Convenience Store E&S: Good Food Fast

Enhanced Foodservice offerings help C-stores create a competitive advantage in a competitive market.

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Never thought you'd say one day, “Let's get lunch at the gas station,” did you? That might have been the case, at least until a few years ago when profit margins for tobacco and gas began rapidly declining, and gas station operators saw foodservice as a way to not only get those profits back, but also to attract more customers. As a result, the convenience store attached to a gas station became less of a shop for cigarettes, beef jerky and cold medicine, and more of a quick-service restaurant offering meals on the go. Now, customers can order toasted subs, fresh salads, quesadillas, pizza and burgers made right on the spot.

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“You're not just selling a sandwich, you're gaining a customer,” says Jeff Lenard, spokesman for the National Association of Convenience Stores, about C-store foodservice. “A lot of convenience stores look at foodservice as the future, if not the present of the industry. They want to be known more as a restaurant that happens to sell gas, rather than a gas station that happens to sell food.” One in 10 people buy food at a convenience store in a two-week period, and more than half of the time the person is buying a full meal, according to the NACS' 2006 State of the Industry report conducted by The NPD Group, a research firm. In 2005, foodservice sales at convenience stores reached as much as $17.9 billion, according to the report. To top that off, food prepared on-site generated an average of $53,763 per store, vs. $8,546 for packaged sandwiches. The gross profit margin for C-store foodservice stood at $9 billion last year, the report said.

Jerry Weiner, director of foodservice for MAPCO Express, a Franklin, Tenn.-based convenience store and gas station, attributes this boom to the fact that people are finally shedding their prejudices about C-store foodservice. “There's a perception that it's difficult to get consistent, quality, fresh products at a C-store,” Weiner says. “The industry has made a very dramatic and very sizable investment to try and overcome that.”

Foodservice operations also help convenience stores distinguish themselves from their competition. “We all sell Coke, Pepsi and Budweiser, so what's going to make you different?” Weiner says. Having upscale food choices and convenient service attracts more customers to the store. For C-store operators, foodservice is more profitable than gas because most customers will just go to the cheapest gas station they can find, regardless of brand, Lenard says. “It's very difficult to run the business on gas sales alone.” A gallon of gas may go for $3, but the C-store will sometimes only generate a dime in profit, he says.

Location is also a huge factor in attracting customers. “Sometimes people think a left-hand turn can be inconvenient, that's why stores are locating on the opposite side of the street from each other,” Lenard says. “One side gets all the business from the morning commute, and the other side gets the afternoon rush. The guy on the same side of the street is much more of a competitive threat than the guy on the other side.” And in smaller towns, those C-stores are more popular. “If you as a customer are in an area that's already served by existing restaurants, you may not look at C-stores as strongly as if you're in a smaller town where C-stores can literally be like the corner grocery store.”

Regardless of location, however, many customers will still bypass traditional restaurants and head to a convenience store for meals. “Convenience stores sell speed,” Lenard says. “People are becoming more time-starved, and are more and more interested in finding ways to get back time.”

While there's a strong desire among convenience stores to bump up their foodservice sales, they can't simply become more of a restaurant at the flip of a switch, and that's because they've started off as a retail institution. “There's a differential between retail and restaurants,” Lenard says. “In retail, the general concept is to put something on the shelf and replace it when it's bought. You can't do that with food. You have spoilage issues. Consistency, quality and cleanliness are critical. And there's a far less forgiving customer base. Dissatisfied customers will never come back and they'll tell everyone about their experience.”

Hence, the key to becoming more of a restaurant is to think like one, and that means hiring traditional restaurant/foodservice designers and suppliers, says Mike Lawshe, consultant and president of Paragon Solutions, who has worked on an extensive number of foodservice projects for convenience stores. The other option for a convenience store looking to offer more fresh foods without the added work of running an entire foodservice operation is to co-brand with a national chain. The advantage to co-branding is that most restaurant chains already have elaborate advertising systems and a built-in customer base that easily attract customers to the C-store.

This is especially the case for C-stores located off of highways, where people tend to stop only for restaurants with recognizable names, Lawshe says. The downside to co-branding, however, is that the convenience store gives up control, according to Lawshe. The store can no longer decide what kind of image it wants to display as a foodservice operation, and it also loses the ability to control food costs or avoid franchise fees. Another approach is to opt for a hybrid design. Top Star in Reading, Pa., one of Lawshe's many projects, has a Subway restaurant connected to the C-store in order to offer high-quality, consistent deli sandwiches. But Subway is known best for its sandwiches, so the C-store offers alternative items in the form of Top Star-branded soups, breakfast sandwiches, and hot dogs from a roller grill.

