CSN - Nov 2017 by ensembleiq

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VIEWPOINT By Don Longo, Editorial Director

Optimism High as Business Improves

Last month’s NACS Show revealed pulse of the c-store industry

t’s no secret that after two years of surging in-store sales, the convenience store industry got off to a rough start this year. Our Convenience Store News Midyear Report Card, published in August, revealed that sales in key product categories like packaged beverages and salty snacks were lagging behind the previous year’s growth rate. So, the annual NACS Show, held last month in Chicago, was an opportunity for the CSNews editorial team to take the temperature of the industry from retailers, suppliers and distributors. We were encouraged by the positive outlook, as well as some of the product and technology trends that are driving the business. Motivating and retaining For comments, please contact Don Longo, Editorial Director, good employees was certainly top at (201) 855-7606 or of mind among retailers, as two dlongo@ensembleiq.com. general session speakers focused on how to fire up a mostly-millennial workforce. “Employees want to follow leaders who are themselves motivated,” said Kum & Go LC Talent Acquisition Manager Sean Bremer at one educational session. Citing a recent Gallup poll, Bremer noted that 71 percent of employees are not motivated by their current job. Even small operators (three to 25 stores), in a session designed for them, cited employee training as one of their key concerns, reports CSNews Associate Managing Editor Danielle Romano.

On the product front, bottled water and ready-todrink teas and coffee stood out on the show floor. “This jives with Wells Fargo Securities LLC’s recent Beverage Buzz survey that retailers expect total beverage sales to be up about 3 percent for the year, led by bottled water, craft and imported beers, and ready-to-drink coffee,” noted CSNews Senior Editor Melissa Kress. On the other hand, the tobacco area of the expo was relatively quiet. “I think the FDA’s deeming rules have begun to weed out e-cigarette and vapor companies,” Kress added. On the fuels side, speakers from OPIS and The Fuels Institute predicted a continuation of low fuel prices, which is good for consumers, although I think retailers have already benefitted from this windfall. CSNews Assistant Editor Chelsea Regan reports that there was some debate about the pros and cons of retailer branded apps — and at least one company is looking to roll out biometric payment authentication within the next year. At the CSNews Technology Leadership Dinner, the talk revolved around loyalty programs (Kwik Trip’s rollout of its new Kwik Club) and internet security, while retailers seem resigned that the cost of EMV upgrades at the pump will be the “cost of doing business for everyone.” Digital and mobile engagement appear to be gaining speed among both retailers and manufacturers as the industry strives to maintain its dominance of consumers’ evolving definition of “convenience.” To see our complete coverage from the 2017 NACS Show, visit csnews.com/nacs-show.

EDITORIAL EXCELLENCE AWARDS (2013-2017)

EDITORIAL ADVISORY BOARD

2016 American Society of Business Press Editors, National Azbee Awards Gold, Best How-To Article, March 2015 Bronze, Best Original Research, June 2015

2013 Jesse H. Neal National Business Journalism Award

2016 American Society of Business Press Editors, Midwest Regional Azbee Awards

2013 Jesse H. Neal National Business Journalism Award

Gold, Best How-To Article, March 2015 Silver, Best Original Research, June 2015

Best Single Issue, October 2012 Finalist, Best Profile, August 2012

2015 American Society of Business Press Editors, National Azbee Awards Silver, Best Profile (long form), February 2014

2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014

2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012

2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

2017 Eddie Awards, Folio: magazine Winner, Business to Business. Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business. Retail, Single/Series of Articles, June 2016

2016 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2015 Business to Business, Retail, Single/Series of Articles, August 2015

2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014

2014 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2013

Business to Business, Retail, Single Article, February 2013 2013 Eddie Award Honorable Mention, Folio: magazine

Business to Business, Retail, Full Issue, October 2012

4 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

Brett Atherton Bolla Management Jon Bratta Core-Mark International Inc. Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Jim Hachtel Eby-Brown Co. Ray Johnson Speedee Mart

Jack Lewis GPM Midwest

Kirk Leff McLane Co. Inc.

Roy Strasburger Convenience Management Services Inc.

Danielle Mattiussi Maverik Inc. Kyle McKeen Alon Brands Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc.

The Next Generation of Tamper-Evident Packaging

Tamper-Evident Hinged Containers Intuitive one-step PINCH TO OPEN design CONSUMERS CHOSE ANCHOR 2 TO 1 in focus groups by Metaphase research* NO CRACKING OR SHARP EDGES to cut fingers Wide separation of HINGE SIGNALS TAMPERING SIZES 8OZ - 32OZ; Rounds & Squares coming soon *Extensive consumer interviews conducted by Metaphase Design Group, Inc. Â©2017 Anchor Packaging, Inc - St. Louis, Missouri

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CONTENTS

NOVEMBER 2017

VOLUME 53/NUMBER 11

26 | COVER STORY A Day in the Life of ampm

The predominantly franchised chain taps into its mojo as it nears its 40th anniversary and 1,000th store.

DEPARTMENTS VIEWPOINT

STORE SPOTLIGHT

4 | Optimism High as Business Improves Last month’s NACS Show revealed pulse of the c-store industry.

94 | Fueled by a Dream John Benda’s personal mission is to foster positive memories for his Fuel City customers.

10 | CSNews Online

OUT & ABOUT

20 | New Products

SMALL OPERATOR

22 | Uncovering “Small” Secrets of Customer Service Small operators can capitalize on their strong employee-customer connection. EXPERT’S VIEW

100 | Topping the Charts McLane shows off new private label brands at its Music City tradeshow. GETTING TO THE CORE

114 | What Fuels Consumers’ Fuel Purchases? One factor above all else impacts c-store shoppers’ path to the pump.

92 | Heeding the Painful Lessons of Charlottesville It’s time to talk about race in society — and the workplace. Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright © 2017 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

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THE STAND-OUT, NEW ® COMBOS PACKAGING 10% Easier to Find*

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NEW COMBOS® PACKAGING FEATURES: • Simpliﬁed, Stand-Out Design • Appealing, Food-Focused Imagery • More Visible Color Bands ®/TM trademarks © Mars, Incorporated 2017

*Source: COMBOS® PRS Testing 2016 – All Respondents

CONTENTS

570 Lake Cook Road, Ste. 310, Deerfield, IL. 60015 (224) 632-8200 Fax: (224) 632-8266 www.csnews.com Direct Mailing Address for Convenience Store News: 111 Town Square Place, Suite 400, Jersey City, N.J. 07310

BRAND MANAGEMENT Vice President/Group Brand Director (917) 446-4117

Paula Lashinsky plashinsky@ensembleiq.com

EDITORIAL

48 88 FEATURES SPECIAL SECTION: WHERE INNOVATION MEETS CONVENIENCE

48 | What Is Innovation? Experts contemplate the meaning of innovation and its role in convenience retail. 54 | Hitting the Sweet Spot The 21st annual CSNews Best New Products Awards recognize 36 items that stand out. 68 | Innovation Is on the Menu Wawa wins its second Foodservice Innovator of the Year title in five years. TOP WHOLESALERS

76 | Wholesale Changes Another year, another set of acquisitions and challenges for convenience wholesalers. INDUSTRY LEADERS

80 | Keeping the Legacy Alive With two former NACS chairmen in his family, Joseph Sheetz, president and CEO of Sheetz Inc., is ready to take on his new role. 84 | A Global Ambassador Rahim Budhwani, CEO of Encore Franchises, reflects on this past year as NACS chairman and what he was able to accomplish.

Editorial Director (201) 855-7606 Editor-in-Chief (201) 855-7608 Senior News Editor (201) 855-7618 Associate Editor (201) 855-7619 Associate Managing Editor (201) 855-7604 Assistant Editor (201) 855-7614 Contributing Editor (303) 741-3377 Contributing Editor (201) 280-2614

Don Longo dlongo@ensembleiq.com Linda Lisanti llisanti@ensembleiq.com Melissa Kress mkress@ensembleiq.com Angela Hanson ahanson@ensembleiq.com Danielle Romano dromano@ensembleiq.com Chelsea Regan cregan@ensembleiq.com Renée M. Covino reneek@aol.com Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS Associate Brand Director & Northeast Sales Manager Rachel McGaffigan (508) 385-2524 rmcgaffigan@ensembleiq.com Associate Brand Director & Western Sales Manager Ron Lowy (330) 840-9557 rlowy@ensembleiq.com Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com

CUSTOM MEDIA Vice President/Custom Media Division Pierce Hollingsworth (224) 632-8229 phollingsworth@ensembleiq.com General Manager, Custom Media Kathy Colwell (224) 632-8244 kcolwell@ensembleiq.com

MARKETING VP, Marketing & Communications (224) 632-8214

Bruce Hendrickson bhendrickson@ensembleiq.com

AUDIENCE DEVELOPMENT Director of Audience Development Gail Reboletti (224) 632-8214 greboletti@ensembleiq.com Audience Development Manager Shelly Patton (646) 217-1045 spatton@ensembleiq.com List Rental The Information Refinery (800) 529-9020 Brian Clotworthy Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net

ART/PRODUCTION Director of Production (973) 358-4875 Advertising/Production Manager (314) 403-4753 Art Director (224) 632-8245

Kathryn Homenick khomenick@ensembleiq.com Roz Gilman rgilman@ensembleiq.com Michael Escobedo mescobedo@ensembleiq.com

CORPORATE OFFICERS

88 | The Fighting Four Breaking down the top legislative issues facing convenience stores today.

Executive Chairman Alan Glass Chief Operating Officer & Chief Brand Officer Rich Rivera Chief Financial Officer Len Farrell Chief Business Development Officer & President, EnsembleIQ Canada Korry Stagnito Chief Customer Officer/President of Enterprise Solutions Ned Bardic Chief Digital Officer Joel Hughes Chief Human Resources Officer Greg Flores

CONVENIENCE STORE NEWS AFFILIATIONS

Premier Trade Press Exhibitor 8 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295.

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CSNEWS.COM TOP 5 Daily News Headlines The most viewed articles online.

ONLINE EXCLUSIVE What Will Convenience Retailing Look Like in 2030?

1 | Couche-Tard Plans to Keep Holiday Stationstores Banner The global retailer’s pending deal with Holiday Cos. to acquire all the issued and outstanding shares of Holiday Stations Inc. and certain affiliated companies, including the Holiday Stationstores retail network, is on track to close in the third quarter of Couche-Tard’s 2018 fiscal year. 2 | Six Ways Today’s C-stores Are Redefining ‘Convenience’ The industry offers healthy options, meals prepared to order, community involvement and more. 3 | Walgreens & Rite Aid Merger Is Back On Under the terms of an amended and restated asset purchase agreement, Walgreens Boots Alliance Inc. will purchase 1,932 stores, three distribution centers and related inventory from Rite Aid Corp. for nearly $4.4 billion. 4 | Study: Start at the Core to Optimize Your Beer Assortment Within a convenience store retail outlet, the cold vault space is the beachfront property in the store and, on average, there are typically five cold vault doors dedicated to beer. 5 | Blu Aims to Clear Up Common Misconceptions Around Vaping The “Something Better” campaign is designed to showcase a world without judgement for those who enjoy vaping, empowering others with inspiring stories from the real faces behind blu.

It’s 2030. You drive into the local convenience store to fill up — high-efficiency liquid fuel on the left, electrical vehicle plug-ins on the right. You head into the store through recycled timber automatic doors to discover a food and wine tasting event in progress. A loyalty promotion pops up on your smartwatch: today’s seasonal special is locally sourced farm fresh chicken. So, you tap your watch, grab dinner for the family, and tell the store operator you’ll see her tomorrow morning for a drive-thru coffee on the way to work. Truth is, according to Australasian Association of Convenience Stores CEO Jeff Rogut, there is no way of really telling what the convenience stores of 2030 might look like, but none of the above is out of the question. For more exclusive stories, visit the Special Features section of www.csnews.com.

PRODUCT HIGHLIGHT

The most viewed New Product online.

Swisher Sweets Boozy Mango Swisher Sweets announces the release of a limited-edition twist on its classic mango cigarillos. The new Swisher Sweets Limited Edition Boozy Mango cigarillos pair the company’s popular mango flavor with the tropical sweetness of guava. Swisher Sweets Boozy Mango is available for a limited time in a resealable two-count pouch with the brand’s “Sealed Fresh” guarantee and is ready for shipment to stores nationwide. The product is being offered in “Save on 2,” “2 for 99 cents” and “2 for $1.49” price options. Swisher International Darien, Conn. www.swisher.com

BLOG:

What’s So Shocking About Warren Buffett’s Investment in Pilot Flying J? Berkshire Hathaway’s Oct. 3 announcement that it was taking a 38.6-percent equity stake in Pilot Flying J was greeted with surprise, bordering on amazement, in some quarters of the industry. CSNews Editorial Director Don Longo certainly understands how any action taken by legendary investor Warren Buffett, CEO of Berkshire 10 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

Hathaway, will attract attention. However, he asks: Is it really so surprising that the self-made billionaire, son of a grocer, whose company is a big holder of supermarket and food company stocks (Walmart, Costco, Kraft Heinz, Coca-Cola and Mondelez), would see growth opportunities in Pilot Flying J?

INDUSTRYROUNDUP

Kroger Considers Exit From Convenience Channel Retailer exploring possible sale of its nearly 800 stores across five banners

he Kroger Co. has begun a strategic review of its convenience store holdings — including the consideration of putting a for-sale sign on its multi-banner portfolio. According to the Cincinnati-based retailer, a potential sale is the result of a review of assets that are potentially of more value outside the company than as part of Kroger. “Our convenience stores are strong, successful and growing, with the potential to grow even more,” said Mike Schlotman, Kroger’s executive vice president and chief financial officer. “We want to look at all options to ensure this part of the business is meeting its full potential. Considering the current premium multiples for convenience stores, we feel it is our obligation as a management team to under-

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take this review.” Kroger’s convenience store business consists of 784 stores in 18 states. It includes 68 franchise operations. The stores employ 11,000 associates and operate under the following banner names: Turkey Hill Minit Markets, Loaf ‘N Jug, Kwik Shop, Tom Thumb, and Quick Stop. Neither supermarket fuel centers nor Turkey Hill Dairy is included in the strategic review. “Our convenience store management and associates are an important part of our success. They put our customers first every day. We value what they do and thank them for what they will continue to do as we conduct this evaluation,” Schlotman said. The company has hired Goldman Sachs & Co. to identify, review and evaluate the options.

CHEER YOUR TEAM, AS A TEAM.

INDUSTRYROUNDUP FAST FACTS Shoppers prefer using grocery retailers’ mobile apps over consumer product companies’ apps — 41 percent to 27 percent, respectively. Source: Deloitte

By 2020, sales of confectionery products in the United States will exceed $41 billion for the first time. Source: Packaged Facts

Sixty-eight percent of consumers use cash for purchases under $10 and 55 percent of people use cash for purchases under $20. Source: 2017 Cardtronics Health of Cash Study

More than 1,000 fuel stations around the country are now offering E15 — more than doubling the number of stations from the same time last year. Source: Growth Energy

BP’s Amoco Brand Returns

Move is intended to help resolve competitive issues and spur growth opportunities

P is planning to reintroduce the Amoco retail fuel brand, which was last available to BP marketers in the United States more than a decade ago. The Amoco brand will be available in select U.S. markets as a complementary retail offering to BP marketers in the corresponding cities. Resurrecting the brand is intended to foster additional growth opportunities and help resolve local competitive station conflicts, according to BP. “The reintroduction of the historic Amoco brand is an exciting step forward in BP’s U.S. retail growth strategy, and it clearly demonstrates our commitment to helping our branded marketers grow their businesses,” said Rick Altizer, senior vice president of sales and marketing for BP Fuels North America. “BP has a very strong brand presence in the U.S. and now, with the addition of the Amoco brand, we have the opportunity to build further on this success and give an important boost to our sales and

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marketing business in the U.S.,” Altizer added. All of the consumer loyalty programs that BP-branded retail sites offer will be offered at the Amoco-branded stations as well. Amoco-branded stations will also sell all grades of gasoline with BP’s proprietary additive, Invigorate. BP made the decision to reintroduce Amoco after consumer research showed the brand still resonates with a number of U.S. consumers. The findings also revealed that both the Amoco brand and the BP brand appeal to similar audiences. Due to these findings, the two brands will share a similar marketing strategy. BP plans to have the first Amocobranded station up and running by the end of this year. By 2021, BP expects to see an additional $1.4 billion in earnings growth from its fuels marketing business. BP plc is an oil and gas producer. Its Chicago-based North America division employs approximately 18,000 people across all 50 states.

FRUIT, VEGGIES & MORE

HEALTHY OPTIONS FOR YOUR STORE Are you taking advantage of the growing consumer preference for fresh, healthy grab and go options? According to a recent NACS Retailer Sentiment survey, 48% of Americans say c-stores are a place to buy fresh items and 50% of c-stores have expanded fresh fruit sales. Need a consistent solution for one store or stores nationwide? You can count on McLane to deliver.

Our Fresh Produce+ solution leverages industryleading cold chain capabilities to deliver a quality fresh product mix to all customers, regardless of location. With easy-to-order shipments and customer-determined markup, Fresh Produce+ makes produce simple and profitable. For more information, visit mclaneco.com/goto/produce

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INDUSTRYROUNDUP

eye on growth n Getty Realty Corp. closed on its

acquisition-leaseback transaction with a U.S. subsidiary of Applegreen plc. Getty, through a subsidiary, acquired interests in 38 fee simple properties for $68.3 million and leased them under a unitary lease to Applegreenâ&#x20AC;&#x2122;s U.S. subsidiary. n Alimentation Couche-Tard Inc. is plan-

ning to enter the Thai and India markets, and to grow in southern China. Couche-Tard already has a foothold in China through licensing agreements, but does not operate stores there. n Wawa Inc. held two job fairs to fill

200 positions for its first Northeast Florida convenience stores. The retailer is looking for customer ser-

vice supervisors, night supervisors, and customer service associates. n Motiva

teamed with By mid-2018, Victron Motiva will supply 76-branded fuel Energy to through six major open the largfuel wholesalers. est 76-branded gas station in Texas. This station is the 12th 76-brand location in Texas to be supplied by Motiva. n TA Restaurant Group, a

division of TravelCenters of America LLC, opened the doors to its first Arbyâ&#x20AC;&#x2122;s location in Bordentown, N.J.

retailer tidbits n Downloads of Casey’s General Stores

n Hy-Vee’s new Fast &

Inc.’s mobile app surpassed 1 million since its launch in January 2016. The app was developed by GasBuddy Retailer Services. n Par Mar Stores

Par Mar Stores’

is turning 50 and name reflects its marking the occafounders’ roots, a combination of sion with a daily gift Parkersburg, W. Va., card giveaway. Par and Marietta, Ohio. Mar Stores traces its roots to Par Mar Oil Co., which was established in 1967. n Buc-ee’s captured the top spot in all six categories on

the most recent GasBuddy Perfect Pit Stop Report Card, including top-rated overall, coffee, cleanliness, customer service, outdoor lighting and restrooms. This was the retailer’s first appearance on the quarterly report card.

Fresh concept will be a 10,000-square-foot-plus convenience store with grocery items, fresh prepared foods, a coffee shop, and fueling stations. It will also feature a Hy-Vee Market Grille Express sit-down restaurant with table service. n Sheetz Inc. added eight Tesla

Superchargers to its North Huntingdon, Pa., location. Tesla Superchargers are already available at Sheetz stores in Breezewood, Falls Creek and Cambridge, Ohio. n Wawa Inc. is piloting a foodservice delivery service with

GrubHub at four locations in Pennsylvania. Available menu items include hoagies, soups, handcrafted beverages, fresh baked goods, and various sides.

