Trade Insights Category: CSP

By: Chuck Ulie | July 2, 2024

Getting customers to salivate for food requires understanding their needs, journeys, pain points, sensory experiences

Getting convenience-store customers to salivate for one’s food and beverage programs is a multilayered strategy.

This insight came from Rachel Toner, founder and technical director of Chalfont, Pennsylvania-based Taste Strategy, who presented with Peter Rasmussen, founder and CEO of Convenience and Energy Advisors, St. Petersburg, Florida, last week at the 2024 CSP C-Store Foodservice Forum in Schaumburg, Illinois. Their talk was titled Is Your Food and Beverage Program Worth Salivating For?

More Foodservice Forum Coverage:

• Consumption of Food and Beverages at Home Remains High
• C-Stores Must Be Sensitive to Foodservice Prices They’re Charging
• From Preparation to Store Design, Retailers at Forum Talk About Growing Foodservice
• Reducing Negative Friction in a Convenience-Store Foodservice Program
• Retailer Commitment Essential for a Successful Convenience-Store Foodservice Program

The pair said that growing foodservice sales requires maximizing ingredients while minimizing costs via fresh, trending offerings; appealing smells; clean amenities—and a solid strategy to get customers inside from the pump.

“It is very, very, very difficult to get someone to salivate, especially through photos, and you think about convenience retail—we are always pursuing photos and describing products,” Toner said.

Food and beverage is a multisensory experience, Toner said. “And the research shows it is difficult to get people to salivate. In some cases, it takes consumer empathy, and to get people to think about that consumer empathy you have to think about the way that our customers are engaging with our products.”

“When I think about foodservice programs, especially in convenience stores, it’s not a single department job.”

To win in food and beverage programs, retailers must ask themselves how well they are engaging with their consumers to understand their needs, their journeys, their pain points and their sensory experiences when they’re consuming the retailer’s food and beverages, Toner said.

With that, Toner showed videos of c-store customers saying the three words that come to mind when they think about food and beverages at c-stores. Some responses:

• Cheap, fast, convenience
• Value, efficiency, fast
• Cheap, convenient, easy
• Fast, quick, easy
• Fast, ready, cheap
• Cheap, affordable, decent
• Quick, accessible, affordable

After the videos, Toner said, “That’s pretty impactful, right? Hearing it straight from the consumer. And the themes pulled from those videos aligned perfectly from what we see with the quantitative data. We’re seeing people want speed, and they think of pricing value. … What we have to realize is that in convenience, retail, quick and good do not need to be mutually exclusive.”

Retailers have to worry about fresh, trending offerings and trends that are progressing faster and faster—and having the right smells.

“Smells. When consumers enter your store, it’s like entering someone’s house. …  When they enter your stores, is it clean? Is it open? Or is it like walking into a casino? This is an entire sensory experience for them. It’s important to understand what they’re going through.”

“Free works. Deep discounts work. Fifteen percent probably is not going to do much for you.”

Toner added that “the reality is our consumers are not thinking about us in the way we think they are,” and to get their attention “is through creating an exceptional and memorable experience.”

Toner then played a video of consumers earlier this year talking about the factors that impact their decisions to buy food and beverages from c-stores. Some responses:

• Don’t want it to look dried out
• Taste
• Affordable and healthy-ish
• The smell and look; is the store a little more grungy?
• Look for price, quantity, unique, size of the product
• Price and options

“What this means the customer is always right,” Toner said. “Their needs are driving our development decisions.”

Toner then turned to turned to four foodservice must-haves:

• Safe
• Fulfilling. “If you have something in your store that isn’t fulfilling a need, it shouldn’t be there,” she said.
• Fast
• Affordable

Once the retailer has those four things, the three differentiators are the:

• Customer experience. Develop and set great sensory expectations, Toner said. “What are they going through when they shop at your retail store?”
• Assortment
• Taste and quality

Rasmussen then took over, discussing marketing, advertising and the path to purchase.

“When I think about foodservice programs, especially in convenience stores, it’s not a single department job,” he said. “It goes to your social media, to your advertising, to category management, and it even links with fuel.”

Other aspects to this are investing in signage as well as direct mail.

“Believe it or not, I love direct mail,” he said. “Free works. Deep discounts work. Fifteen percent probably is not going to do much for you.”

Retailers also must wow their customers through taste, quality and packaging—and then bring customers back to the store.

One way to do this is via loyalty programs, where a retailer can expect 18% to 30% more spend and one extra trip per week from members, he said.

“I would say that sounds great, but dream bigger beyond that,” Rasmussen said. “Loyalty programs outside of our industry perform better, particularly travel.”

Also in loyalty, the top 10% of loyalty members account for:

• 56% of all loyalty visits
• 59% of all in-store c-store loyalty purchases

At c-stores, the top performers achieve one in three transactions via loyalty programs.

With texting, Rasmussen said, “Don’t be annoying. Twice a week at the most.”

