Convenience Store Food Service Consultant- Dean Dirks: News, Articles, Events

October 18, 2008

Foodservice Programs to Build Profits in C-Stores

Outline of the “Foodservice – Building Profits in C-Stores” speech I gave at the The Foodservice Distribution Conference & Expo earlier this week.

  1. Food Service – Building Profits in C-Stores
  2. State of the Industry-Fuel
    Fuel companies- least trusted out of 20 industries
    Volatility of fuel prices- inventory management- $3.50 in ground and selling it for $3.25
    Capital tied up inventory-$100,000 per site
    Fuel customers are not entering the store
    Credit-card fees- 10 cents a gallon, margins are averaging 11 cents. Net margins of 1 cent
  3. Last line of defense
  4. State of the Industry
    Cigarette margins are as low as 10% vs. 20% in the late 1990’s
    Proposed Federal excise tax of .61 a pack
    Wal-Mart ‘s “Market Side” small-scale stores
    Car wash sales (90% margin) have decreased as much as 50% in some markets
    Lottery sales are down due to inside traffic
    Increased labor , $8.50 in Washington in 2009
  5. Industry Trends
    Oil companies are selling company owned convenience stores to retailers
    New construction has slowed down
    Large retailers (Circle K) will continue to buy out smaller (10-100 store) retailers
    Retailers are looking for other streams of income; prepaid phones, phone cards, etc.
    RETAILERS SEE FOOD SERVICE AS ONE OF THE FEW OPPORTUNITIES LEFT
  6. Food service sales growth
    Food service sales grew 11 percent in 2007, largest category increase
    Foodservice eclipsed cigarettes in gross margin dollars for the first time in 2007
    Sandwiches increased sales 16 percent
    Roller grill sales rose 9.6 percent
    Coffee sales rose 8.2 percent last year
  7. Food Service Trends
    Environmentally safe “Green”
    Obesity issue
    Healthy
    Meal Replacement – take home meals
    Organic
    Any program that will reduce labor
    Programs that have low investment
  8. Branded food service Subway, Godfather’s
    Branded peaked in the 1998,down 35% in 2007
    Royalties of 8-12% and low volumes have driven this downward trend
    Retailers need to weigh brand equity and national advertising
    Taco Bell and others have exited the market
  9. Leveraging a food service brand
  10. Unbranded food service “Jim’s Sandwiches”
    Unbranded food service increased 19% in 2007
    Requires food service expertise
    Creativeness, systems and food safety
    7-11’s new menu pizza, wings, tenders, and burgers
    Retailers need a partnership with suppliers, such as; Turbo- chef, signage, and menu development
  11. Unbranded concept
  12. Unbranded Food Service
  13. Semi- branded food service Hot Stuff –Piccadilly Circus
    15% increase in 2007
    Appearance of brand equity
    Systems and training in place
    Low labor
    Pre-made quality products
    Royalties are built into the supplier price
  14. Semi-branded
  15. Semi-branded
  16. Roller grill
    Roller grill sales increased 9.6% in 2007
    Overcoming “Two dried up hot dogs” image
    New items, taquitos, scramblers, fiesta rolled dogs
    Retailers are looking for a complete package, menu board, item identifiers, promotional materials
    Food safety issues may threaten this program
  17. Roller grill of the past
  18. Roller grill of the future
  19. Roller grill of the future
  20. Pre Packaged Program sandwiches, burritos
    C-stores have a stigma of gas station food
    Over come the “Wedge” sandwich image
    Small investment and low risk
    Confidence- Kraft, Pierre, Oscar Meyer
    No extra labor
    Open air cooler, signage, merchandising
  21. Pre-packaged of the past
  22. Pre-packaged of the future
  23. Open air merchandising
  24. Replacing the “wedge”
  25. Product confidence
  26. Breakfast
    Breakfast hours sales grew 30.7 %
    Customer counts are heavy in the mornings
    Breakfast is the biggest growing segment
    Retailers want products that won’t increase labor costs
    Need for microwave products
    Portable items are needed
    Attractive display cases at the register
  27. Donut program
  28. Executable- counter top
  29. Coffee
    Starbucks look
    Quality that can compete with Starbucks
    6 blends of coffee
    Cappuccino machine with 6 flavors
    6 flavored packet choices
    BIG SUPPLIER PROBLEM- service from third parties. 8hrs to 2 days
    Direct suppliers, service is 4 to 8 hours
  30. Coffee of the future
  31. Fast food war
    Discounting, McDonald’s $1 menus, Taco Bell less than $1 menu, and Subway $5 subs
    QSR aggressive focus on growing breakfast
    McDonald’s success with premium coffee
    Espresso on McDonald’s menu in 2008
    Portable growth, breakfast and snack wraps
    McDonald’s $1 soft drinks to steal C-store sales
  32. Supplier partners of the past
  33. Supplier Partners of the future
  34. Supplier Partners of the future
  35. Supplier opportunities
    Unbranded partnerships
    Comprehensive roller grill program
    Prepackaged sandwich-burrito
    Executable breakfast products
    Upscale coffee with service
    Signage and merchandising
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