Surging Demand for Ethnic Foods

With the growth of specialty restaurants, consumers today are exposed to new foods they may not be used to finding locally, and it’s creating a demand at convenience stores.

By Howard Riell, Associate Editor.

Ethnic offerings are driving foodservice sales at convenience stores hoping to diversify beyond basics like hot dogs, burgers and sandwiches. But doing ethnic foods right—doing them justice, especially among customers who will know the difference—can be difficult, but it is increasingly essential.

Ethnic food sales are on the rise and expected to grow by another 20% through 2014. The estimates came from Mintel International, the global research supplier report company, which noted that more than one million foreigners have become permanent legal U.S. residents each year since 2005, giving steady growth to the ethnic foods market since 2004.

Mexican/Hispanic foods are the most popular among all ethnic foods in the U.S. Six in 10 consumers polled in Mintel’s survey reported having prepared Mexican food within the past month.

A study released this spring by Latinum Network agreed that Hispanics are the critical demographic group when it comes to raising food sales throughout the food and beverage industry.

According to the research, Hispanic consumers comprised more than half of the real growth despite the stagnant American consumer economy from 2005 to 2008, accounting for $52 billion of new inflation-adjusted spending. Non-Hispanics were responsible for $40 billion of new spending. Hispanics’ new spending, Latinum discovered, offset 84% of the real decline in demand across the trillion-dollar sector.

Hispanic consumers created over $9 billion of new value in food and beverage in otherwise dormant or declining categories, such as fish and seafood, fresh fruit juice and dairy products, between 2005 and 2008.

Furthermore, Hispanics created $5.9 billion of new value in growing categories where they represent approximately 20% of the growth, such as vegetable juices and fruit drinks, meats including pork, ham and mutton and frozen meals, which represent the highest-growth food category among Hispanic shoppers.

The research also found that Hispanics are increasingly apt to dine out during the workday, a particularly pleasing finding for convenience stores, whose speed of service and portability of food offerings serve that market well.

“Clearly, U.S. Hispanics represent a growing market in the midst of a mature U.S. consumer economy, but in order to win over this important demo, brands must make an authentic appeal to the unique behaviors and tastes of U.S. Hispanics through distinct products, channels, messaging and marketing strategies,” said David Wellisch, co-founder of Latinum Network.

Authenticity Crucial
David Wishard, vice president of business development for Susser Inc., which has 521 Stripes stores in Texas, New Mexico and Oklahoma, said authenticity is the key to success with an ethnic food program.

Stripes, which offers foodservice at 304 stores, sells authentic handmade Mexican and Tex-Mex food that receives rave reviews from customers of all ethnic backgrounds. “The key for us is that we don’t take a cookie cutter approach to foodservice operations,” Wishard said. “The regional diversity, the regional flavor profile changes from store to store.”

This is a standard from which executives will not budge. “It is authentic and handmade. We don’t use any prepared ingredients, so if we are going to make a tortilla, as an example, we make it from flour, baking powder, shortening, salt and cold water to bind it. It does not come in a package,” Wishard said. “A majority of the items we sell are hot, made to order and prepared right in front of you.”

Wishard described Stripes stores as resembling cafeterias, offering a distinctly home-style ambiance. “Imagine walking into your mom’s house or your grandmother’s house. The first thing you do is open the door and your senses are excited because when you smell something cooking then you are attracted to that area,” he said. “If you’re in mom’s house you take the lid off the pot to see what’s cooking and you’re excited to taste the food. That’s how it is in our stores.”

Food is prepared fresh on flat grills located behind the counter. “If you come up to our foodservice counters you can see all the food laid out there,” Wishard said. “More importantly, we will make it suit individual tastes. If you say, ‘I want my Tortilla Tostada or my Tortilla Charlie Brown’ we know that you want it cooked a little more so that it’s got a few more toast points on it, and that’s how we’ll prepare it.”

Freshly prepared breakfast tacos—made with potatoes and eggs, bacon and eggs, sausage and eggs or ham and eggs—Huevos a la Mexicana wraps and other grab-and-go items are just 99 cents.

“Most of our prices range from 99 cents up to $1.59, with some of the items being $1.99, such as all-meat ingredients like carne asada or barbacoa,” Wishard said. Lunch plates, consisting of an entrée and two side items, are priced at $3.99.

A mistake that c-store operators make in running ethnic food programs, according to Wishard, is keeping too tight a grip on things. “Don’t try to control the menu too much. Manage it, but encourage customers to customize the products to fit their tastes. If you try to get fancy and focus too much on sticking strictly to what’s on the menu you’ll control yourself out of existence.”

Americanized and Authentic
While some debate exists over whether or not pizza is still considered an ethnic food, no one questions its popularity. Village Pantry offers pizza in about 50 of its locations, ranging from product made in store to branded locations like Hunt Brothers. Prices average from $1.99 to $2.69 a slice, or $9.49 for a whole pie. The key to making the program successful and not just a me-too concept is to offer a quality product, said Chad Prast, director of foodservice for Village Pantry.

“You can usually get someone to try something once, but getting them to come back is the key. A poor quality product at a cheap price won’t last long,” Prast said. “As for authenticity, pizza is pretty much Americanized versus authentic Italian.”

Village Pantry stores include a variety of types of equipment. Some locations use the old brick-style gas ovens, while most are outfitted with impinger ovens. Training, Prast insisted, is important when it comes to making sure the product is received, stored, baked and held properly.

“We have a food specialist who visits each site to train employees and monitor their progress to ensure they are operating up to our high standards,” Prast said.

Pizza remains such a popular item, not only for the taste, but also because consumers on the go appreciate its portability. “It’s something that you can eat quickly, and could eat in a car if needed,” Prast said,

Change remains a constant, Prast added. “We have had pizza for a while now. We continue to increase the quality as new programs and ideas come around. Right now we are reviewing adding proprietary calzone items made from fresh dough and ingredients. It is still in the early stages of research and development, but we’re optimistic about the possibilities.”

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