Once the convenience store decides on the type of foodservice infrastructure, the challenge becomes attracting customers and turning them into regulars. Lenard says a number of C-stores have begun offering breakfast sandwiches as a way to get customers in the door first thing in the morning when they purchase their coffee and newspapers. That way, the store has a chance of getting the same customers back for lunch, and at other times throughout the day. “Now, in those two to three minutes when you usually stare at your feet while getting gas, you could instead go inside and pick up a sandwich,” Lenard says. “If you can fill up and fuel up at the same time, that's something that a retailer can capitalize on.” Some stores, such as MAPCO and Wawa, are installing touch-screen order systems at the gas pump where customers can place food orders and then pick them up inside within minutes.

Weiner says the touch-screen kiosks are a key piece of equipment for MAPCO stores because they allow customers to customize their order and go at their own speed. Also, many kiosks are bilingual. “The consumers literally build their sandwich exactly how they want it,” he says. “These days it's definitely about getting the food made as if they were back there putting it together themselves.” Touch-screen order systems also save labor and spare employees from having to ask customers a litany of questions such as which condiments they prefer on their sandwiches and if they want extra cheese. As a result, the kiosks also tend to sell more menu upgrades and items. “One-hundred percent of the time they try to upsell the customer, offering the option for extra meat or cheese, or upsizing the fries,” Weiner says. “I can't always get employees to do that.”

Heated holding cabinets are also key in MAPCO stores. Staff will cook items such as the 1/3-pound Black Angus hamburgers on the grill periodically throughout the day, and put them in the heated cabinet to hold for 45 minutes up to three hours. This reduces the wait time for customers after they place their order. Whereas burgers take about seven minutes to cook, heated holding cabinets speed up that wait time by about four or five minutes, Weiner says. “Basically all we're doing after they've ordered is assembling the food.”

Out of a total of 395 stores, MAPCO has 10 “Grille Marx” locations, offering its own line of foods prepared on-site, and in some cases, branded items such as Subway sandwiches and CooKoo's Chicken. The company launched the concept in December 2005, building the first MAPCO Grille Marx in Brentwood, Tenn., and the next in Hendersonville, Tenn. Other sites are spread throughout Tennessee as well as Alabama, Louisiana, Georgia, Virginia and Mississippi, with more locations in the works. All locations have indoor seating, with an outdoor patio expected to open up this year at the Hendersonville location.

The foodservice section takes up about 30 percent of floor space in the Grille Marx stores, which range from 4,200- to 5,400-squarefeet. All kitchen operations are visible to the customer, while a back-of-the-house area contains only the dishwasher, and walk-in and reach-in refrigerators. The bakery features triple-door, undercounter refrigeration, and convection ovens for baking and finishing goods such as pastries, muffins and cinnamon buns.

In addition to the hamburgers, the menu also features the chain's self-declared signature item, the Philly cheese steak, plus breakfast sandwiches and burritos, scrambled eggs, and omelets prepared on the grill to accommodate the store's busy morning rush. The menu also includes cold deli sandwiches, Panini and wrap sandwiches, hot dogs, onion rings, and three kinds of potatoes aside from fries including wedge, shoe string and potato cakes. Chicken strips, wings, and cheese steak sandwiches are other hot items. Wawa is another convenience-store chain with a successful foodservice operation.

“Foodservice is one of our key strategic focuses,” says Mike Sherlock, culinary director for Wawa stores. An East Coast institution, with 550 locations throughout Pennsylvania, New Jersey, Delaware, Maryland and Virginia, Wawa rakes in most business from regular customers who seek it out specifically for its food offerings, according to Sherlock. “We have a lot of consistent customers that use our stores multiple times a day,” he says. This is partly because Wawa has been around for 30 years, but also because the chain has focused on its foodservice operations for the last 10 years. The strongest Wawa foodservice program, Sherlock believes, is breakfast and hoagie sandwiches.

At Wawa stores, convection ovens prepare breakfast sandwiches and slicers slice meat for the deli sandwiches. Most refrigeration is in the form of undercounter or bain marie. A walk-in cooler, freezer and dishwasher sit in a back room. Salads are prepared to order or prepackaged for quick pick-up. Baked items come from Wawa's central bakery. Combi-therm ovens prepare hot sandwiches.

Wawa's big competitor, Sheetz, offers similar menu items using an open display kitchen. The “Convenience Restaurant” within the Sheetz store in Altoona, Pa., allows customers to watch staff assemble pizzas and bake them in large ovens, while other staff prepare quesadillas and sandwiches on the Panini grills and high-speed toasters toast sub sandwiches. Nearby, a convection oven prepares bakery items and espresso machines brew coffee drinks. The kitchen area also features undercounter refrigeration at the stations as well as a walk-in cooler and freezer.

“The microwave, high-speed ovens, and fryers are the most critical equipment we use,” says Keith Boston, director of culinary development for Sheetz stores. The reason, he says, is that most products come ready-to-cook or are speed-scratch items, and only need assembly or reheating. For example, dough for the bread and pastries like Danish, turnovers, brownies and cookies comes unbaked from suppliers, and staff use convection ovens to bake it. The pizza is the only menu item made completely from scratch.

