EXPLORING NEW & INNOVATIVE FOODSERVICE OFFERINGS AT ...

EXPLORING NEW & INNOVATIVE

FOODSERVICE OFFERINGS AT

CONVENIENCE STORES

SEPTEMBER 2016

“Now may be one of the best times in

history to be a convenience store

retailer.”

Convenience Store News, January 2016

2015

IN STORE SALES

MOTOR FUEL GALLONS SOLD

GROSS PROFIT

$196.8 $203.1 $213.0

2013 2014 2015

+5%

+3%

2013 2014 2015

$79.7 $89.7 $92.8

2013 2014 2015

+4%

151.3147.0143.3

BIL

LIO

NS

BIL

LIO

NS

BIL

LIO

NS

and yet…

2014: $3.412015: $2.58

MOTOR FUEL SALES -22%

PRICE PER GALLON $0.83

1.00

2.00

3.00

4.00

5.00

$ p

er

gallo

n

U.S. Regular Price per Gallon

Source: U.S. Energy Information Administration

in fact…

72.1% 71.2% 64.7%

2013 2014 2015

motor fuel as a percentage of total

industry sales is at its lowest point in more

than a decade.

-7%

!

MOTOR FUEL -- % OF INDUSTRY SALES

Supermarkets, Convenience Stores Now Woo Diners Too(January 2014)

“Sheetz Inc… has rolled out barista stations that offer fruit smoothies and coffee drinks, as well as full-service kitchens that can make items like mozzarella sticks and burritos and provide in-store seating.

And Wawa Inc.’s more than 650 convenience stores have counters that make items from French onion soup to custom-ordered sandwiches. [The] company aims to compete with fast-casual chains like Panera Bread Co. in terms of quality, but at fast-food prices.”

“Foodservice has been one of the primary drivers for growth for c-stores and 2015 proved that.”

http://quotes.wsj.com/PNRA

$22.5$24.1

$25.6$27.6

$29.4$31.2

$33.5

$0

$20

$40

2009 2010 2011 2012 2013 2014 2015

($ B

ILLI

ON

S)

Foodservice sales achieved its biggest percentage increase since 2012.!

+7%

C-STORE FOODSERVICE SALES

Foodservice retainedits crown as the c-store’s most profitable category,

generating

$96,662 in gross margin dollars per

store last year (a 5% increase).

“

Convenience Store News, June 2016

For many retailers, foodservice is thecentral component of their growth strategy.

1

2

3

THIS LED US TO WONDER….

4

What are attitudes and perceptions of shopping for prepared foods at convenience stores?

What factors impact purchase experience?

What innovative product and service concepts are interesting to both consumers and retailers?

How much impact will these concepts provide?

How much effort is required to implement these concepts?

Online survey to obtain unbiased, baseline

knowledge of retailers’wants and needs for

foodservice innovation

COREMembers

(n=12)

PHASE 1: PRE-PROJECT QUALITATIVE EVALUATION

Online survey to evaluate18 concepts for:

UniquenessRelevance

Likelihood to PurchaseVisit Store More Often

Preference

Consumers(n=1009)

PHASE 1: PRE-PROJECT CORE

EVALUATION

Online survey to evaluate18 concepts for:Impact vs. Effort

Likelihood to OfferPreference

Retailers(n=21)

PHASE 1: PRE-PROJECT CORE

EVALUATION

PHASE 2: CONSUMER

QUANTITATIVE SURVEY

PHASE 3: RETAILER

QUANTITATIVE SURVEY

New & InnovativeFoodservice Offerings

Areas of StrengthAreas to Improve

Number of Visits per Store$ per Store Visit

Likely to RecommendLikely to Visit Again

Likely to Visit More OftenIncrease Share of Occasions

Satisfactionwith Experience

Drivers of Satisfaction

KEY FINDINGS

51%

51%

58%

Overall Satisfaction

Likely to Recommend

Likely to Purchase Again

Evaluation of Experience Shopping forPrepared Foods at Convenience Stores

% Top 3 Box

TOTAL BASE = 857 Prepared Food Purchasers

Impact of Overall Satisfaction on Loyalty Metrics

94%

84%

68%

34%

12% 9%

10 9 8 7 6 0-5

Like

ly t

o R

eco

mm

end

(%

To

p 3

Bo

x)

Overall Satisfaction Rating

Impact of Overall Satisfaction Ratingon Likely to Recommend

Dissatisfied visitors can create vulnerability.