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INDUSTRYROUNDUP SEEN on SOCIAL MEDIA Love’s Travel Stops & Country Stores, Oklahoma City

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Our company is growing by leaps and bounds! It’s the perfect time to get on board with our team.

people on the move Convenience Store News Welcomes New Brand Director B-to-B media veteran Paula Lashinsky oversees sales and editorial efforts EnsembleIQ has appointed Paula Lashinsky as vice president, brand director for Convenience Store News. In her new role, she will be responsible for CSNews sales and editorial efforts, along with all of the brand’s products, services and events. Lashinsky is a seasoned media professional with an extensive background in building, leading and motivating high-performance sales and marketing teams. Having successfully navigated print to digital transformations in prior roles, she combines expertise in new business development, brand positioning, and financial management that is on trend with today’s rapidly evolving media landscape. Most recently, Lashinsky served as brand director of EnsembleIQ’s RIS News. Prior to joining CSNews’ parent company, Lashinsky was part of the management team at Lebhar-Friedman.

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NEWPRODUCTS Nature Valley Layered Bars

Red Diamond Fitz Cold Brew Coffee

General Mills Convenience brings a new product to the bars category with a sweet treat that features simple, recognizable ingredients. Nature Valley Layered Bars have a triple layer of creamy nut butter coating, granola, nuts and chocolate. They are currently available in two varieties: Almond Butter and Peanut Butter. Each 1.38-ounce bar has a suggested retail price of $1.39.

Red Diamond Coffee & Tea launches Fitz Cold Brew Coffee, the same full-bodied coffee that guests have adored before but now with a new look and feel, according to the company. The 100-percent Arabica blend offers a fullbodied, rich, sweet taste, with a hint of nutty flavor. Fitz Cold Brew is specially blended for the cold brew process and brings out the distinctive characteristics of the bean.

General Mills Convenience Minneapolis (800) 243-5687 generalmillscf.com

J&J Snack Foods Pretzel Fillers Pretzel Fillers from J&J Snack Foods are stuffed and topped soft pretzels that now come in three varieties: Sea Salted Caramel, Chipotle Cheddar, and Beer Cheese. Pretzel Fillers are currently available in the foodservice channel in both 3.5-ounce and 6.25-ounce sizes. The hand-twisted and pre-baked soft pretzels only need to be heated and served, making them ideal for any grab-and-go location, according to the company.

Red Diamond Coffee & Tea Moody, Ala. (800) 292-4651 reddiamond.com

Skittles Sweet Heat Skittles Sweet Heat will debut in December. The new variety gives a spicy and sweet twist to the popular candy, which has been around since 1979. Each Skittles Sweet Heat pack features fruity flavors with a spicy kick, including Fiery Watermelon, Blazin’ Mango, Flamin’ Orange, Sizzlin’ Strawberry, and Lemon Spark. Wm. Wrigley Jr. Co. Chicago (800) 974-4539 wrigley.com

J&J Snack Foods Pennsauken, N.J. (800) 486-9533 jjsnack.com

ADD Systems Nutrition & Ingredient Labeling Advanced Digital Data Inc. (ADD Systems) introduces a nutrition and ingredient labeling enhancement to its ADD eStore software. With this enhancement, eStore now makes meeting the Food & Drug Administration labeling requirements easier for convenience store foodservice retailers, before the rules even go into effect. ADD eStore leverages its own recipe-building component to keep track of all ingredients included in the creation of foodservice items. From there, eStore can create all of the appropriate labels and barcodes necessary to properly display the required information. ADD Systems Flanders, N.J. (800) 922-0972 addsys.com

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SMALLOPERATOR

Uncovering “Small” Secrets of Customer Service Small operators can capitalize on their strong employee-customer connection By Renée M. Covino

n the world of convenience store customer service, good things come in small packages. According to recent Convenience Store News consumer research, the industry’s small operators beat out chains when it comes to customer service. And they have the potential to fine-tune their advantage even more as the timing is perfect now for the industry’s more petite players, operationally speaking, to capitalize on the intimate customer engagement they cultivate. Survey.com, which measures product introductions and more at convenience stores, has built its whole business model on the belief that what is local, familiar and knowledgeable is superior vis a vis brand representation, according to cofounder JeanEric Penicaud. The way he sees it, the core advantage of the small operator is its “high level of involvement with customers’ needs and expectations from the perspective of in-store experience.” Furthermore, he says, intimate knowledge leads to a more granular offering and a greater sense of community between customers and operators. “Relationships are part of the deal, not a bonus,” said Penicaud. Traditionally, good customer service in convenience stores

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has meant making immediate-consumption products readily available. A c-store customer was predisposed to what they needed and the brands they were looking for when they walked through the door. This core aspect of customer service still remains. “All retailers who are successful in customer service make it easy to find what customers are looking for, treat their customers well, and go out of their way to anticipate needs,” said Jonathan Rosen, senior vice president of content, strategy and creative services at PRN, a provider of in-store shopper marketing solutions. Of course, most c-store shoppers have a need for a quick in and out. “They want a clean entry, clean exit, with minimal friction,” according to Don Stuart, managing director of Cadent Consulting Group. But while all of this remains important, “all bets are off today,” Penicaud stated. “Customers’ perceptions of c-stores are changing rapidly. C-store operators can provide a traditional experience, or they can be something very different. They have an opportunity to mean much more to their customers. They can be food and beverage curators, for example.” PILLARS OF EXCELLENCE

Retailers who recognize and implement key trends, like those having to do with food and beverage, are creating a different store experience. Rosen of PRN highlights the four accelerating areas of excellence in c-store

customer service, as he sees it: • Loyalty programs — “These provide deeper personalization through offers and discounts based on shopper purchase behavior,” he said. Small operators are finding ways to make loyalty programs feel more intimate by asking customers exactly how they want to be rewarded. • Higher quality food offerings — More and more c-stores have been upping their food offerings by including ready-to-eat meals, fresh produce and more “upscale” menu offerings, according to Rosen. Independents and small operators have gotten very “local” about it, utilizing local farms or cuisine indicative of the area. Adding an edge doesn’t hurt either. • Point-of-sale — Retailers are seeing broader adoption of mobile payment methods, such as Apple Pay. Customers are attracted to smaller stores that highlight this as an option. And why shouldn’t they? It makes perfect sense since Apple Pay does not require Apple Pay-specific contactless payment terminals and can work with existing contactless terminals. • Customization through technology — The industry is seeing more technology like interactive ordering and menuboards that offer customization and better display options. Again, it won’t go unnoticed when a small operator taps into this. CONNECTIONS CAPITALIZED

Beyond these trends, how can the convenience store industry’s small operators capitalize on their strong employee-customer connection? Creative upselling is certainly a starting point. “Upselling is an art, not a science, and McDonald’s

nailed it with a simple phrase: ‘You want fries with that?’” relayed Nancy Friedman, a customer/employee relations expert and president of Telephone Doctor Customer Service Training Inc., based in St. Louis. “So, showing employees how to simply make an offer will increase upsells. We like to say, ‘don’t deny the customer a choice.’ Let them decide,” she told Convenience Store News.

“Customers’ perceptions of c-stores are changing rapidly. C-store operators can provide a traditional experience, or they can be something very different. They have an opportunity to mean much more to their customers. They can be food and beverage curators, for example.” — Jean-Eric Penicaud, Survey.com

There are other evolving opportunities, too. Consumer experience is one. “In today’s retail environment, ‘customer service’ needs to finally evolve into ‘consumer experience,’” Penicaud relayed. “By taking advantage of stronger local consumer connections, small operators are better positioned to engage with their customers in ways that matter locally.” And what truly matters to their customers? According to Penicaud, it’s not about upselling, but how the experience can expand the role of the store to the community. He highlighted examples in speed and meals. “What if

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SMALLOPERATOR they could place their order on a mobile app and pick up their coffee and sandwich on their way to work, or beer/wine on the way home?” he offered. Rosen expanded on the fact that new technologies are making it easier to capitalize on “in-store moments of truth,” or as he further defines it, “those micro moments when shoppers go from ‘maybe?’ to ‘yes!’” These include the aforementioned smart menuboards that change offerings based on time of day and even weather conditions, as well as digital signage that supports easier wayfinding and product discovery. PRN’s new LIFT POS personalization platform provides personalized offerings at the register based on basket and loyalty history. “For c-store retailers, it provides upsell opportunities that drive higher unit sales per transaction, employee training, and a wealth of prescriptive data and insights for increasing sales, improving employee performance and delivering nextgeneration customer service,” said CEO Kevin Carbone.

“All retailers who are successful in customer service make it easy to find what customers are looking for, treat their customers well, and go out of their way to anticipate needs.” — Jonathan Rosen, PRN

Other ways small operators can enhance the employee-customer connection are key merchandising of complementary items; a more complete foodservice offering; and even frictionless self-checkout, according to Stuart. “Automatic name recognition based on automated visual recognition software when the customer enters, as well as his or her most-purchased list right on the employee’s screen,” Stuart continued. “A bit scary, but it will certainly get customer attention.”

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SMALL FOOTPRINT MATTERS

Historically, convenience stores have underinvested in customer service, according to Penicaud. Lately, however, the industry’s independents and small operators are actually leading a turnaround in this vein, where previous convenience channel drawbacks are now being considered relevant customer advantages. “The size of the footprint and hyperlocal proximity to consumers have been previously viewed as limiting variables on the number of consumers, relevance and spend. However, as consumer retail experience and options continue to expand to include web/mobile ordering, real-time delivery, prime shipping and curbside pick-up, what was once considered a major challenge may actually become an advantage,” Penicaud explained. Many of the reasons why large retail footprints provided a valuable experience are diminishing, he added. “Busy consumers need real-time, hyperlocal solutions,” he said. “The intangibles required to provide differentiated customer service are less dependent on square footage than ever before. The future is bright for c-store small operators that engage with consumers and deliver experiences that truly matter.” CSN

Same C-store Channel. Different C-store Businesses.

DIRECTORY OF CONVENIENCE STORES Chains often take a more global view of things and look for products, services, and resources that impact their total enterprise.

DATABASE OF SINGLE STORE CONVENIENCE OWNERS Single store owners, along with their distribution partners, often don’t have the level of business support that chains bring to their stores. They’re always on the lookout for new products and solutions to compete in an increasingly complex market.

In C-store retailing, there is no “one size fits all” solution. Chains and single-store operators occupy the same channel, but they have very different challenges.

Reach All the Right Retailers in All the Right Ways Visit www.Retailbuyers.net, call 813-713-4301 or contact klopez@ensembleIQ.com for more information or product demonstrations. POWERED BY

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A Day in the Life of ampm THE PREDOMINANTLY FRANCHISED CHAIN TAPS INTO ITS MOJO AS IT NEARS ITS 40TH ANNIVERSARY AND 1,000TH STORE

By Melissa Kress & Danielle Romano he latest Convenience Store News Top 100 report finds Houston-based BP North America at No. 6 with a total store count of approximately 7,100 locations. Those operate primarily under the ampm, ARCO, BP, BP Connect and BP Shop banners. One of these banners is gearing up for an exciting year ahead. ampm has a strong presence dating back to 1978 alongside ARCO-branded fuel locations. Today, the ampm network spans five western states: Arizona, California, Nevada, Oregon and Washington. A majority franchise operation, ampm is not only coming up on its 40th anniversary, but it is also eyeing its 1,000th location along its journey to kick the definition of “convenience” up a notch on the nation’s West Coast.

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Regional Sales Manager Brandi Gaston (left) chats with franchisee Daljit Bains.

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TAKING IT TO THE NEXT LEVEL

With almost 40 years under its belt, ampm is taking steps to bring its offer to the next level. Known as “Project Mojo,” the brand is in the midst of rolling out a program with new in-store graphics, a new coffee program, and a new fresh food program. “We are dialing up the offer, making it current and fresh, and aligned with the trends we see around our consumer base,” Donna Sanker, BP chief operating officer, explained to Convenience Store News during its visit to the brand’s La Palma, Calif., headquarters to conduct this year’s CSNews “A Day in the Life” of a c-store retailer series. ampm is on a journey to significantly grow its business over the next five years, “so it’s an exciting time,” she said, adding that BP and its franchisees are invest-

them across nearly 1,000 sites. The Project Mojo initiative has been the pinnacle of Orsbourn’s tenure so far. The goal of the project is exactly what it sounds like: maintain and enhance the mojo at ampm with an updated store image and offers that consumers are demanding. For ampm, mojo means the inclusion of various things, such as a more robust coffee program, the rollout of a proprietary fresh food program, and improvements to the overall store image. As part of Project Mojo, BP is introducing new interior graphics to its ampm stores. Interior graphics can create a warm, attractive and fun atmosphere, if done right, and invite customers to “linger for longer for potential basket-building results,” noted Orsbourn. As with most c-store retailers who periodically

Improvements to the overall store image are a key part of ampm’s “Project Mojo.”

ing a lot of money in the business. “We’ve got some big things in the hopper to come.” Near the top of the hopper is food. One difference between the convenience store scenes on the West Coast of the United States vs. the East Coast is the level of foodservice, with the West Coast lagging behind. The disparity may stem from the larger number of food options on the West Coast, whether it’s fast-casual or quick-service restaurants, or even food trucks. “There is such a range of options for food because it is so heavily populated,” Sanker said. “Regardless, many of the convenience retailers you see here are trying to advance and elevate their offers.” RAMPING UP ITS MOJO

As BP’s director of convenience marketing for the ampm brand, Carl Orsbourn and his team are faced with how to implement new programs and deploy

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refresh their dispensed beverage program, ampm knew it was time to revitalize its offering. Entering into a new playing field for the brand with the latest customer craze, the brand is introducing cold brew coffee and frozen coffee. The debut of both products will help consumers recognize that they can get a good quality and differentiated beverage solution at ampm, Orsbourn explained. “ampm represents customization and variety. At ampm, it’s about the consumer being able to make their own beverage the way they want it,” the director of convenience marketing said. If Orsbourn had to choose which initiative of Project Mojo he is most excited about, it would be the fresh food element because he firmly believes that foodservice — and all areas associated with it — is going to be an “important differentiator” for ampm. Fresh food, in particular, has the ability to attract

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new consumers, as well as draw out different missions from current consumers, he added. If ampm gets fresh food right, it will build further trust in the brand and heighten consumer perceptions about “gas station food” quality, he continued. “There is no better job than mine right now. It’s a really exciting place to be one of the leaders of the brand’s further aspirations for success,” Orsbourn said. MISSION POSSIBLE

Having a large footprint like ampm can prove daunting, though. Implementing a new program or making a change across the network can be “a big ship to move,” Sanker acknowledged. “It is a gift and it is a challenge. It’s a gift because we have meaningful scale, but it certainly makes it challenging to roll things out,” she said. Speed to market can be a challenge as well. “The world is changing so quickly. We keep a close watch on these changes, and keeping up is an area in which we try to press ourselves all the time,” Sanker said. Challenging, yes, but not impossible. As one of the leaders of a well-established brand in the convenience and fuel retailing industry, Orsbourn is keenly aware that his role goes beyond that of a typical marketing director. He has made it his personal mission to foster a culture of belief that what initially seems unachievable is indeed possible. “If I can help people understand that one day we can have a higher transaction mix of consumers coming in to the store to purchase something in addition to gas, then that would be tremendous,” Orsbourn expressed to CSNews. He is faced with several core challenges. An important one is identifying and prioritizing the exciting list of opportunities to grow and improve the ampm offer. Because the brand functions in a franchise environment, how to engage and sell offer innovation across nearly 1,000 sites can likewise present a challenge. “Franchisees are brilliant entrepreneurs — they have great ideas and thoughts about what it takes to drive their business forward and take it to the next level. However, taking those ideas and applying them across a network of nearly 1,000 sites is challenging,” Orsbourn explained. To overcome this challenge, ampm engages in frequent and open conversations with its franchisees to hear what’s on their minds and share exciting developments being made within the overall offer. Then, the team takes into consideration the demographics and consumer behaviors in each region and works with

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Another significant element of ampm’s “Project Mojo” is the rollout of a proprietary fresh food program.

franchisees to deliver achievable individual goals. PREPARING FOR THE FUTURE

Growth at ampm is occurring through its network and offer by ensuring ampm is a place that consumers can come visit to help manage their busy lives with true convenience solutions. Orsbourn said the brand is focused on strategies for 2018 and beyond. “We ask ourselves, ‘What’s an ampm in 2020 going to feel like and look like to our consumer? How can we aspire to something bigger, bolder and better than anyone else?’” he said. CSN

Leader of the Brand

Donna Sanker began as an engineer and now leads ampm as chief operating officer

uring her 21 years with BP, Donna Sanker has touched all aspects of the business. An engineer by training, she has held several health, safety, security and environmental roles. As she advanced in her career at BP, she took a turn running the logistics operations, overseeing 450 truck drivers up and down the West Coast delivering more than 4 billion gallons of fuel to the company’s ARCO stations. Moving to the retail side, she then ran BP’s company-operated retail operations and held a number of marketing roles over the years before taking on the responsibility of chief marketing officer for the company’s Fuels North America business. There, she covered DONNA SANKER Current job title: Chief operat- the ARCO and ampm brands, as well as the ing officer, ampm & ARCO BP brand. In all, there Been with BP: 21 years Previous role: Chief marketing are more than 6,500 BP-branded locations in officer for BP’s Fuels North the U.S. Today, Sanker America division is leading BP’s West Coast retail business into its next phase as chief operating officer for ampm and ARCO. “I love our brands, our business and our customers,” she said. “We have really fantastic people who work here that have a lot of passion and heart for what we do.” WORK-LIFE-CONSUMER

Sanker credits BP for giving her the opportunity to grow and step up into different roles over the past 20-plus years. “I love the range and the variety of the things I get involved in. The pace is quite fast, which suits me well,” she explained. “I like the diversity of that.” The company also gives Sanker a lot of room to run and make a difference, she added. Moreover, she’s been able to find the right balance between having a family and having a career while at BP and ampm. “I work hard, but when it’s my time with my kids, the company is really good in that regard,” she said.

In her role, Sanker finds it hard to pinpoint a typical day. Her favorite kind of day finds her in the company’s convenience stores talking with the ampm team and franchisees. “It’s where the business happens; it’s where the money comes through the register,” she explained. “I love to watch consumers when they come to the site, what they do, and how they use the offer. Are the things we are doing working? All of us are consumers, so a lot of products we sell we consume, too; you relate to it.” Sanker also enjoys working with ampm’s vendors, learning about their businesses and what’s important to them, and working with them to find what works best for all sides of the retailing equation. WHAT IT TAKES

In her position at BP and the ampm brand, it helps to be “a people person,” according to Sanker, and to have a sense of humor. It also requires a good mix of using data and facts, but also instincts around what consumers want. “You have to have an appetite for something new every day and you have to have an aptitude for solving problems,” she said. “There is that balance between what is happening today and making sure we get it right — get it right for our consumers, for our franchisees. But how do you balance that with having enough time to think about the future, how we want to grow the business and where we want to take the brand next?” Looking at ampm’s long-term picture, Sanker’s role is to guide and lead the business. “We have a lot of franchisees who have invested their money and their sweat equity and their time and their effort to help grow the business, so it is on us to bring relevant offers and programs forward and keep it healthy for the future,” she said. “Already, we have quite a strong share and good position, and we want to continue to build on that success,” she added. “Our brand has a reputation for being playful and irreverent. I want my team and our franchisees to be proud to be associated with the ampm brand.”

