Convenience Stores Enhance Fast, Hot Food Options

QSRs are feeling the pressure from food-focused convenience stores.

May 02, 2017

NEW YORK – The Washington Post reports that the evolution of convenience stores into “hot, fast, affordable foods is just one of the pressures facing chains like Burger King, Wendy’s and Taco Bell,” noting that “low prices and speed for ready-to-eat foods” among convenience stores with successful foodservice programs are big factors. 

“If you go to convenience store conventions, all they talk about is the decline of gas and tobacco, so they have to become more like [fast food],” said Dunkin’ Donuts CEO Nigel Travis, noting the effect of convenience stores on Dunkin’s business.

For example, a chain like 7-Eleven has added low-priced chicken sandwiches and cheeseburgers to its hot and ready-to-eat foodservice offers, in addition to sandwich melts and roller grill items. “We can drop in a product [in stores] overnight, and all of a sudden we’re in a brand-new business,” Nancy Smith, 7-Eleven’s senior vice president of merchandising, told the news source.

The price point that convenience stores are selling hot and fresh foods at is also attractive to consumers with less discretionary income. In fact, as stated at the NACS State of the Industry Summit in April, 70% of convenience store shoppers have an annual household income of $55,000 or less. And for consumers in rural areas without access to a nearby grocery store or restaurants, convenience stores with hot-prepared foods are filling the mealtime void.

The Washington Post writes that Sheetz has found that customers mainly use its drive-thrus to order made-to-order foods like burgers, but also to request items like a gallon of milk. Travis Sheetz, vice president of operations, told the news source that he has also seen growth more recently in the cold cases containing yogurts, cut fruit and other pre-packaged foods. Those options cater to the growing number of people looking for “convenient health,” he said.

Wawa told the Post that the quality of food at convenience stores has improved, and that convenience stores have an advantage over QSRs in speed of service and variety in packaged beverage coolers and center-store items like salty snacks, confections and other grab-and-go merchandise. “That’s something that McDonald’s and the franchisees can’t match,” Mike Sherlock, Wawa’s vice president of fresh food and beverage, told the news source.

Jeff Lenard, NACS vice president of strategic industry initiatives, told the Post that convenience stores cannot excel at foodservice if their stores are not clean, especially the bathrooms. NACS asked consumers in May 2016 about their upcoming summer road trips, and how and when they might stop along their drives. The survey found that more than 70% of consumers would stop to use the bathroom.

“Americans are seeking out stores that are more appealing inside with fresh food and an emphasis on cleanliness, and convenience stores are delivering, serving 160 million customers every day—and even more over the summer months,” Lenard said.

Foodservice, a broad category that includes prepared and commissary foods, hot dispensed beverages (coffee) and cold (fountain) and frozen dispensed (slushee) drinks, is a key focus for growth in the convenience store channel. Data released at the April NACS State of the Industry Summit revealed that foodservice contributed 21.7% of in-store sales in 2016 and accounted for 35.2% of gross profit dollars, with prepared food and cold dispensed beverages driving the category’s growth. Complete industry data and analysis will be released in June in the NACS State of the Industry Report of 2016 Data.