Speaking Schedule Update: 2010 Foodservice at Retail Exchange

My speaking schedule at the 2010 Foodservice at Retail Exchange will be as follows:

Tuesday, June 29, 2010
12:45 – 1:45 PM

Breakout 3

Opportunities in Today’s Economy
Speaker: Dean Dirks, Dirks & Associates

This breakout session focuses on the economic factors that affect the foodservice segment: unemployment, low customer counts, lack of disposable income, increased fuel prices, and fear of job losses. While the challenges may be overwhelming, they also create opportunities.

Analysis from convenience store, grocery, fast casual and fast food will be presented. Trends from all segments will be reviewed and analyzed. While each segment is different, common trends can help operators draw conclusions. These trends include home meal replacement, organic, obesity, green operations, labeling regulation, and healthy foods, to name a few. All segments are struggling with the same issues, but some are reacting differently. Some companies are pulling out of foodservice or scaling it down, others are getting more aggressive with discounting and promotions, and others are merchandising menus.

Expense categories and opportunities will be discussed, primarily labor and food costs. There are no magic bullets when it comes to expense management. Well-managed food service is operated on a few basic principles but the key is execution. This session will offer operators excellent ideas on how to increase revenues while lowering expenses.

Recent Interview: Convenience Store Petroleum Magazine’s 2010 Category Management Handbook

You can find it here. Article “Hungry for More”.

2010 Foodservice At Retail Exchange (FARE) June 28-30 2010

I will be speaking at this event later this month:

2010 Foodservice At Retail Exchange (FARE)
Monday, June 28, 2010 – Wednesday, June 30, 2010

Intercontinental Chicago O’Hare
(847) 544-5300
5300 N. River Road
Rosemont, IL 60018
United States

Session: Title TBA – Tuesday, June 29, 2010; 12:45pm – 1:45pm

Visit www.foodserviceatretail.com for more information or Register here.

An Appetizing Offering

Recently quoted in this article by John Lofstock

With customers spending more carefully, smaller portions and appetizers are proving to be effective low-cost menu items.

Restaurant operators that focus on infusing their appetizer menus with “craveable” items can expect to gain additional consumer traffic. However, during tight times, consumers are less willing to order appetizers, soups and salads. To justify spending on items from the left side of the menu, they want more value—dishes with unique flavors they can’t make at home, or are large enough to share or eat as an entrée.

“Consumers are trying to cut their dining budgets, in many cases by eliminating starters,” said Darren Tristano, executive vice president at foodservice consultant Technomic. “To drive cravings and create interest in appetizers, salads and soups, operators must innovate with exciting dressings and dips, unusual ingredients, and preparation techniques that can’t easily be duplicated at home. These encourage consumers to feel the experience is worth the extra cost.”

These and other findings are detailed in a study from “Technomic’s Left Side of the Menu” series, which includes the Appetizer Consumer Trend Report, the Salad Consumer Trend Report and the Soup Consumer Trend Report. Based on more than 4,500 consumer interviews and analysis of menus from the Top 250 chain restaurants, emerging chains and independent restaurants, the reports examine consumer attitudes, purchase behavior and price sensitivity, plus emerging trends in flavor, preparation and presentation. Select findings include:

• Fifty-eight percent of consumers overall, and 64% of consumers aged 18 to 34, are not fully satisfied with the variety of appetizers menued at restaurants. Over two-thirds (70%) said that salad variety could be improved as well. Though most consumers (68%) expect restaurants to menu just three or four soups, 40% would like to see more ethnic soups offered.

• For shareability and for making a starter the main course, size is important in appetizer purchases. Four out of five (82%) consumers felt that appetizers should be shared, and 61% said that portions should be large enough to do so.

• For soups and finger foods like chicken wings and tenders, global flavor profiles are in vogue, especially those derived from the cuisines of Asia and Mexico. Mexican flavors tend to dominate at chains, while Asian-inspired soups are widely menued by emerging chains and large independents.

