The Future of Convenience Foodservice.

admin | September 19th, 2017 - 1:56 pm

ROSEMONT, Ill. — With $34.5 billion in sales in 2016, the convenience store foodservice market is not only strong, but seeing continued solid growth.

Prepared food accounts for the lion’s share of the pie at $23.4 billion. Hot dispensed beverages comes in second at $7.3 billion, according to Mintel research shared during the 2017 Convenience Store News Convenience Foodservice & Beverage Exchange event, taking place this week in Rosemont.

Even with an increasingly fragmented landscape — competition from other convenience store players, competition from traditional fast-food players like McDonald’s and Dunkin’ Donuts, and competition from new players like Grubhub — “c-store foodservice purchases are fairly common,” said Caleb Bryant, senior foodservice analyst at Mintel.

Presenting the keynote at the Convenience Foodservice & Beverage Exchange on Sept. 12, Bryant explained that the core c-store demographic skews male and iGen. Known by many names, the iGen generation is also sometimes referred to as Gen Z, Centennials and Founders. The oldest members of this emerging generation are 20 years old.

“Even though millennials get a lot of attention, the next generation is the core customer.

Why iGen? Because they are frequent snackers and key consumers for beverage programs — attracted by customization and flavor.

Other core convenience channel consumers are Hispanics, parents, and urban dwellers.

However, even with convenience foodservice sales topping $34 billion, a lot negative consumer perceptions still exist around the category. For example, consumers think:

  • The items contain too many artificial ingredients;
  • It’s only good for cheap meals; and
  • It often looks unappealing.

On the flip side, 31 percent of consumers would go out of their way for c-store food.

Where the opportunities lie are with the 40 percent of consumers who are not making a foodservice purchase currently. Their reasons? They typically don’t visit a c-store; they only visit for gas; or they don’t think about buying those items in a convenience store.

 

Tried & True

Taking a deeper dive into the demographics, Mintel found that c-store “true loyalists” — those who are true fans of c-stores — are foodservice buyers and they skew male, millennial, urban, Hispanic, and from the Pacific and Mid-Atlantic census regions.

What are they buying? Pizza. They are also more likely to buy salads, tea drinks, and chicken items.

Loyalists are more likely to buy three items or more.

When it comes to innovation in foodservice segments, true loyalists want:

  • Pizza: personal size; delivery
  • Coffee: flavored hot coffee; loyalty program
  • Roller grill: value meals; breakfast items
  • Salad: fruit salads; salad bars; pasta salads

 

Driving the Buy

More than 90 percent of true loyalists say convenience store ready-to-eat food saves them time vs. roughly 75 percent of general c-store consumers.

One in five consumers wants kiosk ordering in a c-store, according to Mintel’s research.

“We see c-stores at the forefront of innovation when it comes to kiosk ordering,”  pointing to retailers such as Sheetz Inc. and Wawa Inc.

While convenience is “extremely important” to a convenience store operator, it is a point of entry. “Quality is the differentiator”.

Quality centers around visual cues:

  • The store is clean.
  • Food and drinks are made fresh.
  • Food and drinks look appealing.
  • Items are made with fresh ingredients.
  • Items come in high-quality packaging.

We found that focusing on quality issues can change the perception of food.

Coming Down the Pike

Looking ahead, convenience store retailers need to keep their eyes on two key areas: innovation and the competitive landscape.

Innovation continues to come to the c-store cold vault. For example, there are more carbonated soft drink alternatives, especially new types of water and flavored iced teas.

In a broader foodservice sense, “help me help myself” rings true as consumers look for ways to nudge themselves toward better options, she said.

New concepts from other retail channels should be on convenience operators’ radars, notably Amazon’s Amazon Go c-store concept that is testing in Seattle, and Dollar General’s DGX c-store concept in Nashville.

 

Source:  csnews.com, 9-13-17

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