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Directing the Sails Carl Orsbourn’s journey around the world has led him to serving as director of convenience marketing at ampm

any are familiar with author and poet Oscar Wilde’s famous quote, “Aim for the moon. Even if you miss it, you’ll land among the stars.” For Carl Orsbourn, it is more than a saying; it’s the standard to which he holds himself in his role as director of convenience marketing at ampm. Orsbourn’s career has largely been with BP, coming in through its Challenge Graduate program, where he experienced roles in many different parts of the company. After CARL ORSBOURN completing the graduate Current job title: Director of program, he joined BP’s convenience marketing retail arm as a program Been in current role: 2 years manager, where he Previous industry roles: Various supported the rollout operational roles, including of improvements to program manager operational execution, fuel pricing, channel management, performance management and category management to BP’s retail businesses worldwide. Following that, Orsbourn undertook a number of operational roles in San Diego, Calif., supporting dayto-day activities of both company-owned and franchised ampm stores. Thereafter, Orsbourn headed back to the United Kingdom for eight years, enjoying roles in pricing, strategy, finance and franchise development. However, he always aspired for a return to the ampm business and, shortly after earning his MBA, Orsbourn recognized that he enjoyed working with customers and being in an environment that offered more variety. “I’ve had a very varied career that has afforded me a lot of great opportunities very much centered in retail, but I don’t have your typical convenience marketing director background,” he told CSNews. “It’s

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an exciting business with opportunities and career advancement, and I’ve really been able to benefit from that. It really depends on how flexible you are and how willing you are to build your career because the opportunities are there.” Orsbourn has been the director of convenience marketing since December 2015. His responsibilities are associated with the store offer, from the category management function to the supply chain to foodservice offer development activity. On any given day, he can be found meeting with vendors to support senior category managers, helping with negotiations when necessary, and conducting meetings with his team as well as with stakeholders. Beyond that, Orsbourn enjoys being in the field, seeing customers interact with and react to ampm and its offers. He also enjoys discussing operational challenges with franchisees and getting an understanding of how the operational teams feel, seeing as they are the epicenter of everything, according to the executive. The greatest satisfaction Orsbourn receives from working at ampm comes from three different levels: customers, franchisees and his team. At the first level, Orsbourn is “thrilled” when a customer tries a product and says they’ll never go back to another retail other than ampm for it. On the second level, he takes pride in helping franchisees with their business. And “most importantly,” on the third level, is his team. As for what excites him most about his future at ampm and the company’s future overall, he said it’s the “raw potential” for what can be achieved that he finds “tremendously exciting.” “We’ve got a very exciting future ahead of us with our growth agenda and plans for our brand,” Orsbourn expressed.

For Ferrero and our retail partners, 2018 is shaping up to be sweet! Tic-Tac Gum will rejuvenate the gum category through brand appeal and product innovation. And we’re proud to introduce Kinder Joy, the global #2 chocolate brand, to the world’s #1 chocolate market.

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Cooking Up Innovation

Barb Nova is leading the “gas-station good to truly delicious” foodservice charge at ampm

s convenience stores increasingly become known for their quality foodservice, ampm aspires to change the customer experience from “gas station good” to “truly delicious” when it comes to food. “You hear a lot about folks going into a gas station, grabbing something and saying, ‘Wow, this is pretty good for a gas station.’ We’re trying to BARB NOVA get past this and get to Current job title: Senior category a point where someone manager for food puts that food in their Been with BP: 4 years Previous industry roles: Foodservice mouth and says, ‘Wow this is great,’ without consultant for Valero Energy Corp., mentioning it came as well as stints at The Kroger Co.’s Loaf ‘N Jug chain, CEFCO and from a gas station, a food truck or a five-star Thorntons Inc. restaurant — it’s just delicious,” Barb Nova, senior category manager for food at ampm, expressed to CSNews. “We have a long way to go both as an industry and as a company, but that’s our goal.” Overseeing the food offer for the brand’s nearly 1,000 sites across a five-state footprint, Nova remains committed to finding ways to turn consumer insights into long-term business strategies when it comes to the West Coast c-store chain’s food offerings. “Stores can sell packaged beverages and packaged snacks, but only we can sell ampm food and beverage products, and that’s what sets us apart. Ultimately, that’s what will drive people in the door, especially if we do it well,” said Nova, who leads a team of food research developers, category managers, foodservice operators, and a chef.

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ampm has spent 2017 getting back to basics in its food offer with what it calls “building strong foundations on executions.” With a “Simple. Fresh. Delicious.” mindset, the brand removed everything from its hamburgers, meaning they’re not only USDAcertified, but they’re also all-natural, made from no more than beef, salt and pepper, according to Nova. The company also re-released an all-natural version of ampm’s No. 1 product, the BBQ Rib Sandwich. “It’s really exciting to offer a product like that in an industry where most people wouldn’t expect it to be made that way,” the foodservice executive said. “This year is all about removing unnecessary flavors, colors and preservatives, and just getting back to simple basics and doing really good food really well.” Nova revealed that ampm will soon launch a new grab-and-go sandwich line that will also follow the “Simple. Fresh. Delicious.” approach, but it is currently under wraps. Although Nova describes her role as “fun, challenging and exciting,” she admits that it can be difficult managing her time. This is especially true when she’s in the kitchen developing and testing a product, or spending time with a franchisee. That’s why the best advice Nova can give to someone in a position like hers is to have a positive attitude and remain patient. “With innovation, ideas are fun and exciting so you want everything to happen tomorrow, but with a network of 1,000 sites, launching a new and innovative idea can take time. You have to be adaptive and flexible — especially for the foodservice arm of this industry,” she commented. “We’re growing, we’re changing, and our customers are growing and changing.”

A Collaborative Effort

As senior category manager for the center of store, Scott West helps ampm evolve and adapt

hen Scott West took over as senior category manager for the center of store at ampm three years ago, nuts, seeds and salty snacks were spread out in different areas of the store. That’s when he took the initiative and aligned these categories into one aisle, which today the brand refers to as “The Salty Canyon.” Although a seemingly simple solution, The Salty Canyon is just one of West’s many contributions to SCOTT WEST the ampm brand, Current job title: Senior category helping it evolve manager for the center of store and adapt to curBeen with BP: 10 years Previous industry role: Field business rent and future customers’ needs. consultant and merchandising for “I like to think large c-store competitor that everything I do is collaborative. Everything we do is focusing on balancing the short-, medium- and long-term,” he commented, calling his nearly 10-year career at BP helping manage the ampm brand “ever-changing.” Drawn to ampm for its franchise environment, West joined the BP and ampm team in 2008 as the fountain and frozen category manager. One of his first moves was to give a new look and feel to the brand’s cold dispensed program with new equipment, graphics and cups. Similar changes were implemented on the frozen dispensed side. West played an instrumental role in the launch of Freeze, ampm’s branded frozen beverage offering. Three years later, West was promoted to format development and merchandising manager. In this role, he collaborated with architecture and engineering firms to design new ampm locations, ensuring that

floor layouts were set the way they’re supposed to be. He also worked with individual category teams to make sure resets were done properly, and ensured stores were up-to-date with the latest equipment. Fast-forward another three years and West, now as senior category manager, oversees ampm’s center of store, which encompasses three categories: candy, salty and “rest of store,” which includes segments like packaged bakery, self-health and beauty aids, nutritional and breakfast bars, ice, automotive, lottery and ice cream. A major project for West and his team today is the rollout of new graphics across ampm sites. The rollout includes a new look and feel for the brand’s interior offer, with each category receiving new branding like: “Straight Chillin” for cold dispensed, “Lookin Hot” for its prepared food offer, “Lookin Fresh” at the deli, and “High Voltage” for its coffee program. “We’re changing the inside to bring bright, fun images to make customers feel excited about coming into ampm, and make them realize at the end of the day, ampm really does have ‘too much good stuff,’” West commented. From his perspective, everything — from resets to the new graphics rollout to The Salty Canyon and the introduction of a new item section that showcases the latest innovation — is done to adapt, attract and retain its current customers, as well as invite future customers like millennials and Gen Zers. “I think the future of ampm’s center of store is bright. We obviously work with our vendors on a regular basis to see what trends are in, what the future looks like, and how we can adapt to make sure we have what our customers want,” the senior category manager said. “Our opportunity is working with our vendors to understand future customers’ needs and wants.”

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Keeping the Brand Young

Luisa Salazar keeps ampm connected to consumers through the use of digital

ith a customer base largely comprised of millennials and Gen Zers, no one knows better than ampm that technology and digital play an integral role in the relevancy and longevity of a brand in the modern-day convenience retailing landscape. That’s what drew Luisa Salazar to the ampm brand: Its ability to connect with consumers and its “natural appetite to test, learn and pilot,” said the director of brand and advertising for ARCO and ampm. “One of the most LUISA SALAZAR unique things for me is Current job title: Director of brand that while this brand and advertising will turn 40 years old Been with BP: 14 years next year, it’s always Previous industry roles: Marketing had a connection with manager for Castrol, as well as younger consumers. B2B marketing and offer Keeping the brand development roles young while continuing to grow the business was always curious to me,” she said. “Now that I’m here, I just love it even more.” Part of the challenge for Salazar and her team is anticipating what’s coming next for the c-store industry and continuing to learn and engage with consumers without being too intrusive. Their mission is to combine consumer insights, brand strategy, advertising and social media to ultimately put the brand where its consumers are, which is on their small screens. With today’s sophistication of technology, ampm invests in the digital space, dedicating location-based offers and dynamic advertising to both the general market and its Hispanic consumers. And with the continued

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focus on mobile technology, ampm’s mobile app Scratch Power remains a focal point for Salazar and her team. Scratch Power launched in 2013 as a way to drive transactions, as well as surprise and delight consumers. Once a consumer gets to an ampm location, he or she checks in and the mobile app generates a scratcher game, giving them the opportunity to win prizes. “The mobile app has a great deal of retention with consumers, which is very difficult these days. In this day and age, people will download an app for a coupon or service and delete it after two days. They’re not doing that here,” she said. “It’s also a good opportunity to engage with consumers.” Still, Salazar can’t speak to ampm’s long-term digital and advertising strategies without talking about Toomgis. Named after the brand’s tagline of “Too Much Good Stuff,” Toomgis was introduced to the world as ampm brand ambassador via an Instagram post in 2016. Toomgis — a 7-and-a-half-foot tall creature made entirely from snacks — has received unique responses from consumers. According to Salazar, some consumers love him and others ask, “What is that?” However, ampm has found that the more consumers see him, the more they love engaging with him. “We’re excited about the level of engagement he’s given to the brand. We still have those who don’t get it, but they’re curious,” she noted. “Not too long ago, we were doing test groups and asked what kind of advertising consumers remembered for this type of category. It was interesting because some people said, ‘I can’t remember if it was this brand or that brand,’ but when it came to Toomgis, they all remembered the giant from ampm.”

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Networking Opportunities Mike Hager takes on the role of growing ampm’s footprint

s network development manager for ampm, Mike Hager is responsible for all new site development covering Northern California, Oregon and Washington. In addition to helping the retailer grow its footprint, he assesses the current portfolio for enhancement and improvement opportunities — like raze-and-rebuilds. It is a task he has been working toward since graduating college. Hager’s connection to BP dates back 32 years. Over his three-decade career with the company — including the past 12 years supportMIKE HAGER ing the ampm brand on Current job title: Network developthe West Coast — he ment manager has worn many hats Been with BP: 32 years Previous roles within the company: touching several aspects of the business, from Field auditor, accounting manager, operations and territory manager, and field auditor to territory manager to his field merchandising specialist current role. His storied background with the company is not unique. Many team members have held several roles. “I think a lot of it has to do with the size of the company; there are so many opportunities. It is really what attracted me to the company,” he explained. The strength of the oil industry and BP’s geographic reach also drew him to the company, Hager said, noting that he has moved 10 times over the course of his BP career. He started out in Toledo, Ohio, working for Standard Oil of Ohio, which BP acquired in the 1970s. “I don’t want to date myself, but it was back in the

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days when they still had full service,” he said. When the chance came along to work with the ampm brand, he took it — and fell in love with it. “The business and the brands on the West Coast were different than what I had worked on before,” he said. “Being able to work here on the West Coast and do things to improve the brand has been fun.” What is a typical day for Hager? There really isn’t one and he likes it that way. “No two sites are the same; no two deals are the same; no two franchisees are the same,” he explained. “You always have to look at things differently.” On any given day, Hager spends a lot of time communicating with his team, reviewing site plans, looking at the economics for projects, and talking to franchisees. But what he really likes to do, and wishes he could spend more time doing, is being in the field. “That’s the way to really understand your business,” he said. “I try to spend as much time as I can out in the field, riding with my team and the operations members. Every time I go out in the field, it seems I learn something new.” For example, Hager often spots signs for new developments, new homes rising, or even a new competitor. “It gives you a really strong understanding of the market and will help you determine where the best places are to put your sites in the future,” he said. He even has one eye on potential sites when he is not working. “My wife said that I should charge the company for mileage because I am always looking for sites,” he joked.

Working in the Field

As a regional sales manager, Brandi Gaston helps franchisees stay connected to the ampm brand

wenty years ago, Brandi Gaston’s daughter started school. Looking to help pay for private school education, she decided to get a part-time job. What she found was so much more — she found a career. Today, Gaston is the Northern California regional sales manager for ampm with 13 direct reports known as franchise business consultants (FBCs). She has been in her current role for a year. She was previously a FBC, “which is a little BRANDI GASTON Current job title: Northern California unusual to move up and become the regional sales manager manager for my Been with BP: 20 years Previous roles within the company: peers, but it was Field supervisor; operations, market- an exciting opportunity,” she said. ing and merchandising roles; and Gaston was franchise business consultant drawn to ampm for the flexibility. “I wanted to work a shift when my children were sleeping. It worked out for us,” she explained. “And I just ran with it.” During her two-decade career with BP, Gaston has always been based in Northern California. Similar to many colleagues, she has tackled several different roles within ampm. She began her career inside an ampm convenience store and then made her way through the ranks, partly by taking advantage of training opportunities that came her way. “When I started, we had company operations and many people I have worked with through the years started out as I did, in the store. As time went on, we were able to move into roles outside the store and into management,” she recalled. ampm sold its company ops around 2007; however, the company continued to offer — and still does — chances to develop and further its team members’ careers, according to Gaston.

“I feel completely blessed to have been able to start out at a store and work my way up to regional sales manager,” she told CSNews. Working with franchisees was not much of an adjustment for Gaston. “The standards are the same; the customer offer is the same,” she explained. “The franchise business is all about relationships and influence, and being able to work with franchisees to help them grow their business.” This is an aspect of her job that she finds very rewarding. “It’s about coaching and guiding,” she said, adding that it is a combination of discussing compliance as well as strategy, and working with the franchisees to achieve their goals. “For many of these operators, they started out with very little. They saved diligently for their first site. With a lot of hard work and determination, along with support from the ampm team, they’ve been successful and grown their business,” Gaston said. Some franchisees have even grown to operate 10-plus sites. Still, single-store operators are just as important, she is quick to note. “They are big believers in the brand. They are ambassadors for all that we do,” she said. In all, Gaston and her team oversee approximately 275 sites, which makes pinpointing a typical workday difficult. “One of the greatest things about this role is that every day is different,” she said. Conference calls and site visits usually dot her agenda, as well as consultations — either face-toface or over the phone — with her team members and franchisees. The best day? Being out in the field. “That’s really what I prefer. This job requires some office days, and that’s OK,” she said. “But after the days out in the field, working with the franchisees and talking about their business, I always go home thinking ‘this is what it is all about.’”

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The Franchisee Perspective

After 16 years, Daljit and Bal Bains are fully vested in their two ampm locations

ct. 17 marked the 16th anniversary of the opening of Daljit and Bal Bains’ first franchised ampm store. Today, the Bains franchise two ampm locations in Sacramento, Calif., which in and of itself is a success story for a couple that had no prior experience owning, operating or franchising a convenience store and gas station. In fact, Bal admitted to CSNews that before their first franchised ampm, she had only come to gas stations to buy gas and very rarely shopped the adjoining c-store. Despite these circumstances, the Bains were drawn to franchising because they had friends in the business and were looking DALJIT & BAL BAINS for the opportunity to be Current job title: Franchisee their own boss. Been with ampm: 16 years According to the Number of ampm franchises: 2 couple, they were drawn to ampm because it is a brand that customers love and it had the right elements in place that would set them up for success. “There are a lot of franchises out there, but there are certain franchises that set themselves apart from the others. This is definitely, 100 percent one of them,” Daljit said. After the Bains identified a retail site they were interested in purchasing, they had to prove they were qualified to buy into the company. They were interviewed to make sure they were a good fit for the ampm brand based on their skills, traits and characteristics. From there, the couple entered ampm’s “superior” training program that reinforced the “details in retail,” the couple recalled. During the six-week program, three weeks were spent with trainers in La Palma, Calif., and the remainder was conducted

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Daljit and Bal Bains welcome the changes ampm is making to its stores.

online and through onsite, hands-on training at local sites. The program has since evolved, Daljit noted. ALL IN A DAY’S WORK

Now 16 years later, Daljit and Bal’s ampm locations are among the first to roll out the new interior look and feel associated with the brand’s Project Mojo. This initiative also introduces a rebranding of ampm’s proprietary dispensed beverage and fresh food offerings. Although Bal admits that the introduction of anything new to the store is scary, she and Daljit “welcome the changes” and are excited overall.

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“After a while, a store gets stale and outdated. Now, we have fresh, bright graphics that we feel good about. We know the customers will feel good about coming and shopping here,” she shared. In addition to the new interior graphics rollout, Daljit and Bal are the first to pilot an interactive fountain machine, giving customers the opportunity to engage with the beverage offering. “We want to make this not only a place to come for a snack or beverage but, at some point, make it a destination where customers want to come and linger and test new products and play with equipment. We want customers to think of our stores as an experience,” expressed Daljit. “We want customers to interact more with ampm. Once they’ve experienced it, they will want to come back.” Bal manages the majority of the day-to-day operations at the couple’s two locations, which includes more than just paperwork. Each day always requires a walkthrough of each store inside and out, from one corner to the other, to ensure every square foot is up to quality standards. Even though Daljit and Bal’s employees are responsible for certain areas of the store that can be overlooked by managers, Bal still prefers to be an “extra layer” of hands and eyes to ensure that everything from the forecourt to the backroom is a pleasant experience for customers and employees. “If it’s a messy store, customers aren’t going to want to come back. And if you’re out of products, they’re not going to want to come back. If it’s not good enough for me, it’s not good enough for the customer,” Bal emphasized. ADVICE FOR FUTURE FRANCHISEES

After 16 years in the business, Daljit and Bal have learned one thing: Franchising is not for the faint at heart. “In my opinion, this is not necessarily a franchise for the absentee owner,” Daljit points out. “This is a fully-vested franchise, where you need to be on your toes. You need to be involved if you’re going to run the franchise successfully. You need to make sure you’re continuing to learn and evolve on a daily basis and understand what’s required of you.” If these franchisee veterans can offer a condensed list of must-have attributes for future franchisees, they say their list would include possessing an entrepreneurial spirit, determination, a willingness to learn, and flexibility. “The good thing about owning a business is it

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Daljit wants all of his customers to leave with a smile on their faces.

gives you flexibility to spend time with your family and enjoy yourself. You want to run the business; you don’t want the business to run you. So remember, you can’t do everything. [Bal and I] had a discussion when we took over that if we get burned out, it’s not fun anymore. So, delegate responsibilities and hold people accountable,” Daljit offered. Collaboration is also a key element. According to the Bains, everything a franchisee does collectively with its franchisor, vendors, consultants and staff is to provide the customer with a gratifying experience. “Customers should leave with a smile on their face because there’s a lot of stress in today’s environment, so this should be the place they come to and it’s a seamless and great experience,” according to Daljit. “Know that as the owner of this business, you have to work to make the experience convenient for the customer.” Last, but certainly not least, they say you must be prepared to work hard, but have fun. “Know it’s not a Monday through Friday, 8 a.m. to 5 p.m. job. It’s 24 hours a day, seven days a week. So, be passionate about the business because if you are, it’ll show in your franchise, it’ll show in your staff and it’ll show in your customers,” Bal concluded.

Making Their Mark

In a male-dominated industry, women strike a work/life balance at ampm

little more than a year ago, Astrid Brett was working on the agency side of the retail industry and was admittedly burnt out. “I didn’t have a life,” she explained. “I had to choose between working crazy hours and having a life.” So, after seven years on the agency side, she decided to switch to a client-side role and found a new home at BP helping manage the ampm brand. “The work/life balance is night and day. My fiancée sees a difference; my family sees a difference,” Brett said, notBROOKE ADELMAN ing that focusing on Current job title: Retail one brand now and transformation manager having a 360-degree Been with BP: 3 years feel of how everyone works together gives ASTRID BRETT team members the flexCurrent job title: Associate ibility to call on others brand manager for help. Been with BP: 1 year The associate brand manager is not alone MARGARET KRONICK in her thoughts about Current job title: Category the work environment manager for center of store at BP. All the women Been with BP: 14 months sitting down for a marketing panel with CHRISTINA MAURER CSNews during our Current job title: Category “A Day in the Life” manager for packaged beverages visit expressed similar Been with BP: 10 years sentiments. Whether single or married, chilTERRY OHTA dren or no children, Current job title: Marketing the five female team programs specialist members agreed the Been with BP: 10 years retailer helps them have a career and a life outside the office. “Women overall are masters of opportunity development. Specifically in convenience, I think women have to try even harder because it has been an industry

Category Manager Christina Maurer is a career woman and mom to two small children.