Visitors satisfied with experience purchasing prepared foods are

likely to recommend their convenience store to others.

Impact of Overall Satisfaction on Loyalty Metrics

94%

84%

68%

34%

12% 9%

10 9 8 7 6 0-5

Like

ly t

o R

eco

mm

end

(%

To

p 3

Bo

x)


Impact of Overall Satisfaction Ratingon Likely to Recommend

93%

77% 75%

54%

22%

11%

10 9 8 7 6 0-5

Like

ly t

o P

urc

has

e A

gain

(%

To

p 3

Bo

x)


Impact of Overall Satisfaction Ratingon Likely to Purchase Again

• “Different options for healthy food.”

• “Cleanliness would make my opinion of new products at convenience stores more favorable.”

• “Lower prices would also make a difference.”

• “I would love to see more competitive pricing.”

• “Drive thru would be a great option and new healthy lunches like the salad bar.”

• “I think convenient stores would do extremely better if they focused on selling products that are "fresh”.

• “Better quality food.”

IN THEIR WORDS…..

CONVENIENCE

VALUE

CLEANLINESS

QUALITY

VARIETY

What factors are most likely to impact overall satisfaction?

• Treated like a valued customer

• Courtesy and friendliness of staff

• Professional appearance of staff

• Ease of getting in and out of the store quickly

• Store is directly on my route

• Portability of packaging and food for on-the-go eating

• Availability of healthy prepared food options

• Variety of beverages to serve with prepared foods

• Ease of customizing the prepared foods I usually purchase

• Quality of the prepared foods

• Appearance of the prepared foods

• Taste of the prepared foods

• Freshness of the prepared foods

• Overall appearance and taste reminds me restaurant-quality

• Overall reputation of the convenience store as a whole

• Knowing that I am serving me/my family a good meal/snack

• Value for price paid

• Confident the food was prepared in a safe, clean manner and area

• Overall cleanliness of the store

$

CONVENIENCECUSTOMER SERVICE VALUE

CLEANLINESS QUALITYVARIETY

?

? How do c-stores currently deliver on these factors?

Valued customer

EZ in/out

Staff courtesy

Staff appearanceHealthy options

Variety of prepared foods

Variety of beverages

On my route

Quality

Appearance

TasteFreshness

Value

Packaging

Confidence in prep

EZ customize

Restaurant-quality

Store cleanliness

Store reputationServing good meal

0.200

0.300

0.400

0.500

0.600

0.700

0.800

10% 20% 30% 40% 50% 60% 70% 80%

Imp

ac

t o

n O

ve

rall

Sa

tis

fac

tio

n

Attribute Rating (% 8-10)

Customer Service

Convenience

Quality

Value

Cleanliness

Variety

Primary Strengths

Secondary Strengths

Must Fixes

Secondary Opportunities

0.72

0.71

0.70

0.69

0.65

Taste of Prepared Foods

Freshness of Prepared Foods

Confidence Food was Prepared in Safe,

Clean Manner/Area

Quality of Prepared Foods

Variety of Prepared Foods

Bivariate Correlation between Overall Satisfaction and individual attributes

Prepared Foods are at the epicenter of desired improvement.

