Easy doesn’t necessarily mean better. That’s the view of Casey’s General Stores(Ankeny, IA) when it comes to foodservice. With more than 1,300 corporate-ownedstores and 19 franchised stores covering nine Midwest states, the company servessmall, rural communities that are often overlooked by larger pizza chains likePizza Hut and Domino’s. But it still has plenty of competition.
“We’re not dealing with the larger chains as often, but we have to go up against regional pizza chains and local family restaurants that have a lot of loyalty,” says Terry Handley, seniorvice president of store operations for Casey’s. “From our experience, we’re going to have a greater challenge in smaller communities because of the loyalty customers feel to those local operators. But if we can just get customers to try our product, they see what a high quality offer it is. It’s part of the stigma we deal with as a c-store/gas station: No one believes that such good food can come from a ‘gas station.’ We prefer to see ourselves—and promote ourselves—as a restaurant that sells gas and groceries.”
Casey’s began developing its pizza program in 1985. Pizza is the cornerstone of its prepared foods business, representing 65% of its total food sales. Foodservice, in general, accounts for the company’s thirdhighest revenue category at 8%, though it’s well behind gas (67%) and grocery/general merchandise (25%). Still, prepared foods account for 27% of the company’s total gross profit.
Foodservice has become so profitable for Casey’s because the chain has learned to work smarter, not harder.
“We have evolved over the years and that’s our focus—to do it well and do it right,” says Handley. “We began to investigate pizza because there was a void in our market. Our CEO [at the time] saw a chance to fill a niche for our consumers. In order to do gas and grocery, pizza and bakery all at once, we knew we had to do it right the first time. We started slowly to make sure the program was cost efficient and would bring a return on our investment. When we realized that was possible, we worked on making the program better.
“The challenge for larger chains is maintaining a quality program while also keeping prices in line,” he continues. “We haven’t changed our pizza prices for many years. We grow our gross profit through purchasing efficiencies and efficiency in our operations.”
When Casey’s first introduced pizza to its stores, it purchased whole blocks of cheese and grated them by hand. The company also purchased bags of flour to mix with sugar and water. The system was inefficient because employees had to measure from the 50-lb. bags of flour, which was inconsistent and yielded a lot of spoilage. But soon the vendor community caught up with the company’s needs, and Casey’s recognized yet another opportunity to spur sales growth.
“Mixing the sugar, water and flour for the dough was very costly, while grating the cheese in-store was extremely labor intensive,” says Handley. “Over time, suppliers worked to create more efficient options without sacrificing quality. We could buy our 100% whole milk mozzarella cheese pre-shredded, without having to go to a lower quality cheese. We also began buying premixed sugar and flour mixtures in smaller bag sizes so all we had to do was measure out a gallon of water. This allowed us to increase our gross profit by decreasing our waste.”
Another key factor in Casey’s keeping its costs in line is its foodservicestaff and regimented procedures. In creating its own proprietary pizza program,Casey’s has meticulously calculated the recipes for each size pie it offers.
“We have simple-to-follow specification sheets for our kitchen employees,”says Handley. “We don’t do multiple types of crusts (i.e., thin, thick, Chicago-style,etc.), so that brings simplicity to the operation. We have ingredients pre-measuredby 10", 12" and 14" offerings. As employees are dicing freshingredients, they are measuring out exactly how much each size pie calls for.Everything is weighed as it’s being produced; we have pre-measured cups formeat and cheese, and there is a specific number of pepperoni slices for eachsize. There’s an expectation with our pies, and the process is well-controlledbecause customers want a consistent product.”
Bright lights, big sales
Dave Borchers, owner of CJ’s Market (Las Vegas, NV), might have only one storeunder his belt (with another in the works), but he has plenty of experienceto go around. Before opening his own store eight years ago, he operated a 7-Elevenfranchise for almost seven years, and before that he worked for 7-Up. He thengained a well-rounded industry education with 7-Eleven, learning the importanceof food as a traffic driver.
“I liked running my own store, but franchise fees were difficult to swallow,”he says. “I did learn the value of a clean store and the kind of traffic a freshfood program could produce. So when I built this store, the store designer suggestedI implement a Piccadilly Circus Pizza program. I talked to the Piccadilly repand liked what he had to say. It didn’t sound out of hand in terms of laborand pricing, and I particularly liked that they didn’t charge a franchise fee,so I jumped on board. Now I offer their entire program—from pizza and breadsticksto subs and wings.” Piccadilly Circus Pizza is wellknown in Borchers’ neck ofthe woods. He says there are about 20 Piccadilly sites in town, so the nameis very recognizable to construction workers and other blue-collar types thatmake up the bulk of his customers. Such familiarity with the program helpedbuild his volume right off the bat. Borchers’ maximum investment in the Piccadillyprogram topped out at $40,000, which included the purchase of two ovens.
CJ’s generates impressive inside sales—Borchers says it’s one of the beststores in Las Vegas measured by sales—with pizza representing 6% to 8% of totalsales. His store used to sell 400 pizzas per day, but the emergence of a newcompetitor has trimmed that number to about 300 pies per day.
“We do 7" personal pizzas rather than slices to cut down on our labor,”says Borchers. “It’s hard enough to prep the pizza, cook it, box it and dateand time it to go in the hot case, so I couldn’t imagine asking my staff tocut and serve the pies individually. People will walk in and buy seven to 107" pizzas for a [construction] crew.
“The ovens never stop; we’re always cooking,” he continues. “We start at 4a.m. and by 4:30 a.m. we have customers buying 7" pies with breakfast sandwiches.We probably sell 15% of our pizzas between 4 a.m. and 7 a.m.”
