C-Stores Can Offset Pain at Pump through Foodservice

By FES Staff -- Foodservice Equipment & Supplies, 7/23/2008 10:55:00 AM

An old cliché goes “all market conditions favor someone.” While most foodservice operators continue to struggle with the impact of rising gas prices, an unlikely segment may be poised to cash in, according to “Target: C-Stores, A Growing Opportunity on the Foodservice Landscape,” a research report released by Chicago-based Technomic.

“Consumers are much more interested in reducing their driving,” explained 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.”

The 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. And, according to the Technomic study, margins on foodservice items at C-stores tend to easily exceed 40 percent, which will make pursuing this business more appealing to these operators as they deal with pressures in other areas.

Suppliers looking for partners in this arena may want to shift their gaze toward the smaller to more medium-sized players. While the major chains, those with 1,000 units or more, hold most of the industry’s foodservice share, mid-tier chains, companies with 10 to 1,000 units, account for 23 percent of all locations and nearly a fifth of all C-store foodservice industry sales, according to Technomic.

“These chains are often easier for suppliers to target and penetrate, particularly since there are fewer management levels and fewer competitors,” said Powell. “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.”

The study 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.