Source: CSP

By: Chuck Ulie | June 25, 2024

With many concerned about inflation, retailers must work to grow sales, according to Technomic’s Donna Hood Crecca

Nearly eight in 10 convenience-store customers are struggling or just getting by, with 82% concerned about inflation, meaning retailers must up their game to grow sales.

This insight came from Donna Hood Crecca, principal at CSP sister research arm Technomic, Chicago, who spoke June 26 on Winning the Battle for Traffic at CSP’s 2024 C-Store Foodservice Forum in Schaumburg, Illinois.

Crecca was optimistic about c-stores winning this battle.

More Foodservice Forum Coverage:

• Consumption of Food and Beverages at Home Remains High
• Do You Smell That? Experts Talk Power of Scents, More at Convenience Stores
• From Preparation to Store Design, Retailers at Forum Talk About Growing Foodservice
• Reducing Negative Friction in a Convenience-Store Foodservice Program
• Retailer Commitment Essential for a Successful Convenience-Store Foodservice Program

“This particular segment is in the enviable position that you are just so well suited, particularly from quick-service restaurants,” she said, though cautioned, “There’s a lot that we have to do in order to make that happen.”

Compounding the problem is that menu price inflation continues to outpace grocery, Crecca said, with food-away-from-home inflation at 4% in May 2024 and food-at-home inflation at 1%, according to U.S. Bureau of Labor statistics.

Turning to competition, Crecca showed a quote from McDonald’s CEO Chris Kempczinski: “The battleground is certainly with that low-income consumer.”

She noted, per Technomic data, that 53% of frequent c-store foodservice purchasers—once weekly or more—have household income below $50,000. This percentage is 43% for quick-service restaurants (QSRs).

“QSRs are aggressively pursuing lower-income consumers.”

These lower-income consumers, however, are more likely to notice higher menu prices at QSRs than at c-stores, 63% versus 59%—and this has resulted in more foodservice occasions shifting to c-stores, she said.

“The No. 1 reason for the shift: lower prices,” Crecca said.

Breaking it out, she said, all consumers using c-store foodservice once a week or more was 57% in 2023’s first quarter but jumped to 59% a year later; among those with a household income below $50,000, it grew from 55% to 58%.

In the same time frame, all consumers using a restaurant once a week or more dropped from 68% to 67%, while the low-income group fell from 59% to 58%.

Because of this, “The fast-food restaurants are going heavy into those value meal deals, she said.

But c-stores do have pricing advantages, and Crecca highlighted a few notable gaps:

• Chicken sandwich: $9.11 at a QSR, $4.90 at a c-store
• Cheese pizza: $13.11 versus $6.63                      
• Sausage breakfast sandwich: $5.77 versus $3.55
• Regular coffee: $2.58 versus $1.87
• Frozen blended coffee: $5.71 versus $3.84

“Consumers understand everything costs more today—so value is more important than ever,” she said.

Crecca said it was interesting to find that the importance of value is the same for all consumers and household incomes. “It’s universal,” she said. “Everybody’s after values. That’s what they’re looking for.”

Specifically, in 2023, 33% of all consumers, and 32% of lower-income households, said value was extremely important.

Increasing the perception of value “is really key to prompting that consumer to turn into your location instead of the fast-food restaurants,” she said.

Ways to boost this perception are, first, to leverage a c-store’s inherent advantage. “Seventy-five percent of c-store foodservice patrons prioritize the ability to multitask at the location,” she said, a stat that jumps to 86% among 18- to 34-year-olds.

“Consumers understand everything costs more today—so value is more important than ever.”

“Speed, ease and multitasking give c-stores the edge over QSRs,” Crecca said, showing a customer testimonial that read, “I can purchase other items like gas, retail items and household goods at the same time.”

Secondly, flaunt format options. The top three features that would increase value perception across all formats are combos/bundles, a fuel discount with a purchase, and loyalty/rewards program points/benefits, she said.

Third, excel at customer experience attributes that drive value in the c-store foodservice occasion, she said.

The top seven are:

• Quality of takeout packaging
• Speed of visit
• Portion size for the price paid
• Overall takeout capabilities
• Unique items a customer can get only at that retailer
• Availability of healthy options
• Overall atmosphere and ambiance

Fourth, have strategic price promotions, including:

• Buy-one, get-one offers
• Free beverage with food purchase
• Free food item with beverage purchase
• Half-off deals
• Discount with fuel purchase
• Happy hour deals
• Limited-time offers

Because of higher menu prices, the percentage of customers who said they are seeking out more foodservice specials and deals at fast-food restaurants is 49%, compared with 40% at c-stores. At the same time, Crecca said, 40% of customers said they are ordering less expensive items at fast-food restaurants, versus 33% at c-stores.

However, c-store menu price hikes are prompting some consumers to migrate away from c-stores.

Among c-store consumers buying foodservice items elsewhere due to increased prices at c-stores:

• 62% go to grocery store foodservice
• 60% to fast-food restaurants
• 42% to fast-casual restaurants
• 40% to coffee shops/snack shops

“Protect the core,” she said. “QSRs are aggressively pursuing lower-income consumers.”