TOTAL BASE = 1009 Total Respondents

HIGHEST CORRELATION SCORES

high impact on satisfaction

moderate to low attribute ratings

&

60%Say there is nothing new of

interest at c-stores – basically just the same food, drinks and

snacks

79%would consider visiting c-stores more often and buy more food,

beverages and snacks if they offered

new products/services that were of interest

TOTAL BASE =1009 Total Respondents 6-10 rating

6 in 10

8 in 10

BUT…

9FOOD

CONCEPTS

• Section of the store dedicated to making this treat.

• Select donut type, add glaze, and add toppings.

• Traditional sneeze-guards, tongs for each item, and individual mess-free packaging

CREATE YOUR OWN

DONUT BARCREATE YOUR OWN

SALAD BAR

• Section of the store dedicated to providing wide variety of salad items.

• Light, healthy option with a variety of salad/pasta salads/dressings


• Can be a meal or a side dish for your entrée.

CREATE YOUR OWN

PASTA BAR

• A section of the store dedicated to providing a variety of pasta dishes.

• Select a pasta, add a sauce, and top it with parmesan and basil.


1 2 3

• A section of the store dedicated to creating your perfect ramen dish.

• Ramen noodles are freshly cooked to perfection and then, add your favorite broth and other condiments to finish customizing.

• Can be a meal or snack.

CREATE YOUR OWN

RAMEN BAR CRAFT SECTION

• A section of the store that features small batches of items from regional and local producers.

• Purchase craft beer, wines, cheeses, oils, and salsas.

• Unique products not typically available in grocery stores.

CREATE YOUR OWN

BURRITO BAR

• A section of the store dedicated to creating the perfect burrito.

• Select a burrito wrap or bowl and fill it with meats, rice, beans, and traditional toppings.


4 5 6

• A fountain station that provides sparkling or non-carbonated filtered water, enhanced with minerals for taste.

• Select the flavored water from the fountain dispenser and customize with your flavor(s).

H2O FLAVOR STATION

• A section of the store dedicated to making a special treat.

• Select a yogurt, add toppings., and add sauce or whip cream.

• Make it healthy or make it indulgent.

FOOD TRUCKS

• Introducing professional grade food trucks to come to a place near you! Professional grade food trucks will offer a mix of popular breakfast, lunch, snack, and drink items.

• Seating will be available to enjoy the food.

• Food trucks can rotate around nearby locations.

CREATE YOUR OWN

YOGURT BAR

7 8 9

89%

80% 79% 78% 78%76%

74%

67%

54%

% Unique

While many of the new ideas were seen as “unique”…

BURRITO BARDONUT BAR RAMEN STATION PASTA BAR H2O FLAVORSTATION

YOGURT BAR CRAFT STATION FOOD TRUCKS SALAD BAR


89%

80% 79% 78% 78%76%

74%

67%

54%

68%

72%

52%

63%

67%

62%

55%

67% 67%

% Unique - % Relevant

several of the most differentiating ideas failed to resonate.




89%

80% 79% 78% 78%76%

74%

67%

54%

68%

72%

52%

63%

67%

62%

55%

67% 67%

67% 66%

47%

61% 61%59%

50%

68% 63%

% Unique - % Relevant - % Likely to Purchase

Which, ultimately, impacted likelihood to purchase.




9TECHNOLOGY

& SERVICECONCEPTS

• A secure, outside section of the convenience store dedicated to items that you can access anytime.

• Offering both food and urgent items (i.e. aspirin and toilet paper). Video games and movies, too.

• Get what you want, when you want it!

24-HOUR ACCESSDRIVE-THRU

WINDOW SERVICE

• A service that is designed to make it easier for you to get your favorite items quickly

• Convenient to get your food and beverage under any circumstance

• Menu board is used for ordering items

GOING GREEN INITIATIVE

• A series of green practices that are good for customers and good for the environment.

• Practices include creating LEED-certified buildings, solar/wind energy, hydroponic garden for fruits/veggies.

• Use of seed-infused, biodegradable packaging, which is better for the environment.