• Health drives the decision to order a salad as an entree for 66% of consumers at lunch and 63% at dinner.

Make it Portable
Cost and portability are two crucial aspects to convenience store customers, said Dean Dirks, president of Dirks and Associates, a foodservice consultancy in Tacoma, Wash.

“Flavor profiles and quality are extremely important, but for c-store customers, many of whom are reducing their foodservice spending in this recession, the price has to be affordable and they have to be able to eat it in the car,” Dirks said. “That means the container has to fit in the cup holder and the food can’t be too messy.”

Dirks, a former retailer with more than a decade of service developing food programs at West Star Corp. and Balmar Petroleum, warned that chain restaurants like Wendy’s and McDonald’s are expanding value menus with an eye toward stealing c-store customers. Furthermore, they are adding snack items like cake, cookies and coffee to the value menus to entice more traffic.

“C-store retailers need to know what their competitors are doing and should be real concerned about the growth at chain restaurants,” Dirks said. “Not only do they offer a large variety of items for $1 or less, they are eroding margins and changing consumer expectations on the price point. This means you have to offer value not to gain a competitive advantage, but just to keep up.”

Add Some Spice
Meeting consumers’ current food cravings often translates into presenting items with new, interesting and bolder flavor profiles. Ethnic flavors, in particular, play an important role. Likewise, appetizers give operators an important opportunity to test new appetizer items for consumer appeal.

“We brought egg rolls and tornados into our roller grill program about three years ago, and they now account for 48% of our roller grill business.” said Jay L.E. Ellingson, Ph.D., director of food safety and quality assurance for LaCrosse, Wis.-based Kwik Trip.

To that end, Kwik Trip is currently testing a chicken product called “Rollerbites” with an eye on adding the food item to roller grills in its 350 stores.

Kwik Trip has had success pushing value meals such as two small dogs and a fountain drink for $1.99. “We also have two-for pricing on most roller grill items and this helps with multiple sales,” Ellingson said.

While new products help attract new customers, old favorites are still the backbone of the c-store menu. Chicken wings, for example, drive sales at Uniontown Chevron Inc., in Uniontown, Ala. The company dropped its local foodservice provider to partner with Hunt Bros. to enhance the menu. It currently moves more than 450 pounds of chicken wings each week at its flagship store, according to Company President Brian Malone. It averages an additional 365 pizzas at the same store per week.

“After studying the demographics of our market and the competition, we found that chicken wings were the ideal menu item because they give us the flexibility to offer them as a meal or a snack. This enables us to satisfy a variety of needs,” Malone said. “We decided to switch to Hunt Brothers because they offered a choice of flavors on the wings. Our previous supplier only offered hot wings, which meant we were missing out on sales opportunities.”

On the price side, Uniontown has an extremely competitive offering. It sells six wings for $2.69 and still ekes a 35% margin.

“The good thing about this wing program is that there is no waste. The profit could be better, but in this economy a 35% margin isn’t too bad,” Malone said. “Plus, we have had success upselling fountain drinks and other beverages to increase our overall margin.” CSD

This article can also be found here: http://www.csdecisions.com/article/9405/an-appetizing-offering.html

Convenience Store News – Foodservice Roundtable

Was a Guest Speaker at This Recent Event.

Agenda
April 12-13, 2010
Dress: Business casual

Monday, April 12

3:00 – 6:00 p.m. All guests arrive in New York City
Check into Cooper Square Hotel
25 Cooper Square
New York City
Phone: 212-475-5700
http://www.coopersquarehotel.com

7:00 p.m. Cocktails and Dinner
Table 8 (hotel restaurant)
25 Cooper Square

Tuesday, April 13

Roundtable location Nielsen/CSNews Headquarters
770 Broadway (entrance on 9th Street, between 4th Avenue and Broadway, short walk from Cooper Square Hotel)