Source: CSP

By: Chuck Ulie | June 26, 2024

Placer.ai reports includes ways to help convenience stores succeed

The coffee category is facing new challenges due to inflation, work-pattern changes due to the pandemic, and the ease in making a better cup of coffee at home.

To combat this, big-name chains are adapting, said Los Altos, California-based location-analytics company Placer.ai in a new report with lessons for convenience stores.

Some coffee chains have locked in on attracting specific consumer segments, while others are diversifying the selection of products, Placer.ai said.

• Read about CSP’s 20 Great Coffee Programs for 2023.

Despite the aforementioned challenges, the coffee space is proving resilient, Placer.ai said.

Since January 2020, “coffee’s COVID recovery regularly outperformed that of the overall dining industry,” Placer.ai said. “And since January 2022, monthly year-over-three-year (Yo3Y) visit gaps in the coffee space were consistently narrower than Yo3Y visit gaps for the wider dining category.”

These good times might be due to recent economic challenges spurred by rising commodity costs, Placer.ai said. “With many consumers feeling the strain of inflation, going out for a meal might feel like too steep of a  splurge, but picking up a coffee can be an affordable indulgence. The dip in dining visits, then, may partially explain some of coffee’s relative strength.”

Lunch: Key Daypart

Location intelligence from Placer.ai shows a relative increase in midday visits at many coffee leaders nationwide. This shift in visit times offers a new opportunity for sellers of coffee to boost lunch offerings and “tap into the market of customers looking for a convenient and comfortable place to grab a bite alongside their coffee or tea,” Placer.ai said.

“Between Q1 2019 and Q1 2023, almost all coffee chains analyzed, including Starbucks, Dunkin’, Tim Hortons, Peet’s Coffee and Caribou Coffee (and excluding Dutch Bros) saw an increase in visits between 11 a.m. and 2 p.m.,” the company said.

This growth in these visits might be due to people looking for a midday jolt or hybrid workers seeking a place to feel more creative.

Employees back in the office also could be choosing coffee shops for lunch to combat skyrocketing lunch prices, Placer.ai said.

Weekdays

Changes in weekday coffee visits between 2022 and 2023 show the shift from remote to hybrid work is affecting some of the recent visitation shifts.

“Between Q1 2022 and Q1 2023, weekday visits to coffee shops increased across all four major chains,” Placer.ai said. “Dutch Bros, the one chain that hasn’t seen an increased share of midday visits, saw the most significant shift in its visitation patterns, with weekday visits to the Oregon-based brand growing from 59.3% in Q1 2022 to 61.8% in Q1 2023. Starbucks took second place, followed by Tim Hortons and Dunkin’.”

Catering to Youth

Many Americans try their first cup of coffee before they can vote, Placer.ai said. “And with the rise in popularity of TikToks focusing on coffee orders, recipes and menu hacks, there are now many different channels to reach younger cohorts—and the long-term potential of wooing young consumers is significant.” 

Placer.ai said Dunkin’ is one chain focusing on reaching a younger audience, rebranding in 2018 by dropping “Donuts.”

“The name change was driven by the recognition that coffee drinks, especially iced beverages, were gaining popularity over sugar-laden pastries and wanted its new name to de-emphasize donuts to reflect shifts in consumer tastes,” Placer.ai said

Location intelligence indicates this rebranding is working, Placer.ai said, as between Q1 2019 and Q1 2023, the median age of Dunkin’s visitors dropped from 36.2 to 33.6.

Happy Helps

Dutch Bros is successfully targeting younger audiences and has enjoyed explosive growth, doubling its store count since 2019.

“And while the chain offers plenty of incentives for coffee lovers, perhaps one factor driving its popularity is its commitment to customer service,” Placer.ai said. “Known for its ‘bro-istas,’ or perpetually friendly and cheerful coffee slingers, Dutch Bros aims to create a customer experience that resonates with younger customers likely to seek out companies that share their values.”

Placer.ai said the company appears to be succeeding in reaching younger audiences. “In 2022, residents of Dutch Bros’ trade areas in California had a median age of 32.7, while the median age in the trade areas of the wider California coffee industry stood at 34.0.”

Source: CSP

By: Bruce Reinstein | June 24, 2024

Why did it take a pandemic to figure it out?

Sometimes it takes a major event in our lives to force us to adjust. It turns out that these adjustments are just practical changes that should have been made without being prodded or pushed into it. Prior to the pandemic, many decisions in foodservice were made based upon what was best for the operator and not the consumer.

Many were ego driven, but in most cases, team members and consumers were not involved in the decision. It is hard to imagine in the “new normal” a decision that does not involve the people who prepare or consume the products.

1. Simplification is about more than the menu.
Back in 2020, simplification became the key focus of foodservice operators who were dealing with bloated menus, single use SKUs, and complicated preparation and execution practices. There was no choice but to simplify as sales dropped, and staffing became a major problem.

