The Growing Importance of Foodservice

JohnNewI had the opportunity recently to look back at the archives of Convenience Store Decisions from the early 1990s. The majority of stories were dominated by candy and tobacco. Sure, there were some sandwich stories and the obligatory narrative on roller grills—even one mention of a futuristic retailer in Texas attempting to develop a pricebook for his 10-store chain. But, by and large, these issues were heavily skewed toward tobacco and confections.

When the game changed in 1998 with the Master Settlement Agreement (MSA), a handful of progressive retailers recognized that tobacco profitability would be compromised and that they would need a fresh hook to drive new and repeat business.

Foodservice emerged as the logical choice and much of the industry has been chasing these top quartile chains ever since. And that’s OK because the standards at the top of the industry nowadays are pretty high. As long as these second and third tier chains are executing food programs with a real sense of purpose and professionalism and have a true commitment from all levels of management to be in the foodservice business, they will acquire a certain degree of success. The bottom line to note, though, is that a tepid interest in food is simply not enough to get you where you need to be in order to succeed in this uber-competitive category.

Fresh and Focused
Foodservice, you can make the case, is now the center of the retail universe. Walgreens, Barnes & Noble, Home Depot, Ikea and Toys R Us are just some of the mega national chains that are either testing or actively rolling out fresh foodservice concepts to customers in key concentrated markets like Chicago, New York and Los Angeles–markets where fresh food demand is surging.

This burgeoning competition is further fueled by the likes of regional supermarket chains already pushing the menu with dynamic fresh foodservice solutions. Starbucks, Dunkin’ Donuts and many, many QSR concepts are also upgrading their coffee programs to attract a wider base of customers.
They are doing this for one reason: to steal your business. Don’t think so? Consider the number of commercials that have run on TV over the past year basically mocking customers for buying “gas station sushi” or “day-old roller grill food.”

Old perceptions may die hard, but imitation is the best form of flattery. Other retail channels going on the attack to replicate the c-store industry’s approach to foodservice is very telling about how these folks view convenience stores. Make no mistake, they are concerned and that is a real testament to the outstanding hard work being done by all of you.

Remember all those stories about Tesco, Walmart, Costco and BJ’s taking over your business? Even with their deep pockets we’re still waiting for them to figure out how to solve the convenience factor.

But these other retail channels are learning and becoming shrewd operators, so this industry must keep its foot on the gas pedal. Walgreens, for example, is taking slow, calculated steps to usurp the convenience business. Like convenience stores, the chain has great corners, they are open 24 hours and they have a lock on two coveted demographics: women and seniors.

Walgreens is supporting that effort with a new cafe format, featuring a host of fresh foods and many of its stores have been applying for beer permits. This is a real threat that cannot be taken lightly.

The goal of CSD‘s sixth annual foodservice issue is to be a tool to help you fend off these threats. I encourage you to read the pages ahead closely as you develop your next move in the fight to boost foodservice dollars. Your competition is relentless. Don’t let them get the upper hand.

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