Skip navigation
Sheetz_Made_To_Go_sandwiches1000.png Sheetz
The food-to-go program at Sheetz has long been one of the convenience store industry’s leading innovators and success stories.

Convenience stores up the ante in fresh food

Format serves up quick, healthy meal and snack options

As supermarkets fine-tune their offerings to sync with consumers’ changing eating habits, convenience stores are showing their mettle as rivals for mealtime and snacking dollars.

Foodservice sales — including prepared foods, commissary foods and dispensed beverages (hot, cold and frozen) — accounted for 22.5% of the $237 billion in in-store sales by convenience stores last year and generated 33.9% of in-store gross profits, according to the National Association of Convenience Stores (NACS).

In a NACS survey, 69% of convenience retailers said their foodservice sales rose in 2017, and 61% said better-for-you fare — such as fruit and vegetables, yogurt, nuts and health bars — saw sales gains.

Introduction: Taking stock of the competition >>
The meal kit turnaround >>
Thinking like a restaurant to thrive >>

Alternative snacks exhibited strong growth as some consumers, particularly Millennials, have shifted away from traditional meals and toward snacking, NACS reported. The association said 2017 marked the second consecutive year that alternative snacks — driven by protein- and energy-rich items — reached the top 10 in-store merchandise categories, reflecting heightened consumer demand for immediate and healthier snacking options.

“Food is a way to get a higher ring and a higher margin,” said Jeff Lenard, vice president of strategic initiatives at NACS.

“There are a couple of things that are driving the push towards food in convenience stores. Number one, when you look at the core categories in our industry, they all face challenges,” Lenard explained, citing fuel, tobacco and lottery. “So retailers need to look at how they reinvent themselves around convenience. From the other end, consumers are looking at where they can buy fresh food on the go, and they are now much more likely to seek out nontraditional places.”

Pushing prepared foods

Indeed, c-store retailers are seeing firsthand how foodservice can be a big differentiator. NACS said top-quartile performers tallied 3.6 times greater prepared food sales than bottom-quartile stores, while coffee sales at top performers were 5.2 times greater that than those of the bottom quartile.

Prepared foods drove 69% of foodservice sales and profits in 2017, the association noted.

“That’s where the growth has been for convenience stores. It’s incredible what convenience stores have done on the prepared foods side of the business,” said Paul Chapman, director of bakery and deli at supermarket chain Giant Food of Landover, Md.

Convenience stores are banking on the customer who wants to get in and out of the store quickly.

“A strategic play on their part is trying to capture the customer who wants a quick stop — to be able to get in and out of the store quickly. That’s an advantage they’re trying to leverage,” he said. “I do see convenience stores as a competitor, as well as any restaurant. But that all just makes us better. It helps us refine our offer and define what our brand is going to represent so we resonate with our customer and bring new customers into our stores.”

At c-stores, “there’s been a focus on better sandwiches, better salads and other products that look more appealing,” according to Larry Levin, executive VP of consumer and shopper marketing at IRI.

“The c-store channel is changing to much more of a destination for fresh and healthy alternatives. While it’s a small number in the total $150 billion business that we track for c-stores, we’re seeing about $430 million in total sales for fresh — UPC-based fresh items — which grew at 6.5% year on year. It’s becoming an important part of what that channel has to offer,” Levin said.

For example, convenience stores are scoring in attempts to sell healthy, fresh and made-to-order foods when customers purchase fuel. In a Market Force Information survey on where consumers like to get gas, 21% of respondents said they bought a fresh-food item during their last fuel visit. Of those customers, 35% purchased a sandwich, 20% bought a hot dog and 19% got pizza. Casey’s General Store was the most popular for fresh food purchases, and Wawa had the highest satisfaction for fresh food.

“There are certainly chains that are doing it right,” IRI’s Levin said. “I think that Wawa and Sheetz are the emblem of what consumers are looking for, but RaceTrac, QuikTrip and others also are doing it well.”

Peter Kim, deli category manager for Schnucks Markets, said the St. Louis-based grocery chain has worked hard to make itself a customer destination for convenience items like ready-to-eat foods.

“Convenience stores offer many grab-and-go options but typically use a third-party for build. We focus on delivering fresh, innovative and higher quality offerings,” Kim said. “Our customers are as savvy as ever. They demand quality, better ingredients and healthier options, and their expectations continue to grow. It is our job to provide our customers with a broader variety of options using high-quality ingredients to create a complete, healthy meal solution.”

Hitting new dayparts

C-store retailers polled by NACS cited lunchtime traffic as a high-potential growth opportunity, with midday snacks also promising. And a recent NACS survey showed that fresh food and healthy items will be key to driving summer sales. Fifty-six percent of retailers expect sandwiches and meals to spur sales in the summer travel season, and 35% cited healthy packaged snacks.

“Coffee also is a huge opportunity and is something convenience stores are known for. If you get the coffee customer in the morning, you have an opportunity to sell them breakfast,” Lenard said. “Convenience stores have some interesting potential for breakfast. You can get a breakfast sandwich or grab something healthy from the fresh case, whether it’s yogurt, boiled eggs or a fruit cup.”

In a research note following NACS’ State of the Industry Summit in April, Jefferies analyst Christopher Mandeville said the message was clear that convenience retailers must focus on more profitable categories, especially foodservice. “Elevating quality and providing a differentiated offering will prove vital to drive future success,” he added. “However, so too will promotional effectiveness, as only 22% of customers are noticing current efforts to convey value.”

Supermarket retailers say the best way to compete with other formats like convenience stores is to maintain the value proposition for consumers.

“The landscape is growing out there when it comes to the prepared foods and sandwiches business,” said Brian Lorenz, director of deli and bakery at Giant Food Stores, Carlisle, Pa., whose stores are under the Giant and Martin’s banners. “But we feel that offering a very consistent, high-quality and good value for our items will keep them coming back because they trust the name and know that we’ll have it for them every day.”

Learn more about online grocery shopping/delivery and meal solutions at the inaugural SN Summit, held Oct. 1-3 in Dallas, the only conference where food retailers and restaurateurs learn from each other.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.