Simplification has now become much more than about the menu. It is about making it easier for the customer to order, pay, and pick-up/have their meal delivered. It is also about making it easier for employees to build the menu items so they can do it quicker, but more importantly do it consistently.

2. Consistency of execution drives consumer traffic.
While great tasting food at a good value remains crucial to what the consumer wants, nothing really matters to them there is a lack of consistency in the food & beverage, service or the overall experience.

Convenience used to be the only reason to visit a convenience store, but that is not the case today.

Convenience store foodservice has become a destination for the consumer, much like restaurants. If consistent execution is not in the cards, convenience stores not only lose the foodservice business, but also the fuel, sundries and more that they purchase while they are there.

From Kinetic12’s Q1 2024 Emergence Group Report

3. The approach to team engagement has permanently changed.
The pandemic forced operators to learn how to do more with less. With a shortage of staff, it became crucial to cross-train employees and most of all treat them in ways that they had never been treated before.

Team members always preferred to remain loyal and avoid going from job to job, but they weren’t treated in a proper fashion and money alone was the key factor. Today, making work enjoyable, providing a quality-of-life balance and allowing team members to be engaged in decision making has a tremendous impact on their loyalty and desire to remain at their job. They are also looking for opportunities to learn and move up in the organization. Culture is not something you talk about — it must be earned.

From Kinetic12’s Q1 2024 Emergence Group Report

4. Value is much more than just price.
The consumer, in many cases, used to focus strictly on price as a guideline to getting a good value. Coupons, loyalty cards, discount nights and more were drivers of traffic.

Value is defined quite differently now. Price still is the most important element value, but other intangibles come into play which adjust the value proposition. If it was as easy as everyone selling the same exact products at different prices, the consumer response would be obvious.

Now there is focus on differentiation, consistent execution, portion size, enhanced product quality, a high level of service and hospitality and enhanced experience. Foodservice operators now must adapt to value.

From Kinetic12’s Q1 2024 Emergence Group Report

5. Driving sales does not necessarily reflect driving profitability.
Four years ago, customer counts went to zero. Gradually, customers came back, but for many, not at the levels necessary. Sales also increased due to significant price increases which ultimately reduced customer counts. The result has been a quandary. Costs are up, but the consumer will not pay a higher price.

Profitability now must come as a result of creative innovation, using quality ingredients that are available at reasonable costs, and providing consumers with customized options where they make the decision to increase their average check.

Loss leaders bring in customers, but they also cut into your bottom line. LTOs must now become the most profitable foodservice items. A great perceived value for the customer and profitable for the operator.

From Kinetic12’s Q1 2024 Emergence Group Report

6. Hospitality is back and not going away.
Hospitality is defined as the friendly and generous reception and entertainment of guests. It has always been associated with hotels. During the last four years, convenience foodservice operators have had a lot to digest.

Part of it was getting the labor, training the team, and going back to a customer first approach and getting away from a transactional mindset. Moving forward, great service is not enough.

Hospitality is all about a team being happy a customer comes in and making sure that they have an experience that exceeds their expectations. This is a big part of why they will return.

Bruce Reinstein and Tim Hand are partners with Kinetic12 Consulting, a Chicago-based foodservice and general management consulting firm. The firm works with leading foodservice operators, suppliers and organizations on customized strategic initiatives as well as guiding multiple collaborative forums and best practice projects. It also engages as keynote speakers at operator franchise conferences and supplier sales meetings.

Reinstein and Hand can be reached at [email protected] or [email protected].

Source: CStore Decisions

By: Aimee Levitt | May 28, 2024

Craving is not the same as hunger. Hunger is a need. Craving is a want.

Craving is not the same as hunger. Hunger is a need. Craving is a want. Say you just finished Thanksgiving dinner. The turkey was dry, but you satisfied your basic hunger with rolls and pie. Your belly is full. But then, on the way home, you pass a Casey’s General Store and suddenly you really, really need a taco pizza because it’s delicious and because it fulfills a basic need for crunch and salt and cheese. That’s craveability.

“People are allowing themselves to be swayed by cravings,” said Robert Byrne, director, consumer and insights, of Technomic, a Chicago-based sister data company of CSP. According to a recent survey by Technomic, 29% of customers visit convenience stores to satisfy a craving. That’s the same number who visit for … convenience.

So how do you get customers to go to convenience stores to satisfy their cravings? Here are 10 suggestions.

Source: CSP

By: Greg Lindenberg | April 4, 2024

Foodservice drives in-store sales, which grew 8.2% in 2023, according to NACS

Convenience stores saw record sales in stores in 2023, according to newly released data from the National Association of Convenience Stores (NACS).

Total convenience industry sales in 2023 were $859.8 billion, of which $327.6 billion were from in-store sales. The average basket—what customers spent per visit—increased 3.7% to $7.80.

Overall, total industry foodservice sales—which includes prepared food; commissary; and hot, cold and frozen dispensed beverages—represented 26.9% of in-store sales, up 1.3 percentage points in 2023 from the year prior.

