What’s Your Foodservice Future?
You can learn a lot about a foodservice program by simply looking inside the kitchen. How committed is the retailer? How does its program compare to the competition? And what investments should the retailer make to further evolve it?
A recent study conducted by Convenience Store Products ad Product Evaluations Inc. examined the spectrum of c-store foodservice to help retailers target their own growth trajectory. A total of 150 retailers were interviewed nationwide regarding their foodservice programs, expectations for the future and strategies for the coming year. The findings uncovered three levels of foodservice commitment, reflecting an industry that ranges from beginner to advanced programs, as well as recommendations for which investments are necessary for moving to the next level.
Jane Wood, CEO of Product Evaluations Inc., Oak Brook, Ill., recommends retailers use the study to determine where they fall on the spectrum of dedication. Next, take a look at what equipment pieces you have and how your inventory compares to others in your level of foodservice commitment and to retailers in groups above yours.
“[Food] items that you do not offer should be evaluated for potential inclusion in your program, using the lens of your strategic criteria: Do they fit your operation/customers, what is the cost of entry, and what new equipment will give you the greatest flexibility for growth?” she says. (For details on what foodservice items are found at each commitment level, visit cspnet.com/producteval.)
From there, consider how your program might evolve—and what equipment you’ll need to get there. “Always be thinking about your long-term plan and where you envision your foodservice area to be in the future,” Wood says.
What’s Your Commitment Level?
Evaluating the food items offered and equipment used reveals where a retailer falls on the foodservice spectrum. The study broke the industry into three segments: limited, moderate and high commitment. Retailers with limited commitment to foodservice represent the smallest share of the c-store foodservice market at 18%, and their equipment inventory (and menu) is equally small. They tend to have two pieces of equipment or fewer, most likely a microwave (93% of limited-commitment respondents) and a roller grill (30%).
As foodservice offerings expand, operators show moderate dedication to foodservice. In addition to a microwave and roller grill, moderate-commitment retailers (making up 49% of the c-store foodservice market) typically purchase additional cooking equipment such as a fryer (32% of moderate-level respondents) or convection oven (29%) to accommodate preparation of broader product offerings. These operators also bring in hot-holding display cases and other warming cabinets to merchandise their expanded hot grab-and-go offerings.
At 33% share of c-stores offering foodservice, high-commitment operators typically house six or more equipment pieces—everything moderate and limited stores have, plus perhaps a flat-top grill or range (50% of high-level respondents), a conveyor oven (42%) or a high-speed oven (24%).
Equipment variances aside, arguably the most notable difference between these three levels of retailer commitment are their sales growth expectations. The limited-commitment operators expect 8% foodservice sales growth in the year to come, moderate-commitment retailers double that at 16.4%, and high-commitment players eclipse them all with 22.4% growth expectation.
The bottom line: Those who are investing are confident they’ll reap the rewards.