an assortment of festive holiday apparel and merchandise as part of the 7Collection online store, including branded holiday sweaters, knitted beanies, sherpa blankets, stockings, Oh Thank Heaven script necklaces and a clock.
Ballston Spa, New York-based Stewart’s Shops has launched an online shop offering merchandise such as branded sweatshirts, retro T-shirts, PopSockets, dog bandanas, dog leashes, pint koozies, a set of pint glasses and color-changing cups. Other items include a bejeweled vacuum tumbler, short-sleeve baby onesie, winter hat, socks and dog leash. Following the debut of an online Christmas ornament in 2022, the retailer will also offer multiple limited-time-only merchandise drops throughout the year.
Meridian, Idaho-based Jacksons Food Stores has begun selling exclusive, officially licensed, professionally designed, printed and packaged college football trading cards. Featured teams include Boise State’s Broncos, University of Washington’s Huskies and University of Oregon’s Ducks. Each pack contains 14 cards and retails for $12.99. One out of every 10 packs also includes a limited-edition, autographed card.
Remarkable price increases driven by inflation were the name of the game in beverages in 2022, helping categories that were soft in volume, such as carbonated soft drinks (CSDs), to grow in revenue. Entering the year, inflationary pressures drove price increases to levels two times that of those in the previous two years.
Here’s a look at where the major segments of the category stand today.
The Big Picture
Remarkable price increases driven by inflation were the name of the game in beverages in 2022, helping categories that were soft in volume, such as carbonated soft drinks (CSDs), to grow in revenue, said Gary Hemphill.
The managing director and chief operating office of the Beverage Marketing Corp., Wintersville, Ohio, said another reason for higher prices is there are fewer price promotions, which in CSDs particularly have been used historically as an effective way to move volume. However, as the cost of ingredients and labor have increased, companies have cut back on price promotions, “which averages out to even higher prices still,” Hemphill said.
Entering 2022, inflationary pressures drove price increases to levels two times that of those in 2020 and 2021, said Sally Lyons Wyatt, executive vice president and practice leader for Chicago-based IRI.
“In ’20 and ’21, the average was around a 6% price increase,” she said. “In ’22, pricing for packaged beverages jumped to 13% per unit on average. That level of price increase slowed down our unit volume demand and we’re seeing unit sales turn more negative for the first time in three years.”
For example, energy drinks, aseptic juices and plant-based milk were among the few nonalcohol segments that showed unit growth in 2022 in convenience stores, according to IRI. In alcohol, spirits showed unit growth while beer, table wine and sparkling wine/champagne sunk. When it comes to dollar sales; however, most segments grew.
The mass market, tried-and-true categories—like CSDs, milk and juice —are struggling in the overall beverage market, Hemphill said. Those segments have taken a backseat to segments like bottled water, energy drinks, sports drinks and RTD coffee, he said.
“We’re continuing to see overall market improvement coming out of COVID,” Hemphill said. “It’s more limited with c-stores.”
Drilling Down
Bill Nolan, a partner with the Phoenix-based Business Accelerator Team, said unit growth in certain cold vault subcategories is very good news considering a declining c-store customer count versus pre-COVID conditions. Customers are down, he said, due to the pandemic’s stay-at-home effect and inflation belt-tightening.
“For the last two years, if you’re holding flat on your customer count, you’re doing better than most,” said Nolan, who worked for 30 years at Irving, Texas-based 7-Eleven in management and for eight years as vice president of marketing at Family Express, Valparaiso, Indiana . “The fact that the cold box is still generating sales and unit increases in a few of the key subcategories amongst this customer count decline is a very good thing. It shows the cold box continues to be one of the industry’s core strengths.”
Keeping the cold vault organized with today’s proliferation of flavors has been a challenge of late for Jeff Taylor, director of stores, Last Minit Mart, New Castle, Pennsylvania, which has six locations. Taylor said with manufacturers trying to cater to everybody, displaying the array of flavors becomes tricky.
More flavors to display means fewer facings in the cold vault for each flavor, which requires restocking more often. And while he wants to offer customers variety, innovation and new flavors, when a flavor is less than 1% of sales, he might let it fade away.
Typically, he said, a retailer wants to turn inventory at least monthly. “If you have $100,000 in sales, you don’t want inventory of retail value more than $100,000 in your store,” he said. However, the wide flavor variety means Taylor must carry a higher value of inventory compared to sales, meaning he isn’t getting the turns he would like.
Carbonated Soft Drinks Lag
Fewer people going out during the pandemic affected c-stores, Hemphill said, leading to a big drop in CSD sales in 2020, the 16th straight year of declines. In 2021, “People started going back into convenience stores, so the overall performance improved, but it’s a little bit artificial” because it had plummeted so badly in 2020, Hemphill said.
In 2022, CSDs grew 7.6% in dollar sales but fell 2.7% in unit sales, according to IRI. The increase in 2021, the first in 17 years, was helped by restaurants reopening, he adds.
The unit-sales decline in CSD sales is for two reasons, he said: consumers seeking a healthier refreshment and variety. “Because some of these smaller niche categories are growing, people are sometimes choosing those over carbonated soft drinks,” he said.
