Say grabbing a cold deli sandwich crosses your mind while you're driving through your neighborhood. It’s past noon and you're in a time crunch. The grocery store is too far away and the closest restaurant's drive-thru is packed. A vending machine lunch? Yeah, no.
Then you remember Wawa's specialties like their Thanksgiving-themed The Gobbler sandwich. Or how the plump hot dogs always look enticing on the roller grill at your nearby gas station. Suddenly a convenience store sounds like the perfect place to grab some delicious prepared food—fast. Guess what? You're not alone.
As c-stores increasingly offer fresh food variety and quality to rival quick service restaurants (QSRs) and grocery stores, busy consumers' meal choices are multiplying. The convenience store industry keeps responding by expanding their food service offerings even more. And thanks to self-service kiosks and mobile technology, convenience retailers are making it easy for consumers to take advantage of an increasingly viable alternative to restaurants and grocery stores...growing market share along the way.
In fact, food service, including prepared items and dispensed beverages, now accounts for 22.6% of sales at US c-stores and 36.4% of profits, excluding fuel, according to the NACS state of the industry report. So it’s not a stretch to suggest food service has the potential to transform the convenience store and gas station business.
Long-term trend: demand for quality, healthy options in foodservice
This transformation is being driven primarily by a couple of trends that carry the potential for higher profit margins. First, competition within QSR and grocery store segments has increased the quality of their prepared food offerings, setting a minimum standard for convenience retailers entering the fray.
Second, in a related trend, consumer demand for healthy options is growing—an aspect of food quality that QSRs and grocery stores have addressed more and more in recent years.
COVID-19 hastened the focus on foodservice
While some c-stores suspended in-store dining and self-service during the first waves of the global pandemic, many others adjusted their convenience offerings, according to a Statista survey The study found that 15 percent of c-stores started offering curbside pickup and 12 percent implemented delivery services during the pandemic. For many of these stores, the pandemic offered an unplanned opportunity to beta-test these services for potentially permanent implementation.
Consumers’ food preferences also shifted amid shelter-in-place orders in many areas…to the types of items c-stores readily offer:
- A mid-2020 study indicated that pizza (63 percent) and burgers and sandwiches (51 percent) were the restaurant items most in demand among locked-down consumers.
- With the shelter-in-place orders shutting down many restaurants, Kwik Trip offered fried and rotisserie chicken at every one of its 600 locations.
Looking further, c-stores are well-positioned to provide a foodservice alternative to QSRs and grocery stores over the long term.
Kiosks and self-service increase convenience
While foodservice is surging, it’s key to make sure the experience is fast, easy and high-quality. Technology can make it simple to create a speedy, memorable experience and address changing consumer preferences, which are quickly becoming expectations.
One such technology is the customer self-ordering terminal, or self-service kiosk, and it’s quickly becoming a c-store staple. For instance, Sheetz has provided touchscreen-enabled self service kiosks customers can use to select branded food options and drinks from a made-to-order menu. And a few years before that, they began offering interactive voice ordering via Amazon’s Alexa. The company also introduced a Sheetz Freakz program that allows customers to redeem reward points through Apple and Android smartphone apps and also online.
Mobile and self-service technologies for on-demand service are part of a trend some are calling the “Now Economy.” A PYMNTS.com and USA Technologies report found that half of consumers who use these technologies do so because it’s faster than traditional retail interactions. It’s particularly true of up-and-coming generations—younger consumers are more likely to embrace self service technology than older consumers are.
C-stores’ expansion of foodservice lends itself perfectly to the mobile and self-service trend, especially because self-service offers some significant benefits:
- Convenience – This is the core value proposition of c-stores anyway, so making it easy to do more in less stops goes a long way to attracting customers.
- Speed of service – Convenience retailers can deliver high-quality prepared food items in less time, providing a fast experience consumers appreciate.
- Order accuracy – The best self-service kiosks and mobile ordering technologies integrate directly with the c-store’s POS and kitchen production system, eliminating the possibility of miscommunication between the customer, the kitchen and the POS, since customers can review, customize and confirm their orders before finalizing them.
- Choice – Touchscreen kiosks and mobile apps clearly present all available options and specials to the consumer in a step-by-step way so it’s easy for consumers to control their whole experience. What’s more, self-service technology also facilitates upselling—customers can easily add-on other items.
- Differentiation – Providing a modern, intuitive technology experience helps boost brand affinity and create a more memorable experience.