Marketing Programs Specialist Terry Ohta believes women are pros at time management.

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Associate Brand Manager Astrid Brett praises the work environment at BP.

traditionally that women haven’t had lead roles or a strong presence in,” remarked Margaret Kronick, category manager for center of store. According to Kronick, it all comes down to multitask management: how to prioritize and how to manage time throughout the day to make sure everything gets done. “As women, we try to support each other and network, work as a community within a larger culture to get everything done, and wear various day-to-day hats,” she added. Finding that balance doesn’t come easy or right away, but it does come, acknowledged Terry Ohta, marketing programs specialist. “We are used to managing time as women, whether you have kids or not. You just do it. I’ve learned through the years that as long as I manage my time well at work, I can leave at 5 p.m. or 6 p.m. and not be stressed about it,” she said. “Maybe it comes with age, time or experience, but you get to that point. Once you set your mind to managing your time well, it makes a big difference,” Ohta noted. MAIN ATTRACTION

Complementing their time management skills is the

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Category Manager Margaret Kronick was drawn to BP for its focused West Coast footprint.

flexibility that BP offers to its team members, a key draw for many of the women on the panel. As a career woman and mom to two small children, Christina Maurer, category manager for packaged beverages, admits that she has asked herself if she is making the right decision by working fulltime. “Is being a career woman the right thing to do or is being a mother at home the right thing to do? I couldn’t see myself leaving my career because I love working and what I can accomplish. I feel I would regret that if I stayed at home,” Maurer explained. The fact that ampm stands out among its convenience channel peers as a “fun” brand doesn’t hurt either. “From the digital and social side, ampm is not afraid to have a little fun. The team really understands the personality of the brand and that shines through,” Brett pointed out. “It’s hard to connect with your customers when you play it too safe; they don’t really know your personality.” Brooke Adelman, retail transformation manager, agreed. Looking for a change in geography three years ago, Adelman said, “all the stars aligned and ampm sparked my interest. The company is a leading retailer on the West Coast. It is a trendy, fun brand and I

Retail Transformation Manager Brooke Adelman likes that ampm is a “fun brand.”

wanted to be a part of that atmosphere.” The West Coast also beckoned Kronick, who previously worked for a national competitor and was drawn to BP and the ampm brand for its focused West Coast footprint and all the opportunities that come with it. “Because it is a regional retailer, you get involved in all the cutting-edge things that are occurring. You have a voice and you have a relationship with management. You have the ability to be involved in the larger picture. That’s what drew me to ampm. But you also have the flexibility,” she said. The relationship with management was a recurring theme with the panel. “We all have our roles and yes, there is a time when we should be in the office and make our presence known; but we have a culture that makes it a lot easier for women who have other things going on in their lives to make their priorities known. Here are my professional goals and here are my personal goals, and they are not going to get in the way of each other,” Maurer said. “It is harder to have those conversations at companies where management is not as involved or does not have close relationships,” she added. CSN

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What Is Innovation? Experts contemplate the meaning of innovation and its role in convenience retail By Renée M. Covino

“I

nnovation” is a seductive industry term that gets tossed around a lot, but what does it mean exactly? Albert Einstein said we cannot solve problems by using the same kind of thinking we used when we created them. Using his logic, innovators utilize new thoughts and creative brainpower to solve problems. The end result — innovation. But what does innovation look like in the retail world and, more specifically, in the convenience channel? To answer this question, Convenience Store News started a dialogue with experts from various corners of the retail/supplier arena. They pondered the meaning and role of innovation in this industry, and cast their vote for the greatest retail innovation to date. Some of

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their viewpoints are unique. Many core ideas overlap. But they all offer up excitement for where retail innovation is headed. PERSPECTIVE 1: LET’S GET “PHYGITAL”

Innovation in retail means getting “phygital” or, in other words, effectively blending the physical store experience with digital information, according to Angela Fernandez, vice president of retail grocery and foodservice for GS1 US, a standards organization. While she recognizes that consumers are in convenience stores because they are pressed for time, that doesn’t mean they lack the desire for quick access to information about a product via their smartphones. Consumers across all channels are looking for this,

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WHERE INNOVATION MEETS CONVENIENCE

according to Fernandez. She would like to see more convenience stores partner with their distributors and suppliers to be able to answer consumer questions like: What’s in this granola bar? Where was it made? Does its packaging have a minimal impact on the environment? “More companies are launching data quality programs to ensure consumers can trust the information they find online,” Fernandez told CSNews. “Additionally, more technological innovation with better data quality can enable more vigilant food safety measures like POS [point-of-sale] alerts about expiry dates or recalled items.” Fernandez, therefore, believes the greatest innovation in retail to date is the “way that packaging is

blending with digital information.” She wants us to imagine this IoT (Internet of Things) world where packaging is the connected medium for information. “What if you didn’t have to Google a product name to get info about it? You can scan the product and pull up the ingredients, coupons, recipes and other rich content,” she said. GS1, in fact, supports the SmartLabel transparency program so that consumers can quickly access brand-authorized product information in a consistent digital format. “Some major companies who are active in GS1

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US initiatives are also SmartLabel early adopters, including Hershey’s and Unilever, pointing to their commitment to product information transparency,” said Fernandez. “Additionally in the c-store industry, 7-Eleven has been very public about being the first convenience store to implement GS1 Standards on fresh food products. They are using these global supply chain standards for accurate product information and improved product transparency.” PERSPECTIVE 2: LET’S GET THEM GOING

Tyson Foods’ Nancy Todys, director of c-store and vending channel development, believes that for convenience stores, innovation greatness is found in the form of better ways to meet the everyday needs of consumers on the go. “Much of the innovation today is in food packaging, such as packaging that protects flavor and integrity over longer periods of time, while giving the consumer full visibility to the product quality prior to purchase,” said Todys. By making consumers’ lives even more convenient, she sees mobile store sites and apps as one of the greatest innovations in the industry to date, allowing for online ordering of prepared food that’s ready for pickup when the consumer arrives at the store. “It gives consumers back time for their busy lives,” she said. PERSPECTIVE 3: LET’S GET PERSONAL

With a world of products available 24/7 for virtual perusal today, fewer shoppers are taking the time to step into a brick-and-mortar convenience store anymore, and so personalization is the key to retail survival, believes Enda McShane, CEO of Velocity Worldwide, which specializes in personalization technology and creative marketing.

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“Whether that means having personalized in-store experiences for loyal customers, special deals to attract new customers, or even interactive robots that connect via consumers’ mobile devices to help bring the shopping experience to life, the bottom line is that retail innovation should always revolve around the customer,” he told CSNews. The way McShane sees it, the greatest innovation in retail to date is the use of platform technology focused on the customer. This allows retailers to have deeper insights into who their customers are, so they can truly understand their habits and shopping behaviors. “Once retailers have that type of data, they can then activate it to engage with personalized in-store experiences at all points of the customer journey — pre-store, in-store and post-store,” he said. “Acting on useful customer data insights is the best way to build lasting customer relationships.” According to a recent survey conducted by Velocity Worldwide and Sapio Research, 53 percent of retailers wait for customers to walk into or check out of a store before engaging with them. “That is absurd,” stated McShane. “Retailers need to be engaging with customers before they even walk into a store if they really want to influence shopping intent and, ultimately, sales.” The customer journey is cyclical, he stressed. “When only 35 percent of retailers analyze data in real-time, there is a majority of retailers missing out on important ways to capture insights about their customers and engage with them to build brand loyalty.” McShane cautions that “true retail innovation” isn’t reliant on the latest tech trend. “It comes from having actionable data as the critical first step to a winning retail customer experience,” he said. Not only does data help strengthen relationships with customers, but also with the brands retailers stock. It allows both parties to act on

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valuable data and customer insights to grow their businesses, he explained. PERSPECTIVE 4: LET’S GET VIRTUAL

In its simplest form, innovation in the retail world is business enabled by technology, according to Ryan Dee, creative director at Interactions, a Daymon Worldwide marketing company. He views the greatest innovation in retail to date as twofold technologies: virtual and augmented reality (VR/AR) and artificial intelligence (AI) with voice recognition. While still in the experimental stage, virtual and augmented reality offer compelling tools for reimagining retail tasks in both the frontend and backend, Dee told CSNews. “From intuitive information overlays to immersive sessions, these platforms are poised to assist the store associate of the future,” he noted. Regarding AI/voice recognition, Dee said, “Artificially intelligent assistants can respond to voice commands to streamline the completion of specific tasks and offer hands-free access to relevant information. When paired with contextual understanding, these systems can move toward predictive assistance, enhancing the associate experience further.” “We are at the most Dee recognizes that exciting time in retail in today’s economy, convenience is an element innovation during our at the forefront of most lifetime. It is disrupt or innovative services and, therefore, he believes be disrupted. It is there is a huge opporthrive or die.” tunity for convenience stores to capitalize on — Don Stuart, Cadent Consulting Group these innovative technology trends. PERSPECTIVE 5: LET’S GET DYNAMIC

Retail is becoming an arena in which to explore, expand and be gratified, according to Jean-Eric Penicaud, cofounder of Survey.com, which measures product introductions and brands at convenience stores. “If you are a consumer, you know that if you ask, you shall receive and if you explore, you shall be surprised,” Penicaud relayed to CSNews. “The hyperlocal network of convenience stores and the proximity to demand offers the perfect distribution channel for new trends and dynamic consumer feedback.” In Penicaud’s view, being able to target the consumer “live” based on their needs and expectations through

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mobile, iBeacon and rewards programs, to name a few, has become “a serious differentiator” — and, in his view, the greatest innovation in retail to date. “Constant feedback and data has allowed the industry to maximize volume at much lower costs,” he stated. “But there is still a great deal of both data and experiential integration that needs to take place in order to bridge the gap between our parents’ retail experience and today’s customized individual experience.” PERSPECTIVE 6: LET’S GET SEXY

With high-volume, low-margin products, innovation within convenience stores will come by way of experience and service, said David Sheldon, vice president of client engagement for retail design firm Retail Design Collaborative. “[It’s] when technology and the consumer experience are fused together in a unique way,” said Sheldon, who believes that ecommerce has taken a big bite out of physical in-store shopping and “people want to be seduced and mesmerized in the experience they have, which is where technology plays a part.” The rise of ecommerce has been a benefit to the retail industry in a way that physical stores have had to up their game and be better at creating a unique platform for customers to engage with their brand, Sheldon told CSNews. As an example, he offered up the new Nordstrom “service-focused” concept store in Los Angeles, which was pared down from the typical 140,000 square feet to 3,000 square feet (closer to the c-store range). This store focuses on “product, style, fit and experience,” according to Sheldon. “Nordstrom is banking on the fusion of technology colliding with experience in a fun, productive and unique way.” He challenges convenience stores to get “sexier” in this vein. PERSPECTIVE 7: LET’S GET SEAMLESSLY CONNECTED

Retail innovation means continuously exploring ways to do more with less, with recent advancements in

payments technology being a prime example, according to Jim Allen, senior vice president, global head of SMB operations at First Data. “POS solutions are no longer just a means to collect payments. Instead, modern payment solutions are enabling convenience store owners to manage every aspect of their businesses remotely on a single, cloud-based platform — from collecting and analyzing sales data to managing loyalty and rewards programs,” he said. Payment devices are also becoming critical points of engagement between the retailer and the consumer. “Through innovation, we are able to help retailers make that engagement a seamless interaction,” Allen added. The way he sees it, some of the great innovation in retail to date includes QR code-based transactions and the ability to embed payments technology directly into any number of “connected” devices. He stressed, though, that with security and fraud threats evolving at a rapid pace, retailers must constantly adapt to protect their customers and their companies. Ultimately, retailers should aim to go beyond simply selling products and instead strive to provide a customer experience that is convenient, secure and enjoyable, he said. “Through innovative payment options to rewarding loyalty programs, retailers can embrace new and evolving technologies to connect with customers and keep them coming back,” Allen concluded.

PERSPECTIVE 8: LET’S GET (EVEN MORE) CONVENIENT

By definition of what they are, convenience stores need to think about how to leverage innovation to be more convenient, according to Don Stuart, managing director of the Cadent Consulting Group. “Close-in innovation should leverage this convenience strength,” he said. He also told CSNews that “true disruptive innovation” may totally change the convenience model. For example, in addition to a gas pump, c-stores could have a merchandise pump, whereby consumers press the screen while they pump gas (a screen by the pump or a screen on their phone) and the merchandise selected is directly delivered to their vehicle either by an automated mechanism or by hand. Stuart also imagines what the world of c-stores might look like when they no longer have gas as a draw and the world switches to electric cars. C-stores might consider offering fast battery chargers unmatched in any type of home or alternative source. He envisions “batteries that can be charged almost instantaneously with special equipment that creates a real need and draw for the convenience stores of tomorrow.” He goes even further, imagining that convenience stores might become “third-place meeting areas” or, even more outrageous but not out of the question in his mind, self-driving vehicles could be sent to c-stores to pick up an electronic order for delivery. Stuart sees retail innovation evolving for tomorrow and beyond by improving the old model via better information and less friction. “Minimization of the store hassles, but duplication of the store virtually,” he said. “We are at the most exciting time in retail innovation during our lifetime,” he added. “It is disrupt or be disrupted. It is thrive or die.” CSN

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Hitting the Sweet Spot The 21st annual CSNews Best New Products Awards recognize 36 items that stand out By Susan Durtschi, Past Times Marketing

hirty-six products new to convenience store shelves in the past year have been selected as winners in the 21st annual Convenience Store News Best New Products Awards competition. The CSNews Best New Products Awards program recognizes and honors the marketers who introduced the most innovative, high-quality products that meet consumers’ evolving needs. This year’s winners certainly reflect changing consumer needs, with many featuring and playing to aspects of the foodie culture, spurred on by millennials. That means many of this year’s best new products are made with local, pure, ethically or naturally-raised and grown ingredients, which are readily transparent to the consumer. For instance, most of the alternative and healthy snack winners are chock full of fresh and organic ingredients. And the winning flavors of many products are bold, reflecting the multicultural influence in the United States. Beverages showed the most innovation among the winners this year. We have lots of alternatives to sugary sodas, to cow’s milk, organic and certified Fair Trade ingredients, trending cider, carbonated flavored waters, kombucha, ready-to-drink (RTD) tea, and cold brew coffee drinks.

Since speed is a necessity in the convenience store market, grab-and-go was a feature in most every category. The refreshing (retooling) of iconic brands and nostalgic nods to former bestsellers is also alive and well in candy, snacks and doughnuts. Judging for the 2017 CSNews Best New Products Awards was supervised by Past Times Marketing, a New York-based consumer research and product testing firm. Contest entries were rated and awarded points by consumers based on the criteria of taste, value, convenience, healthfulness, ingredients, preparation requirements, appearance and packaging. Here are the products that caught the eye and tempted the taste buds enough to win this year: Alcoholic Beverages/Beer: Amstel Xlight. Consumers want superior beer quality and taste without the carbs or calories. Amstel Xlight from Heineken satisfies both with a 90-calorie can with only two carbs. This is the lightest domestic premium beer on the market today. Our consumer panel was skeptical, but this beer ranked more filling than they thought it would and was called “very drinkable.” (continued on page 58)

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Giving shoppers a convenient way to enjoy 3 snack breaks?

Now that’s rewarding.

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Alcoholic Beverages/Cider: Strongbow Mini Cans. The word is out about hard ciders. Seems cider is following the trend of craft beer, which places emphasis on ingredient quality and a tie to the agricultural roots of the product. An easy winner is the limitededition four-pack from Strongbow that includes four 5.1-ounce cans with one each of the following flavors: Strongbow Orange Blossom, Strongbow Gold Apple, Strongbow Honey, and Strongbow Cherry Blossom. Our testers loved the perfect size and the great price of $1 for a four-pack. This sampler will most certainly bring repeat customers back to convenience stores for a six-pack of their favorite flavor. Alternative Snacks/Fruit Snacks: Fruit Gushers Sour. Wanna get your sour fix on? Fruit Gushers Sour have a chewy outer shell and when you bite into them, you get a “gush” of sour flavor in apple, cherry or grape flavors. These fruit snacks, packaged in a 4.25-ounce bag for a suggested retail price of $2.19, balance sweet and sour well, and have some nostalgia as well. Consumers said they were fun to eat in the bigger size. Alternative Snacks/Health & Energy Bars: FITCRUNCH Birthday Cake Bar. For an energy bar to be a hit, it must possess the “wow factor” in both taste and performance. FITCRUNCH Birthday Cake is a unique six-layer, baked Whey Isolate Protein bar. The appearance, flavor and texture of the Birthday Cake Bar were highly rated. Our testers said “wow” to this 30-gram-protein powerhouse meal option. Alternative Snacks/Meat Snacks: Perky Jerky Beef Stick. Millennials love their meat snacks and this one is even better for them. Perky Jerky 100% Grass-Fed Beef Sticks come in four bold flavors, are made from 100-percent grass-fed beef raised without antibiotics

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or added hormones, and appeal to shoppers seeking healthy, cleaner protein snacks. These snacks are touted as a “protein pal” for kids as an afterschool treat rather than candy. They come in a nifty 1-ounce single pack. Of the four varieties, Jammin’ Jamaican was our testers’ favorite. Candy/Chocolate: M&M’S Caramel Chocolate Candies. Consumers love the M&M’S brand so Mars Chocolate keeps adding new flavors. Caramel filling is the fourth most popular category of chocolate filling. This new M&M’S iteration does not disappoint. M&M’S Caramel Chocolate Candies are on the larger size and the caramel is somewhat dense. There is a slightly salty milk-chocolate aftertaste that was very satisfying to our testers. Candy/Mints: Breath Savers Protect. Breath Savers Protect is made with dentist-recommended Xylitol. These mints help protect teeth by neutralizing plaque acids in the mouth following consumption of sugar or starch-containing foods, while defusing bad breath. They are sugar-free and come in peppermint and spearmint flavors. Candy/Novelty & Seasonal: Trolls Candy Fan. CandyRific came out with an adorable line of Trolls novelty candy fans to correspond with the movie that hit theaters last November. Miniature troll dolls, Poppy and Branch, sit on top of a candy-filled handle fan. Poppy troll has a bright pink hair tuft and Branch troll a blue hair tuft. This novelty candy item appeals to kids and nostalgia lovers. Priced at $4.99, they are just the right price, as well as the right size, to have as a memory of the Trolls. Dairy Beverages: Horizon Organic Milk Aseptic Quarts. Shelf-stable and convenience go hand-in-hand. Horizon is the No. 1 organic milk brand in the U.S.