Lyons Wyatt said consumers are shifting from traditional pack types—12-ounce (still the largest share), 12-packs and 2-liter—to the 7.5-ounce mini cans and 16.9 half-liter 6-pack configurations, which have sustained the highest compounded annual growth rate. “Trends show that the club-pack offerings are providing better value to consumers, and they’re really doing better than the old-fashioned ones,” she said.
Bottled Water Healthy
Bottled water is a remarkable category, Hemphill said, that segments a variety of ways. Of most interest to c-stores is the single-serve clear plastic bottle of still water, which is about 70% of the total bottled water category on volume and is the biggest growth driver.
“It started to slow because it’s so big, and pricing is going up there, too, which could be impacting the growth of the category,” he adds. “But we continue to see healthy performance there because it’s a very well-positioned product.”
Sparkling water, which showed double-digit growth for several years, has hit a wall, Hemphill said. “That (slowdown) is maybe the biggest surprise in bottled water,” he said.
Energy Drinks Vibrant
Energy drinks are the best-performing category for two reasons, Lyons Wyatt said. First, prices haven’t risen as much compared with other categories, and second, it’s popular with the “home-centric life we have, and people going back to work are looking for a little boost.”
Regarding prices, Lyons Wyatt said she has seen not only energy but any category holding prices steady “getting a lot of bang for their buck” from consumers seeking savings.
Lyons Wyatt adds that she’s seeing more category blurring. “There’s this move toward physical and mental health supplement with C4, which is energy and hydration, and the Starbucks Baya, which is coffee fruit-based energy,” she said. “There’s Bang, which has creatine. And they’ve all launched successful innovations that still have energy and stimulation but with performance-based attributes.”
Hemphill adds that about half of energy drink volume is via c-store sales, a “vital channel” for this category. “As goes the performance of c-stores, so goes the performance a lot of times of energy drinks,” he said.
Recently, however, Hemphill said more competitors have entered the market, some championing healthier, premium products.
“While there is innovation, the tried-and-true brands have introduced line extensions that have also helped,” Hemphill said.
Monster and Red Bull dominate, with Rockstar a distant third but also a significant player, he said.
Sports Drinks Sustain
This category is experiencing a similar dynamic to energy: fairly concentrated with leaders—Gatorade, Powerade—at the top but new players like Body Armor entering the market, Hemphill said. “Because of innovation and newcomers, and strong demand just for sports drinks, you’re seeing fairly healthy performance there,” he said.
Milk and Juice Challenged
Milk and juice have underperformed in recent years.
“Milk is a challenging category because you have a lot of competition with the dairy alternatives like almond milk and oat milk and others,” Hemphill said. “On the juice side, the difficulty has been the high sugar and caloric content of the products…. Also, juice was an expensive product that’s gotten only more expensive.”
Nolan said grocery stores are taking over the milk industry because of the cost of goods. “But (c-stores) still have to stay in stock and be ready for it,” he said.
CBD Drinks Vary
CBD drinks are a “challenging environment,” Hemphill said. “It’s a bit of a patchwork situation because most of the regulatory rules and laws are taking place at the state level.”
“I think the marketplace is waiting for more clarity federally before we see it developed in a bigger way,” he added. “There’s an opportunity there, but it tends to be niche, and it tends to vary widely depending on the state you’re in.”
CSP sister research firm Technomic shows CBD beverage market penetration tripling from the 2018’s fourth quarter to 2022’s third quarter, from 0.1% to 0.3%. In addition, cannabis beverages are projected to grow in the U.S. from $1.2 billion in 2023 to $5.9 billion by 2033, according to Future Market Insights Inc., Newark, Delaware.
Alcohol Evolves
Hard seltzers and ready-to-drink alcohol cocktails are what’s growing in alcohol, Hemphill said.
Hard seltzers, however, have slowed in 2022 and have taken “a bit of backseat to other alcohol alternatives like spirit cocktails.”
Jon Berg, vice president of beverage alcohol thought leadership at NielsenIQ, Chicago, said there’s been a “seismic shift” in the ready-to-drink segment. “And whether it’s a new flavor or a functional beverage difference, all of those things really hit a fever pitch during 2022,” he said, adding the intense shortening of product life cycles has been the biggest issue.
A shortened life cycle can be due to distribution issues or lack of shelf space, he adds. Another reason is many suppliers test a new product in a select location, then roll it out wider or pull it back to “retool and come up with a different idea,” he said.
On the heels of RTD growth is the non-alcohol trend, Berg adds: “That has been really interesting to watch and see who has gravitated to those products.”
In recent years, spirits have done a “premiumization escalation,” Berg adds, and tequila is the most important growth area in RTD alcohol. Tequila, he said, “lends itself to (premiumization) because it has blanco, anejo, reposado variants, which come through aging, and consumers are gravitating toward that.
However, a retailer must be licensed to sell tequila, a significant restriction, Berg said.
Wine under $10, meanwhile, has encountered the biggest headwinds, Berg adds. “A lot of those shoppers who were buying inexpensive wine are now either buying ready-to-drink products or going back to craft beer as part of their repertoire,” he said.