8:30 a.m. Continental Breakfast

8:50 a.m. – 9:00 a.m. Welcome Remarks and Introductions
Michael Hatherill, Publisher, CSNews

9:00 a.m. – 10:00 a.m. 2nd Annual CSNews Consumer Foodservice Study
Results of exclusive consumer study on how shoppers perceive and purchase foodservice from c-stores.
Don Longo, Editor-in-Chief, CSNews
Linda Lisanti, Senior Editor, CSNews

10:00 a.m. – 10:30 a.m. Coffee and Networking Break

10:30 a.m. – 11:15 a.m. Guest Speaker: Tim Powell, Director, Convenience Store Foodservice, Technomics

11:15 a.m. – Noon Group Discussion: Hot Dispensed Beverages
• What do you need to have a first-class hot beverage program?
• Benefits of house branded vs. generic coffee program
• Best practices in coffee: quality, water, hold times, controlling waste
• What does it take to have a successful specialty coffee program – flavored, cappuccino, espresso?
• How are other hot beverages performing – tea, hot chocolate, Chai, hot milk beverages? Any rising stars?
• Promotional strategies that work

Noon – 1:00 p.m. Catered Lunch

1:00 p.m. – 2:00 p.m. Group Discussion: Prepared Foods
• Focus on fresh – full steam ahead or slowing down?
• High touch, some touch, no touch – which is the right tactic for you?
• What’s new with roller grills?
• Shifts in daypart traffic?
• Consistency, execution, quality control and food safety: what are the best practices?
• Best selling/fastest-growing food items
• New trends in flavor – ethnic foods growing?
• New or emerging foodservice technologies/equipment

2:00 p.m. – 3:00 p.m. Group Discussion: Cold & Frozen Dispensed Beverages
• What makes a first-class cold dispensed program – best practices in quality control, brixing, water, flavor offerings
• What’s selling best at the fountain?
• Relationship between packaged beverage sales and fountain volume
• Frozen beverages – coming back?

3:00 p.m. Wrap-Up & Departures
Transportation will be provided to the three local airports and Penn Station

Food-borne Illness Equals Foodservice Disaster

January 19, 2010 – An estimated 87 million cases of food-borne illness occurred in the U.S. last year, including 371,000 hospitalizations and 5,700 deaths, according to an Associated Press calculation that used a formula devised by the Center for Disease Control (CDC) and current population estimates.

A food-borne illness outbreak is defined by the CDC as an “incident in which two or more persons experience a similar illness resulting from the ingestion of a common food.”

Every day restaurants, fast food and convenience store food services are operating in a very high-risk environment. A food-borne illness outbreak creates legal exposure and a public relaxations disaster. In the c-store business it will affect overall gas and inside sales as consumers avoid locations.

A new report by Virginia’s Hollins University found alarming levels of bacteria in convenience and fast-food soda fountains. Forty-eight percent of machine beverages tested contained coliform bacteria — which can originate in fecal matter. Everyone has procedures for cleaning fountain units, but is it getting done daily and more importantly, is it being executed correctly?

In my opinion all levels of foodservice management should be ServSafe certified by the National Restaurant Association. This certification will give management an extreme amount of information to avoid food-borne illness. More than anything else, it will create a high level of awareness of the risk they are working with daily and probably not taking seriously enough.

Best practices to avoid a food-borne illness:

