August 21, 2016
Foodservice Strategy – The Basics
You’ve heard all the hype, read all the articles and are thinking that you need to get into “foodservice.” How do you decide? Let’s use who, what, where, how and why approach.
The NACS 2006 SOI reported that the average c-store generated $128,000+ in sales and, more importantly, $64,000+ in gross margin from foodservice. It is one of the keys to the industry’s future and a category you need to be involved in to compete.
Foodservice requires certain physical attributes to be successful. You have to ask yourself the following questions. Does your store look like a place where people will buy immediately consumable food? Do you have the parking spaces to support a foodservice program? Do you have the interior space to do what you would like to do? Even if the answers to the proceeding questions are yes – do you have the capital to remodel, buy the equipment, etc.?
Be realistic. Don’t try to replicate the very involved proprietary foodservice programs you see in the trade press. Most of those chains have devoted years, and a lot of money, to get to where they are. Look at doing the basics well – coffee, fountain and, perhaps, roller grill. QuikTrip is one of the most successful chains in the industry and uses this “basic” approach to foodservice, but does it very well.
You may or may not have any foodservice experience, but your potential vendors do. Check to see what may be available through CBC and your primary distributor. Contact the vendors you see in the other trade press. If you have seen programs you like in non-competing c-stores, ask them about it.
Do your homework! Make sure that you know exactly what you get as part of their program. Does it include equipment, ingredients, and supplies and, if so, what are the costs as part of the program versus what they could be purchased for from someone else. What, if any, training (initial and on-going) will they provide? The same is true for marketing materials. Will they provide you with signage and other POP? At what cost?
What are their fees? Do they charge franchise or license fees upfront? Do you have to pay on-going advertising or other fees? If you do, what do you get. Again, talk to people with the program to see if the vendor lives up to the promises they made.
Remember, all the suppliers want you to use their programs and you must check their offer against alternatives. Call references and, if at all possible, visit stores that have the program and talk with the operator.
Don’t forget that you also have to raise the bar on cleanliness. C-Store clean is not foodservice clean.
Who is going to do this at your location(s)? Foodservice requires different skills and more labor than other categories. Even something as simple as coffee requires that someone make it, check it for freshness, and clean up the area every half hour or so. Are you willing to make the investment in both until you achieve the sales you want?
If you can answer the questions outlined and can execute the program, a foodservice offers you great rewards.