To stay competitive in beverages, c-stores should determine if they have the right product mix for immediate consumption and bigger sizes for the take-home consumer, Lyons Wyatt said. Consider promotions and deals to boost sales—and ensure consumers are informed. “Use digital signage, some of the apps, things like that,” she said.
As COVID concerns fade, consumers are returning to some of their prepandemic behaviors, giving rise to breakfast coming back as the go-to daypart for convenience-store foodservice. But that doesn’t mean things are back to normal. Anything but!
Instead, c-stores are feeling the blows of inflation, as well as ongoing labor and supply shortages, as they plan daypart menu items to please customers and grow revenue in 2023.
“Labor is pretty much dictating any innovation that we have, and supply shortages are dictating what we can put on our menu,” said Michelle Weckstein, director of food and beverage brands for Southwest Georgia Oil Co. “So we have made a strategic effort to streamline our menu to our core items or the items that we call stars.”
Here’s a breakdown of where each major foodservice daypart stands today.
WAKE-UP CALL
Technomic data shows the breakfast daypart hasn’t recovered to pre-pandemic levels, but momentum is growing as commuters make their way back to offices.
According to Technomic’s Fourth Quarter 2022 C-Store MarketBrief, 74% of c-store foodservice patrons are commuting either full time or a few days a week.
“The challenges at breakfast include increased costs on ingredients like eggs and breads, which compresses margins,” said Donna Hood Crecca, principal with Chicago-based Technomic, a sister company to CSP.
She also cites a new competitor for retailers: at-home preparation. “Many consumers got into the habit of preparing breakfast and coffee at home during the pandemic and continue to do so.”
Manufacturers that supply breakfast items to c-stores have also seen changes in the breakfast daypart. “Prior to COVID, the morning daypart was a significant source of consumer traffic,” said Sandie D. Ray, vice president, foodservice business unit marketing and data analysis, Ruiz Foods, Dinuba, Calif. Lunch and snacking dayparts are strongest now, she said.
Not all retailers are feeling the breakfast pain.
“As ugly as COVID was on the East Coast, here in the Midwest, we had about five months of ugliness, but after that, things started to bounce back,” said Paul Servais, foodservice zone leader for Kwik Trip. The family-owned chain based in La Crosse, Wis., operates 843 stores and serves customers in Wisconsin, Minnesota, Illinois and Iowa.
“We’re having record sales. Our food program has flourished. The breakfast daypart is still the best. That has not changed, and it continues to grow,” he said. “The only amazing thing to me is that you can have double-digit growth on your best daypart.”
Grab-and-go foods any time of day are still the preferred choice of customers, retailers agree. In the morning, that means breakfast sandwiches. “Sandwiches are huge,” Servais said. “Bakery is not far behind, a lot of doughnuts.”
At Tulsa, Okla.-based QuikTrip, “We’ve seen breakfast come back strong over the past year,” said Adam Fidanza, corporate sales manager. “Things shifted more to lunch during COVID, as people shifted their schedules. In the last six to eight months, we’ve really seen a shift back to breakfast.”
During the height of the pandemic, foodservice was all about being creative with available ingredients and seeking additional vendor partners as backups for supplies.
Nick Rech, area sales representative for Sheboygan Falls, Wis.-based Johnsonville, said versatile products can help with the daypart challenges.
“Sausage patties and sausage strips can be used in various menus across dayparts,” he said. “They not only add flavor, but they are incredibly versatile and can be used in breakfast sandwiches, burgers, salads and more.”
While those trends continued in 2022, there was some relief as retailers saw “more normal” times in foodservice. Depending on the geographic region of stores, daypart traffic remained stronger for lunch and snacking as consumers continued to work from home and avoid a morning commute.
Coffee Perks
Technomic data shows hot beverages, especially coffee, continue to be a traffic driver in the breakfast daypart, as do self-serve beverages throughout the day.
While coffee has rebounded, some chains note sales have not returned to pre-pandemic levels. “Coffee probably took the biggest hit within the category,” said Chad White, foodservice category manager for York, Pa.-based Rutter’s. “We certainly have seen it bounce back, but we’ve still got some work to do.”
Much of the lag is attributed to workers returning to offices. “Coffee correlates right along with that,” White said, adding that he works closely with his coffee supplier—S&D Coffee/Westrock—to keep his program vibrant and fresh for the customer.
“We allow a lot of customization, and we certainly want to continue down that road.” Quarterly limited-time offers (LTOs) of new flavors also help boost coffee sales, he said.
Weigel’s c-stores are seeing success across dayparts with credit to two key factors: customer service and new products that are fresh, non-GMO and humanely sourced, said Beth Hoffer, vice president of foodservice and manufacturing for the Powell, Tenn.-based chain.
She said food sales increased almost 30% in 2022. Good-quality food is part of the reason, she said, “but I think customer service is what’s driving our business right now more than anything.” She points to long wait times in fast-food drive-thru windows, as well as the c-store’s wide variety of products.
“You can be in and out of the store in less than five minutes. You’ve got your lunch, you’ve got everything else that you need, but it’s quicker to come here,” she said.
Now Trending
As for what’s trending, Hoffer said the chain’s stuffed biscuit of handmade dough with sausage, egg and cheese inside is the No. 1 seller. “It’s portable, and portable is a big deal,” she said. Pizza continues to be a top seller at lunch and dinner.