It is a more labor-intensive program, but that’s what gives his pizza thequality his customers crave. Piccadilly recently introduced a frozen-to-ovenprogram for its retailers, which would save labor hours, but it’s not for Borchers.
“I prefer the fresh program to Piccadilly’s freezer-to-oven program,” he says.“It’s less labor, but I don’t think it provides the quality of pizza my customersare used to. Piccadilly offered me a one-mile zone, meaning no one can builda Piccadilly unit within a mile of my store. I would hate for someone to comein and offer that [freezer-to-oven] program
because I feel it would reflectnegatively on my program. Piccadilly has stood by its word and has never pressuredme to carry a product I didn’t want.”
Borchers, like most retailers offering prepared foods, has had to come to termswith the labor requirements of his program.
“When I first built this store, I projected our labor cost to be half of whatit actually is,” he says. “The program is labor-intensive, and our employeesknow they’re making pizzas all day long. If they get a break it’s usually whenthey’re replacing one tray with another.
“Even though the program is laborintensive, I don’t have a lot of turnover,”Borchers continues. “Some of my employees have been with me since Day One, butI also pay a higher wage to my employees than typical c-stores do. I treat mypeople fairly— they need to make a living—and I make sure they do for all thehard work they give me.”
Borchers credits his employees’ grasp of the program to Piccadilly’s training.The vendor provided CJ’s with training on every aspect of the program abouta week before the store opened, and stayed on for two days after the opening.
Training for Casey’s General Stores, on the other hand, is handled by a seasonedpizza maker who, in some cases, might be the store manager. The company alsohas semiannual food training sessions at stores with area supervisors to keepeveryone sharp and to reinforce safety and portioning policies.
Employees are cross-trained to work in both the c-store and the kitchen, butHandley says the employee’s desire to work on one side or the other plays ahuge factor.
“The vast majority of our employees are cross-trained for greater efficiency,and it develops a stronger employee base,” Handley says. “The kitchen does provide[employees with] more freedom; employees work in their own time and environment.But there’s a technique to rolling the dough out and creating the pizza fromscratch. Kitchen employees take great pride in creating quality products forour customers.”
About 90% of Casey’s General Stores offer foodservice. The company looks ateach store on an individual basis to see if there is a niche to be filled andthe volume needed to return the investment. If the conditions aren’t right,Casey’s will remove the program. At the same time, the company may considermarket changes after a store removes foodservice, then go back and “ readd”the program based on a positive evaluation.
“Our goal is to maintain an average margin of 60.5% in the prepared foodscategory each year,” says Handley.
“Currently our margins are around 64% in prepared food. We sell approximately9 million pizzas a year, and we’re classified as a top 10 retailer of pizzaand donuts based on the number of outlets we have.”
Pretzels are no longer simply a hard, salty snack that customers buyby the bag. Soft pretzels, for instance, have become a mainstay in conveniencestores, far beyond the reaches of “pretzel-crazy” Philadelphia. The popularityof the Bavarian treats—along with manageable price points and productinnovations—has allowed them to evolve from the snack shelf to the freezerto the sandwich warmer to the deli counter.
Matt Vaughan, category manager for Tri Star Marketing dba Super Pantry(Urbana, IL), decided to revamp his chain’s freezer sections to accommodatemore heat-and-eat options. The thought of incorporating gourmet pretzelsinto his stores’ prepared foods repertoire helped fuel the change.
“We only have so much space in our stores and we had done all we couldwith a traditional freezer program,” says Vaughan. “We had heard aboutthese [stuffed] gourmet pretzels and tested them in our home office. Theywere great—a real quality product. So we now have a freezer door devotedto pizza and another to single-serve ice cream, and then another has WhiteCastle burgers and these pretzels. Our customers heat them up in our microwaves.We’ve only had them for six months, but they’re already selling reallywell.”
Super Pantry knew it could offer the individual stuffed pretzels ina warmer, but it didn’t want to invest in warmers for all 50 stores withoutproving that the product would catch on. The company signed on to carrysix flavors of Kim & Scott’s Gourmet Pretzels, and Vaughan says thetraditional Bavarian flavor is by far the least popular. The most popularflavor? Pizza, of course.
“The pizza flavor sells above and beyond the other flavors we carry,”says Vaughan. “It just shows that consumers want to try something differentthan a traditional item. And these pretzels are considerable—they’re practicallya meal as opposed to a snack.”
At Sheetz Inc. (Altoona, PA), pretzels have become an integral partof the menu. When the company was looking for an alternative bread forits Made-To-Order food program, the “pretzel roll” proved to be a logicalchoice. The chain had already been experiencing great success with thePretzel Fillers line from J&J Snack Foods when it put a new twiston its sandwich program: Gourmet Pretzel Rolls.
“The pretzel roll works well in the convenience environment becauseit heats best in the microwave as opposed to grilling or toasting,” saysKeith Boston, director of culinary development for Sheetz. “The microwaveactivates the moisture in the roll and makes it soft rather than chewy.”
For two years Sheetz has been using a 4-oz. roll to make its pretzelmelt sandwiches, which come in ham, turkey, club, tuna and chicken saladvarieties; the chain also offers hamburgers and chicken sandwiches onthe roll. A slightly smaller version of the pretzel roll has added a newdimension to Sheetz’s breakfast sandwiches with egg, cheese and a choiceof sausage, ham or bacon.
“We typically sell about 250 pretzel sandwiches a week per store,” saysBoston. “Utilizing a pretzel roll gives our customers another option thatthey’ve really taken to.”