Convenience stores, which sell an estimated 80% of the fuel purchased in the country, saw total fuels sales decrease in 2023 to $532.2 billion, mostly the result of lower gas prices, which decreased 11.2% to $3.53 in 2023. Fuels sales accounted for 67.3% of revenues, but only 38.6% of profits for the convenience-store industry in 2023.

Factoring in both transactions at the pump and inside the store, the average convenience store had 45,312 transactions per month in 2023, or 1,491 per day, which is a 0.4% decrease from the year prior.

Industry metrics will be released this week during the NACS State of the Industry Summit in Rosemont, Illinois.

Founded in 1961 as the National Association of Convenience Stores, Alexandria, Virginia-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.

Source: CSP

By: Hannah Hammond | March 7, 2024

C-stores need to consider older and younger generations, Nik Modi says at Convenience Retailing University

Convenience stores focus heavily on younger generations, like Gen Z or millennials, when marketing packaged beverages—but older generations are worth paying attention to. Nik Modi, managing director at RBC Capital Markets, said 64% of beverage buyers are 45 years old or older. 

“And we don’t talk to them at all… we’re so obsessed with getting these younger consumers that we’ve completely neglected our core consumer base,” Modi said.

By 2030, the baby boomers will still be a significant amount of the population and will lead almost every other age group in the amount they spend, he said.

“We’re living longer, we’re living with disability longer, we’re living more productive lives, and beverages can play a key role in all of that,” Modi said.

Older consumers, or those 55 years old and older, Modi said, look to the convenience channel for categories such as beverages, snacks and deli and prepared foods. And within beverages, according to Numerator Insights and RBC Capital Markets data, they buy:

• Still water 28.4%
• Cola 28.3%
• Citrus and berry soda 22.9%
• Premium beer 21.6%
• Ready-to-drink tea 21.5%

Modi pointed to beverages that target gut health—like functional sodas poppi and Olipop—as well as beverages with adaptogens as areas of opportunity in packaged beverages.

But recruiting young consumers is still important, too, Modi said. “However, it’s a whole new world,” he said.

The racial makeup of Baby Boomers in the United States is 78% white, followed by 8% Hispanic and 8% Black, he said. While the makeup of Gen Alpha, or those born between approximately 2010 and 2025, is 32% white, 39% Hispanic and 13% Black.

“This is not a homogeneous situation,” Modi said. “It is very different groups that we have to cater to…. So we need to focus on the older consumer and the younger consumer at the same time.”

One way to do this is to consider promotions outside of holidays like Memorial Day, Independence Day and Christmas, he said.

“When was the last time you did a Diwali display? Or a Chinese New Year display? Or even a Cinco de Mayo display?”

“There’s just so much opportunity,” Modi said.

Source: CSP

By: Chuck Ulie | November 8, 2023

Outlook expects beverage, deli categories to perform best

Expect modest food and beverage volume growth in 2024 after three consecutive years of volume declines, according to a new outlook report from Circana, the Chicago-based company that was formerly IRI and The NPD Group.

“Amid shifting consumer preferences and evolving market dynamics, our food and beverage outlook not only highlights key growth opportunities for 2024 but reveals a cautiously optimistic outlook as we emerge from a myriad of challenges that the industry has faced over the past several years,” said Sally Lyons Wyatt, executive vice president and practice leader at Circana. “With continued innovation and adaptability, retailers and manufacturers will be poised to position themselves for success in the coming year and beyond.”

The report points to a more favorable landscape as several headwinds that weighed down 2023 are expected to recede, Circana said.

High inflation is anticipated to ease considerably next year, and the impact of increased mobility on retail food and beverage consumption will likely be less pronounced,” the company said. “In addition, our research shows that several factors will impact food and beverage growth throughout 2024, including an improving macroeconomic environment and growing promotional investments.

Circana predicts the beverage and deli sectors will continue outperforming overall food and beverage unit sales in 2024. “One factor likely driving beverage growth is an increase in health-conscious consumers seeking more protein and energy options in their diet,” the company said. “Another likely factor fueling beverage sales increase is that it has had more innovation than other departments, which delivered excitement and encouraged category exploration.”

In the deli aisle, convenient grab-and-go options will likely continue driving sales as consumers prioritize meal options that address diverse needs, Circana continued.

“Shifting consumer preferences in other departments throughout the store will likely put pressure on unit growth,” Circana said. “To succeed in 2024, our research indicates that perimeter aisles will need to optimize turnkey options for on-the-go consumers.”

Meanwhile, in the frozen department, retailers should re-evaluate assortments in the store and online to ensure there’s a variety to meet consumers’ needs.

“Consumers will likely look to the center store for solutions that deliver convenience, quality and value,” Circana said.

Circana’s 2024 food and beverage outlook was developed using econometric demand models leveraging Circana’s Demand Forecasting Platform. It analyzed more than 100 variables to test hypotheses for each model, supported by a machine-learning algorithm and more than 500 random forest models to determine the most important causal factors. It finalized the models based on their best fit, significance levels and intuitive insights. And it developed forward-looking input variable assumptions using historical trends and insight from industry experts. This platform allows Circana to run scenarios and estimate future sales, breaking them down by their driving factors.