Hoffer has high hopes for a new item the chain was set to launch in January: fried chicken tenders. “These are fresh, never frozen, non-GMO, no antibiotics and humanely sourced fresh fried chicken tenders” from Springer Mountain Chicken of Georgia, Hoffer said. “Our big growth will be going from a frozen tender to a fresh one.” Hoffer said this change also addresses younger consumers who look for environmental and social responsibility when choosing companies to support.
Single-store owner Tammy Affolter, who with her husband Woody owns Woody’s Pump n Munch in Randolph, Minn., said her Hunt Brothers Pizza program is a key traffic driver at all times of the day. “Pizza is 95% of our [foodservice] business,” she said, with about 60% sold in slices from the warmer and 40% full pies. The store is in a town of about 800 people and serves an average of 350 pizzas a week, including breakfast, lunch and dinner. “We sell a ton of breakfast pizza,” Affolter said, noting the nearby K-12 school attracts students, teachers and staff.
The store was built in the 1950s and fully remodeled and expanded in 2021 to include a liquor store as well as the convenience store and gas station. “The remodel has increased our business substantially,” she said. In the year since the renovation, she estimates the store sells 100 more pizzas a week than it did previously. As for new food offerings in 2023, Affolter said she may consider adding a chicken program.
Well-Equipped
One of the main changes and biggest driver of menu adjustments at QuikTrip is expansion of QT Kitchens and their new equipment. “We upgraded our grab-and-go offer with new warmers. Almost everything off the warmer is now made fresh in house,” Fidanza said.
Equipment also has been a driver for Kwik Trip. “We introduced fryers to all of our stores,” Servais said. “Once you have a fryer, you have a whole other venue because you can do so much.”
The emphasis at Kwik Trip has been offering a wide selection of appetizers, including mozzarella sticks, French toast sticks, jalapeno poppers, bacon cheddar bites, mini-tacos and boneless wings. “We can’t make enough,” he said of the wings and tacos. Servais said he rotates menu items every six to eight weeks to keep the offer fresh.
“We have a lot of hot cases in our stores; we call them Hot Spot cases,” he said.
The cases serve items for every daypart but especially breakfast and lunch, Servais said. “Everything we do is grab and go,” except for mobile orders. “We make it fresh [for delivery or carryout] rather than taking something that’s been sitting in the case,” he said.
In addition to the slowdown in store traffic and distribution issues, inflation stands as the third element slowing retailers’ return to pre-pandemic sales.
But Fidanza said QuikTrip customers seem to be much more accepting of higher prices and other changes due to shortages.
“Before,” he said, “a retailer may be called out for price gouging. Now it’s just a blip because it’s just one more thing that costs more. I’ve had more price increases in the past six to eight months that I had in my previous seven and a half years.”
He adds, “Customers are much more accepting of rapidly changing supplies,” noting a recent shortage of lettuce. “Selling lettuce right now, you might as well be selling gold. We had to take it off our menu. Not one customer has said a thing. We’ve all just rolled with the punches.”
LUNCH BREAK
Topped with lettuce or not, sandwiches remain a staple of the lunch daypart, along with roller grill, chicken and pizza, as retailers emphasize traditional c-store foodservice items.
At Southwest Georgia Oil’s SunStop Markets and Eat’s Deli, Southern-style foods resonate. “We sell a lot of chicken, whether it’s chicken tenders or our eight-piece fried,” Weckstein said. “We were seeing people being a little more mindful of what they are eating, so we added a baked chicken option as an LTO.” The limited-time offer did so well that it will be a core menu item for the chain in 2023. “We’re still streamlining and keeping our menu as simple as possible.”
Biscuits are also a big seller in the South.
“We found a cornbread biscuit that has the texture of a biscuit with the sweetness of the cornbread, so we are going to be featuring that with our breakfast sandwiches,” Weckstein said.
Ray at Ruiz Foods said the manufacturer’s roller-grill Tornados and hot-case empanadas are top sellers. “We know consumers desire variety throughout the day,” she said. A recent launch of apple pie empanadas has been popular in the morning as an accompaniment to coffee, she said, as well as an all-day snack option.
The goal for most retailers is to transition as smoothly as possible from one daypart to the next. “During lunch, it’s a meat and one side. Then we include two sides and a roll for later in the afternoon,” Weckstein said.
At Kwik Trip, Servais said the dayparts have blurred. “We have breakfast items out all day now, and we have lunch items out 24 hours a day, too.” He said the biggest daypart adjustment at Kwik Trip stores happens later in the day. “As we roll into evening, we put more of an emphasis on our hot cases, whole [pizza] pies and eight-piece chicken to take home and eat.”
Consultant Jessica Williams, founder and CEO of Food Forward Thinking, said cold beverages fit nicely into these now-blurred dayparts. “Cold-brew coffee, cold espresso-based drinks, energy and fountain drinks will continue trending toward massive popularity in 2023,” she said. “As foodservice leaders, we will be wise to hop onboard that trend and offer food items that pair well with cold beverages in every daypart.”