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and it introduced this quart carton so that the consumer can always have a quart on hand that does not need to be refrigerated until opened. Convenience stores can save cooler space also. Aseptic means sterilized using an ultra high-temperature pasteurized process. Dairy Products: CheeseHeads Sticks. These three-count snacking cheese products from Saputo Cheese are a nutritious snack for the grab-and-go customer. You can’t beat the 99-cent price for three filling pieces. The String Original Mozzarella was a real crowd pleaser. Edible Grocery: Yo Momma’s Style Colorado Green Chile. This is a flavorful Southwestern style condiment that you spoon on warm burritos, chimichangas, tamales, or other tortilla offerings. The exceptional flavor comes from just four basic ingredients: chili peppers, tomatoes, water and spices. Energy Products: FORTO Coffee Shots. C-store operators seeking to get that Dunkin’ Donuts or Starbucks customer into their store may want to check out this new product. The 2-ounce ready-to-drink portable coffee energy boost is made with super-premium organic and Fair Trade Arabica beans that are cold-brewed for 20 hours. Shake it and drink straight. FORTO Coffee Shots contain the same amount of caffeine as two cups of coffee and come in a sleekly designed container with peel-back lid for on-the-go consumption. Foodservice/Breakfast: Big AZ Western Style Omelet Wrap. In a perfect world, breakfast is the meal that should not be rushed; it should be savored and lingered over. But let’s get real, no one has the time for that. Enter the Big AZ Western Style Omelet Wrap. This breakfast option is a fully cooked western omelet

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wrap — consisting of a frittata egg patty with Pepperjack cheese, ham, onion, red and green peppers in a flour tortilla — in a nifty hand-wrapped package that makes it a convenient, on-the-go handheld wrap. The packaging gives off a fresh-made look. Foodservice/Condiments: Califia Farms Barista Blend. Alternatives to cow’s milk have been increasingly displacing dairy milk in America’s diet, and almond milk is America’s favorite milk substitute, growing more than 250 percent in the past five years, according to Nielsen. Designed for easy steaming, the Barista Blend is a shelf-stable variation of Califia Farms’ Original Almondmilk. It is perfect for integrating with coffeehouse beverages, creating full-bodied foam and better latte art, and helping customers who desire dairy-free. The Barista Blend is 100 percent vegan, dairy-free, soy-free, glutenfree, GMO-free, and carrageenan-free. Foodservice/Lunch: Hillshire Farm Premium Chicken Sausages, Bacon & Gouda. This is the perfect option for the roller grill when you want to offer something different but yet still mainstream. The combination of bacon and gouda cheese appeals to millennial and Generation X consumers interested in variety. The smoked flavor of the chicken sausage and the bacon and gooey cheese give it a great texture as well. Foodservice/Snacks: Bosco Sticks, Ham & Cheese. Snacking and Bosco Sticks go together. Think of all those years where they were a favorite in the school cafeteria. Now, Tyson Convenience has made up a classic version with ham and cheese inside a delicious breading. Served in convenient serving sleeves, it is a great on-the-go option and an easy sale for convenience store retailers with flavors and the Bosco brand name.

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Frozen Novelties: M&M’S Brand Ice Cream Bars. Who doesn’t like M&M’S? Each individually wrapped bar features chopped M&M’S chocolate candies inside reduced-fat vanilla ice cream, all smothered in creamy milk chocolate. The frozen novelty bar format is growing more than two times faster than the overall ice cream category. Part of this increase may be that parents prefer the frozen novelty format of a bar since it’s clean and convenient for families. “Totally satisfying” was the general sentiment for this new product. General Merchandise: Personalized Lanyard Keychains. Consumers of all ages love to see their name, and it creates instant curiosity to try and find a special name on a spinner. There is broad demographic appeal with these personalized lanyard keychains. Colorful, eye-catching embroidered names are on a small-footprint floor spinner that holds about 252 names. The $3.99 price makes it a great add-on sale. The spinner comes packed with the most popular names along with military names, dog names, and other cool phrases to choose from. The color combinations appealed to our testers, as did the quality for the price. This truly represents a one-of-a-kind personalized product that stands out for c-stores. Health & Beauty Care: Nicorette Gum. Smoking cessation is a nearly $1-billion category with great potential for c-stores. The No. 1 brand in the category, Nicorette, has been repackaged and distributed by Convenience Valet in an on-the-go size of 10 pieces for $7.99. In White Ice Mint and Fruit Chill flavors, the small-count box is a more affordable price point and so convenient. Healthy Snacks/Crackers: Good Zebra Spirit Animal Crackers. Good Zebra has reinvented an iconic childhood treat by upping its nutritional profile and letting

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the animals out of their cages. Available in Vanilla, Lemon and Chai, each 2-ounce zip-top bag offers 12 grams of protein and all-natural ingredients — sweetened with only honey and coconut sugars. Each of the 11 animal shapes are inspired by original tattoo art. Light and crisp with a satisfying crunch, Spirit Animal Crackers contain more than 70 percent organic ingredients and no artificial colors or flavors. Our testers said they were great for kids and adults — a gourmet animal cracker that doesn’t break the bank. Our testers rated the vanilla as their favorite and noted that there is a generous amount of crackers in each bag. Healthy Snacks/Other: Goodfoods Chunky Guacamole & Tortilla Chips. Health-conscious consumers are looking for convenient, great-tasting snacks that offer positive health benefits using fresh produce. All parts of Goodfoods Chunky Guacamole & Tortilla Chips are gluten-free, vegan, vegetarian, and free of added sugar, preservatives or artificial colors. The avocado is hand-scooped Haas avocado. There is a very short list of ingredients, which is always a good sign for a healthy snack. This grab-and-go pack stands out with its innovative avocado-shaped double snack cup. Our testers liked the texture, flavor and $2.49 price point. Liquor: Cafe Agave. Touted as “Adult Coffee Creamers” with a 13.8 percent ABV, Café Agave offers a great way for a convenience store to increase coffee sales. Plus, this is a product line never before available to the majority of c-stores since most only have a beer and wine license. Café Agave is a creamy liqueur that enhances hot and cold coffee drinks or can be used as a mixer. This is a sophisticated and innovative new product. Non-Edible Grocery: Purina Beneful Grain Free. Following the trend of humanization of pet food,

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Nestle Purina has a new formula that provides abundant nutrition without sacrificing taste. Made without corn, wheat or gluten, Purina Beneful Grain Free is the first natural dog food for the convenience channel in affordable 4.5-pound bags.

Farms Organic Cucumber & Mint Lemonade is a carbonated, sparkling, bubbly “soda.” Certified organic and made in the U.K., it combines carbonated spring water with fresh organic-pressed cucumber juice, organic lemon juice, and organic cane sugar. This product was dubbed authentic and refreshing by our panelists.

Packaged Beverages/Alternative: Wonder Drink Kombucha. The fermented tea movement is coming to a convenience store near you. Kombucha, a naturally sparkling, effervescent tea beverage, has gone mainstream. Wonder Drink Kombucha is a sparkling, certified organic, fermented tea that hails from Oregon. It comes in eight flavors in both 14-ounce bottles and 8.4-ounce sleek cans. Our testers “trusted their gut” and had plenty to say about the health benefits of drinking kombucha, from probiotics to energy to Vitamin B. They were a fan of the Asian Pear & Ginger flavor, calling it refreshing and cleantasting.

Packaged Beverages/Juice Drinks: Califia Farms Tangerine Juice. This ready-to-drink, 10.5-ounce beverage is 100 percent pure premium squeezed juice from Californiasourced tangerines. It is an excellent source of vitamin C and offers a unique California citrus taste profile that stands out. This is a great alternative to the orange juice segment in c-stores, offering a unique twist on citrus. The flavor was intense and fresh-tasting; a hit with our panel. They liked the package as well, and the fact that it was pure and not from concentrate.

Packaged Beverages/Bottled Water: Volvic Natural Spring Water. The best bottled water for everyday use is pure and balanced, and this one received excellent ratings. Over the years, spring water has always ranked higher in taste tests than water from other sources and Volvic is no exception. This spring water is filtered with volcanic rock in France. The easy-to-grip volcanic shape sport bottle with a flip cap added to its high marks. Several testers called it crisp and clean. Packaged Beverages/Carbonated: Belvoir Fruit Farms Organic Cucumber & Mint Lemonade. For the past five years, there has been a huge target on the backs of conventional carbonated sodas, both sugary and diet. They have been deemed unhealthy in the eyes of activists. At the same time, the natural beverage market has been steadily gaining traction in the convenience store market. Belvoir Fruit

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Packaged Beverages/RTD Tea: Gold Peak Tea Chai Latte & Vanilla Chai Latte. RTD tea is the second-fastest growing beverage subsegment and is projected to grow four times faster than total beverages from 2016 to 2020. Millennials crave variety and new flavor experiences, and this product delivers on both. Gold Peak is one of the first to bring high-demand RTD tea lattes to the market. C-stores have embraced this new segment. Likewise, our panelists embraced the chai and also liked the smooth drinking sensation. Packaged Sweet Snacks: Krispy Kreme Doughnuts. There are a lot of items introduced in the category of packaged sweet snacks, but none as iconic as the packaged Krispy Kreme Doughnut. This nails the taste even though it is pre-packaged. The Krispy Kreme brand has broad appeal with all demographics. The glaze on the Jumbo Glazed Honey Bun variety was a sure winner, although the Jumbo White Iced Honey Bun was given high ratings as well.

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Salty Snacks/Nuts & Seeds: BIGS Tapatio Chile Limon Sunflower Seeds. Bold is better, said one of our testers when asked about these BIGS signature sunflower seeds seasoned in Tapatio salsa picante with a hint of lime. The panelists liked the pairing of the heat and the crunch, with the twist of lime for a satisfying salty snack. Salty Snacks/Other: Take 5 Snack Mix. This mix pairs bite-sized milk chocolate and pretzel bites with peanut butter candy, chocolate-covered caramels, and peanuts in one delicious snack. The slim packaging makes it an easy, on-the-go pickup item. The package looks like healthy trail mix, said one tester. Take 5 Snack Mix is perfect for stashing in the desk drawer when you just want a little crunchy, sweet and salty bite. Tobacco/Cigars: White Owl Blue Raspberry. Sales of flavored cigars have increased more than 50 percent since 2008 and now make up over half of the cigar market. Fruit remains the most popular flavor group. The fruity blue raspberry flavor and sweet aroma of Swedish Match’s White Owl Blue Raspberry make these bold cigars speak to the trend. This flavor was the favorite of our panel. The cigars come in a convenient, individual foil package at “2 for 99 cents.” Tobacco/Cigarettes: Gold Crest Cigarettes. These cigarettes are margin makers. Gold Crest Cigarettes allow the c-store operator to earn higher margins and provide the customer with a high-quality product at an attractive price. Gold Crest has introduced a new artfully designed package that looks expensive.

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The cigarette is American made and blended. Tobacco/Electronic Cigarettes & Vapor Products: Cue Vapor System. Designed with simplicity and convenience in mind, the Cue Vapor Sub Ohm System delivers high performance with hassle-free pod refills. It boasts a super-sleek design also. Our testers liked the clever pod refills and the charging system, along with the “buddy” tip for sharing your Cue. Wine: Gallo Family Vineyard Sweets. Full fruit flavors are trending in the beer and spirits categories, so E. & J. Gallo decided to introduce them into the wine category. Gallo Family Vineyard Sweets is a sweet wine that delivers a lot of wine for the money, and should win over new customers with its 750-milliliter party bottle. Overall Innovation: Califia Farms Nitro Cold Brew Mocha. Leading the way in overall innovation for the convenience channel is Califia Farms Nitro Cold Brew Mocha, a carefully curated blend of direct tradesourced coffee with almond milk and macadamia milk that is infused with nitrogen to create a smooth mouth feel. This product can help differentiate the c-store coffee segment by offering a unique, nitrogeninfused coffee that will draw consumers away from local coffee shops. The packaging is sleek and modern, and matches the name of the brew. It beckons to be picked off the shelf. It was a favorite among our panelists and ticked the boxes for a product that has it all. CSN Susan Durtschi, an experienced buyer and product development specialist for both brick-and-mortar and online retailers, is president of Past Times Marketing, a consumer research firm. For the eighth consecutive year, Convenience Store News partnered with Past Times Marketing for the Best New Products Awards. Past Times works via focus groups and through online surveys with consumers across the country to judge new products. For more information, go to www.pasttimesmarketing.com.

o With CSN Best New Product Winner Horizon Organic HORIZON ORGANIC ASEPTIC QUARTS • • • •

Innovative aseptic packaging Guaranteed 60-day shelf life Certified USDA Organic No artificial colors, flavors or preservatives

Convenient quart-size aseptic packaging lasts twice as long as conventional ultra-pasteurized half-gallon milk—and is perfect for consumers between grocery store trips.

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Innovation Is on the Menu

Wawa wins its second Foodservice Innovator of the Year title in five years By Don Longo

awa Inc., the 756-unit convenience store chain that operates in the Mid-Atlantic states and Florida, earned its second Foodservice Innovator of the Year award in five years, leading a group of six exceptional convenience foodservice retailers selected as winners in Convenience Store News’ sixth-annual Foodservice Innovators Awards program, presented in partnership with Tyson Convenience. “Why Wawa? They have the great MTO (madeto-order) program already,” said one of the experts on CSNews’ Foodservice Advisory Council. “And now, they add mobile ordering. This will be industrychanging. And their handcrafted specialty hot beverage program is the best!” Foodservice Innovator of the Year winners are chosen by CSNews’ Foodservice Advisory Council, a panel of foodservice experts from the retailer, supplier, wholesaler, research and consulting fields. Winners are recognized for raising the bar on quality, service and innovation in the fast-growing and critically important foodservice category in the convenience channel. In addition to Wawa, the other 2017 Foodservice Innovators Awards winners are: • Prepared Foods Innovator of the Year: Holiday Stationstores Inc. • Hot Beverages Innovator of the Year: Cumberland Farms Inc. • Cold & Frozen Beverages Innovator of the Year: RaceTrac Petroleum Inc. • Best New Foodservice Offering of the Year: Swiss Farms • Foodservice Innovator to Watch: Pilot Flying J

Foodservice Innovator of the Year: WAWA

According to the CSNews Foodservice Advisory Council, Wawa is touching most, if not all, the bases on the most important menu trends, now and for the foreseeable future at retail. These trends include providing customers with foods and beverages that deliver on consumer health priorities and preferences for healthier foods and beverages. Consumers define these healthier preferences to include: GMO-free, antibiotic-free, gluten-free, grassfed beef, organic, natural and unadulterated products, vegetarian items, as well as a clear preference for local sourcing and sustainably sourced products. The judges specifically cited Wawa’s continuous improvement; enhanced food quality mission to source and provide safe, high-quality and fresh food products; and its launch this year of H4U (healthy-for-you), a compelling offer that delivers on customers’ healthier eating preferences. Other impressive steps the company has undertaken include: • Established a quality foods program that includes

Judges lauded Wawa for hitting on today’s most important menu trends.

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comprehensive operating procedures for its retail business, as well as for all suppliers of Wawa’s food and beverages; • Created an audit process with specific criteria and guidelines to oversee and provide continuous improvement opportunities for Wawa’s enhanced quality food and beverage supply chain; • Formed an independent, multi-disciplined oversight expert council in the food, food technology and healthier-for-you food sectors. The stated objective of this panel is to provide Wawa with ongoing, independent and expert oversight and continuous improvement insights of its overall enhanced quality foods program. • Announced publicly that the retailer will introduce throughout its fresh food program only poultry products that have been raised without antibiotics. Reportedly upwards of 23 of Wawa’s menu items will be changed to adhere to this new standard. Wawa previously won the Foodservice Innovator of the Year award in 2013. Prepared Foods Innovator of the Year: HOLIDAY STATIONSTORES

Based in Bloomington, Minn., Holiday Stationstores operates more than 500 convenience stores throughout 10 states in the Northern Tier region of the United States. The family-owned company, which recently reached an agreement to be acquired by Canadian c-store giant Alimentation Couche-Tard Inc., has stores in Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Montana, Wyoming, Idaho, Washington and Alaska. Holiday’s large stores feature a variety of food offerings from its exclusive Holiday Pantry sandwich and salad line. The retailer received the most votes for Prepared Foods Innovator of the Year among the members of the CSNews Foodservice Advisory Council, with many citing Holiday’s centralized commissary and wide variety of quality prepared foods. “They have really upped their game this year,” said one expert on the Council. Judges were impressed with a breakfast menu that includes Jimmy Dean Sausage, Egg & Cheese Croissants and Black Forest Ham, Egg & Cheese Croissants; limited-time offerings like the Johnsonville Beer & Cheddar Brat on a pretzel bun; sandwiches including burgers, chicken, Philly cheesesteak, rack o’ rib and beef brisket; and extensive hot snacks such as taquitos, Bosco breadsticks, buffalo chicken sticks,

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Holiday stores offer a wide variety of quality prepared foods.

nachos to go, and soft pretzels with nacho cheese. In addition, Couche-Tard President and CEO Brian Hannasch specifically pointed to foodservice expertise as something the retail giant, which operates the Circle K network in the U.S. and globally, is eager to learn from its purchase of Holiday. Holiday has operated a commissary in the Minneapolis area for about 15 years. “They’ve had a long time to really refine the offers they have, the products they have, what travels well, what freezes well, what can be reheated, and turn out a high-quality product,” said Hannasch. This is Holiday Stationstores’ first entrance into the winner’s circle in the CSNews Foodservice Innovators Awards program. Hot Beverages Innovator of the Year: CUMBERLAND FARMS

Cumberland Farms, which operates nearly 600 c-stores in eight states, was selected as the 2017 Hot Beverages Innovator of the Year after launching its biggest advertising campaign ever to support its popular Farmhouse Blend Coffee. The multichannel campaign urged consumers to “Come to Your Coffee Senses,” with actor Michael Rapaport’s voice pointing out that consumers are conditioned to pay nearly $3 for a cup of coffee elsewhere, while waiting in line and experiencing uncertainty that their order will be fulfilled correctly. The promo points out that Farmhouse Blend Coffee at Cumberland Farms is priced at just 99 cents a cup for any size, customers make it themselves and customize it the way they want it, and don’t have to wait in line. The “Come to Your Coffee Senses” campaign included television, digital video, radio, in-store signage, billboards and social media. On top of the clever marketing campaign, our judges said Cumberland Farms makes a mean cup of coffee.

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“The precision with each brew is unmatched in this industry,” said one member of the CSNews Foodservice Advisory Council. “Coupled with technology, they know how to extract each brew profile to perfection.” Cumberland Farms won an honorable mention in the Cold & Frozen Beverages Innovator of the Year category in the 2013 Foodservice Innovators Awards program. Cold & Frozen Beverages Innovator of the Year: RACETRAC PETROLEUM

RaceTrac Petroleum, the 720-store convenience chain, is no stranger to the winner’s circle in the cold and frozen beverages category. The Atlanta-based retailer was voted Cold & Frozen Beverages Innovator of the Year in 2013, 2015, and is now a three-time winner with its 2017 achievement.

RaceTrac’s Swirl World frozen yogurt offering has caught on with its customers.

The three-peat winner has turned its “Sodapalooza” promotion into an iconic industry event. This year, the promotion featured a 2017 Sodapalooza cup with $30 to $150 in exclusive coupons, and bottomless summer free refills on its fountain and “NumbSkull” frozen drinks. The Sodapalooza promotion continues to impress, according to our judges. RaceTrac’s oversized fountain has many specialty flavors, including a six- to eight-head noncarbonated fountain offer of vitaminwater, punch, lemonade and tea. “Their daily, fresh brewed on premise iced tea offer is comprised of four flavors, and for each tea, there is a matching presweetened urn, thus extending the tea offer from four to eight urns,” explained a member of the CSNews Foodservice Advisory Council. RaceTrac also has a good variety of slush flavors and granitas. What’s more, its Swirl World frozen yogurt by the ounce, with a toppings bar, is an impressive offering that has apparently caught on well with RaceTrac’s customers. “And they are always working on new beverage

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program innovations,” said another judge on the Foodservice Advisory Council. Best New Foodservice Offering of the Year: SWISS FARMS

Another first-time winner in the CSNews Foodservice Innovators Awards program is Broomall, Pa.-based Swiss Farms. The 13-store chain of convenience drivethru markets is the 2017 winner in the Best New Foodservice Offering of the Year category. Swiss Farms made its mark by combining the added speed and convenience of a drive-thru with staples and other items typically found in a grocery store, plus freshly prepared, restaurant-quality food. But the company hasn’t rested on its legacy. Since new President and CEO Scott Simon joined the retailer about a year and a half ago, the chain has been steadily improving its fresh food program. With a commissary and test kitchen in the rear of its Milmont Park, Pa., store, Swiss Farms is able to self-distribute fresh products to its stores six days a week. In the past year, Swiss Farms has significantly enhanced its foodservice offering by launching a line of fresh-made breakfast sandwiches, a premium coffee line, and adding signature meals to its Fresh Solutions line of prepared-to-take-home meals. The breakfast sandwich line features house-made sausage, pork roll and more, and includes a lean option of egg white, spinach and cheese on a multigrain English muffin. As part of its effort to include a greater number of healthier food items, Swiss Farms hired a dietitian to curate better-for-you food choices and develop recipes using ingredients available at Swiss Farms. “It’s fun to watch a small chain take their foodservice to a new level, offering fresh sandwiches and better quality coffee. Plus, the drive-thru! Their sales will

Swiss Farms has enhanced its fresh food and coffee programs in the past year.