— Avoid cross contamination storage. Keep raw meat, poultry, seafood, and their juices away from all ready-to-eat foods.
— Date all products upon delivery and utilize a first in first out procedure.
— Refrigerate foods promptly. If prepared food stands at room temperature for more than two hours, it may not be safe to eat.
— Reheat foods properly, to kill the harmful bacteria. Reheat cooked food to at least 165 degrees.
— Employees need to wash their hands properly. I see kitchens out of soap, sanitizers and towels. Even after employees wash their hands, they can be observed touching their hats, hair and dirty aprons.
— Wash utensils and surfaces before and after use with hot, soapy water followed by a sanitizer.
— Maintain hot cooked food at 140 degrees or higher.
— Divide large amounts of leftovers into small, shallow containers for quick cooling in the refrigerator.
— Continually talk about food safety, particularly at team meetings.
Ask what should you do if you experience a food-borne illness.
— Train employees to refer consumer calls to management.
— Train managers to collect information and commit to the consumer an investigation. Never take responsibility until the investigation is finalized, avoiding legal exposure starts at the store level in regards to how they handle the situation.
— Communicate to managers that a food-borne illness is a 911 issue. If a store gets more than two complaints, they should be called at home.
— Immediately contact the health department. Many companies try to do their own investigations but the health department will be more thorough. It is important to build a positive relationship with health departments.
— Senior management should be notified and should be prepared to create press releases.
— Discuss food safety at all employees meeting and incorporate it into newsletters.

Remember food is an integral part of your organization

This article was written for Convenience Store Decisions and can also be found here: http://www.csnews.com/csn/foodservice/article_display.jsp?vnu_content_id=1004060025

Future Convenience Food And Drinks: New Opportunities in a Developed Market

Notes from webinar I lead in October.

Business Intelligence for the Consumer Goods Industry

Business Insights’ portfolio of consumer goods management reports are designed to help you make well informed and timely business decisions. We understand the problems facing today’s consumer goods executives when trying to drive your business forward, and appreciate the importance of accurate, up-to-date, incisive product, market and company analysis. We help you to crystallize your business decisions.

The strength of our consumer goods research and analysis is derived from access to unparalleled databases and libraries of information and the use of proprietary analytic techniques. Business Insights reports are authored by independent experts and contain findings garnered from dedicated primary research. Our authors’ leading positions secure them access to interview key executives and to establish which issues will be of greatest strategic significance for the industry.

Our consumer goods portfolio of reports can be used across a wide range of business functions to assess market conditions and devise future strategies and cover the food and drinks, ingredients, packaging, health, toiletries and cosmetics categories and key consumer issues including eRetail and marketing.

Key issues examined by this report

• Ethical packaging. Green packaging is a primary concern for the food and drinks industry. Using less packaging will become a key focus over the next five years, and this is especially important for convenience products that rely heavily on packaging benefits such as multi-packs, compartment packaging and portioning.
• Health concerns. Health is an increasingly important driver of convenient products, and marketing is becoming multi-faceted with the evolution of food and drink offering more advanced health benefits such as weight control and other specific health concerns.
• Emerging markets. Growth in regions such as Asia-Pacific and Latin America is acting to boost overall sales of dried, instant and wet ambient convenient products. These have shown increasing signs of maturity in Western markets where demand has tended to move into fresher convenient products.
Convenience continues to be a key trend in food and drinks, with consumers increasingly looking for products that suit their lifestyle requirements. The extent of the development of convenient products is signaled by the notion that consumers are coming to view various convenience benefits as the norm. Adding value in terms of convenience is increasingly linked to providing further benefits, combining saving time and effort with additional aspects of food and drink marketing. These include providing health, freshness, taste, versatility and ethical benefits, and marketing products that suit particular consumer needs such as on-the-go convenience and products for children.

Future Convenience Food and Drinks is a new report published by Business Insights that provides insight into the direction of the convenient food and drinks market and how the sector will develop over the next five years. This report analyzes current and future trends that are set to impact significantly on the marketing, formulation and packaging of convenience food and drinks.

Discover future growth opportunities in the convenience food and drinks market with this new report

This new report will enable you to:
• Identify future growth opportunities in a developed sector, using this reports analysis of sales of convenience food and drinks in emerging markets to 2011.
• Gain insight into industry opinions on the convenience food and drinks market over the next 5 years through an exclusive survey of industry executives undertaken by Business Insights.
• Improve the targeting and effectiveness of your NPD strategies with this report’s analysis of convenience benefits, product categories and regional trends based on analysis of Productscan data of 35,000 convenient food and drinks products launched globally between 2005 and 2008.
• Predict future convenience food and drink market size and growth levels, using this report’s forecasts to 2011, including category specific analysis, in Europe and the US.