DINNER RESERVATIONS
While Kwik Trip has seen growth in all foodservice in the past year, dinner is the area of slowest growth, Servais said. Others echo that sentiment. “That’s been the piece we haven’t been able to unlock,” said Fidanza of QuikTrip.
The biggest challenge in the dinner daypart is offering meal solutions that are not found anywhere else, said Williams, former foodservice category manager at Thorntons.
“Cold grab-and-go snacks and roller grill might be the best options at dinner time,” she said.
Andrea Taylor, foodservice category manager for distributor McLane Co., said many consumers are no longer shopping according to daypart. “Pizza has become a top seller in the mornings, and breakfast items are now popular in the afternoons,” she said.
Temple, Texas-based McLane has noticed that consumers are interested in new and unique offerings, so stores are looking to stand out from their competition with healthier options, such as grain bowls with a protein and vegetables, Taylor said.
In 2023, McLane plans to offer more fresh salads and fruit, and improve its Javaperksprogram to help stores drive coffee sales and traffic, Taylor said.
Let’s Make a Deal
One strategy that seems to work across dayparts is embracing limited-time offers and promotions.
“LTOs have been very successful because they’re usually innovative flavors,” Fidanza said.
At QT, the offers typically run for three months and feature core items at reduced prices. Another strategy that has worked for QT is partnering with suppliers to feature new items and flavors. “They work with our chefs and develop unique flavors; a lot of them have been first-to-market,” Fidanza said.
The jalapeno bacon popper taquito, for example, has been “hugely successful,” he said.
Deals and promotions are increasingly important, said Ray at Ruiz Foods.
“Consumers love their go-to-favorites but also crave variety,” she said, noting limited-time offers are a way to satisfy existing consumers and attract new future loyalists.
White said LTOs are an important part of innovation at Rutter’s. “We’re expanding our LTOs and using that as a measure of whether the customer has interest in the product,” he said. Rutter’s plans to announce new LTOs in the second quarter of 2023.
As a supplier, Johnsonville is also keen on driving foodservice sales with promotions.
“We know that 42% of customers coming into the store purchase a beverage only. One of our goals is to drive those consumers from the beverage area to the roller grill, and creating a bundle promotion can help drive incremental foodservice sales and higher basket rings,” Rech said.
Meanwhile, continued distribution issues have slowed down innovation in foodservice and other products categories. “That’s the exciting part of my job, getting to roll out innovation,” Fidanza said. And that stopped in 2020 when COVID hit hard. “I’m going to have to retrain myself on how to do it,” he said, adding that one of the first innovations of 2023 will be the addition of hot sub sandwiches.
SNACK ATTACK
Snacking continues to be a key driver of c-store traffic throughout the day. A Technomic study shows that just over half of consumers purchase foodservice snacks from c-stores at least once a week; that rises to nearly 7 in 10 for consumers ages 18 to 34.
“Our recent research finds consumers are getting busier, so snacking is top of mind as they look to satisfy hunger quickly,” Crecca said. She adds that about a third said they’re purchasing snacks at c-stores more often now because value has improved, and mid-afternoon is prime time for snack purchases.
While packaged snacks and roller-grill items often top the list of foodservice snacks in c-stores, Paul Stippich, director of marketing for San Leandro, Calif.-based Otis Spunkmeyer, suggests retailers consider the advantage of fresh-baked snacks.
“Craveability and portability and that fresh-baked aroma” attract c-store shoppers, he said. Otis Spunkmeyer data shows 50% or more of consumers identify freshness at a No. 1 decision driver.
Citing Technomic data, Stippich said muffins are a top item in the mornings, and cookie consumption peaks at midday. While chocolate-chip cookies and blueberry muffins are the category leaders, he said some flavor innovation is coming in 2023. “It’s a balance of unique flavors and generating repeat purchases. We’ll be looking at flavors that are the perfect balance of that combination,” he said.
Across the dayparts, c-stores are expected to outpace fast-food chains in the next year, and specifically at breakfast and lunch, c-stores are winning, according to Technomic.
“Given recent menu price increases at fast-food restaurants, c-stores are seen as a less-expensive option,” Crecca said. She notes that about half of consumers rate c-stores being just as capable as restaurants in offering fresh, quality food and beverages.
“From a nominal sales growth perspective, c-stores are expected to outperform fast food in 2022 and again in 2023,” Crecca said.
That insight confirms what Hoffer of Weigel’s notes, that c-stores beat fast- food outlets by offering faster, better customer service and a broader range of products.
FIELD RESEARCH
Foodservice consultant Ed Burcher of the Business Accelerator Team has traveled coast-to-coast by car twice in the past year. And like any longtime retailer, he stopped at many convenience stores across America along the way. A few observations on the state of c-store foodservice …
The breakfast daypart lags pre-pandemic numbers. Why? Because fewer people are commuting for work. “So while it’s come back a bit, it certainly hasn’t returned to pre-COVID levels,” he said.
Consumers are more money-conscious than usual. To that end, Burcher sees retailers turning to more bundles or price promotions and limited-time offers to drive foodservice sales. Inflation-related price increases are unavoidable, Burcher said, “but retailers are trying to emphasize value and quality.”
