Convenience stores must step up on foodservice, says report

Research also finds Shoppers Drug Mart could hurt c-store foodservice
2/9/2015

Convenience stores do a great job selling chips and pop. But new research says they could do a better job on meals to compete with the likes of Tim Hortons, McDonald’s and even now Shoppers Drug Mart.

Canadian C-stores must “step up” on foodservice by improving quality and freshness and by providing healthier meal options, says Technomic, a Chicago-based food industry research and consulting firm, in a new report.

“The opportunity for c-stores is there,” Deanna Jordan, senior research analyst of consumer insight at Technomic, told Canadian Grocer, noting 67% of Canadians visit a convenience store at least once a month.

But most of the food bought at c-stores consists of snacks and beverages, not meals.

According to Technomic, beverage-only occasions make up 51% of c-store foodservice and snacks 26%. Breakfast, lunch and dinner combine for only 24% of occasions.

C-stores in particular should target younger consumers in the 18 to 34 demographic for meals. “They’re on the go, they’re eating quick meals,” Jordan said.

The findings come from a consumer survey of 1,000 Canadians by Technomic. The results are published in the company’s new Canadian Convenience-Store Foodservice Consumer Trend Report.

Among the report's findings:

• Price and store cleanliness are the two biggest drivers of foodservice occasions at c-stores. Both were cited by 78 per cent of respondents to the survey. Speed of service was chosen by 67 per cent.

• Nearly half (49 per cent) of foodservice purchases at c-stores are unplanned.

• Breakfast sandwiches are the favourite breakfast food at c-stores, chosen by 52 per cent of respondents, followed by bagels (48 per cent), muffins (44 per cent) and doughnuts (30 per cent)

• Sandwiches and wraps are the top choice for lunch and dinner options at c-stores (56 per cent), followed by pizza (45 per cent), burgers (43 per cent) and chicken strips/nuggets/wings (36 per cent)

But convenience stores face tough competition for meal occasions. Rivals include quick-serve restaurants such as Tim Hortons, as well as bakeries and cafes.

One way c-stores can fight back is through co-branding deals with restaurants in which those restaurants sell their products inside the convenience store.

Examples of co-branding include Tim Hortons coffee counters in Esso On the Run c-stores, Mr. Sub outlets in Needs c-stores, and A&W burger stands in Petro Canada stores.

Jordan says c-stores could also emphasize freshness by having their own sandwich counters. One of the few in Canada that currently has such counters is Petro Canada’s Neighbours format.

As part of its research, Technomic also looked at a potential new competitor: Shoppers Drug Mart, which is adding more food with the help of Loblaw, its new owner.

Technomic asked Canadians how likely they would be to purchase prepared foods at Shoppers Drug Mart. Only about a quarter of those surveyed said they would be “likely” or “extremely likely” to make such purchases.

However, when Technomic drilled into the data, it found that half of Canadians who buy foodservice at convenience stores would be “likely” or “extremely likely” to buy prepared foods at Shoppers Drug Mart.

“So there's possibly going to be some new competition for convenience stores,” Jordan said.

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