Self-service and mobile technologies underpin convenience stores’ foodservice growth

Published August 26, 2020

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.

Global Partners' 4,800-square-foot Alltown Fresh concept c-store in Plymouth, Mass., which opened in 2019, provides a likely glimpse into a high-quality, healthy c-store food service future.

Among other items, the made-to-order menu offers customers:

  • A variety of organic and vegan options
  • A Korean Kimchi bowl
  • Sandwiches with flavors such as Sweet Chili Lime Grilled Chicken

Beverage dispensers offer health- and eco-conscious choices such as:

  • Organic juices
  • Non-GMO soda alternatives

The convenience store also has a coffee counter, where customers can enjoy:

  • Various coffee blends
  • Milk alternatives
  • A variety of sweeteners
  • Made-to-order macchiatos and lattes
  • Instantly brewed locally roasted beans in Swiss-made 'bean-to-cup' machines

 

COVID-19 could hasten 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 published in June 2020. 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 planned to offer fried and rotisserie chicken at every one of its 600 locations by October 2020.
  • More professionals were working from home, commuting less and less likely to pick up breakfast during the early stages of the pandemic. Still, breakfast could be a growth area for c-stores—an increasing number are beginning to offer breakfast items throughout the day.

Looking further, c-stores are well-positioned to provide a foodservice alternative to QSRs and grocery stores over the long term. To wit: A 2018 NACS survey found that 86 percent of Americans living in rural areas are located within 10 minutes of a convenience store.

 

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.

 

"99 percent of people say they’ve purchased a get-it-and-go food or beverage item within the past week—Mattson"

Ordering and pickup options also in demand

The surge of foodservice goes beyond just self service kiosks: consumers want additional options for ordering and order pickup, too. So, as a convenience retailer, it’s key to consider prioritizing the integration of mobile ordering, payment and loyalty programs into your foodservice operations, which maximizes convenience and customer loyalty.

Mobile ordering or mobile order ahead—the equivalent of Buy Online, Pick Up In Store (BOPIS) in other retail categories—has the potential to boost profit and door swings for both get-it-and-go and cooked-to-order food service. For example, P97’s mobile apps let customers order items while they fill up, and an attendant delivers them to their vehicles. According to Conexxus, a c-store technology standards organization, 5G networks will make mobile ordering faster and easier in the years to come.

Ordering food and beverages right at the gas pump is another emerging convenience. For example, OPTIC outdoor fuel payment terminals can engage customers with foodservice options that they can order and pay for while they’re fueling, driving more people past the pump and into the store, boosting revenue. Customers can have the order delivered to their car or they can come inside—creating potential for impulse purchases.

 

"89 percent of c-stores expected their foodservice sales to grow in 2020—Technomic "

Implementing self service

“Get-it-and-go” foodservice might be an easy place to start implementing self-service in your convenience stores—its potential to increase revenue and profitability is tremendous. According to food and beverage research firm Mattson, 99 percent of the population has purchased a get-it-and-go food or beverage item within the past week and 86 percent combine food and beverages in these purchases.

Consider a stepped approach to implementing self-service:

  • Introduce a limited assortment of self-service items. Making individual self-service items available, and investing in equipment such as a roller grill, can lead to future foodservice expansion. For example, if self-service items such as hot dogs are well-received, you can feel reasonably confident that offering additional prepackaged or prepared food options will get a good response, too.
  • Consider adding customizable choices. Despite their demand for quick store visits, many customers like hand-crafting their own orders, according to Mattson. Chances are, when customers have the opportunity to enjoy a little hands-on creativity, their affinity for self-service will grow, too.

Convenience retailers can also look to technology to help train and optimize labor resources on self-service, such as showing video training sessions on tablets to ensure order accuracy and food quality across the c-store enterprise.

Similarly, emerging kitchen technology and cloud computing can improve foodservice quality control across c-store chains. One cloud-based, remote oven management system connects ovens to a cloud-based dashboard to store operational data and recipe libraries—preventing discrepancies among different locations’ recipes.

 

What lies ahead

  • C-stores’ foodservice sales should continue to increase. According to an annual convenience market report by research firm Technomic, 89 percent of c-stores expected their foodservice sales to grow in 2020. It’s true that the early stages of the COVID-19 pandemic saw a decrease in c-store foodservice sales, but its impact on 2020 and beyond was uncertain by midyear.
  • More and more, the culinary arts will impact menus and the quality of entrees should increasingly rival those of restaurants. Already, Clark’s Pump-N-Shop offers made-to-order breakfast items throughout the day, available for drive-through pickup at most of its 68 stores serving the eastern United States. Pump N Pantry, which serves northeastern Pennsylvania, offers its entire menu, from buffalo chicken pizza to pierogis and chicken waffle fries, from open to close.
  • More stores will offer customers mobile digital technology. These include mobile order-ahead apps and online ordering, like 7-Eleven’s 7Now delivery app and Sheetz’s Alexa voice ordering capabilities.
  • Health concerns related to the COVID-19 pandemic will likely impact c-store ordering and pickup, including food items, to some extent in coming years. According to weighing technologies provider Shekel Brainweigh, 87 percent of shoppers said they preferred touchless or robust self checkout options during the pandemic. In spring 2020, RaceTrac Petroleum launched an online ordering platform to address customer safety. Customers gained the ability to order items for pickup at the nearest RaceTrac location from its website 24 hours a day, 7 days a week, except while the store is closed for cleaning. They can pick up their orders in a ‘Grab and Go Box’ and pay for them at a pass-through window.
  • Delivery, which has a great deal of potential to enhance the customer experience, will become more common. Citing some consumers’ hesitancy to visit c-stores, Cliff’s Local Market, a c-store chain serving the central New York region, is exploring third-party delivery through Grubhub. 7-Eleven has positioned itself on the leading edge of the supply chain by testing delivery by drone.
  • In a sign that convenience stores are fully committing to food service, some even plan to offer catering. In 2019, Wawa launched this service, including a boxed lunch for $6.49 a head for a minimum order of 10 servings. Nearly any food item or beverage sold in a store can be grouped into a catering menu. Customers place orders via phone or in person and pick up the orders themselves.

It’s clear that competition and consumers are starting to expect more upscale food choices from c-stores. And the technology solutions are there to maintain the convenience and speed that c-stores have built their reputations on.

It leaves just one question: how quickly will you adapt to accommodate the massive shift toward customized food service? After all, it’s a delicious way to differentiate your brand while delivering what customers want.

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