Boston says the busiest shifts are lunch and breakfast. Sheetz offers a variety of breakfast sandwiches they call “shmuffins,” “shmiscuits” and “shmagels” with a combination of eggs, cheese, sausage and other meats.

“We offer a variety of casual dining-style foods at the speed of a QSR,” Boston says. Sheetz's M-T-O ® (made-to-order) menu includes Black Angus “burgerz” with a choice of just about any topping; hot dogs; nachos; pizza; hot toasted and cold sub sandwiches; bagel sandwiches; wraps; fajitas; and a Bavarian ham sandwich on a pretzel roll. The foodservice area also features 10-foot display cases holding ingredients for salads.

Customers place their orders on touch-screen kiosks throughout the store. There is also a drive-thru service, an inside dining area that seats up to 70 people, and an outside patio that seats 40. Boston says the dining area helps Sheetz further its image as a food- and family-focused store. “A family of five can all come in and sit down and eat five different things, and it's instantaneous,” he says. “People come in as much for the food as they do for the convenience.” He estimates that roughly 8,000 people eat at the restaurant each week.

Whereas Sheetz primarily serves eastern states, BP's Wild Bean Café serves markets both in the East and in the Midwest, including Atlanta; New York; Orlando, Fla.; South Florida; Chicago; Cincinnati; Cleveland; Columbus, Ohio; and Indianapolis. About 250 of the chain's total locations feature Wild Bean Cafés. BP opened the first Wild Bean in Indianapolis in January 2001, and since then, the bakery cafés generate about 20 percent in total C-store sales, according to Tom Terlecky, food offer development manager for BP.

The café targets BP's heavy morning rush, offering bakery items such as pastries, bagels, muffins and danishes that are all baked or par-baked on the premises using pre-made dough. The menu includes made-to-order sandwiches and pre-packaged ones available in cold displays. BP rolled out a new toasted sub menu in the Chicago area. “We're starting to put a major emphasis on our lunch segment,” Terlecky says.

The new Wild Bean Café in Westchester, Ill., represents BP's larger design, at 42,000-square-feet, which Terlecky says is becoming the new standard for future stores. The left side of the store features the café where customers proceed to a counter and place their order with staff. For toasted sandwiches, staff use a thermo-finisher designed to heat and lightly toast sandwiches. Nearby, staff use a convection oven for bakery items, and refrigeration lines the underside of the counter. The back of the house contains a walk-in refrigerator and freezer as well as a small prep table for limited food preparation. Terlecky says the design idea was to make the Wild Bean Café area feel like a separate restaurant. There is limited seating with six to 24 seats depending on the store's traffic. While some locations feature touch-screens for ordering, BP found that most customers prefer the contact with staff when ordering.

Wild Bean Café, like Sheetz, MAPCO and Wawa, has an open kitchen. According to Lawshe, many C-stores offering on-site foodservice choose this design because it allows customers to watch high-quality food being prepared in a food-safe manner, thereby helping to break the preconceptions that convenience stores can't offer fresh food. But sometimes, an open kitchen can be a problem. “You can have the open kitchen, but if nothing is happening there, it's not a really positive thing to the customer,”

Lawshe says. For example, at the Get N Go in Sioux Falls, S.D., that Lawshe designed, he did not choose to go with an open kitchen because the C-store has a limited menu and a smaller staff. Lawshe decided to put the kitchen and prep area in a back room so that it wouldn't need to be manned constantly. The design takes more of a food-court style, offering items such as pizza, hot dogs, taquitos, and barbecued sandwiches that staff prepare in the back kitchen and then place in heated display units for customers to grab and go. To further reduce the need for extra labor, the C-store does not offer in-house seating, and orders pre-sliced meats and other pre-prepared foods that only require reheating.

Lawshe did go with the open kitchen design at the Roadrunner Convenience Store in Texarkana, Texas, because the owner, Truman Arnold Cos., wanted the C-store to be known for serving great burgers. Lawshe made the grilling stations viewable to customers, allowing line staff to interact with customers. “It's critical to their marketing strategy,” he says.

Aside from burgers, the menu at Roadrunner features traditional American food, with a variety of deli items as well as fried chicken and french fries. Fryers, hot-hold ovens, convection ovens and prep tables make up the majority of the equipment on the line. The business is a successful one, Lawshe says, not only because regular customers come in for the burgers and quality food items, but also because of the store's location just off a main interstate.

According to Lawshe, designing foodservice operations in C-stores is a lot about what the customer wants and needs, but it's also what the Cstore can handle as far as foodservice. “If the retailer does not have the infrastructure to do it right, then it would be a huge mistake to put in a big kitchen,” he says. “And some companies just don't want to get into the full foodservice because that's not who they are. There is no single answer.”

Regarding Top Star, Get N Go, and Roadrunner, Lawshe says they are “three different customers with three different foodservice offerings, but they're all very good and very successful stores.”

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