August 25, 2016
Foodservice – First Steps
b2b Solutions often receives calls from retailers who have read the articles, heard the lectures, attended the seminars, etc., and have determined that foodservice is the key to their future. The first question we ask is how are you doing with coffee and fountain? They generally reply “Ok” but what we are really interested in is made on premise sandwiches, chicken, pizza – you know, foodservice “stuff”. More on why we ask about coffee and fountain at the end of the article.
Prior to going on site we ask them to provide us information on their current offer. What items are they selling, what are sales in terms of units and dollars, what are food costs (or gross margin), what are foodservice sales per labor hour – the list is fairly extensive etc. The ability to provide this information tells a great deal about their current foodservice operation. The more they can provide, the more serious they are and the more likely that they will be able to make the next step in foodservice.
As part of the b2b Solutions assessment process, we visit as many of their c-stores as possible. During our visits we are looking at the existing operation, its layout, the equipment being utilized, and how clean is the store – especially the foodservice area. We have learned most c-store retailers don’t understand that c-store clean is not equal to restaurant clean.
Customers may tolerate a little (and we do mean little) mess in a c-store’s coffee are, but they will never accept it in the “kitchen” for a more complex offering. We believe the reason that they do is that they lay part of the blame for the coffee area’s condition on their fellow customers. We know that if we find a dirty coffee/ fountain area that the company is not yet ready to tackle a more complex foodservice offer.
We also talk with the people on duty to see the type of culture that exists. Is this an organization where customer service is a priority? Are they staffed sufficiently to be able to have the time to devote to customers? Foodservice is unlike other categories. Most c-store items are pre-sold to the customer by the manufacturer. That is not true with foodservice. The store personnel must “sell” the items with every element of the store’s environment. Many are not prepared to do so.
We talk with management about how they view employees — are they an asset or an expense? To do foodservice well you must be willing to invest in your employees. They will need additional skill sets and that will require training and probably certification. This means every time you lose an employee your investment goes out the door. To address this you will need to be willing to adapt your corporate culture and compensation to ensure that you retain them.
As I said at the beginning, we pay particular attention to their current fountain and coffee business. Have they created a brand for both? Either? Have they devoted sufficient space to the categories? Do they have marketing programs for them?
Why the emphasis on these two seemly mundane categories? First, both are already accepted by the customers as being “ok” to purchase in a c-store. Second, if they cannot do these well, then they have no chance of implementing a more complex foodservice offering. If they are being handled poorly, it is indicative of how serious the company is about foodservice.
More money is being made by the average c-store today on the hot, cold and frozen beverage categories than on all other foodservice combined. Over 65% of all gross margin reported by NACS in its SOI for the foodservice category came from these three.
I go back to my original statement — You want to know if you are ready to add foodservice to your operation? Ask yourself, how am I really doing with coffee and fountain?