Developing A Winning Foodservice Strategy

 In the convenience store marketplace, margins continue to tighten on core products such as candy, snacks, and tobacco. Prudent operators are attempting to stem the tide by introducing food service items into their stores. Most facilities provide plenty of customer traffic and space within the store to enable modifications for introducing a foodservice operation. While the desire to incorporate food service is at the forefront, operators need to address every aspect of the implementation.

With the appropriate modifications to their operating systems and procedures, convenience store owners can slowly unveil a foodservice offering. Many items need to be addressed including a concerted effort in marketing outside the store to attract new customers, capitalizing on improved merchandising and signage, and developing better metrics and Key Performance Indicators (KPIs). Only through a holistic approach, can the stores be poised for a giant leap forward to improved profitability.

Overall Business Planning: It is essential to understand the direction of both the c-store and foodservice operations. Separating the food service component from the rest of the P & L will enable a true assessment of the operation. For ease of computing, labor can be an estimated allocated number of hours. By doing this, one can see if the operation is performing adequately through the use of break-even analysis and four wall analysis. In addition, any CAPEX improvements can be reviewed for ROI and each of these reports can be rolled up into a 3-year Proforma.

Operational Excellence: Foodservice operations are viewed differently than typical retail from an accounting standpoint. The big three in food service are food, paper, and labor. Tied to inventory management, this is truly the only way to manage food service. Systems and procedures are then built to support the overall management of operations. Foodservice operators leave nothing to chance and develop metrics and procedures in a disciplined fashion to regularly monitor the business. Prepare for an opportunity.

Merchandising And In-Store Promotion: All of the Quick Service Restaurants (QSRs) utilize some sort of value or combo meal. Take the time to develop - and market - combos to your customers to help them decide on items; improve the speed of operation, and raise an average ticket. That being said, out of stocks need to be non-existent, and better merchandising should be put in place through product placement adjacencies. These complimentary items are developed to capture all of the opportunities. Addressing these potential shortfalls improves sales and margins and can be easily avoided through systems and procedures.

Local Store Marketing And Advertising Plans: While customer traffic in the convenience industry is stronger than in the QSR market, the items above will address some of the additional opportunities to capture sales. External cultivation of customers - both onsite and offsite - is generally non-existent in the convenience industry. Window signage with product photography is a must, and outside local store marketing opportunities need to be put in place. Overall signage needs a whole new approach to guide and entice customers. Opportunities in catering and "To Go" marketing are plentiful and require a proactive plan addressing these opportunities. All marketing activities should be included in an annual advertising plan.

Key Performance Indicators: Knowing the key drivers is the only way to improve the bottom line of the business. Lumping the foodservice results in with the convenience product P & L makes it difficult to understand the nuances of food service. A series of KPIs should be developed to fully grasp where the opportunities exist and provide the measurements on the steps toward improvements. Conducting a marketing/operational pilot is a key step in creating the benchmarks to target.

Vendor Management And Purchasing: Vendor management is important for both the convenience store and foodservice operations. Managing your vendors concerning drop-off times is critical . Inventory management at the store level about FIFO  is not only smart, but it is also food safe. Foodservice means you need to be aligned with the right vendors that can help you expand your operation in tandem with the customer needs - it cannot be a deterrent.

Launching a foodservice operation in your c-store is both an exciting initiative and a smart decision. Manage it correctly and you enjoy the benefits of high-margin products that address a growing customer need for improved foodservice items. On the flip side, running your food service operation like a typical c-store and you will be disappointed with your results.