Customer demographics are as important as ever. Younger customers, ages 28 to36, are more comfortable with technology, such as kiosk or mobile ordering, Burcher said. Those customers also lean toward cold beverages, whether it’s cold brew, energy drinks or fountain and frozen beverages. “I’m amazed at how much energy slushies I see being made to order,” Burcher said. He challenges retailers to understand what that age group wants and do more to satisfy them. The caveat, of course, is to avoid alienating other core customers.
By: Bill Nolan–partner with the Business Accelerator Team | December 2022
With just a few days until the end of 2022, it’s doubtful we will look back with any remorse, but rather, hopeful for the new year. Yes, the pandemic of the last three years is, for the most part, in our rearview mirror. But inflation, expense increases and labor issues will continue to hammer the convenience-store industry for some time, regardless of changes in the political landscape.
Like the seasoned operators we are, having an optimistic outlook for the future is what drives our business and is a vital component that the c-store industry has and will continue to embrace.
With this in mind, here are the three proven approaches to help you improve business as we head into 2023.
Pitching Coffee
There’s been no question that coffee has been a key profit producer and customer-count influencer for years. I would even say, many chains have overcome the gas-station stigma and are respected for their hot beverage offerings. But even with an influx of new and upgraded equipment, specifically bean-to-cup drip, espresso and the numerous gourmet coffeehouse options, one has to ask: Why aren’t we exponentially growing our coffee business?
I’ve come to understand one reason why: The average coffee consumer seems to believe that coffeehouses have a much higher quality bean than a c-store. In reality, many c-store chains have roasters providing the highest quality bean that would match any $4-$5 beverage at Starbucks.
Rather than just relying on advertising our hot and fresh offer, more concentration should be placed on the quality and origin of the bean and that it’s as good or better than any coffeehouse. This is especially important to reach younger coffee consumers, who may not understand your neighborhood c-store may just be your most convenient (and more affordable) coffeehouse.
Employee Retention
A very real and persistent concern is the issue of having enough employees to staff the store and the numerous corporate positions needed to operate successfully. Offering a higher hourly wage, paying hiring bonuses, and demonstrating and implementing the value of diversity and company culture have had an impact. But still, retaining those employees, especially the best ones, present a unique situation.
We all as employees want to feel valued and that we contribute to the team. But feeling appreciated and regarded as a reliable member of the operation can mean several different things. An important one: Will management see me as someone it wants to train and develop, and am I considered a valuable asset to this operation?
Most employees are looking for self-satisfaction, in addition to recognition of their efforts.
Providing additional responsibilities and the necessary training to be successful will demonstrate the value you have in them. That may just be the solution to energize the average employee and the key to keeping them much longer.
‘Quiet Profit Maker’
Managing the cost of inventory continues to be the “quiet profit maker.” This has always been necessary for efficiently run retailers. But when sales, margin and consumer packaged goods returns are adequate, new item introductions (or the steady flow of deliveries) can take priority over removing slow-moving items.
Category managers typically review and upgrade their plan-o-grams once or twice a year. But whether it’s cigarettes or the cold vault, removing slow-selling products in a more timely manner can save significant dollars over a year’s time.
Managing the cost of inventory continues to be the "Quiet Profit Maker."
For many operators, this has become evident over the past two years. As we head into 2023, customer counts may remain flat, or for many, continue to decrease due to socioeconomic factors. Maintaining the top and core sellers, adding high-potential new items and constantly deleting unnecessary slow sellers will undeniably improve margins and profits.
Retailers must remain vigilant in this area of business to achieve the greatest results.
Which snacks and candy fads had the most innovative products this year?
CHICAGO — In 2022, snacks became healthier, and candy became spicier. Trends in sweets and snacks also included a gummy revolution and kicks of caffeine in unexpected ways. Read on to review this year’s innovations.
Spice
One of the top trends of 2022 spanned both salty and sweet snacks—spice. The bold flavors encompassed chips, popcorn, gummies and hard candy.
Gummies
Reaching for the attention of today’s younger generation has recently included transforming existing nonchocolate candies into gummies, especially with a fruity, multi-flavor approach.
Caffeine
Whether they provide a boost of energy or simply the taste of coffee, caffeinated sweets were popular this year. Treats with a coffee theme spanned chocolate, nonchocolate and sweet snacks.
Better for You
Better-for-you products continued to perform well in 2022, and there was a draw toward protein-based snacks in the category.
Candy brands are also committing to being transparent about nutrition. More than 94% of candy products have front-of-pack calorie labels and 85% of chocolate and candy sold today comes with 200 calories or less per pack, according to a report by Partnership for a Healthier America (PHA) and the National Confectioners Association (NCA).
CHICAGO – Foodservice in 2022 addressed the lack of labor, both in product and equipment offerings, while adding more branded restaurants in convenience stores. Meanwhile, healthier and fresh continued their growth in this space.
Fewer Steps
Foodservice products and equipment are responding heavily to the call to do more with less. Retailers’ hiring woes were magnified as they struggled with having fewer people to prepare menu items. The response was quite apparent at the NACS Show in October, where products showcased saving on time, labor and costs.
For example, the Equalizer pizza cutter from Spokane, Wash.-based LloydPans boasted equal slices–thus reducing waste because there are no smaller pieces customers avoid.
