The rise of convenience store foodservice business

Restaurants can fend off c-store competition by emulating them

Competition in the restaurant industry between sit-down and fast-casual establishments has become evident in the past few years. Less evident is the competition that is cropping up between fast-casual eateries and convenience stores (“c-stores”), unless you’re inside the restaurant industry and fending convenience stores off. C-stores offer a wide variety of quick foods that can have customers in and out in no time. The food options at these stores are not typically gourmet by any means, but still are attractive and adequate when it comes to fast dining as many can be prepared in the microwave or assembled in very little time without many extra ingredients.

Rise of c-store foodservice

A December 2018 report prepared by AlixPartners, a management consulting firm, notes that 41 percent of consumers they surveyed said their rationale for purchasing food from c-stores was because they were out shopping already and the food was easier to pick up. This points to an interesting finding in that consumers are increasingly valuing convenience more than price when making food purchasing decisions. With this in mind, the data in Innovating to Compete: The Next Step for North American Convenience Stores suggests restaurateurs need to be prepared to secure their market share.

The rise of c-store foodservice business has caused restaurant executives to rethink their strategy as they approach 2020. Convenience is king, and an increasing number of restaurant chains will devote more resources to making the customer experience easy and convenient.

Innovating for speed

Grab & go is prized by consumers in this day and age. Foods that are pre-prepared and can be literally snatched up, paid for, and taken out are the most sought-after items at c-stores. The data points to grab & go beverages, bakery items, hotdogs, and prepackaged sandwiches and salads as the those that purchasers look for most at c-stores. Wawa built an empire on hoagies and breakfast sandwiches. Quick, convenient foodservice offerings have formed a strong foundation for some of the top c-store chains, and helped Wawa get to $10B in revenue as a private company, according to Inc.

Additionally, c-stores are jumping in on the healthy foods trend that has been sweeping the nation for the last few years. The AlixPartners report states that, between 2017 and 2018, there was a 10 percent increase in the number of respondents who said healthy food choices were “extremely important” for them at c-stores. To avoid loss of customer base, fast-casual restaurants, especially, need to follow c-stores and offer healthy grab & go options that are healthy. and up the convenience factor.

Fostering customer loyalty

Hoagies and breakfast sandwiches built Wawa into what it is today. The c-store chain continues to build on its foodservice offering.
Hoagies and breakfast sandwiches built Wawa into what it is today. The c-store chain continues to build on its foodservice offering. Photo by Wawa.

C-stores have also been taking advantage of their demand and unique environments to drive more sales. One way they do this is through loyalty programs that use technology to incentivize purchasing, such as mobile applications on smartphones where users can simply scan their device to log points that can then be redeemed for free items. AlixPartners reports that millennials are a huge target audience for this marketing since they have both high brand loyalty and technology use.

Last year, only nine percent of respondents said they have used mobile technology (ordering, payment, etc.) at c-stores, showing that there is still a long way to go before Starbucks-type rewards systems become standard in the industry.

Looking toward the future

As the world becomes more and more connected, c-stores face a disadvantage in that they are “old school” when it comes to technology. Eateries like McDonald’s have introduced kiosks that take customers’ orders, eliminating long lines and wait times. By continuing to implement technology like this that gets people in and out quickly, fast-casual restaurants can compete with the convenience of c-stores.

Mobile checkout options, and even machine learning capabilities that memorize customers’ preferences to offer customized purchase options when needed, are areas where growth is possible at eateries.

Although growth is currently small now, the future for c-stores is bright and filled with a myriad opportunities to innovate and expand. Restaurants still have the upper hand and will be able to provide more foodservice selection and higher quality than their c-store counterparts, but they must also innovate and look ahead to maintain dominance in the food industry in the years ahead.

As the rise of c-store foodservice business continues, stocking healthy grab & go food options and implementing mobile checkout technology will be two clear, key ways that restaurants can stay one step ahead.

Photo credit: Wawa

Author credit: Roshan Thomas

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