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grow quickly,” commented a member of the CSNews Foodservice Advisory Council. FOODSERVICE INNOVATOR TO WATCH: PILOT FLYING J

Pilot Flying J, the Knoxville, Tenn.-based retailer that operates more than 750 convenience stores and travel centers in North America, is the winner of the inaugural Foodservice Innovator to Watch award in this year’s competition. The judges on the CSNews Foodservice Advisory Council were impressed with the direction Pilot Flying J is taking in its prepared foods program. Earlier this year, the retailer hired celebrity chef and restaurant owner Tim Love to create new signature food items and work on developing Pilot Flying J’s foodservice culture. Reportedly, Love will focus first on the company’s stores in its Southwest region by developing new nutritious menu items with representative flavors and items considered specialties from the U.S. Southwest. Chef Love’s dishes have received critical and popu-

Pilot Flying J is working with celebrity chef Tim Love to develop signature items.

lar acclaim, and he has been recognized by leading publications including The New York Times, The Wall Street Journal, Bon Appétit and Food & Wine. Love has also appeared on Bravo’s “Top Chef: The Cruise” and “Top Chef Masters” programs, as well as Food Network’s “Chef America” program. Love will work closely with Shannon Johnson, vice president of food innovation at Pilot Flying J, to continue to develop the PJ Fresh Marketplace brand throughout the chain. CSN

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TOP WHOLESALERS

Wholesale

CHANGES

Another year, another set of acquisitions and challenges for convenience wholesalers A Convenience Store News Staff Report

espite some challenges, the 20 companies included in this year’s Convenience Store News Top Wholesalers ranking combined to post sales of $67.5 billion, an increase of 4.3 percent in the past year. That growth rate was slightly ahead of last year’s increase of 4.1 percent. Strong gains by individual companies continue to be boosted by acquisitions — a trend that is likely to continue. Core-Mark Holding Co. Inc., ranked in second place, increased sales by 30.6 percent year over year. Last year, this California-based convenience distributor acquired the convenience store division of Gardiner, Maine-based Pine State Trading Co. Then, in May of this year, Core-Mark announced the completion of its acquisition of last year’s fifth-ranked wholesaler, Farner-Bocken Co. of Carroll, Iowa. Consumer Product Distributors Inc. posted a 31.3-percent sales increase, rising from ninth place last year to fifth place in this year’s CSNews Top Wholesalers report. The distributor recently acquired certain assets and most of the sales force of last year’s 12th-ranked company, Garber Bros. Inc. of Stoughton, Mass., when that company closed its doors in April. Interestingly, only one other company achieved double-digit sales growth: Harbor Wholesale Foods, at 18 percent over the previous year. No acquisitions were reported by this company, headquartered in Lacey, Wash. McLane Co. Inc. of Temple, Texas, remains at the top of the list with $31.7 billion in sales, a slight 1.9-percent decline from a year ago. Third-ranked EbyBrown Co. LLC of Naperville, Ill., at $5.6 billion in sales, also saw a drop of 6.7 percent in the past year. Knoxville, Tenn.-based H.T. Hackney Co. rounds out this year’s top five, with sales of $4 billion. The top five companies, including Core-Mark, combined for sales of $57.3 billion, which accounts for 85 per-

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cent of the total 2017 CSNews Top Wholesalers list. Cigarettes continue to bring in the largest share of sales for convenience wholesalers, at 67.9 percent. Following far behind are other tobacco products (9.7 percent of sales), candy, gum and packaged sweet

Top Wholesalers Summary TOTAL SALES (Percent change vs. year ago): Top 20 wholesalers $67.5 billion (+4.3%) Top 5 wholesalers $57.3 billion (+5%) AVERAGE SALES PER: Company Retail location served Warehouse Full-time employee PERCENT OF SALES: Chains Single stores

$3.374 billion $388,033 $519 million $2.421 million

50.7% 49.3%

Source: Convenience Store News Market Research, 2017

Sales per Retail Location Served McLane Co. Inc. Chambers & Owen Inc. Team Sledd Charles C. Parks Co. Cooper-Booth Wholesale Co. Imperial Super Regional Distributors Topicz S. Abraham & Sons Inc. Southco Distributing Co. Core-Mark Holding Co. Inc. Source: Convenience Store News Market Research, 2017

$710,940 $500,000 $482,727 $470,000 $452,522 $440,000 $388,889 $367,500 $332,500 $315,217

Sales per Delivery per Week McLane Co. Inc.

$471,902

Cooper-Booth Wholesale Co.

$462,121

S. Abraham & Sons Inc.

$420,000

Team Sledd

$408,462

Imperial Super Regional Distributors

$407,407

Charles C. Parks Co.

$390,041

Topicz

$358,974

Resnick Distributors

$315,000

AMCON Distributing Co.

$308,333

Allen Brothers Wholesale Distribution Inc.

$307,059

Source: Convenience Store News Market Research, 2017

Top 5 Trends Impacting Business Today

6.3% 9.8% 12.5%

Increased government regulation

31.3%

18.8%

Increased retailer consolidation Competition from other full-line wholesalers Short supply of qualified truck drivers Pressure on tobacco margins

Source: Convenience Store News Market Research, 2017

Percent of Sales by Category Cigarettes

67.9%

Other tobacco products

9.7

Candy/gum/packaged sweet snacks

6.1

Foodservice

5.9

Salty snacks

2.8

Grocery

2.4

General merchandise/health & beauty care

1.9

Packaged beverages

1.9

Fresh produce

0.7

Gourmet/natural/specialty food

0.1

Other

0.6

Source: Convenience Store News Market Research, 2017

snacks (6.1 percent), and foodservice (5.9 percent). Regarding cigarettes, several wholesalers noted that pressure on margins and continuing decline in consumer demand for these products are the most important trends affecting their business currently. However, topping that list of trends impacting business today is increased government regulation, cited by almost one-third of respondents to this yearâ&#x20AC;&#x2122;s survey (31.3 percent). Increased retailer consolidation was selected by 18.8 percent of respondents, followed by competition from other full-line wholesalers at 12.5 percent.

Strong gains by individual companies continue to be boosted by acquisitions â&#x20AC;&#x201D; a trend that is likely to continue. When asked about new services or business solutions implemented over the past year to help their retailer customers, mobile apps and improved ordering platforms were mentioned most often by the top wholesalers. Enhanced foodservice programs were also mentioned frequently. Foodservice and fresh-food programs were also cited most often when wholesalers were asked to name new convenience categories added or enhanced in the past year. Cold brew coffee, produce (both whole and cut fruits and vegetables), wraps, bakery, and frozen beverage programs were named as well. Several wholesalers also mentioned an expansion in novelty product programs. No wholesaler reported eliminating any categories over the past year. METHODOLOGY

Rankings for the 2017 Convenience Store News Top Wholesalers report are based on sales from the last full fiscal year for each company. Data for this report was gathered through a survey conducted among the largest wholesalers primarily servicing c-stores that derive the majority of their annual sales from tobacco and candy products. Additional data was obtained through company reports and other public sources of financial data. In some cases, estimates have been made by CSNews based on historical data and current industry trends. CSN

WWW.CSNEWS.COM | NOVEMBER 2017 | Convenience Store News 77

TOP WHOLESALERS

ESTIMATED SALES

RANKING

2017

Company/Headquarters

Chief Executive

RETAIL SERVICE

Latest FY1 (millions)

Previous FY (millions)

% change

$31,725

$32,346

-1.9%

50 states

44,624

67,228

14,500

11,100

30.6

50 states

46,000

51,000

Trading Area

Locations Deliveries Served per Week

McLane Co. Inc., Temple, Texas2

Grady Rosier

Core-Mark Holding Co. Inc., South San Francisco, Calif.

Thomas B. Perkins

Eby-Brown Co. LLC, Naperville, Ill.

Thomas & Richard Wake

5,600

6,000

-6.7

MN, IA, WI, IL, MO, KY, IN, MI, GA, TN, NC, SC, MS, AL, ND, SD, PA, WV, VA, OH, NY, MD, DE

22,000

H.T. Hackney Co., Knoxville, Tenn.

William Sansom

4,000

0.0

AL, AR, FL, GA, MS, NC, SC, TN, LA, TX, KY OH, PA, VA, WV, MD, IN, MO, IA, MI, MO

20,000

n/a

Consumer Product Distributors Inc., Chicopee, Mass.3

Jeffrey Polep

1,482

1,129

31.3

MA, CT, RI, NH, VT, ME, NY, NJ, PA

4,800

5,400

Harold Levinson Associates Inc., Farmingdale, N.Y.

Edward Berro

1,297

1,330

-2.5

All except AL

9,000

12,000

AMCON Distributing Co., Omaha, Neb.

Christopher H. Atayan

1,295

1,282

1.0

AR, CO, GA, IA, ID, IL, IN, KS, KY, MN, MO, MT, NC, ND, NE, OK, SD, TN, TX, UT, VA, WI, WV, WY

4,600

4,200

S. Abraham & Sons Inc., Grand Rapids, Mich.4

Alan Abraham

1,176

1,224

-3.9

WI, IL, MI, IN, OH, KY, PA, WV

3,200

2,800

Imperial Super Regional Distributors, Elmwood, La.5

John D. Georges

1,100

0.0

LA, MS, AL, GA, TN, AR, TX, OK, KS, MO

2,500

2,700

GSC Enterprises Inc., Sulphur Springs, Texas

Michael Bain

973

944

3.1

AR, KS, LA, MS, NE, NM, OK, TX

n/a

Cooper-Booth Wholesale Co., Mountville, Pa.

Barry Margolis

610

575

6.1

PA, MD, DE, VA, WV, NJ

1,348

1,320

Chambers & Owen Inc., Janesville, Wis. John K. Owen

600

0.0

WI, MI, MN, IA, IL

1,200

1,250

Harbor Wholesale Foods, Lacey, Wash. Justin Erickson

558

473

18.0

WA, OR, ID, CA, AK

3,000

2,200

Southco Distributing Co., Goldsboro, N.C. Sherwin Herring

532

0.0

NC, SC, VA, TN, GA

1,600

1,900

Team Sledd, Wheeling, W.Va.

Robert M. Sincavich

531

0.0

OH, PA, WV, VA, MD, KY

1,100

1,300

Topicz, Cincinnati6

Marvin Schwartz

350

367

-4.6

OH, KY, IN, IL, TN, WV

900

975

Resnick Distributors, New Brunswick, N.J. Steven Resnick

315

303

4.0

NJ, PA, NY, CT, MD, DE, DC, VA, NC

1,000

Stephenson Wholesale Co. Inc., Durant, Okla.7

Corey Cooper

298

317

-6.0

OK, TX

2,500

n/a

Charles C. Parks Co., Gallatin, Tenn.

Charles C. Parks III

282

271

4.1

TN, KY, VA, NC, SC, GA, AL, MS, AR, MO, IN

Allen Brothers Wholesale Distribution Inc., Philadelphia

Jeff. B. Allen

261

250

4.4

PA, DE, NJ, NY, DC

Footnotes: 1 FY=Fiscal year 2 McLane corporate parent is Berkshire Hathaway, Omaha, Neb. 3 Consumer Product Distributors dba J. Polep Distribution Services 4 S. Abraham & Sons corporate parent is GRAD, Grand Rapids, Mich. 5 Imperial Super Regional corporate parent is Georges Enterprises LLC, Elmwood, La. 6 Topicz corporate parent is Novelart Manufacturing Co., Cincinnati 7 Stephenson Wholesale dba Indian Nation Wholesale Source: Convenience Store News Market Research, 2017

78 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

600

723

1,436

850

PERCENT OF SALES

WAREHOUSES

EMPLOYEES Full-time Part-time

PRODUCTIVITY RATIOS: SALES PER

Chain

Indep.

# of Warehouses

Sq. Feet (thousands)

Sales

Sq. Foot

Employee (thousands)

Location (thousands)

Delivery (thousands)

99%

11,615

13,274

279

$2,731

$2,390

$711

$472

5,500

5,000

n/a

2,636

2,900

315

284

n/a

2,000

2,400

100

200

2,800

2,333

255

n/a

200

n/a

387

886

110

3,829

1,673

309

274

420

562

3,088

2,308

144

108

641

528

104

2,020

2,453

282

308

440

485

2,673

2,425

368

420

329

485

3,343

2,268

440

407

n/a

450

n/a

2,162

n/a

110

218

5,545

2,798

453

462

252

260

2,381

2,308

500

480

312

420

1,788

1,329

186

254

240

225

2,217

2,364

333

280

195

270

2,723

1,967

483

408

120

170

2,917

2,059

389

359

100

135

3,150

2,333

315

212

264

1,406

1,129

119

n/a

159

157

1,774

1,796

470

390

4,015

3,346

182

307

WWW.CSNEWS.COM | NOVEMBER 2017 | Convenience Store News 79

Keeping the

Legacy Alive

With two former NACS chairmen in his family, Joseph Sheetz, president and CEO of Sheetz Inc., is ready to take on his new role By Tammy Mastroberte

ith Sheetz Inc. being a family-owned and -operated convenience store chain, Joseph Sheetz — now president and CEO — started working in the industry during the summer months at age 16. He worked a number of office jobs, and even went through standard store manager training, including managing a store for a short period of time. After college, he worked in consulting for seven years, but eventually returned to Sheetz Inc. as the director of compensation and benefits in 1995. “In 1996, I became the executive vice president of finance, running the finance and accounting department and in that job I eventually took over IT and then store development as well, until 2013 when I took over as CEO,” he explains. This year, he adds another title to his resume: chairman of NACS, the Association for Convenience & Fuel Retailing. Convenience Store News caught up with Sheetz to find out what he believes are the biggest challenges facing the c-store industry today, what he is looking forward to most in his new role, and much more. CSNews: What benefits have you received from being part of the NACS Board? Sheetz: More than anything, NACS provides connections, whether to new products or new ideas. Of course, you see that at the NACS Show, but you also see that throughout the year, whether in meetings or just staying in touch with people who are always there to help you address challenges. More connections mean more ideas and that just makes you a better operator. I am honored to work with, and learn from, such a talented group on the NACS Board of Directors. CSNews: What do you believe are the biggest challenges facing the c-store industry today, and what issues should retailers be prepared to take on? Sheetz: Our industry has done such an incredible

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job in elevating the value of convenience that people expect convenience everywhere, which means that retailers in every channel that want to stay in business are now our competition. Everywhere you look, other stores look like us at the register. And not just dollar stores and drugstores — craft stores, auto parts stores, home improvement stores, pet stores all sell snacks and drinks at the register. All retailers are aggressively seeking to redefine convenience to make it work for their operations. That’s something we all should be watching. Look at labor alone. Amazon Go is trying to eliminate it at the checkout and others are adding labor as a way to

Joseph Sheetz started working in the convenience store industry at age 16.

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redefine convenience through delivery of convenience items or even gas. CSNews: What are the biggest trends in the industry right now that retailers should be capitalizing on? Sheetz: Probably more than anything, it’s that the definition of convenience is evolving into something being customized by that specific person at that specific time. It’s not just a convenient location because for some

CSNews: What personal insights or knowledge do you think you can lend to the chairman role and to the industry? Sheetz: Everyone comes from a different background. For instance, I worked as a consultant for a several years before I joined Sheetz’s executive team. But we all really have a lot in common: we focus on culture, on communities and on our customers, all wrapped up in the broad umbrella of convenience. It’s just our personal context that is different. CSNews: In taking on the chairman role, what are you looking forward to the most? Sheetz: I think NACS, and the industry, has taken great steps to redefine what we mean to communities through our reFresh initiative. We signed up — both NACS and Sheetz and other retailers and distributors — to see how we can play a prominent role in improving our betterfor-you sets and improving the wellness of our customers. We are working with other community groups like Keep America Beautiful and, of course, the American

…The definition of convenience is evolving into something being customized by that specific person at that specific time. It’s not just a convenient location because for some people, it’s delivery or the Internet. And it’s not one-stop shopping for a few quick items because some customers want to slow down and relax as part of convenience. So, it’s really about understanding what people want at different occasions and making it as easy as possible for them to choose you as often as possible. people, it’s delivery or the Internet. And it’s not onestop shopping for a few quick items because some customers want to slow down and relax as part of convenience. So, it’s really about understanding what people want at different occasions and making it as easy as possible for them to choose you as often as possible. CSNews: Looking toward the future, what do you think the c-store industry will look like five years from now? Sheetz: This is a question we push each other to answer all the time, and we continue to reinvent ourselves and bring innovation to our industry. In fact, our vision is to create the business that will put Sheetz, as we know it today, out of business. That’s what keeps us on top and keeps us focused on ways to make our business even more successful in the future.

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Red Cross. It is inspiring to see how our industry helped with disaster relief following Hurricane Harvey. I look forward to seeing these initiatives grow and making a difference in our customers’ lives. CSNews: How are you preparing for the chairman role? Sheetz: First off, NACS does a great job preparing you. There is a process to get here and by the time you serve on the board and on the executive committee, you are pretty familiar with how NACS operates. And, of course, I have seen and heard firsthand about the chairmanship from both Steve Sheetz and Stan Sheetz, who served as previous NACS chairmen. I don’t have to wait until some family gathering to get great advice from them — we talk regularly because they are still pretty engaged in our total customer focus at Sheetz.

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A Global

Ambassador

Rahim Budhwani, CEO of Encore Franchises, reflects on this past year as NACS chairman and what he was able to accomplish By Tammy Mastroberte

pending the past year as NACS chairman is not something Rahim Budhwani, CEO of Encore Franchises based in Birmingham, Ala., would have predicted back in 2001 when he “accidentally” started in the convenience store business. His company now operates 12 franchised locations under the Encore banner, but he started out as a computer programmer with a degree in engineering and became a silent partner in a convenience store in 2001. Right after he signed the contract, his partner decided to pull out and he found himself the sole owner with a 10-year oil company contract — and he still had to maintain his day job. “I had to learn the c-store industry, so I would start my day at 4 a.m. to open the store with employees and work until I had to get to my day job, and I was going to school at night. I would Rahim Budhwani got his start in convenience get back to the store to retailing in 2001. close at 11 p.m. and it went on like this for eight months before I decided to dedicate all my time to the store,” he told Convenience Store News. His first interaction with NACS was a flyer that came to one of his stores. He headed to Nashville, Tenn., for his first NACSTech conference, and his involvement continued to grow as he became part of the NACS board and eventually chairman last year. “Being a board member enhanced my scope of knowledge in the industry, and every time I traveled, did presentations at the NACS Show and attended

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events, I brought information back with me that I could share with everyone else,” Budhwani noted. “It’s about the whole industry taking a step forward, not just me. If everyone ups their game, it make the whole industry better in the years to come.” In the below interview, Budhwani reflects on the past year, and what lies ahead for 2018. CSNews: What has the past year as NACS chairman been like for you? Budhwani: It’s been an amazing experience and also very humbling. The NACS association has great respect that goes beyond our industry. NACS is admired across channels and is becoming a global entity moving forward. Being in this role as an ambassador of the industry, you meet so many people in all industries and we share a lot of the same issues. CSNews: Have you focused on any particular areas during your term? Budhwani: As NACS is evolving, working toward what is next and becoming more global, we decided to change the logo to give the powerful message that we are now becoming a global entity, with events in Japan, South America, Europe, and all over the world. I also focused on bringing all the ethnic trade associations out there onto one platform, and making NACS the platform for them. Now, we have a forum to talk about ethnic associations, and they are not left by themselves. That opened up a whole new chapter. I probably wrote the first paragraph of a whole novel to be written after me, but I am proud of that. CSNews: What has been your favorite part of being NACS chairman? Budhwani: The most memorable experience was giving my acceptance speech for becoming chairman on the NACS Show floor with my mom, dad and wife sitting right in front of me.