In baked goods, Rich Products’ Fully Finished Donuts portfolio reduces needs and promotes freshness that lasts. The doughnuts come frozen, and after a quick thaw stay fresh twice as long as other bakery options due to exclusive extended shelf-life recipes, the Buffalo, N.Y.-based company said.
Finally, customers can buy a beverage from a refrigeration unit and never have to pay a clerk or check out at all. Tech company Intuitivo, Miami, and refrigeration company Imbera, Kennesaw, Ga., teamed up on units where customers buying a beverage scan a QR code on the cooler door with their smartphone. When they remove their selection, they get charged. Cameras on top of the cooler detect the product being removed and charge the customer accordingly.
Restaurants in C-Stores
Restaurants, both name brand and those created in house, continue to open in convenience stores.
Jack in the Box in 2022 started eyeing convenience stores in its plans for substantial growth beyond its core markets of California and Texas. The 71-year-old fast-food chain, founded in San Diego, has more than 90 c-store locations among its 2,200 restaurants nationwide, but a combination of factors has spurred the company to aim for about 6,000, Van Ingram, vice president of franchise development, told CSP. Jack in the Box seeks new franchisees and operators to come into its system and operate c-stores and travel plazas, he added.
Also, GPM Investments in July opened two new Sbarro restaurants in its E-Z Mart convenience stores in Texarkana and Kilgore, Texas. The stores are part of a strategic partnership with Sbarro. GPM intends to open 50 new Sbarro locations in 2022. GPM, a wholly owned subsidiary of ARKO Corp., currently has seven total stores open with Sbarro, with four in Village Pantry stores across Indiana and one in a Fas Mart in Virginia.
In November, retailer Cumberland Farms, owned by EG America, launched a brand-new restaurant concept with the grand opening of Ria’s Pizzeria at its convenience store in Norton, Mass. Ria’s offers pizza by the slice and pizza made to order. Specialty pizzas include Nashville hot chicken, chicken bacon ranch and loaded baked potato. It also sells savory dough snacks.
Finally, a Togo’s sandwich shop in spring opened in a Grab N Go convenience store in Modesto, Calif. This was the first version of the San Jose, Calif-based fast-casual sandwich chain in a convenience store. Togo’s has about 170 locations and is ramping up to grow in nontraditional locations like c-stores.
Healthier, Fresher
Kum & Go, Des Moines, Iowa, continued the rollout of its made-to-order fresh-food menu. In October it unveiled the new menu on its home turf in Des Moines, Iowa-area convenience stores. The menu includes stackers and bowls for all dayparts and premium ingredients and fresh toppings and sauces. Grab-and-go burritos also are available.
Meanwhile, Altoona, Pa.-based Sheetz promoted its Made-to-Order foodservice program on its website, proclaiming that its food is fresh and “rivals any quick-serve restaurant you’ve ever visited.” Sheetz boasted that it uses the highest-quality ingredients. “Get exactly what you want, when you want it, 24/7,’ Sheetz said.
At startup Curby’s Express Market, which opened its first c-store Feb. 1 in Lubbock, Texas, the team aims for a place where consumers don’t have to make a choice between convenience and quality. The menu, created from scratch, includes kolaches, burritos, muffins and melts for breakfast; and pizza, salads, melts and sandwiches for lunch and later.
Unusual Flavors
Unusual and varied flavor combinations continued their momentum in 2022.
C-store industry pizza program Hunt Brothers rolled out a limited-time-only cheeseburger pizza in November that’s reminiscent of a classic fast-food cheeseburger, the Nashville-based company said. It features Hunt Brothers Pizza’s original crust topped with a creamy dill pickle-cheddar sauce, a blend of shredded cheddar and 100% natural part-skim mozzarella cheeses, hamburger crumbles and fresh chopped white onions. It’s finished with a sprinkling of the company’s Just Rite Spice.
7-Eleven, meanwhile, introduced a new limited-time-only Green Apple Slurpee, which combined tart and sweet, as well as a Smokey Cheddar Sausage to celebrate Oktoberfest.
Nestle-owned Coffee Mate is partnering with two well-known treats right after the holidays. In January, Brown Sugar Cinnamon Pop-Tarts and Zero Sugar Twix, both limited-time offers, make their debuts.
C-stores have been partnering with high-profile candy brands for offbeat beverages and more. C-stores also have been carrying mashups created by other companies.
Sheetz, Altoona, Pa., teamed with Goetze’s Candy Co. to launch a series of Cow Tales-inspired seasonal milkshakes at the c-store chain. The first two limited-edition flavors are Caramel and Cream Milkshake with Cow Tales Flavors, and Strawberry Cream Milkshake with Cow Tales Flavors.
Blend-it-yourself shake and smoothie company f’real, Emeryville, Calif., rolled out a Snickers milkshake, marking the first partnership between f’real and Mars Wrigley, Chicago, the makers of the iconic Snickers bar.
NEW YORK — More than seven in 10 (71%) adult consumers say they discover new products and brands in convenience stores, according to Convenient Insights: The C-Store Shopper, a new nationally representative consumer sentiment survey on c-store shopping from NCSolutions (NCS). Nearly four in 10 (38%) respondents said they shop at c-stores two or more times a week, while overall, nearly two-thirds (62%) visit c-stores at least once a week, the report said.
