When a particular category say, foodserviceaccounts for almost 12% of the industry’s total inside sales (which it did last year, per the National Association of Convenience Stores’ State of the Industry report), retailers will work to control it as much as possible. In fact, retailers have spent millions of dollars and man-hours to add cost control and consistency to their food operations.
Within the foodservice category, the commissary and packaged sandwich segmentaccounts for 16.8% of all food sales, according to the 2005 NACS SOI, whichis precisely why larger chains like Sheetz, Wawa and 7-Eleven, among others,have invested plenty of scratch in their own commissaries. Commissaries, whichby their very nature introduce consistency and cost savings into retail foodserviceoperations, certainly make sense for larger chains, but they’re also gainingsteam in the operations of small and medium-size retailers, too. In most cases,of course, commissary operations for smaller retailers don’t measure up, literallyor figuratively, to those run by the bigger chains, but they’re no less effective.
Size doesn’t matter
“Our commissary is in the back of one of our largerstores that we call ‘The Point,’” says Dean Butgereit, foodservice directorfor Ricker Oil Co. “It’s about 700 square feet in total.”
Before moving the commissary to “The Point,” Ricker’s Market sandwiches were made inside Ricker Oil’s full-service bakery, which produces decorative and seasonal cakes, cookies, muffins and a variety of breads the chain delivers to 24 of its 33 stores seven days a week. Sandwich deliveries, meanwhile, happen twice a week per store. The 10 different varieties of sandwiches are loaded onto a refrigerated box truck early in the evening after the driver loads his haul from the bakery.
“Our driver is usually finished by about 6 a.m.,” Butgereit says. “Every storegets a daily bakery delivery and they get sandwiches twice a week. It used tobe three times a week.”
The reason for scaling back: The shelf life of Ricker’s Market sandwiches has improved dramatically compared to a year ago, when Ricker Oil purchased a package-sealing machine for the sandwiches.
“It shoots nitrogen into the package and then heat-seals it,” Butgereit says. “That really extends the life of the sandwich. The sandwiches can last [on the shelf] up to 10 days. However, our maximum on subs is seven days, and our maximum on salad sandwiches is five days.”
The package-sealing machine manufactured by Clamco Corp. measures 2 feet wide, about 7.5 feet long and a little more than 4 feet tall. The MSRP, according to Craig Cornell, sales coordinator at Clamco, can range from $4,500 to $7,500, depending on how many options a retailer wants.
Saving on spoilage
Ricker Oil (Anderson, IN) has realized a good ROIon spoilage reduction alone.
“The waste is running about 15% to 18% company wide, down from 28% to 35% before the machine,” Butgereit says. “We’re working hard to get the figure lower through merchandising and suggestive selling.”
The irony is that the sealing machine has performed so well it creates a merchandising snafu: Sandwiches are wrapped so tightly that customers see mostly bread.
“We want people to see the meat; we want our guests to see the generous portions of premium meats and cheeses that make up our sandwiches,” Butgereit says. “We’re looking at ways to make it so the machine won’t wrap the sandwiches so tightly so we can give the customers a better view.”
If customers are having a hard time getting the best possible view of the product,it’s not showing in the sales column. Sandwich sales have more than doubledat many stores, and sales at some of the top-volume locations climb past the$2,000-per-month mark. Commissary staffers prepare close to 1,400 sandwichesper day.
“Labor costs are your whole issue, and our total labor hours run around 180 per week,” Butgereit says. “If you control your labor and food costs, you will make money.”
How you slice it
Recently, the Ricker team figured out a way to bettercontrol food costs.
“We were buying packaged sliced meat, but we’ve gone to buying meat whole andwe bought a slicer,” Butgereit says. “When you buy whole meat, you’re gettingbetter quality for a better price. Every time meat is touched, the price goesup.”
For example, when Ricker’s bought sliced turkey, it paid about $3.49 per pound, compared to buying it whole for $2.99 per pound. It’s easy to see why Butgereit says his stainless-steel slicer is actually “pure silver.”
“Your labor goes up, but it’s completely justified,” Butgereit says. “The volumeof meat we do justifies it even if we have someone working the slicer for threehours a day at $10 per hour.”