CHICAGO -- Supermarkets dominate the retail foodservice game, despite convenience stores’ retaliatory efforts in recent years. Since 2015, grocery stores’ total revenue has surged nearly 15%, from $28 billion to just over $32 billion. C-stores hit barely half of that, growing 7.7% to $21 billion in the same time frame, according to Technomic’s 2017 Retail Meal Solutions Consumer Trend Report. Chicago-based Technomic is CSP's sister research firm.
This swell in grocery sales has several sources. One is the enhanced focus on in-store experiences, such as charity gatherings and culinary classes, according to Technomic’s 2018 State of Retail Foodservice Report. Other drivers, Technomic says, are the quality of grocers’ foodservice offer, as well as its affordability, variety and convenience. Sixty-six percent of consumers said convenience is a reason they purchase grocery food.
This gap has sparked c-stores to model supermarkets’ foodservice approach. Paul Servais, foodservice director for Kwik Trip, La Crosse, Wis., says the c-store chain focuses on grocery items in addition to grab-and-go hot foods such as cheeseburgers and breakfast sandwiches. The chain sells fresh meats, produce, milk, butter and eggs; the last three come from its full dairy and bakery.
Doing this lets Kwik Trip price its items equal to or less than supermarkets, and provide customers the comfort of knowing where their food comes from—an edge over local grocers, Servais says. “People in our market know the farm the milk came from,” he says. “The cows can be milked in the morning and in 24 to 36 hours, that milk is in stores.”
Why do consumers purchase grocery meals?
And while c-stores thrive in breakfast sales—Kwik Trip has experienced double-digit growth in the daypart every year since 2003, Servais says—supermarkets lead in p.m. dining occasions, such as take-home dinners and meal kits. Dinner is an area Kwik Trip struggles to break into, but it continually seeks to innovate in that daypart, Servais says.
Although c-stores are prime for snacking and lunch occasions, their narrow scope of p.m. selections limits their performance during dinner, says Robert Byrne, senior manager of consumer insights for Technomic.
“Dinner as a destination for c-stores depends on their offering, and c-stores have a smaller scope than supermarkets,” he says.
A strong dinner focus is clear in the supermarket channel. Union Market, a four-unit grocery chain based in Brooklyn, N.Y., offers prepared foods including Adobo Rubbed Grilled Chicken, Butternut Squash and Raw Kale Salad for on-the-go patrons looking for a quick dinner. Competitors such as Austin, Texas-based Whole Foods and Midwestern chain Mariano’s Fresh Market also offer prepared dinners including pizzas, sandwiches and customizable salad bowls.
If and when c-stores work their way into dinner is unknown. But until then, supermarkets will maintain the driving force in retail foodservice.
Click here to read the complete Race for Retail Foodservice report.
Next: Changing Consumer Perceptions
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