C-stores “are an essential part of the customer journey,” NCSolutions said.
Here are the reasons why the company, which provides solutions for improving advertising effectiveness for the consumer packaged goods (CPG) ecosystem, concluded that “Americans are in love with convenience stores”:
C-Stores Provide Good Shopping Experience, Value
American consumers find shopping at c-stores offers numerous benefits. Seventy-nine percent of shoppers say the stores offer a lot of product variety, while 77% say c-stores provide a good shopping experience. Sixty-three percent see c-stores as delivering good value for their budgets.
CPG brands looking to engage Gen Z can tap into this generation’s favorable view of c-stores. Ninety-one percent of Gen Z say c-stores provide a good shopping experience.
More than two-thirds (67%) of Americans purchase candy from c-stores, and many rely on c-stores as a place to for beverage—57% of consumers said they purchase on-the-go drinks like coffee, tea or fountain beverages at c-stores, while 40% buy milk, juice and other staples. In addition, 32% pick up packaged beverages and 23% buy beer.
Beyond beverages, almost a third (30%) pick up prepared foods while in the store, and 37% purchase lottery tickets.
Image courtesy of NCSolutions
What Brings Consumers Into C-Stores?
Americans visit c-stores for various reasons, but the location is No. 1, cited by 65% of American consumers. Fifty-nine percent say c-stores meet their immediate needs, while 54% like that they can conduct transactions quickly and be on their way.
Nearly one-third (30%) say price brings them into the store, while 28% enjoy the variety of products c-stores have to offer. Additionally, 34% shop at c-stores because they are less crowded.
“The c-store channel offers a compelling potential for CPG brands to motivate new buyers to try their products. It’s an especially attractive channel to reach the Gen Z consumer, who is very loyal to c-stores,” said Dan Malmed, chief revenue officer for NCSolutions. “Appealing to Gen Z c-store enthusiasts enables advertisers to build and drive loyalty as well as improve the return on ad spend of their campaigns.”
Gen Z are also more likely to use a delivery service for c-store items, with almost half (49%) reporting they have used a service such as 7-NOW, Instacart, DoorDash, Uber and others. This is 96% higher than all Americans who reported using a delivery service (25%) for c-store shopping.
Image courtesy of NCSolutions
Getting Social With C-Store Shoppers
Consumer purchase behaviors are also influenced by what they see on social media. Seventy percent of c-store shoppers said they are more likely to purchase products they see promoted on c-store social media channels—16% said they would be completely likely, 19% said they would be very likely and 35% said they would be somewhat likely.
NCSolutions fielded the online survey of 2,216 respondents, age 18 or older, from Oct. 7 to Oct. 10, 2022. It weighted the responses by location, education, income and other demographics to be representative of the overall population.
Based in New York, NCSolutions is a joint venture company with Nielsen as the majority owner.
ALEXANDRIA, Va. — Nearly three in four consumers (72%) say they have a favorable opinion of convenience-store jobs, according to a new survey released by NACS.
The U.S. c-store industry, with more than 148,000 stores nationwide selling fuel, food and merchandise, conducts 160 million transactions daily and had sales of $705.7 billion in 2021. It employs an estimated 2.38 million people.
Customers who most often shop at convenience stores—and interact with employees—give the highest marks: 85% of frequent customers have a favorable option of convenience-store jobs, compared to only 54% of infrequent customers.
Customers also support many of the positive community-focused attributes associated with c-stores:
86% say convenience stores are good first jobs for those looking to enter the workforce.
83% say c- store jobs are good jobs for those re-entering the workforce, such as retirees or veterans.
83% say c-store employees can work their way up to become managers or even run their own stores.
82% say c-store jobs are good jobs for high school or college students.
74% say c-store jobs are good jobs for those who can’t or don’t want to get a traditional education.
A previous NACS consumer survey found that more than one in seven Americans (15%) said they had worked in a convenience store. Of those current and former workers, 79% said their job experience was valuable, and 66% said they would recommend that type of work to others, particularly as a first job.
“With the challenges associated with the labor shortage, these findings are good news for the industry and could help provide valuable insights in how to message the value of jobs at stores,” said NACS Vice President of Strategic Initiatives Jeff Lenard. “Beyond the flexibility to enter—or re-enter—the workforce and set and find flexibility around their lives, current and former employees also cite the daily interactions and conversations they have with regular customers. This human connection is particularly important as we continue to re-establish regular routines that had been disrupted by the pandemic.”
The NACS Consumer Fuels Survey is a national consumer survey conducted Sept. 10-13 by national public opinion research firm Bold Decision. A total of 1,200 American adults were surveyed online, including 1,049 who said they are regular gas customers, and the overall margin of error for the findings is +/- 2.83% at the 95% confidence interval.
Founded in 1961 as the National Association of Convenience Stores, Alexandria, Va.-based NACS advances the role of convenience stores as positive economic, social and philanthropic contributors to the communities they serve and is an adviser to retailer and supplier members from more than 50 countries.