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CSNews: What industry issues did NACS tackle this year, and what has been the outcome? Budhwani: We have been very active in legislative processes because of issues like menu labeling and fighting those who are trying to take SNAP [Supplemental Nutrition Assistance Program] away from c-stores. That would present a big challenge for people who benefit from SNAP. We also had an important win with maintaining debit fees. CSNews: What are you leaving behind for the new chairman to take over? Budhwani: The industry is currently evolving and, from my perspective, it will be important for NACS to stay in constant touch with small operators because they have the power to do things faster than anyone else, and they are silently changing the industry. We still have 96,000 of them out there. CSNews: What have you learned in the past year that you didn’t know before starting this journey? Budhwani: There is so much, I could write a book on what I learned. I gained this wider lens going to Tokyo and seeing how stores are run there and in Europe and South America. It’s such a big difference. And there are

I focused on bringing all the ethnic trade associations out there onto one platform, and making NACS the platform for them. Now, we have a forum to talk about ethnic associations, and they are not left by themselves. That opened up a whole new chapter. I probably wrote the first paragraph of a whole novel to be written after me, but I am proud of that. waves of what happens there and then in the U.S., so it’s about following that wave. They face similar challenges with labor and bringing families or workforces together. We all work long hours. When I started in my c-store in 2001, I worked 17 hours a day, and I still work that many hours a day. CSNews: What surprised you about your role as NACS chairman? Budhwani: I had expectations, but once you get into the role and see all the events you need to attend and

86 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

Budhwani says being NACS chairman allowed him to meet many new people.

presentations you have to do — I never expected the chairman had to do so much! It takes a lot of work and time away from your business. One of my colleagues said to me, “Don’t start any more businesses this year,” because every year I start something new. He said, “Don’t do it or you will regret it.” And I do regret it! Also, when people talk to you, you have to change your hat from operator to chairman, and I think that is very interesting. Instead of representing one or 10 stores, you are representing 146,000. CSNews: What do you think have been the biggest changes in the c-store industry in the past five years? Budhwani: I think it’s QSR [quick-service restaurant] and food offerings that have changed a lot in c-stores, along with more involvement in local communities. I still don’t have an answer for all the acquisitions and mergers happening. It used to be big companies buying small companies, but now we have big acquiring big, which is fascinating. It’s the same thing on the vendor and manufacturing side. It’s a very interesting time for all of us. CSNews: Looking toward the future, what do you think the c-store industry will look like five years from now? Budhwani: The future is bright. I’m an optimistic guy, and I think it will become more of a destination point, and that is what we need to work on. Each store needs to define itself as a destination, what they are known for, and why people are pulling into their lots. Also, everything has become mobile and people want delivery, so I wouldn’t be surprised if that expanded more in our industry. It’s about how much we are in touch with our consumer, and each market is different. The market in Boston vs. Hawaii is different. Consumers have different wants and needs, but I think we are moving toward c-stores being the known local spots for people to stop. That is what we have to start working toward together as an industry, and I think in the years coming, you will see that trend. I’m already seeing it moving in that direction. CSN

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The

Fighting Four

Breaking down the top legislative issues facing convenience stores today By Tammy Mastroberte

elling fuels alone brings up a host of governmental issues for convenience stores, but when you add expanding foodservice, payments, security and labor to the mix, there are a lot of legislative issues to be monitored and adhered to for today’s c-store retailers. The majority of these issues fall into four major buckets: 1. Fuels — How and what is being sold, and how it’s taxed and labeled. 2. Foodservice — Includes food safety, menu labeling, SNAP benefits, and more. 3. Payments and Security — Includes credit and debit issues, fees, data security and compliance, and EMV transactions. 4. Other — Includes labor, corporate taxes, and healthcare. NACS, the Association for Convenience & Fuel Retailing, is extremely active on all fronts when it comes to monitoring these issues and lobbying on behalf of all convenience stores. The association also counts on the support of retailers to take action when necessary. “We could not have won the battle on the Durbin Amendment and debit/credit fees if it hadn’t been for the huge outpouring of grassroots support from our retailers,” Paige Anderson, director of government relations at NACS, told Convenience Store News. NACS now sends out Action Alerts when it needs help from the retailer community, along with keeping an up-to-date tab on legislative issues on its website. “We’ve created a great online system where it just takes three clicks for retailers to contact their member of Congress on an issue,” Anderson noted. THE FUELS FIGHT

One of the top issues right now is the Renewable Fuel

88 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

Standard (RFS), which provides for the inclusion of increasing volumes of renewable fuel into the marketplace each year. With the convenience store industry selling more than 80 percent of the motor fuels in the United States, any legislation in this area has a big impact. “When amended by Congress in 2007, the Renewable Fuel Standard laid out how much renewable fuel has to be put out into the marketplace each year until 2022, and 2022 is only five years away, so we are watching what is going to happen with it,” said Anderson. Right now, the standard says there needed to be 15 billion gallons of corn ethanol put into the marketplace as of last year, and the proposal for 2018 is the same, she explained. Obligations for 2018 will be finalized by Nov. 30, 2017, and Congress is already reviewing what the standard will look like beyond 2022. “Congress, particularly the House of Representatives, have begun asking stakeholders to meet with them for discussions on what the program should look like, and NACS is included in these,” Anderson said. “We believe it’s important for the program to move away from specific volume numbers to percentages, which will make it work easier.” NACS is looking to get more clarity and help around the issue of misfueling, too. Right now, even if a customer’s vehicle is labeled with the type of fuel it should use, and

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there is labeling at the pump, retailers can be held liable and subject to fines and penalties by the Environmental Protection Agency (EPA) if a customer puts the wrong fuel in their vehicle. NACS does not believe retailers should be held responsible in such cases. “There is also an effort by a small group of merchant refiners to shift the responsibility for compliance of the Renewable Fuel Standard from the refiners, importers and manufacturers to the blender or retailer level, and we don’t want to see that happen,” Anderson added. THE FOODSERVICE FIGHT

When it comes to the foodservice category, there are two top-of-mind issues right now: clarifying menu labeling, and preserving the ability for c-stores to participate in the SNAP program, or Supplemental Nutrition Assistance Program. “Under Obamacare, there was a provision for restaurants to start putting calorie counts on their menus; it was intended for restaurants and fast-food service, and it doesn’t take into account the different and unique footprint of convenience stores,” Anderson explained. “There is a delay in the deadline until May 2018, and we have been communicating with the Department of Health and Human Services, seeking legislation with HR772 to provide flexibility for the c-store industry to meet the requirements.” Currently, the legislation states that a store must have signage where food is offered, but everyone is not like a McDonald’s or other fast-food restaurant where you place an order for food with one menu, she said. In convenience stores, there is often a coffee bar, an iced drink station, a yogurt bar, and a host of other offerings throughout the store. This would require them to put signs all over, and there is not enough room or wall space, Anderson noted. “There is also confusion around the small entity carveout, stating if you have less than 12 stores, you would not have to follow it. Does that mean franchisees, or if you happen to sell ExxonMobil gasoline but are not owned by the company, too? The new legislation will clarify all of this,” according to the government relations executive. As of press time, NACS was waiting for the House of Representatives to schedule a floor vote for the Common Sense Nutrition Disclosure Act, being headed by Cathy McMorris Rodgers (R-Washington) and Tony Cardenas (D-California). The other issue concerning foodservice is the push by some to edge out the convenience store industry

90 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

from participating in the SNAP program. Currently, out of the 154,535 c-stores in the United States, 117,000 participate in the program, representing approximately 45 percent of all retail outlets authorized under the program, according to NACS figures. “The 2014 Farm Bill put forth requirements for participating, but the agency implementing them put in changes that would essentially remove the convenience store industry,” Anderson said. The final rule says convenience stores must stock seven varieties of foods in each of the four staple categories — meat, poultry or fish, bread or cereals, fruits and vegetables, and dairy — as well as at least one perishable food item in three of the categories. Furthermore, c-stores must have three units of every variety — 84 total items — on the shelf. NACS maintains that the definition of “variety” is complicated, plus c-stores only get food deliveries one to two times per week, which makes stocking certain foods and items that are perishable difficult for them. C-stores are also limited on space, unlike supermarkets. Congress did pass a bill for expansion on the term “variety,” and NACS is keeping a close eye on this issue as a new Farm Bill is introduced or any more SNAP reforms. THE PAYMENTS & SECURITY FIGHT

Through the efforts of NACS and others, the industry was successful in fighting off the attempt to take away the debit card reform in place. However, the payments space is always changing, especially with mobile commerce, so this continues to be an ongoing area of focus for the organization, according to Anderson. “The next chapter in the payments space is about security, and we are fighting skimmer breaches at the pump and making changes where necessary to reduce risk, but there is no silver bullet,” she acknowledged, explaining that with the transition to EMV, certification processes by credit card companies to get retailers up and running need to move faster because there is a huge backlog right now. And even with all the money that the c-store industry

is putting out to upgrade to EMV — $10,000 per pump and $9 billion industrywide, according to NACS estimates — the chip only solves part of the security issue, Anderson pointed out. “We need to be allowed to require a PIN because, from a security perspective, it makes a huge difference. Right now, credit cards are not allowing us to do that,” she said. “We are trying to educate policy makers that the chip is not enough to really reduce fraud.” THE FIGHT OVER HEALTHCARE, LABOR & MORE

NACS continues to keep a close watch over any changes in the healthcare system or corporate tax reform and reductions, as President Trump has spoken publicly about three priorities: an infrastructure package, a healthcare package, and a tax package. Additionally, a new rule by the Department of Labor (DOL) changed the laws concerning employees eligible for overtime pay, increasing the salary threshold and requiring businesses to pay overtime for all

“The next chapter in the payments space is about security, and we are fighting skimmer breaches at the pump and making changes where necessary to reduce risk, but there is no silver bullet.” — Paige Anderson, NACS

employees earning $913 a week or less. This issue, as NACS sees it, is that the DOL didn’t consider salary levels in the retail marketplace. A federal district judge in the Eastern District of Texas issued an injunction in a lawsuit brought by 21 state attorneys general challenging the rule. Then, this June, the Trump Administration’s DOL announced it would open a comment period to gather information that can be used to rewrite the rule. This is being monitored by NACS, Anderson said. “Today, c-store retailers need to stay informed and engaged on these issues,” she urged. CSN

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EXPERT’SVIEW NEW Horizons

Heeding the Painful Lessons of Charlottesville It’s time to talk about race in society — and the workplace

he sight of self-identified white nationalists marching in Charlottesville, Va. — and the death of a young female counter-protestor — struck a nerve for millions of Americans. It also caused some soul-searching among companies and corporate leaders who usually shy away from controversy. By Sarah Alter, It’s time to talk about race in society — Network of and the workplace. Because as NEW said Executive Women in August, “The events of Charlottesville remind us that the fight for equality is far from over.” “Tapestry: Leveraging the Rich Diversity of Women,” a 2014 NEW report, put numbers to something we already knew: Multicultural women experience the workplace much differently than their white female (and male) colleagues. Recent research confirms that nonwhite Americans of both genders perceive race differently than whites. Eighty-five percent of black Americans told the Public Religion Research Institute that “black people face a lot of discrimination in the United States.” But only 66 percent of Hispanics, 64 percent of those mixed-race, 55 percent of Asian-Pacific Islanders and 47 percent of white Americans agreed with them. These vast differences in perception can have big

implications for your diversity training, leadership development, talent management — and your company. When it comes to race in the workplace, young employees in your company may think very differently than your senior executives, especially if they are white. The Public Religion Research Institute found that more than 60 percent of young white adults (aged 18-29) believe blacks face “a considerable amount of discrimination,” while just 43 percent of white seniors (aged 65 or older) do. These differences may come into play during recruitment, evaluations, reorganizations, promotions and firings. THE COST OF SILENCE

Just because your team isn’t talking about race doesn’t

Convenience Store News is pleased to continue this series of exclusive educational columns by the Network of Executive Women (NEW), coinciding with the annual CSNews Top Women in Convenience awards given out each fall. Fifty female managers, TOP WOMEN IN executives and directors who work CONVENIENCE in the convenience store industry were honored in our 2017 program. In addition to being a presentation sponsor for the Top Women in Convenience program, NEW and CSNews have partnered to develop this series of columns directed at helping corporate leaders drive more inclusive company cultures.

92 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

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mean they’re not thinking about it. A March Gallup Poll revealed that 42 percent of Americans now worry “a great deal” about race relations in the United States, up from 17 percent in 2014. As retail and consumer goods companies seek to leverage diversity and attract, retain and advance the best talent, we must openly address race relations at work. According to a report by the Center for Talent Innovation, nearly four in 10 black professionals feel “it is never acceptable” at their companies to speak out about their experiences of racial bias. A similar percentage of Asian-Americans (36 percent) and more than one-fourth of Hispanics and white professionals agree. Employees who feel silenced about racial discrimination are more likely to walk out (or check out). Black professionals who were not comfortable talking about bias were three times more likely to intend to leave their employers in the next year compared to black colleagues who did feel comfortable talking about bias (21 percent vs. 3 percent, respectively), and they were 13 times more likely to feel disengaged (13 percent vs. 1 percent, respectively).

As retail and consumer goods companies seek to leverage diversity and attract, retain and advance the best talent, we must openly address race relations at work. As one white woman who participated in the Center for Talent Innovation’s focus groups said, “Leaders think a response would distract us from the business, but actually the silence is more distracting. When there’s an elephant in the room, it makes a company look cowardly not to address it in some way, even if it’s only internally.” THREE STRATEGIES

Kira Hudson Banks of Saint Louis University offers three strategies for addressing race at work. Her game plan, published in Harvard Business Review last year, can be effective for retailers big and small. Her strategies are: 1. Make inclusion a long-term investment Standalone trainings and one-off dialogues — though currently considered best practice — are too quickly forgotten and too easily written off as “nice to do,” limiting a company’s ability to foster sustained workplace

climate change, Banks says. You may have good intentions, but one-time diversity training sessions scream, “We feel we should do this, but it’s not a priority.” 2. Embrace and reframe conflict Conversations about race can get tense, fast. “Fear of being seen as ‘confrontational’ for either white or minority employees hinders open dialogue,” Banks says. “Instead of getting surprised by conflict, expect it, and lean on management and facilitation skills that include listening, being color-cognizant rather than color-blind, responding non-defensively, being open to learning, and self-reflecting about how personal and social identities can influence these interactions.” 3. Be proactive about inclusion efforts “Every manager should be willing to proactively ask employees to talk about how they feel race has influenced their experience at the company, rather than wait for a crisis situation,” Banks advises. She suggests a few starter questions to ask employees: • Have you experienced any barriers to success at this company related to your race? • Have you noticed any other obstacles in the way to your success? • Is there anything we can do better to facilitate your success and sense of inclusion? • In terms of mentorship and promotion, do you sense that those happen without bias? A word of warning: When you strip away the Band Aid, be prepared for what you find underneath. By talking to your employees about how they perceive their company, their leaders and their peers, you’ll get a better picture of the underlying injury and how to heal it. CSN Sarah Alter is president and CEO of the Network of Executive Women, Retail and Consumer Goods, a learning and leadership community representing more than 10,000 members, 950 companies, 100 corporate partners and 21 regional groups in the United States and Canada. Learn more at newonline.org. Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.

WWW.CSNEWS.COM | NOVEMBER 2017 | Convenience Store News 93

STORESPOTLIGHT Fuel City

Fueled by a Dream

John Benda’s personal mission is to foster positive memories for his Fuel City customers By Danielle Romano

“W

here dreams come true” is a phrase that has long been associated with Walt Disney World. However, it is Fuel City founder and CEO John Benda’s mission to take this adage and make it the standard for his travel centers across the Dallas/Fort Worth area. For Benda, this mission started in the 1980s. At that time, he was operating a small grocery store and decided he wanted to make a memory for customers who visited so that they wouldn’t forget his brand. After operating progressively bigger stores for 19 years, Benda held on to this mission as he built the first Fuel City “of his dreams” from the ground up in Dallas in December 1999. Following the flagship location, he opened a second travel center in Mesquite, Texas. Today, the company’s third and most recent Fuel City travel center in Haltom City, Texas, carries out Benda’s mission to the “tenth degree.” The location is a continued extension of the founder and CEO’s personal task to create a place where customers, visitors

and tourists alike can create a memory. “It’s still in my gut to make it fun and make it entertaining,” he told Convenience Store News. “Although ‘Where dreams come true’ is known in Disney, we’re making it applicable for truck stops and convenience stores. It’s chic and fun, and we want people to create a positive memory and see the creation of positive dreams coming true when they visit a Fuel City location.” WILD ATTRACTIONS

Spanning nearly 12,000 square feet, the Haltom City Fuel City opened Dec. 23, 2016, and stays true to its home-state roots. Coined as “Texas in a nutshell,” the travel center dons a Western theme — complete with a menagerie of farm animals like buffalo, zebras, camels and longhorns. “Since we’re in Texas, I wanted people to see what the Dallas area looked like before it was a big metropolitan area. Before the hustle and bustle of the city, it

Wildlife is an attraction at the new Fuel City and at the chain’s two existing locations.

94 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

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STORESPOTLIGHT Fuel City

was rolling pastures of farmland where longhorns and buffalo roamed,” Benda said. “It’s fun for families to see what parts of Texas looked like before they were big cities.” Farm animals are an attraction at all three Fuel City locations. Even though obtaining a permit for them and the upkeep takes “tremendous” effort — costs range from $3,000 to $4,000 a month — Benda said it’s worth it because his customers love the animals. The taqueria offers five Inside the store, the Western theme comes alive varieties of tacos, quesadillas through the use of cedar wood and mounted animal and burritos. heads on the walls, including longhorn, buffalo and other steers. Western music plays throughout the travel center, interrupted at times with advertisements about dif“Although ‘Where dreams ferent features offered at the come true’ is known in Disney, store. On Fridays, a country Western singer comes into we’re making it applicable for the Haltom City store during truck stops and convenience lunchtime and performs live. “I’m just trying to do stores. It’s chic and fun, and things that are fun and difwe want people to create a ferent and that will bring people in the store,” Benda positive memory and see the explained, noting that he creation of positive dreams does something similar at his Dallas flagship store with live coming true when they karaoke. He tested karaoke visit a Fuel City location.” at the Haltom City location, — John Benda, Fuel City but it didn’t get as much of a response as it does in Dallas. SAY YES TO TACOS

In addition to being known for its Western theme and free-ranging farm animals, Fuel City has built a strong following for its proprietary taco offering. According to Benda, selling tacos was a new concept that was slow to start the first two years, but by co-branding it as a taqueria with the travel center, the concept caught on. The taqueria has since become one of Fuel City’s main attractions. “When I wear my Fuel City T-shirt out around town, people stop me and say, ‘I love Fuel City! I love your tacos!’ It always makes me feel good,” Benda shared. As part of the Fuel City uniform, all shirts have sayings like, “Say No to Drugs and Yes to Tacos” and “I Love the Smell of Tacos in the Morning” on the back of them. The taqueria offers five varieties of tacos, quesadillas and burritos, including: beef fajita; chicken fajita;

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picadilla, which is ground beef with fresh diced potatoes; slow-roasted barbacoa; and pastor, a spicy pork. All of the food made at the taqueria is prepared fresh onsite around the clock. Providing a unique convenience to Haltom City’s

STORESPOTLIGHT Fuel City

taqueria are two pickup windows. The windows give customers the ability to order their taqueria fare from the front patio without having to come into the travel center. “Of course, you always want to get the customer in the store, but this is really unique. We like offering that convenience to customers and it creates a lot of activity at the front of the store,” Benda said. The taqueria windows remain open all night long. This gives customers the ability to enjoy the same fresh food at 3 in the morning that they would at 3 in the afternoon. “I highly recommend doing a proprietary food [offering] that’s 24 hours to draw customers to you and develop brand loyalty,” Benda advised. “There’s not many places open late at night that are safe. So I think that if you have good food and you’re open late, it will catch on over time. It happened with us.” Another signature Fuel City food offering is “Elotes,” or “street corn.” Calling the program “smashingly successful,” the chief executive said the travel center sells corn on the cob and cups of corn topped with butter, hot sauce, cheese and more from a cart in front of the store. Initially, Fuel City tried to

sell hot dogs in front of the store, but was only selling about six a day. “Here in Texas, a cup of corn is really successful,” he said. Fuel City’s Haltom City travel center also offers The Original Fried Pie Shop franchise. The store prepares fresh fried pies from dough made from scratch all day in-store. The program includes fresh dessert fruit pies, savory meat pies, and breakfast pie options like bacon, egg and cheese, offered daily. Among Fuel City’s other amenities are: indoor and bar seating; an enclosed patio with built-in rollup doors for year-round dining; outdoor picnic tables; fueling lanes (gasoline and diesel) for 32 vehicles; and a state-of-the-art, full-service car wash. The store also sells beer, souvenirs, a variety of local snacks, and bakery items that are brought in fresh daily. RIDING INTO THE FUTURE

Although it’s challenging in the Dallas/Fort Worth market to find the 10 acres of land needed to build a Fuel City travel center for an affordable amount, Benda maintains that the chain will remain local. “Because we’re so well-known in this part of the country, and we love the DFW Metroplex because it’s home, we’ll continue to focus on the Dallas/Fort Worth area for now and we’ll grow out from there,” Benda explained. Opening one new location a year for the past few years, the travel center operator is now preparing for the opening of its fourth location in Saginaw, Texas, in December. This will be the largest Fuel City to date at 14,000 square feet and feature 36 fueling lanes. It will also be the first location to pilot the Little Caesar’s Express franchise. Simultaneously, Fuel City is in the market for its fifth travel center location. At 66 years old, Benda is “looking to leave a legacy.” He is slowly phasing out of making corporate decisions at Fuel City, with his son-in-law Joseph Bickham taking the helm as president. Benda says he is “really excited” about the future of Fuel City and how the travel centers are performing in the Dallas/Fort Worth area. “I want to keep building and see how many I can build,” he said. CSN

A state-of-the-art, full-service car wash is among the amenities at the new Fuel City.