1 2 3

• This program leverages the technology built into smart phones where retailers recognize and give a personalized welcome to each customer.

• Points are accumulated with each purchase, which can be redeemed for special offers on items they often buy during their visits.

• Mobile app provides locations/directions and opt-in texts alerting of special deals.

LOYALTY PROGRAM COFFEE WARMER

• A special heat-activation sticker that is placed on your convenience store coffee cup.

• Simply peel the small strip to quickly warm the cup and have your coffee back at the right temperature.

BEVERAGE COOLER

• A special beverage carrier with a “quick-chill stick” that helps to ensure your beverage stays cool during your trip.

• Simply activate the “quick-chill stick” and place in the special beverage carrier.

4 5 6

HEATME UP

• This system would allow shoppers to put all of their items on a pad, where a high-tech sensor would automatically read and register the complete purchase at once.

• Payment is made using a fast mobile payment system or conducting a traditional cash/credit card transaction.

FASTER CHECKOUT BY SENSOR

• A service that is designed to make it easier for you to get your favorite items quickly.

• Order items from the menu board. Re-charge your hybrid car while you wait. Your items will be brought out to you quickly.

PASSENGER-SIDE PACKAGING

• This unique design has easy-to-access openings for your food, beverage, condiments, utensils, and napkins.

• No digging in bags to find what you are looking for.

• Environmentally-friendly packaging that fits in the passenger seat.

CURBSIDE SERVICE

7 8 9

80%

76% 76%

72%69% 68%

66%

58%

54%

% Unique

Several of the concepts that were seen as more commonplace …

HEATME UP

CURBSIDE SERVICE


FASTER CHECKOUTBY SENSOR

BEVERAGECOOLER

COFFEE WARMER DRIVE-THRU WINDOW SERVICE

GOING GREENINITIATIVE

24-HOUR ACCESS LOYALTY PROGRAM


80%

76% 76%

72%69% 68%

66%

58%

54%

67%64%

75%72%

61%

75%

64%

74%

79%

% Unique - % Relevant

CURBSIDE SERVICE



BEVERAGECOOLER




were also seen as the most relevant to consumers.


HEATME UP

80%

76% 76%

72%69% 68%

66%

58%

54%

67%64%

75%72%

61%

75%

64%

74%

79%

54%57%

64%

59%

49%

70%

49%

67% 72%

% Unique - % Relevant - % Likely to Visit More Often

CURBSIDE SERVICE



BEVERAGECOOLER




Higher relevance appears to drive likelihood to visit more often.


HEATME UP

SO HOW DO RETAILERS WEIGH IN?

HOW DO RETAILERS WEIGH IN?

"

Finding a niche is important

for the food service.

many retailers understand the importance of

differentiated foodservice

“

”

BUT….

differentiated foodservice

prices

corporatecommitment

cost of goods

labor

efficiencytrainingcap-ex

Retailers desire foodservice innovation, but a lot of issuesneed to be considered in the decision-making process.

Text

Technological Enhancements

Customization

Cost implications“Cost--senior-level commitment to do it and stay the course--as it is not an overnight success program; space; building a foodservice culture.”

“Cost of goods and lower margins. Take Chipotle as a prime example. Offer a great product at a price that is acceptable and margins that make sense.”

Variety “Finding a balance between offering variety but also being focused enough to garner benefits of scale and efficiency.”

“It takes time, persistence, and commitment to grow a robust Food business.”

“The integration of various technological elements and incorporation into our operation requires collaboration on a large scale.”

Lower margins

“Most customers nowadays want everything customized and they want fresh food fast. This is where the food market is going, and we want to be able to participate and expand into this specific part of the market.”

