Designing a Foodservice Plan

Fresh sandwichesBoth proprietary and established-brand foodservice have advantages and challenges. Retailers tell Convenience Store Decisions which they chose and why.

By Marilyn Odesser-Torpey, Associate Editor

PS Food Marts had its own proprietary deli program about 20 years ago. They had a great concept and products, but marketing an unknown brand was tough, said Ed Heath, vice president of operations for Folk Oil, PS Food Marts’ parent company,

In an effort to make life easier, PS Food Marts, based in Homer, Mich., looked at a number of branded concepts, but the fit didn’t seem right.

“Some had hot food that had to be held for long periods of time and resulted in high waste, others required too much labor,” Heath said.

Then, in 1994, PS Food Marts saw Subway was opening franchise units in some non-traditional locations. With its high quality and wide variety of products, ease of execution and powerful marketing muscle, Subway seemed to have the perfect package. Today, eight of the 31 PS Food Marts, mostly in south-central Michigan and northwestern Ohio, include Subway food.

“We put them in wherever a franchise is available,” Heath said. “Driving down the highway, people are not likely to stop for lunch at a name they don’t recognize, but they will stop at a Subway. On the day we switched to Subway, our sales doubled.”

Working with a large company with its own research and development capabilities also helps to keep new products coming so the menu remains “dynamic, interesting and meaningful to the customer,” Heath said.

“Subway spends a lot of time and effort keeping track of what’s new and cool, and developing products accordingly,” Heath said. “When we did our own delis we didn’t bake our own bread or toast the sandwiches like Subway does.”

Partnering with a large company gives the c-store chain greater buying power. It also allows the franchisee to deliver a more consistent product and customer experience.
“Customers like the predictability of an established brand,” Heath said. “They know if they liked the Subway in Nova Scotia, they’re going to like the one in Michigan.”

Training and Innovation
Consistency in employee training is also a plus. He noted that Subway has worked out the best and most profitable way to execute the concept, so training guidelines have been tested and proven effective.

When Northern Tier Energy acquired a large block of SuperAmerica stores in 2010, it took on a brand that had roots in Minnesota that traced back to 1958. It also inherited the stores’ fresh foodservice branded concept, SuperMom’s, which had its own bakery and commissary.

“When we acquired the stores, it was our primary focus to reignite the SuperAmerica and SuperMom’s brands and, most importantly, reignite our SuperAmerica/SuperMom’s team” said Jack Helmick, president of SuperAmerica and vice president of retail for Northern Tier Energy.

Northern Tier now operates 164 convenience stores and supports 81 franchised units all under the SuperAmerica banner. The majority of the stores are in Minnesota, with some also in Wisconsin and South Dakota.

Bakery items, including doughnuts, muffins, cookies and brownies, and fresh deli items, including breakfast and lunch sandwiches, salads, sides and, most recently, single serving meal replacements for SuperAmerica are produced in SuperMom’s 45,000-square-foot commissary that was built in St. Paul Park, Minn. in the early 1980s.

“Having our own commissary allows us to be innovative, to keep the new things coming and that’s the key to foodservice success,” Helmick said. “Our competitors are not just the supermarkets, but also McDonald’s and Taco Bell, and they are always coming out with new items.”

Once a month, a team made up of five managers, two district managers and some other staffers do tastings of new items at the commissary. The team also provides input on pricing, merchandising and promotion of the new items.

Quick turnaround from concept to in-store also makes having a commissary a positive for SuperAmerica.

“If I say I want a Mexican burrito with chorizo, I have one on my desk in a week and into production in six weeks,” Helmick said. “We’re the first priority for everything from development to delivery.”

Several of the top 100 items SuperAmerica sells every week are from SuperMom’s. Every month, the company does SKU evaluations in the stores to stay aware of “what’s hot and what’s not,” Helmick said.

“It is clear that SuperMom’s is very important to SuperAmerica’s success,” Helmick said.

Having a proprietary commissary also means that everything in the stores is always fresh. The facility delivers seven days a week.

Extra room in the commissary has allowed SuperAmerica to take on two new foodservice programs.

The first is going from just producing products for immediate consumption to creating grab and go multipacks of bakery items, an innovation that Helmick describes as “fantastic.”
The second program is creating private-label bakery and deli items for other companies.

“If a company has 10-500 stores, Supermom’s can do a private label foodservice program for it,” Helmick said. “We are open, willing and able to help any company develop its own private label foodservice program.”

No Cookie Cutter
Three years ago, Scott Zaremba, owner of Lawrence, Kan.-based Zarco USA, launched a proprietary concept called Sandbar Subs, a made-in-store deli operation at two of his c-stores. Both boast “oases,” as Zaremba calls the Sandbar format. These have proven to be so successful that he also opened two standalone Sandbar Subs stores.

Zaremba said that he looked at all of the major foodservice brands as possible co-branding opportunities, but all seemed “cookie cutter, which wouldn’t cut it since most Zarco USA stores are located in highly-competitive market areas where national brands appear in abundance.

The big brands, Zaremba figured, had the products and systems in place for their franchisees, but all seemed to blend together.

“In a market this competitive, you really need to have a unique offering,” Zaremba said. “In my opinion, no branded concept offered that.”
To carve a niche in a crowded marketplace, Zarco USA required complete menu flexibility. Zaremba pointed out that Sandbar actually has three menus—one for breakfast, one featuring subs and wraps, and another for hot dogs, which he calls “Beach Dogs.”

As far as building Zarco’s proprietary brand, Zaremba said that he focused on the local consumer base rather than transients who are looking for a name they already know. Coming into Zarco USA stores, customers get the freshness message quickly when they see on-site kitchens, deli meats are cut in front of them and everything from the breads to the salads and sides are made in-house.

Foodservice traffic is heaviest for breakfast and lunch, but Sandbar is growing its dinner daypart through catering.

“We didn’t anticipate doing so much catering, but now we expect it to account for 30% or more of our business,” Zaremba said.
While Sandbar’s biscuits and sausage gravy is a best-seller and the brisket in barbecue sauce is “killer,” Zaremba acknowledges that the c-store chain has had its share of menu failures over the years.

“I put rotisserie chicken in the stores and that didn’t work because it wasn’t something my clientele wanted,” Zaremba said. “It can take some failures before you come to understand what your customer base will actually buy.”

Five Tips for Improving Your Foodservice

1.  Be realistic about your chain’s capabilities when choosing between a co-branded or proprietary foodservice program.
2. Understand that profitability takes time.
3. Be consistent in employee training.
4. Make freshness and food quality your top priorities.
5. Sample, sample, sample to encourage customer interest.

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