The C-Store Foodservice Update...C-Store Foodservice: The Good •C-store foodservice is a $31.3...
Transcript of The C-Store Foodservice Update...C-Store Foodservice: The Good •C-store foodservice is a $31.3...
The C-Store Foodservice Update
Abbie Westra — [email protected]
Convenience Stores 101
C-Stores of Today: Total Convenience
TRADITIONAL definition of a convenience store: 1. Building size of less than 5,000 square feet 2. Off-street parking and/or convenient pedestrian access 3. Extended hours of operation, with many open 24/7 4. Offer at least 500 stock keeping units (SKUs) 5. Product mix includes a significant selection of tobacco,
beverages, snacks, candy and grocery items
Source: NACS® State of the Industry Annual Report
Convenience Store Facts C-stores are bigger than ever before. • Average c-store size = 2,744 square feet • New stores are even bigger
Average size = 3,590 square feet Total in-store sales area = 2,582 sq ft
• C-stores have expanded their offerings over the last few years, with stores becoming part supermarket, restaurant, gas station and even a bank or drug store.
83.7% of convenience stores sell gasoline. • Of the 151,282 c-stores in the United States,
126,658 carry motor fuel.
It’s all about immediate consumption: • More than 80% of goods purchased at
convenience stores are consumed within an hour, and 60% are consumed immediately.
Source: NACS® State of the Industry Annual Report
Convenience Stores are Everywhere • There is one c-store per 2,100 people in the U.S. • C-stores account for more than 34% of retail outlets in the U.S. • The majority are independent operators.
Source: NACS® State of the Industry Survey of 2013 Data & CSX, LLC
Trade Channel 2012 2013 %
Change
Convenience Store 149,220 151,282 1.4%
Single Stores 93,819 95,056 1.3%
Category Killer 84,526 83,959 (0.7)%
Supermarket/Supercenter/Superette
50,078 50,645 1.1%
Liquor Store 45,665 46,266 1.3%
Drug 40,727 41,378 1.6%
Dollar 23,421 24,853 6.1%
Kiosk/Other 23,052 22,847 (0.9)%
Cigarette Outlet 10,374 10,956 5.6%
Mass Merchandiser 7,243 7,177 (0.9)%
Wholesale Club 1,261 1,286 2.0%
Total Retail 435,567 440,649 1.2%
Source: NACS® State of the Industry Survey of 2013 Data & CSX, LLC
C-Store Industry Near $700B
Snapshot 2012 2013 Change
Industry Stores 149,220 151,282 1.4%
Industry Sales $700.3B $695.5B (0.7)%
In-Store Sales $199.3B $204.0B 2.4%
Motor Fuel Sales $501.0B $491.5B (1.9)%
Fuel Margin (CPG) 18.1¢ 18.5¢ 2.3%
Source: The Nielsen Co./TDLink – 2012 Survey
Industry Store-Count Breakout
Store Breakout Number Percentage
1-10 Stores 99,603 67.2%
11-50 Stores 11,933 8.1%
51-200 Stores 8,485 5.7%
201-500 Stores 8,136 5.5%
Over 500 Stores 19,969 13.5%
Total 148,126 100%
Source: NACS® State of the Industry Survey of 2013 Data & CSX, LLC
Industry Totals—Same Firm Sales
Per Store/Per Month 2012 2013 Change
In-Store Sales $133,286 $136,265 2.5%
Merchandise Sales $111,700 $111,866 1.3%
Foodservice Sales $24,191 $24,726 2.4%
Fuel Gallons 130,845 132,029 0.9%
Fuel Sales $467,390 $457,754 (2.1)%
Average Selling Price $3.57 $3.47 (2.9)%
Total All Sales $497,962 $497,654 (0.1)%
Source: NACS® State of the Industry Survey of 2013 Data & CSX, LLC
Industry Totals—Gross Profit Dollars
Per Store/Per
Month
2012
2013
Change
In-Store $42,617 $44,514 4.5%
Merchandise $30,372 $31,606 2.8%
Foodservice $12,760 $13,081 2.5%
Fuel $23,845 $24,616 3.2%
Source: NACS® State of the Industry Survey of 2013 Data & CSX, LLC
2013 Top Ten In-Store Categories Share of Sales
37.00%
18.00%
15.50%
11.70%
8%
3.70% 3.10%
2.00% 1.10%
Tobacco
Foodservice
Packaged Beverages
All Other
Beer
Salty Snacks
Candy
Sweet Snacks
Alternative Snacks
Foodservice Deep Dive
C-Store Foodservice: The Good
• C-store foodservice is a $31.3 billion industry, contributing 18% to in-store sales and 29.1% to in store gross-profit dollars.
• Foodservice is picking up the slack from declining fuel/cigarette sales.
• Among the top five c-store categories ranked by gross margin percentages, foodservice items makes up four of the top five.
Source: NACS® State of the Industry Survey of 2013 Data & CSX, LLC
Foodservice in C-Stores: The Not-As-Good
• Retailers aren’t thinking like restaurateurs.