Source: CSP

By: Greg Lindenberg | September 29, 2023

NCASEF recognizes distributor as a ‘committed and fully engaged’ vendor partner

McLane Co. Inc. has received the Service Provider of the Year award from the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) at the group’s national trade show in Las Vegas. “This remarkable accolade is awarded to the partner exhibiting exceptional and unwavering service to 7-Eleven franchisees, franchise owners associations (FOAs) and the National Coalition in its entirety,” NCASEF said.

The coalition’s board members decided unanimously in favor of McLane, lauding the company as a “committed and fully engaged” vendor partner.

“I have had the distinct pleasure of working closely with McLane over the years,” said Sukhi Sandhu, chairman of NCASEF. “Their steadfast dedication and commitment to quality, efficiency and the success of our franchisees has made them an invaluable partner to us. We are proud to present McLane with this well-deserved award, and we look forward to shared success in the years to come.”

McLane has worked with 7-Eleven for 56 years and assists in servicing more than 9,200 7-Eleven locations spanning 38 states, NCASEF said. McLane completes nearly one million deliveries to 7-Elevens each year, carrying a wide range of products, from cold beverages, food and candy to health and beauty essentials.

“We are honored to receive this award and excited to continue growing our partnership with such an exceptional retailer,” said Vito Maurici, McLane’s customer experience officer. “Our trusted partnership with 7-Eleven is something we’re incredibly proud of at McLane. Our amazing team works hard to bring the best in service, quality, efficiency and customer care, and we thank our teammates who consistently go above and beyond to ensure our partners’ success.”

Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 13,000 7-Eleven convenience stores in the United States and Canada. In addition, it operates and franchises Speedway, Stripes, Laredo Taco Company and Raise the Roost Chicken and Biscuits locations. The company is No. 1 on CSP’s2023 Top 202 ranking of U.S. convenience-store chains by store count.

NCASEF represents more than 7,400 7-Eleven franchised convenience stores in the United States. Founded in 1973, the Universal City, Texas-based coalition is made up of 41 separate independent franchise owner associations with more than 4,400 7-Eleven operators as members.

Founded in 1894, McLane is one of the largest distributors in America, serving convenience stores, mass merchants and chain restaurants. With headquarters in Temple, Texas, McLane has more than 80 distribution centers across the country, employs more than 25,000 teammates, and delivers to nearly every zip code in the United States. McLane is a wholly owned subsidiary of Berkshire Hathaway Inc., Omaha, Nebraska.

Source: CSP

By: Chuck Ulie | September 21, 2023

‘There’s a lot of runway for that category as we think about household penetration and what that looks like for the consumers’

Energy is the alpha dog in sparkling beverages, but how this beverage is shelved and promoted—and what other drinks surround it and how—is key to overall success of this category, convenience-store retailers and industry experts say.

Energy continues to be a successful category that outperforms, says Corey Nicely, a category manager at Pilot Co., Knoxville, Tennessee, which has 641 locations. “There’s a lot of runway for that category as we think about household penetration and what that looks like for the consumers going forward.”

Nicely says there have been many energy brands that have paved the way for new entrants in the category. While some brands have come and gone, “it’ll be a category we continue to partner with heavily as we go into 2024.”

At Loop Neighborhood Market, Fremont, California, which has 132 stores, category manager Marat Yeshchin says energy is 40% of his chain’s package-beverage business.

Scott Love, principal, retail client services at Chicago-based Circana, puts into perspective the popularity of energy drinks in c-stores. It’s the biggest category in convenience but “not even close to No. 1” in other outlets. “On a dollar basis, 34% of the sales of non-alcohol beverages go to energy drinks,” he says.

Allocating Space

So, when it comes to planning sparkling-beverage space in the cold vault, retailers must be cognizant of energy’s muscle. Love says that because energy takes one-third of sales, it should get one-third of the space.

After that space-to-sales allocation is in place, Love says retailers must be sure to “brand block,” or keep all brands together on shelves versus organizing in terms of flavor, for example.

“Within energy drinks, you want all the Monster-branded products together,” he says.

Red Bull and Monster are the drivers of the energy-drink business and have a very high loyalty, Love says, and retailers want to ensure customers can find those brands.

“As consumer preferences are frequently changing, it’s important for retailers to reconsider cold vault strategy frequently as well.”

“There are a couple things unique about c-stores,” he says. “One, there’s much more immediate consumption of the product, and your decision or shopping time is significantly condensed versus other channels.

“It has to be easy to find, and it has to be in the right location,” he says.

However, c-stores also must leave room for other sparkling beverages, such as carbonated soft drinks, sparkling waters and sports drinks—and for new innovations.

“Innovation’s really important,” Love says, adding that while new products must be brought in, retailers should not cut too deep into key brands to make space and “potentially miss more sales.”