Commitment

Retailer Feedback On Innovation

67%

57%

52%

48%

48%

38%

33%

33%

29%

H2O Flavor Station

Create-Your-Own Burrito Bar

Create-Your-Own Salad Bar

Craft Section

Make-Your-Own Yogurt Bar

Make-Your-Own Donut Bar

Food Trucks

Create-Your-Own Pasta Bar

Ramen Station

Retailers - Likely to Consider Offering Food Concept% 6-10 Rating

Retailers would be most likely to consider implementing the H2O Flavor Station and Create-Your-Own Burrito Bar.

TOTAL BASE = 21 Total Retailers

“popular growing concept, different price points, fresh mix.”

“High margins,not labor intensive,

not expensive to get into.”

H2O Station

Craft

Ramen

Food Trucks

Donut Bar

Yogurt Bar

Burrito Bar

Pasta Bar

Salad Bar

3.00

4.00

5.00

6.00

7.00

8.00

9.00

3.00 4.00 5.00 6.00 7.00 8.00 9.00

EF

FO

RT

Impact

Perception of Food ConceptsImpact-Effort Matrix

- Retailers -

High Impact, Low Effort

High Impact, High Effort

Low Impact, Low Effort

Low Impact, High Effort

IMPACT

90%

67%

67%

62%

57%

57%

57%

52%

48%

Loyalty Program

Drive-Thru Window Service

Coffee Warmer

Beverage Cooler

Curbside Service

24-Hour Access

Going Green Initiative

Passenger-Side Packaging

Faster Checkout by Sensor

Retailers - Likely to Consider Offering Tech/Services Concept% 6-10 Rating

Retailers would be most likely to consider implementinga loyalty program in their stores.


“It encourages repeat business and is available

uniquely at my stores with what is important and valuable to them.”

Coffee Warmer

PS Packaging

Beverage Cooler

Going Green

Loyalty

Faster Checkout

24-Hr Access

Curbside

DT Window

3.00

4.00

5.00

6.00

7.00

8.00

9.00

3.00 4.00 5.00 6.00 7.00 8.00 9.00

EF

FO

RT

Impact

Perception of Technology/Service Enhancement ConceptsImpact-Effort Matrix

- Retailers -

High Impact, Low Effort

High Impact, High Effort

Low Impact, Low Effort

Low Impact, High Effort

IMPACT

So, which ideas might really move the needle?

H2O Station

Craft

Ramen

Food Trucks

Donut Bar

Yogurt Bar

Burrito Bar

Pasta Bar

Salad Bar

20%

40%

60%

80%

100%

40% 50% 60% 70% 80%

Reta

ile

rs –

Lik

ely

to

Co

nsid

er

Off

eri

ng

(%

6-1

0)

Consumers - Likely to Purchase (% 6-10)

Interest in Food ConceptsRetailers versus Consumers

Mutual Interest

More Consumer Interest

More Retailer Interest

Little Interest


Coffee Warmer

PS Packaging

Beverage Cooler

Going Green

Loyalty

Faster Checkout

24-Hr AccessCurbside

DT Window

20%

40%

60%

80%

100%

40% 50% 60% 70% 80%

Reta

ile

rs –

Lik

ely

to

Co

nsid

er

Off

eri

ng

(%

6-1

0)

Consumers - Likely to Visit More Often (% 6-10)

Interest in Technology/Service Enhancement ConceptsRetailers versus Consumers

Mutual Interest

More Consumer Interest

More Retailer Interest

Little Interest

RECOMMENDED CONCEPTS

H2O FLAVOR STATION: THE QUICK WIN

• Was seen as unique and relevant among consumers

• Moderate to high likelihood to purchase compared to other F&B concepts

• 60% say they would visit a c-store more often if H2O Flavor Station was offered

• Rated the most favorable among retailers

• One of 3 F&B concepts that is of mutual interest between retailers and consumers

• Retailers rated this the only concept as high impact on increasing business and low effort to implement/execute

H2O FLAVOR STATION

“ High margins, not labor intensive, not

expensive to get into.