Your questions answered:
• How are different convenient food formats developing and which products will provide growth?
• What innovations are driving new opportunities in convenience food and drinks NPD?
• Which region will experience the most growth in convenience food and drinks to 2011?
• Who are the most innovative convenience food and drinks manufacturers?
• How does the industry expect the marketing of convenience food and drinks to change over the next 5 years?

Some key findings from this report:
• The convenience food and drinks market is worth $158bn in Asia-Pacific and is expected to grow at a CAGR of 3.9% to 2011. Latin America and the Middle East and Africa are set to grow at a faster rate, but these regions hold a collective share of less than 13% of global sales.
• A growing share of 40% of new convenient products launched globally in 2008 feature benefits relating to speed of preparation, compared to shares of 30% for single serving products and 15% for fresh convenience.
• Expenditure on convenient products peaks in Sweden at over $700 per capita, and is over $400 in the US. Per capita spend in all other regions is less than a quarter than that of the average for Western Europe and North America, but the gap is expected to narrow steadily.
• The number of dinners prepared from scratch at home is highest in France and Spain but is falling fast. The level of cooking from scratch is lowest in the US but the trend away from this appears to be slowing.

Social Responsibility

The convenience store industry raises a tremendous amount of money for various causes. Our industry has a large impact with its support of national and local charities.

Commitment to funding raising is admirable and makes our jobs rewarding. At the same time, it may be a business strategy not utilized enough. Most consumers’ lack of trust towards big businesses is at an all-time high. Banking and Wall Street heightened these feelings of distrust to a level not seen since the great depression. Cause marketing may bridge some of these feelings.

The next generation (22-30) is even more sensitive to cause marketing

• 83% will trust a company if it is socially/environmentally responsible
• 89% are likely to switch from one brand to another if the latter supports a cause
• 79% want to work for a company that cares about how it impacts society
• 74% listen to a company’s messages if they have a deep commitment to a cause

Cause marketing is a big opportunity for our industry. As the price of fuel goes over $3 again, fuel companies are viewed as the villains again. Consumers don’t understand how the average guy can’t afford to drive yet oil companies are posting strong profits. In a recent poll of 20 industries ranked on trust, fuel companies came out 19th. I am not promoting this thinking but trying to point out our industry has issues that we can turn into opportunities.

I would like to share a cause I have been involved in. 20 years ago. We felt our customers and employees didn’t see our company as an organization interested in anything other than generating profit.

We decided the charity must benefit kids and avoid high administrative costs.  After completing my due diligence we felt that getting involved with St. Jude Children’s Hospital was our best fit.

During the past three years, 84 cents of every dollar received has supported the research and treatment at St. Jude. Its mission is to find cures for children with cancer and other catastrophic diseases through research and treatment.

Children never pay for treatment not covered by insurance. No child is ever denied treatment because of the family’s inability to pay.

St. Jude Halloween Promotion sponsored by Coors

During October, employees at the participating establishments will ask patrons to make a $1 donation to St. Jude. The donors will have the opportunity to write their names on pumpkin-themed pinups which will be displayed in each location through Halloween.

Since its inception in 1992, the St. Jude Halloween Promotion has raised more than $41 million to help kids battling cancer at St. Jude.

Currently, the St. Jude Halloween Promotion has four national partners that are convenience stores: Casey’s General Stores, Hess Corporation, TravelCenters of America and Petro Stopping Centers.

