Chipping Away at Foodservice

Technomic forecasts slight c-store foodservice sales increase in 2015

CHICAGO --We’ve heard the battle cry around c-store foodservice for years. We’ve enjoyed moments when traffic gains and sales growth trended better than that of quick-service restaurants, and we’ve truly begun to change the foodservice experience in c-stores. But still, sales forecasts for 2015 reflect a very slow evolution.

The bottom line: You’re not the only one grappling to get more consumers in your stores.  

Chicago-based research firm Technomic is anticipating nominal growth of 2.5% in 2014 and 2.0% in 2015. After adjusting for inflation, the segment will be flat. Compare that to limited-service restaurants, with an estimated 2.5% nominal growth in 2014 and 3% growth in 2015, so a little over flat when adjusted for inflation.

Donna Hood Crecca, senior director for Technomic, says any growth in this economic environment is encouraging. “C-stores are expected to lag quick-service restaurants, but only by half a point, so they’re tracking that segment, which is the primary competitor for the on-the-go dining occasion,” she says.

“To my mind, the projection speaks to the need to maximize opportunities to capture consumer attention, occasions and sales via relevant offerings … and deliver consistent quality on the favorite daily items. … It continues to be a take-share environment for c-store foodservice, so it’s crucial operators stay focused.”

But forget restaurants for a moment: The biggest threat seems to be supermarket foodservice. The segment—which already generates double the amount of sales as c-stores in terms of foodservice—is expected to see 6% growth in both 2014 and 2015. That’s 2.4% growth in 2014 and 3.9% in 2015 when adjusted for inflation.

“Our projection for foodservice growth in supermarkets is as robust as it’s ever been,” says Crecca. “Foodservice is a strategic priority for many supermarket and grocery operators—in some cases it’s ‘mission critical.’ ” She points to strategies such as restaurant-quality foods and using loyalty programs to drive core customers to the foodservice department.

“What’s more, the grocery channel is positioned to also leverage their relevant product categories such as local, organic and sustainable produce in their foodservice programs, which increases consumer appeal,” she says.

Back in the c-store, some opportunities for sales growth are becoming evident. Findings from Technomic’s Convenience Store Market Intelligence Report include:

  • Breakfast sandwiches continue to thrive on c-store menus; their numbers climbed 20% from second-quarter 2013 to second-quarter 2014.
  • More than nine out of 10 consumers say the most important elements are taste and flavor of the food and food quality.
  • Energy drinks saw a significant surge in availability at c-stores, contributing to the category’s nearly 23% growth in menu items.

 So as you continue to close the foodservice gap on QSRs and fast-casual operators, don’t ignore the grocers. Watch how they innovate, translate their ideas to your brand, and keep chipping away at share of sales.

To read more about how to stay aggressive on foodservice sales growth, read CSP’s January cover story, “What Consumers Want.” And find out more about Technomic’s Convenience Store Market Intelligence Report here.