“

“ Two reasons for this; One: The concept is INCREDIBLY

easy to implement.

Two: The idea is very attractive

to health-conscientiouspeople. In avoiding sugary and caffeinated beverages, this appeals to crowds both young and old.

“R

ETA

ILER

S

CREATE-YOUR-OWN BURRITO BAR: THE BIG ONE

CREATE YOUR OWN

BURRITO BAR• Most popular among consumers for being:

• Customizable• Made in front of them• Fresh

• 68% say they would visit a c-store more often if Burrito Bar was offered

• Rated most favorable among consumers

• Rated second favorite among retailers

• One of 3 F&B concepts that is of mutual interest between retailers and consumers

• Retailers rated this as a high impact on increasing business; however, they also rated it as high effort to implement/execute

“ I think it's one of the most realistic concepts to apply in practice with something that is

unique to a convenience

store but familiar to the public.

“

“ I love burritos; and usually you buy them premade or not customized. Really love the idea to be able to customize your own at a convenience store. Would be

fresher and convenient.

“

RET

AIL

ERC

ON

SUM

ER

LOYALTY PROGRAM: THE HIGH HANGING FRUIT

• Most popular among consumers for being:• Relevant• Rewarding/Appreciated• Discounts/Savings/Giveaways

• 71% say they would visit a c-store more often if Loyalty Program was offered (the highest of all tech/services)

• Rated most favorable among consumers

• Rated most favorable among retailers

• Was of mutual interest between retailers and consumers

• Retailers rated this as a high impact on increasing business; however, they also rated it as high effort to implement/execute

“ I could see myself going to the convenience store more if there is a tangible incentive to do so.

“

“ It’s a great way to advertise, gain demographics, and geo target customers. Also helps drive customers into the store by offering great promotions/free offers.

“

LOYALTY PROGRAM

RET

AIL

ERC

ON

SUM

ER

IDEAS TO EXCHANGE

IDEAS TO EXCHANGE

Start with understanding why retailers and consumers favor certain product/service concepts more than others.!



CONVENIENCE STORES

SEPTEMBER 2016

FULL REPORT

Develop a deep understanding what impacts the experience of your customers.!

0.72

0.71

0.70

0.69

0.65

Taste of the prepared foods

Freshness of the prepared foods

Confidence that food was prepared in a safe, clean manner and area

Quality of the prepared foods

Variety of prepared foods of interest to me

Derived Importance – Factors Impacting Overall Satisfaction withShopping Experience for Prepared Foods at Convenience Stores

Develop a deep understanding what impacts the experience of your customers.!

0.72

0.71

0.70

0.69

0.65

0.61

0.60

0.60

0.60

0.59

0.57

0.56

0.56

0.56

0.56

0.55

0.50

0.47

0.42

0.24

Taste of the prepared foods

Freshness of the prepared foods

Confidence that food was prepared in a safe, clean manner and area

Quality of the prepared foods

Variety of prepared foods of interest to me

Appearance of the prepared foods

Overall appearance and taste reminds me of restaurant-quality

Overall reputation of the convenience store as a whole

Treated like a valued customer

Knowing that I am serving me/my family a good meal/snack

Value for price paid

Professional appearance of staff

Ease of customizing the prepared foods I ususally purchase

Availability of healthy prepared food options

Courtesy and friendliness of staff

Overall cleanliness of the store

Variety of beverages to serve with prepared foods

Ease of getting in and out of store quickly

Portability of packaging and food for on-the-go eating

Store is directly on my route

Derived Importance – Factors Impacting Overall Satisfaction withShopping Experience for Prepared Foods at Convenience Stores

Use a disciplined, fact-based approach to introduce products and services with best chance of success for your situation.!

Manufacturer

Retailer

Consumer



CONVENIENCE STORES

SEPTEMBER 2016

EXPLORING NEW & INNOVATIVE FOODSERVICE OFFERINGS AT ...

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