• Per-store profits barely touch that of QSRs.
• Top-quartile retailers are leaving others in the dust.
• Concern that momentum is flagging:
– 2013 foodservice gross-profit dollars: +2.5%
– 2012 foodservice gross-profit dollars: +8.7%
The Haves and Have-Nots
Top quartile Second quartile Third quartile Bottom quartile
Foodservice Sales*
$34,572 $17,640 $10,075 $9,712
Source: NACS State of the Industry Report of 2013 Data * Per store per month
Gross Profits* Top quartile Second quartile Third quartile Bottom quartile
Prepared Foods $14,260 $7,701 $4,448 $4,705
Hot Dispensed $4,756 $2,518 $993 $652
Cold Dispensed $2,507 $1,583 $912 $651
An Industry in Transition Bottom Line:
• Top-Performers Will Continue to Outpace the Industry.
• Those Who Commit Will Continue to Raise all Boats.
• The Challenge: Close the Gap Between C-stores and QSRs.
Category Sales Contribution
5.80%
63.90%
5.80%
9.50%
15.00% Commissary/Pkgd.Sandwiches (+1.2%)
Food prepared onsite (+2.8%)
Frozen dispensedbeverages (+3.1%)
Cold dispensedbeverages (-4.2)
Hot dispensedbeverages (+1.3%)
Source: NACS® State of the Industry Survey of 2013 Data & CSX, LLC
C-Store Foodservice Profit Margins
• 40% - 60% – Prepared sandwiches
– Chicken (non-sandwich)
– Fresh fruit
– Soup
• 60% - 70% – MTO sandwiches
– Hot dogs
– Corn dogs
– Pizza
– Breakfast sandwiches
• Greater than 70% – Cold dispensed beverages
– Hot dispensed beverages
– Frozen dispensed beverages
Source: Technomic
C-Store Traffic Growth
Year Ending Traffic PCYA*
Dec. 2010 +2%
Dec. 2011 +3%
Dec. 2012 +2%
Dec. 2013 +1%
Source: The NPD Group/CREST * Percent change from a year ago
Convenience stores continue to see nice gains in foodservice traffic year over year, especially compared with other foodservice-at-retail channels, which have been flat to negative.
C-Store Day-Part Distribution
6%
19%
33%
42% Supper
Lunch
Morning meals
P.M. snack
Source: The NPD Group/CREST
While c-stores saw nice growth during lunch (5%) and p.m. snack (3%) day-parts last year, breakfast and supper saw losses (-1% and -2%, respectively).
Trends by Category: Food Prepared on Site
• 9.1% of all In-Store Sales and Largest Contributor to Foodservice Sales.
• Third Largest C-store Profit Contributor by Gross-Profit Contribution.
• Menu Trends:
– Breakfast Items
– Proteins
– LTOs
– Deeper Retailer-Supplier Strategies
Source: NACS State of the Industry Report of 2013 Data
Trends by Category: Commissary/Packaged Sandwiches
• Total Category Sales Rose almost 13% in 2013, and Profits Grew 10%.
– Notable in Today’s Atmosphere.
• Sandwiches and Wraps Make up 64.5% of Category.
– Salads & Sides = 10.4%
– Thaw, Heat & Eat = 17.3%
– Ready-to-Eat Meals = 8.7%
Source: NACS State of the Industry Report of 2013 Data
What’s on the Menu?
Desserts
Soups
Chicken (non-sandwich)
Snack items
Cut Produce
Salads
Pizza
Baked Goods
Hot Dogs, Sausages, etc.
Breakfast Items
Sandwiches
37%
38%
40%
42%
44%
50%
66%
77%
85%
92%
96%
Source: FARE State of Foodservice, May 2014
Percent of Operators Offering
Menu Growth Opportunities
8%
13%
14%
16%
18%
23%
33%
33%
54%
54%
Soups
Cut produce
Salads
Chicken (non-sandwich/salad)
Roller grill items
Baked goods/pastry
Pizza (pie/slice)
Snack items
Breakfast items
Sandwiches
What two items do you believe have the highest sales growth potential?
Sandwiches are a low-hanging fruit, since 98% already offer them.
Source: FARE State of Foodservice, May 2014
Day-Part Growth Opportunities
5%
2%
4%
7%
12%
34%
37%
None
Late-night snack
Mid-morning snack
Dinner
Late-afternoon snack
Breakfast
Lunch
Which day-part, if any, do you expect growth in the next year?
Source: FARE State of Foodservice, May 2014
C-Store New Menu Development Category Q2 Rollouts
Non-breaded Protein 2
Oth. Potato 3
Other Sides/Condiments 12
Pasta/Noodles 3
Pizza 18
Pork Dish 9
Protein Side/Extra 4
Salad 11
Sandwich 111
Side 9
Soup 7
Topping 11
Wings 2
Category Q2 Rollouts
Baked Goods 15
Beef Dish 3
Breaded Other 4
Breaded Protein 6
Breads 25
Burgers 14
Chicken Dish 5
Combo Plates 6
Deli Salads 4
Fruit 11
Hot Dogs 26
Ice Cream 5
Mexican 15
Source: Technomic
What the Leaders are Doing
Rutter’s: From irreverence and fun to sophistication: mahi mahi bites, barbecue short ribs, cannolis, “pig tails,” mac and cheese bites.