Considering Categories

This juggling act involves examining more than just space-to-sales data because if that is all that was required, “Your entire cooler would be energy drinks and carbonated soft drinks, end of story,” says Jaron Friedman, head of sales for Toronto-based sparkling water brand Clearly Canadian. “We encourage retailers to really look at the different categories outside of just the top two or three and allocate space based on the opportunity categories and what’s growing in other channels outside of convenience.”

When looking at individual categories, retailers shouldn’t hold brands in smaller subsets to the same sales standards as areas like carbonated soft drinks. This is because every category and subcategory has a different threshold of what makes sense for units per store per week, Friedman says, adding it’s important to offer customers variety in the cold vault to appeal to multiple cross sections of consumers.

Key brands are always top of mind for Nicely, who says when Pilot creates its planograms each year, it looks at new items, categories doing well and those needing help.

“But our main strategy is to make sure we have our core items in stock all the time,” she says. “Red Bull, Monster, Coke, Pepsi, Dr Pepper, those key brands. We look at days of supply to make sure that that aligns with how fast items are going out.”

“There are different terms and conditions to who gets case stacks and who doesn’t.”

Mike Jones of S&S Petroleum, agrees. “Be in stock and well-fronted and faced,” the category manager of the 91-store Mukilteo, Washington-based chain says. “Carbonated soft drink consumers are more brand loyal, and if their brand is not there, they most likely will not buy something else in that category.”

Pilot reduced SKUs heavily during COVID-19 due to supply-chain issues but now is trying to add new items that might “be a positive win for us,” Nicely says. “We will continue to focus on a mix of existing and emerging brands in the energy category as it has been our biggest win the last few years.”

When determining what new items to add, Yeshchin says Loop Neighborhood studies internal sales data plus industry magazines, websites and sales and trend data from partner vendors.

“And sometimes, honestly, it’s a gut instinct to whether something is going to move or not,” he says.

Ultimately, the first step in building a successful cold vault strategy is understanding the consumer, says Carlton Austin, director of convenience retail strategy at Atlanta-based Coca-Cola. “Coca-Cola partners with retailers to test and evaluate beverage sets based on consumer preferences for each brand, package, price point and more,” Austin says. “As consumer preferences are frequently changing, it’s important for retailers to reconsider cold vault strategy frequently as well.”

Figuring Out Flow

When determining the flow to all the doors of a cold vault, Yeshchin says it begins with the big dog, energy, which starts in the far-left door because people read left to right. Next to energy is coffee, “also a type of energy and still in the sugar category.” After that are carbonated soft drinks, then hydration—“where the sugar content kind of dissolves”—and then water. Water is followed by miscellaneous categories such as enhanced water, juice and tea, “the subcategories that provide minimal volume in all of our sets,” he says. “So, the flow goes based on unit movement.”

Anything around the handle is the vault’s most premier space, he says, and where he puts the best-selling SKUs. “You want your best units right by the handle because the consumer just wants to get in and get out.”

This location is also the one where manufacturers will pay for the most. “That is a space that you’ll actually get paid for as far as space funding goes,” Yeshchin says.

There also are times where Yeshchin might put a new SKU near the handle if he thinks it’ll be a success. “For us this year, this was Prime Hydration,” which debuted in January 2022, he says. Meanwhile, Loop also added Prime Energy, which is now its third-largest energy SKU. “This caught us off guard.”

When placing core items, Jones, however, doesn’t think cold-vault position has much impact. “If a customer comes in to buy a Mountain Dew, it does not matter where it sits. They will find it. That said, I do think an innovation item should be placed on the handle and not the hinge,” he says, adding that bottlers tend to disagree and always want their core items on the handle.

34% – The percentage of non-alcohol beverage sales that go to energy drinks, the biggest category in convenience stores, according to Circana

Austin says some argue that because well-known brands already have high recognition and demand, they may not need to be placed on these eye-level, “strike zone” shelves. “Instead, there’s an opportunity to utilize the strike zone for showcasing innovation and new offerings, making them more noticeable in the cold vault,” he says.

An opposing view suggests placing the hottest brand in the strike zone can attract consumers’ attention and drive them to the cold vault in search of a specific product, he adds. “Both approaches can be effective, and it’s important to collaborate with the retailer to determine the best strategy that aligns with their specific goals and target audience.”

A recent study by Coca-Cola found cooler doors act as a visual barrier, limiting horizontal viewing and causing shoppers to navigate the cold vault using a two-step process. “First, they evaluate and select their preferred category door,” Austin says. “Second, shoppers browse and navigate their brand selection vertically within the cold vault door they’ve chosen.”

Planning Planograms

When discussing planograms (POGs) with vendors, Weigel’s c-stores always use its scan data, not shipment data, says Nick Triantafellou of Weigel’s Stores, Powell, Tennessee, which has 73 stores. “Everyone has access to the same data. That way we are all making decisions together based on the same thing.”

