Convenience store operators see foodservice opportunities in a new light

Posted by Daniel Palmer on 21st August 2008

With gross margins on fuel hovering around 5 per cent, it’s not surprising that many convenience store operators are taking a fresh look at their foodservice programs – where margins are typically over 40 per cent and may exceed 60 per cent.As a percent of total c-store sales, foodservice remains small. But higher fuel prices may actually help c-store operators grow their foodservice sales, according to American food consultants Technomic. “Consumers are much more interested in reducing their driving,” explains Tim Powell, Convenience Store Foodservice Program Director at Technomic. “A trip to the gas station may be unavoidable, but now consumers are more likely to also pick up a quick meal or a snack at a c-store and avoid another stop.”

A Technomic study found that when consumers are hungry for a meal, convenience stores typically fall behind restaurants and grocery stores as a top-of-mind destination. However, when asked about snacks, most consumers think of c-stores ahead of all other venues. Such findings suggest potential for foodservice expansion as a means to stimulate profit growth at c-stores.

The study also identified many opportunities for traditional foodservice suppliers to provide expertise in a channel that has historically behaved more like retailers than foodservice operators, including snacks, beverages and meal items. Mid-tier chains, with store numbers between 10 and 1,000, could offer great growth potential to suppliers. “These chains are often easier for suppliers to target and penetrate, particularly since there are fewer management levels and fewer competitors,” Powell advised.

By establishing a strong relationship with foodservice operators and creating effective solutions for c-store owners, suppliers can reap significant rewards. “Any food or beverage supplier that can help implement a branded solution, even if it’s just for one product category, is likely to find success,” Powell concluded.