Convenience stores can help by visiting www.stjude.org/halloween

Webinar: Trends in Eating and Drinking — High Touch, Some Touch or No Touch, Foodservice Is Key to Future of Convenience Retailing

Here is the link to the CSNews exclusive summary of the webinar I participated in “Trends in Eating and Drinking — High Touch, Some Touch or No Touch, Foodservice Is Key to Future of Convenience Retailing,” back in September.

http://www.csnews.com/csn/news/article_display.jsp?vnu_content_id=1004014330

Escaping the Discounting Trap

Most industry experts agree that it’s too late to end the foodservice discounting wars. There are two basic trains of thought with fast feeders in today’s economy: keep discounting deeper and deeper, or merchandise away from discounted menu items.

Here’s what’s happening with the deeper discount strategy. Quizno’s initially discounted selected subs to $5, then developed the $4 Torpedo and just introduced the $3 Bullet. Some Quizno’s franchisees indicated that the $4 Torpedo represented as much as 50 percent of their menu mix and the Bullet has driven down the average ticket even further. Quizno’s is betting on higher customer counts to increase revenue. Subway is countering by testing $4 subs in some markets.

The question franchisees in every sector are asking themselves is: where does it end? By the same token, what would have happened to franchisees had corporate marketing chose not to discount? The outcome would likely have been a further erosion of profits and even more unit closures. Fast feeders as well as convenience store retailers have been forced into pricing decisions they would have never made in a stable economy.

According to a 2009 study conducted by Dollars & Consumer Sense, branded concepts may be devaluing themselves due to discounting. When consumers were asked how they perceive a brand lowering prices, 70 percent of consumers responded, “The brand is normally overpriced.”

What does this mean to c-store retailers? Here are a few suggestions to merchandise away from the discount trap and increase margins.

— If you are going to discount an item, never consistently do so. Offer the item as a monthly promotion and run a different promotion the next month. The trap the sub market walked itself into was offering the $5 sub, month after month, until it wasn’t a promotion anymore, but a customer expectation.

— Don’t forget your brand’s strengths. A sub concept should promote the concept’s strength which is freshness and nutrition. For example, one of Arby’s goals in 2009 is to present itself as a roast beef company and not as a discounter. The fast feeder feels that it built its brand by having the dominate brand in the roast beef category with few competitors.

— Develop new menu items from existing inventory. For example, a pizza concept can develop a sub (for example, Domino’s) and a breakfast sandwich can be created from the basic ingredients on hand for lunch. New products can be priced correctly to achieve strong margins.

— Merchandise value at a price that will drive margins. Move customers up to a higher ticket with bigger portions. Carl’s Jr has achieved this with its higher end burger ($6 in some markets). McDonald’s is using this pricing strategy by introducing the Angus Burger.

— When introducing new items, only introduce them one at a time and promote that item heavily. McDonald’s takes more than a year to develop a new menu item, extensively test markets the item and then finally introduces it. While no one in our industry has the logistical problems that McDonald’s has, the full process should be followed.

— Cultivate price increases by adding value to existing menu items. Burger King is testing condiment bars to add value for better pricing. Bacon, mushrooms, bleu cheese can be used to develop a burger for a higher ring.

— Develop new revenue streams but price them correctly from the start. Use that old adage “you can always lower the price.” Home replacement items and breakfast items are good examples.

— Don’t forget customers are willing to pay premium prices for healthy items. Taco Del Mar has launched a burrito made with marinated chicken, pinto beans, long-grain rice and pico de gallo.

— Don’t alter the main product offering but utilize your existing equipment and skills to develop new lines of products. KFC went to a grilled product that is really doing well. Its sales and customer counts have increased and the company is now in the healthy category.

— Focus on demographics. Most experts agree that the Hispanic market is a huge opportunity. Higher margin pricing can be introduced with new products. It is easier to design a new item and price it correctly.

These are just a few strategies, but powerful ones. The lesson to be learned is to avoid boxing yourself into the discounting war and if you have already done so focus on merchandising your way out of the trap.

This article was written for Convenience Store Decisions and can also be found here: http://www.csnews.com/csn/foodservice/article_display.jsp?vnu_content_id=1003999747