Triantafellou, the director of marketing and merchandising, adds that he never focuses on a contract to build his cold-vault POGs. “Contract finalization should always come after we have made the right decisions for our customers, stores and our categories,” he says. “If we make the right decisions based on those, then everyone’s business will grow, and we won’t be forced to make bad decisions in our sets.”

When it comes to six-packs and 12/15 packs, Weigel’s strategy is to draw take-home consumers with attractive pricing that usually results in unit sales better than area grocery stores, he says.

Weigel’s goal in attracting the take-home customer is to build baskets and loyalty. “We see a 70%-plus loyalty penetration rate on our MyWeigel’s Rewards program with our aggressive loyalty pricing on six- and 15-packs,” Triantafellou says. “This will help exponentially grow our fresh foods and CPG (consumer-packaged goods) programs as consumers pick up other products while in our doors. I strongly believe the loyalty consumer is the most important consumer to be driving into our stores.”

“It has to be easy to find, and it has to be in the right location.”

Outside the cold vault, Triantafellou adds that Weigel’s uses case stacks on the c-store floor to highlight loyalty-program items they are promoting with a vendor partner. “There are different terms and conditions to who gets case stacks and who doesn’t, but we typically use them for promotional purposes or to combat traditionally heavy selling seasons of a particular brand by having extra inventory on the floor,” he says.

Whether it’s in the cold vault or on the c-store floor, the most proactive retailers are those who look outside of the c-store world but don’t stray too far from their consumer base.

“If your core consumer base isn’t going to buy probiotic sodas, don’t invest shelf space in probiotic sodas,” Friedman says. “Find the items that are as close to the current assortment you have that’ll work well with your consumer base, and then those are the items you really want to make your big bets on.”

If a lot of teens enter a store, “Then you want to have products that appeal to that age group or that socioeconomic demographic,” he says. “And if they’re not, then you’re going to want to know what makes sense.”

Source: CSP

By: Steve Holtz | September 15, 2023

Distributor is investing in new hires to energize its ‘Fresh’ offering

McLane Grocery President Chris Smith talks like he knows he’s on to something good when he discusses the new foodservice effort from the distributor.

“The education that I’ve gotten in terms of various types of cheeses and how far the cheese should actually extend when you pull it from your mouth on a piece of pizza … that has been pretty interesting,” he told CSP Daily News during an exclusive interview at the new McLane Engage tradeshow and conference. “I think everything related to our fresh offering is much improved.”

That “fresh offering” is McLane Fresh, a new foodservice program unveiled on the tradeshow floor in late August. It’s an expanded foodservice offering that includes a new coffee program, a new pizza program, hot sandwiches, and other grab-and-go options from McLane’s Central Eats brand.

“We have really doubled down our investments and capabilities related to McLane Fresh,” Smith said, referring to two new hires made this year.

Jon Cox came to McLane in March in the newly created role of vice president of retail foodservice. He was given the directive to create a framework in which the distributor could build a quality foodservice program.

“The directive was to answer some questions: What’s going to make us different five years from now?” Cox told CSP. “Why choose McLane?”

“We want to meet you on your foodservice journey wherever you are, whether that’s the roller grill or a full-service program.”

Just a matter of months into that five-year journey, Cox said the starting point was creating a point of entry, something McLane could build on and grow.

“McLane Fresh is an evolution of McLane Kitchen,” Cox said. “It’s the evolution of where the customer is going [and] where McLane is going.”

To help him get there, Cox invited former coworker Farley Kaiser to join the effort as senior director of culinary innovation. Cox and Kaiser had both previously worked for GetGo Café + Market. There, they connected on a common goal: to create consumer trust that they can “get great pizza or a sandwich.”

“If you do that at one store, it benefits all convenience stores,” Kaiser said, “And at McLane, we have the opportunity to do that in hundreds of c-stores.”

Key among that effort are the new coffee and pizza program, which come complete with new products and equipment, should a retailer need it.

The coffee program, dubbed CupZa! is built on bean-to-cup machines from Franke, as well as espresso, multiple cold-brew options, and brewed tea and lemonade.

The pizza—which will formally be christened during the NACS Show in October—launched in Dallas with two styles—four-cheese and pepperoni, with more to come.

In fact, Cox promises there’s more to come across the McLane Fresh portfolio.

“I’m excited about McLane Fresh,” he said. “McLane Fresh, as you see it here, came together in just 18 weeks of a five-year journey.”

To continue the process, Cox said he’s got additional roles to fill on his team.

“What I see five years from now [is] relationships,” he said. “We want to meet you on your foodservice journey wherever you are, whether that’s the roller grill or a full-service program.”

Smith says he’s eager to watch the progress.

“I do think that when we take a look five years from now, the things that we’re doing now are going to impact the business and our customers and our suppliers,” he said. “And it’s something that I think we’re really, really excited about.”

Based in Temple, Texas, McLane Co. Inc. is one of the largest distributors in America, serving convenience stores, mass merchants and chain restaurants.

Source: CSP

By: Steve Holtz | September 1, 2023

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.

Source: CSP

By: Rachel Gignac | August 9, 2023

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.

Source: CSP