Tedeschi: Better-for-you items (Cuban Black Bean, Edamame and Wheatberry), Indian HMR meals; Appletini Panini.
Quick Chek: Snacks: Santa Fe chicken egg rolls, jalapeno poppers, mozzarella bites.
Wawa: Baking breads fresh in-house for its hoagies.
RaceTrac: Frozen yogurt,
MTO smoothies.
What the Leaders are Doing
Casey’s: Opened stand-alone pizza QSR, testing delivery.
7-Eleven: Snacks and mini-meals, exclusive offers.
QuikTrip: Rolling out MTO sandwich program company-wide.
Spinx: “Fresh on the Go” menu, with better-for-you items such as hummus, wraps, Greek yogurt, as well as MTO sandwiches, pizza and flatbreads.
Global Trends Permeating C-Stores
• Spicy Flavors (sriracha, chipotle)
• Regional Barbecue
• Restaurant Appetizers Turned C-Store Snacks
• Breakfast Foods
• Comfort Foods Reimagined (Wawa’s Mac & Cheese Menu)
C-Stores and Wellness • Balance Is Key
• Success: Egg-white or whole-wheat options, vs. 100% “healthy” offering
• Verdict Still out: Tedeschi’s Salads
• Real Success Has Been in:
– 360-Degree, Open-Air Coolers
• Yogurt, Juices, Cheese Sticks
– Packaged Snacks
• Nuts, Trail Mixes
• “Craft Snacks”
Key C-Store Consumer Attributes
51%
50%
48%
45%
45%
43%
33%
42%
51%
38%
39%
35%
38%
40%
43%
43%
45%
56%
48%
39%
52%
52%
Comparable menu prices
Speed of visit
Good value thru low prices
Takeout quality
Beverage quality
Order accuracy
Clean kitchen/prep area
Convenience location
Service
Food quality
Food taste/flavor
Important
Very Important
Source: Technomic Consumer Brand Metrics Study
Operator Challenges
Greatest Pain Points* Percent Responding Labor pool 57%
Finding right products/programs 57% Labor costs 56%
Equipment costs 51% Quality control 49%
Food costs 48% Safety and sanitation 34%
Distribution chain 26%
Source: FARE State of Foodservice, May 2014 * Rated 5 or 6 on a 6-point scale where 6 is extremely challenging
The Supplier-Operator Partnership
22%
30%
32%
36%
47%
56%
62%
Employee training programs
Consumer insights and data
Products/equipment that require lesslabor
Total programs (product, training,marketing, equipment)
Sales and promotion programs
Improved products (taste, quality, shelflife)
New concepts/products
Source: FARE State of Foodservice, May 2014
What are the three most important tools/information you need from your supplier partners?
Foodservice Sales Expectations Year to Come
23%
64%
12%
2%
Improve greatly
Improve somewhat
Remain the same
Decline somewhat
Source: FARE State of Foodservice, May 2014
28 Trends, Issues and Retailers You
Should Know
Retailer Cheat Sheet 16 companies to track to stay in the know
• 7-Eleven (Dallas)
• Casey’s (Ankeny, IA)
• Cumberland Farms (Framingham, MA)
• Holiday Station Stores (Minneapolis, MN)
• Kwik Trip (LaCrosse, WI)
• Kum & Go (Des Moines, IA)
• Maverik (N. Salt Lake, UT)
• Nice N Easy (Canastota, NY)
• Quick Chek (Whitehouse Station, N.J.)
• QuikTrip (Tulsa, OK)
• RaceTrac (Atlanta)
• Rutter’s Farm Stores (York, PA)
• Sheetz (Altoona, PA)
• Spinx (Greenville, SC)
• Susser/Stripes (Corpus Christi, TX)
• Tedeschi Shoppes (Rockford, MA)
• Wawa (Wawa, PA)
9 Key C-Store Foodservice Themes
• The Leaders Have a Long Legacy – It takes a lot of patience to be true foodservice players.
• Surrounded on All Sides – They are competing w/ restaurants, grocery, drug and dollar.
• Top-Quartile Disparities – The top performers continue to pull away from the pack.
• Operational Execution – Follow-through at the store level is an ongoing hurdle.
• The Distribution Dilemma – The c-store supply chain was not built for fresh foods.
9 Key C-Store Foodservice Themes
• Culture is Critical – The leaders have succeeded through a cultural
commitment from the c-suite to the store floor.
• Top Differentiators: Customization & CPG – Overlap trends toward day-part blurring and snacking.
• Target: Females and Millennials – Savvy retailers are going after these discerning, demanding
segments to help change consumer perception.
• End Game: A Restaurant That Sells Gas – Leaders creating a whole new segment: “fast casual to go.”
C-Store Foodservice Update
Thank You! Abbie Westra — [email protected]