98 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

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OUTABOUT &

Spotlighting major industry events

Topping the Charts

McLane shows off new private label brands at its Music City tradeshow By Angela Hanson

gainst the backdrop of Music City, convenience distributor McLane Co. Inc. invited convenience store operators to “Top the Charts” and live the theme of the 2017 McLane National Trade Show, held in Nashville, Tenn., in late September. Following up last year’s debut of its newly renamed private label line CVP (Consumer Value Products), which was its biggest launch to date, McLane showed off expanded CVP offerings on this year’s trade show floor. With eating occasions blurring together more than ever before, the company is crossing over snacks and confectionery in a new CVP brand called Divinely Sweet. This “snack-fection” line of on-the-go indulgence items launches with four decaMcLane National dent, single-serve items: Milk Trade Show Chocolate Peanut Butter Cups, Nashville, Tenn. September 19-21, 2017 Sea Salt Caramel, Chocolate Grahams, and Toasted S’Mores Chocolate Grahams. More varieties will become available in the future, according to McLane’s Teresa Voelter, general manager of CVP. McLane also wants to help c-stores become a more useful stop-in for consumers in need with an expanded line of CVP Health items, including cough and cold remedies, personal care items, and more. In tandem, McLane announced a permanent partnership between itself and Children’s Miracle Network (CMN) Hospitals. One cent from each CVP Health unit and case of YumBees candy sold will go to the nonprofit organization. The CMN logo now appears on the items’ packaging. Retailers who stopped by the CVP booth also had the opportunity to weigh in on the future of Work Fare Professional, the other new CVP brand that debuted at the show. This line includes back-of-house supplies such as cleaning chemicals, foodservice gloves, and carryout bags. An onsite survey measured retailers’ preferred

100 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

delivery system for chemical cleaners: dissolvable tablets, squeezable bottles or tear-open pouches. Previously known as Salado Sales, CVP celebrates its 25th anniversary this year. More new products are expected to launch before next year’s trade show, but the distributor has been focusing on upgrading many of CVP’s existing offerings first, Voelter said. IN THE KITCHEN

Meanwhile, at the McLane Kitchen booth, the company once again demonstrated the capabilities of how it can enhance convenience stores’ foodservice programs by cooking items onsite in the functioning kitchen. Recipes were created using products from suppliers available through McLane Kitchen. Retailers looking to expand or improve their coffee and hot beverage programs at any level found numerous options to explore at the show. McLane is partnering with Kerry Convenience to design a quarterly limited-time offer (LTO) hot dispensed calendar for 2018, capitalizing on consumers’ increased desire for flavor variety and seasonal offerings. In the first quarter of the year, the LTO will be Mint Fudge Cocoa; Q2 is Smoked Butterscotch Cappuccino; Q3 is Raspberry Crème Brulee Cappuccino; and Q4 is Cinnamon Hazelnut Cappuccino. The Kerry booth had a three-carafe testing area where visitors could try three kinds of coffee at budget, mid-tier and premium levels. While it’s possible to have a successful hot dispensed beverage program at any of the levels, the area was designed to demonstrate the differences between them through in-person experience. CSN

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ADINDEX Advance Pierre Foods ..................................................................................29 Altria Group Distribution Company ...........................................................2-3 Anchor Packaging ........................................................................................5 Anheuser Busch ...........................................................................................13 Autofry/MTI Products ..................................................................................69 Blu ECigs .......................................................................................................83 Califia Farms .................................................................................................63 Cash Depot....................................................................................................16 Cookies United .............................................................................................75 Danone Wave ...............................................................................................67 Dyla/Forto Coffee .........................................................................................65 E Alternative Solutions ................................................................................56-57 E & J Distillers ..............................................................................................59 Ferrero ...........................................................................................................33 F.D.A. ..............................................................................................................46-47 FGX International .........................................................................................115 Forte Products ...............................................................................................45 GSK Group ....................................................................................................85 Hughes Network System,LLC......................................................................116 J&J Snack Foods Corp..................................................................................97 John Middleton.............................................................................................25 Kretek ............................................................................................................41 Krispy Krunchy Chicken..............................................................................71 Liggett Vector Brands ..................................................................................11 Loomis ...........................................................................................................87 Mars Wrigley Confectionery .......................................................................7 McKee/Little Debbie ....................................................................................99 McLane Co. ...................................................................................................15 Micro Matic ...................................................................................................17 MilkPep ..........................................................................................................37 Paragon .........................................................................................................18 Perfetti van Melle .........................................................................................73 Premier Manufacturing................................................................................61 Procter & Gamble .........................................................................................81 RJ Reynolds Tobacco Company .................................................................9 Saputo Cheese USA Inc. ..............................................................................55 Smart Food ....................................................................................................102 Subway..........................................................................................................101 Swedish Match .............................................................................................51 Tillamook Country Smoker .........................................................................19 TPE 2018 .......................................................................................................89 Tyson .............................................................................................................21 Universal Merchant Services ......................................................................Outsert Wenzel’s Farms ............................................................................................74 White Castle .................................................................................................95

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Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright © 2017 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

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GETTINGTOTHECORE

What Fuels Consumers’ Fuel Purchases? One factor above all else impacts c-store shoppers’ path to the pump

espite the buzz over electric and hybrid vehicles, motor fuels remain big business for U.S. convenience stores, with c-stores selling approximately 80 percent of the motor fuels purchased in the nation. To get inside the minds of fuel purchasers, EnsembleIQ Research, sister company of Convenience Store News, recently conducted a survey among consumers who visit a c-store at least once a month, own a vehicle and purchased motor fuels in any channel

Wednesday is the day of the week Americans are most likely to drive

73.1%

(Percent responding once a week) Convenience store with gas station Gas station with no convenience store Highway truck stop Warehouse club Supermarket Other Base: 501 regular c-store patrons who purchased motor fuel (in any channel) in the prior month Source: Convenience Store News Market Research, 2017

Sunday is the day of the week Americans are least likely to drive

The percentage of drivers who belong to at least one fuel rewards loyalty program

in the last month. One interesting finding is that despite today’s cheaper fuel prices, consumers are still seeking out the lowest price at the pump and are willing to drive out of their way for it.

In an average month, how often do you purchase motor fuels from the following?

87.4%

65.3% How far out of the way would you drive for lower-priced motor fuel? 1-2 miles 3-4 miles 5-9 miles 10 miles or more Would not go out of my way for lower-priced motor fuel

49.7% 29.7% 13.0% 23.3% 24.9% 33.3% Males are more likely than females to purchase motor fuels from supermarkets and highway truck stops.

29.9% 36.3% 15.4% 5.8% 12.6%

Base: 501 regular c-store patrons who purchased motor fuel (in any channel) in the prior month Source: Convenience Store News Market Research, 2017

Consumers aged 65 and older are far less willing to drive out of their way for lower-priced fuel.

Please rank the following factors in terms of how important each is in your decision to purchase motor fuels. Cheapest price and convenient location

Want to collaborate and share expertise with your peers? The Council of Retail Experts (CORE) is an exclusive network of convenience store retail leaders who do just that. For more information on how to join CORE, please visit www.cvcoreinsights.com.

significantly outrank Cheapest price other factors in fuel Convenient location purchasing decisions. Has a brand I prefer Membership in loyalty program Offers exact product/formulation I want (diesel, alternative, etc.) Offers environmentally friendly fuel alternatives

1.9 2.1 3.8 3.9 4.4 4.8

*A rank of 1 indicates most important, 2 indicates second most important, and so on. Base: 501 regular c-store patrons who purchased motor fuel (in any channel) in the prior month Source: Convenience Store News Market Research, 2017 Survey respondents sourced via ProdegeMR, a leading provider of data collection solutions for the research industry. Visit www.prodegemr.com for more info. 114 Convenience Store News | NOVEMBER 2017 | WWW.CSNEWS.COM

LEVERAGE THE ESTABLISHED EQUITY OF THESE BRANDS TO DRIVE SALES AND PROFITS.

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EDITOR’S NOTE

The Flavor of Change

Convenience foodservice offers more opportunity than ever, but retailers have to carefully consider and plan out how to take advantage

wenty years ago, hungry customers would stop by convenience stores for a hot dog with traditional toppings, a cup they’d fill with one of a small number of fountain soda options, and perhaps pick up something fried for on the side. There were very few expectations for freshness, quality or variety. Flash forward two decades and c-store operators have raised the bar, transforming the industry’s image from a foodservice last resort to a foodservice destination — one where consumers will debate which brand has the tastiest menu. It’s not a passing fad. The 2017 Convenience Store News Foodservice Study (see page 6) shows the category saw yet another year of growth in sales and profits last year, with small operators and chains having reason for continued optimism as they prepare for the future. Other research into consumer perceptions and behaviors confirms that when, where and how they buy food is changing, and c-stores are more than able

Yes, consumers are more willing to view c-stores as a foodservice destination, but what specific items should a retailer offer them? Should the menu be broad to offer choice, or small and specialized to reflect expertise?

to be part of the mix with quick-service restaurants, fast-casual chains, and other foodservice outlets. The opportunity is obvious; the best way to capitalize is a bit harder to identify. Yes, consumers are more willing to view c-stores as a foodservice destination, but what specific items should a For comments, please contact retailer offer them? Should Angela Hanson, Associate Editor, the menu be broad to offer at (201) 855-7619 or choice, or small and special- ahanson@ensembleiq.com. ized to reflect expertise? People desire new flavors and diverse toppings, but which ones does the local market prefer? Should customizable products be self-serve or made-to-order? With limited space and funds, what should be prioritized in program investment — and how should employees be trained? Even ambitious retailers with specific foodservice goals can find themselves overwhelmed by so many important considerations, where answering one question might prompt several others. The good news, though, is that while developing a quality foodservice program that’s capable of competing within and outside the convenience channel will never be easy, c-store retailers big and small have many options for assistance and advice. The practical information and expert opinions contained in this guide are just a taste of what’s available. It’s an exciting time for the industry, and with so many c-stores just at the beginning of their foodservice journey and more experienced retailers pushing the limits of what convenience foodservice can be, the next 20 years might be the most exciting of all.

WWW.CSNEWS.COM | Guide to Foodservice 3

CONTENTS

EDITORâ&#x20AC;&#x2122;S NOTE

3 | The Flavor of Change

Convenience foodservice offers more opportunity than ever, but retailers have to carefully consider and plan out how to take advantage. COVER STORY

6 | A Steady Heat

Our exclusive Foodservice Study shows continued sales and profit increases in this competitive category, with even more opportunity ahead. CONVENIENCE FOODSERVICE & BEVERAGE EXCHANGE HIGHLIGHTS

12 | Exchanging Insights

The 2017 CSNews Convenience Foodservice & Beverage Exchange event brought industry stakeholders together to tackle the $34.5B foodservice category.

4 Guide to Foodservice | WWW.CSNEWS.COM

Give them a tasty reason to hit the brakes.

A Subway® sandwich shop is a great fit

COVER STORY

By Angela Hanson

6 Guide to Foodservice | WWW.CSNEWS.COM

Cover Story

oodservice proved itself to be a solid growth opportunity for yet another consecutive year in 2016, as both sales and profits increased across the convenience store industry. Small operators and large chains alike reported resoundingly positive results, showing that c-stores of any size can benefit from improving their prepared food and dispensed beverage offerings. According to the exclusive 2017 Convenience Store News Foodservice Study, foodservice sales increased for 81.1 percent of the total convenience store industry in 2016. This was down from the 92.9 percent who reported a sales increase in 2015, but still overwhelmingly positive, as just 10 percent of c-store operators reported a decline and 8.9 percent reported no change. Every chain (11-plus stores) that participated in this yearâ&#x20AC;&#x2122;s study reported that it saw its foodservice sales increase in 2016. This figure even outperformed the 89.3 percent who said last year that they expected their foodservice sales to increase in 2017. Looking ahead, retailer optimism for the foodservice category persists. Nearly nine out of 10 c-store operators surveyed this year (87.8 percent) expect to end 2017 with foodservice sales gains for the year, while 10.1 percent believe their sales will stay the same, and an extreme minority of

Foodservice Sales TOTAL

1-10 STORES OPERATED

11+ STORES OPERATED

2016 Increase Decrease Stay the same

81.1% 10.0 8.9

75.4% 13.0 11.6

100.0% 0.0 0.0

2017 (expected) Increase Decrease Stay the same

87.8% 2.2 10.0

85.5% 1.4 13.0

95.2% 4.8 0.0

Source: Convenience Store News Market Research, 2017

Foodservice Profits TOTAL

1-10 STORES OPERATED

11+ STORES OPERATED

2016 Increase Decrease Stay the same

69.7% 14.6 15.7

67.6% 16.2 16.2

76.2% 9.5 14.3

2017 (expected) Increase Decrease Stay the same

83.0% 2.3 14.7

82.1% 1.5 16.4

85.7% 4.8 9.5

Source: Convenience Store News Market Research, 2017

WWW.CSNEWS.COM | Guide to Foodservice 7

COVER STORY

2.2 percent expect to see their sales down this year compared to last year. As foodservice profits also improved in 2016, convenience store retailers’ bottom lines are faring well, too — 69.7 percent reported their foodservice profits increased in 2016 vs. 2015; 15.7 percent said profits stayed the same; and 14.6 percent reported a decrease. Optimism about profits matches optimism about sales. When asked what they expect to see at the end of 2017, 83 percent of retailers expect their foodservice profits to have increased year over year, 14.7 percent expect profits to stay the same, and just 2.3 percent expect lower profits. Of course, quality foodservice programs require investment, which can offset profits if not carefully balanced. In terms of food costs, 70.9 percent of all respondents reported that their costs increased in the past year. While c-stores of all sizes wrestle with this issue, chains typically have more resources available to them and thus are less likely to see food costs rise.

Foodservice Sales by Daypart TOTAL

Breakfast (6 a.m. – 8:59 a.m.) Morning snack (9 a.m. – 10:59 a.m.) Lunch (11 a.m. – 1:59 p.m.) Afternoon snack (2 p.m. – 3:59 p.m.) Dinner (4 p.m. – 6:59 p.m.) Evening snack (7 p.m. – 9:59 p.m.) Late night (10 p.m. or later) Don’t know

26.1% 11.8% 34.8% 10.0% 16.1% 6.4% 4.9% 28.6%

1-10 STORES OPERATED

24.0% 12.0% 37.5% 10.5% 18.2% 6.5% 5.3% 28.1%

11+ STORES OPERATED

31.9% 11.5% 27.1% 8.7% 10.6% 6.4% 4.4% 30.0%

Source: Convenience Store News Market Research, 2017

Percentage of Foodservice Sales: Prepared Food TOTAL

Chicken Breakfast sandwiches Hot dogs Pizza Hamburgers All other sandwiches Snacks/appetizers All other prepared food Other roller-grill items Bakery Salads Soup Don’t know

20.7% 16.4% 14.5% 13.9% 13.8% 13.1% 12.9% 11.4% 8.1% 7.6% 4.1% 4.0% 35.8%

Source: Convenience Store News Market Research, 2017

8 Guide to Foodservice | WWW.CSNEWS.COM

1-10 STORES OPERATED

25.7% 15.6% 11.8% 13.6% 15.3% 15.0% 14.5% 12.8% 6.2% 7.1% 3.6% 4.9% 31.9%

11+ STORES OPERATED

8.0% 18.6% 19.1% 15.0% 10.5% 7.6% 8.3% 6.8% 11.2% 8.6% 5.4% 2.3% 45.0%

While 72.9 percent of the small operators (1-10 stores) surveyed report higher food costs, only 65 percent of chains say the same. DAYPART MAKES A DIFFERENCE

Busy consumers often turn to c-stores for the very convenience that is in the channel’s name, but they are willing to carve out downtime for a meal or snack in the middle of the day; not just before or after work. Industrywide, lunch (11 a.m. to 1:59 p.m.) captures the largest percentage of foodservice sales at 34.8 percent, followed by breakfast (6 a.m. to 8:59 a.m.) at 26.1 percent. However, there is a notable disparity here between small operators and larger chains, with the latter drawing in more morning foodservice customers and fewer lunch and dinner foodservice customers. Small operators report that 37.5 percent of their foodservice sales come at lunch compared to larger chains at 27.1 percent. In contrast, small operators say 24 percent of their foodservice sales come at breakfast, compared to 31.9 percent for larger chains. The dinner daypart (4 p.m. to 6:59 p.m.) remains in a distant third place, generating 16.1 percent of foodservice sales for the total c-store industry. Though, small operators again see more sales during this period at 18.2 percent compared to 10.6 percent for larger chains. Breakfast and lunch were also the dayparts that saw the biggest increase in foodservice sales in the past year, with both listed by 31.2 percent of c-store operators as being the daypart with their most sales growth in the category. Larger chains outpaced small operators in growth at breakfast (45 percent vs. 26.3 percent, respectively) and lunch (35 percent vs. 29.8 percent). Meanwhile, small operators showed incremental growth in dayparts such as the morning snack (9 a.m. to 10:59 a.m.), afternoon snack (2 p.m. to 3:59 p.m.) and late night (10 p.m. or later), whereas foodservice sales growth at larger chains was flat during these dayparts. Predictably, breakfast and lunch are the dayparts that c-store retailers predict will show the biggest growth at the end of 2017 (27.3 percent and 24.7 percent, respectively). Larger chains are more optimistic about breakfast daypart growth, while small operators express more optimism about growth of the evening snack daypart (7 p.m. to 9:59 p.m.). POPULAR PRODUCTS & PROMOTIONS

The findings of the 2017 CSNews Foodservice Study show that hot and cold prepared foods (including

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COVER STORY

Percentage of Foodservice Sales: Hot Dispensed Beverages TOTAL

Coffee (including flavored) Cappuccino/specialty coffee Hot chocolate All other hot dispensed beverages Hot tea Don’t know

65.1% 24.1% 11.7% 6.5% 4.2% 36.2%

1-10 STORES OPERATED

66.2% 24.5% 12.2% 5.1% 3.8% 30.6%

11+ STORES OPERATED

61.5% 22.8% 10.4% 8.4% 4.9% 50.0%

Source: Convenience Store News Market Research, 2017

Percentage of Foodservice Sales: Cold Dispensed Beverages TOTAL

Fountain carbonated beverages All other cold dispensed beverages Fountain non-carbonated beverages Fountain sports drinks Don’t know

78.4% 21.7% 13.3% 10.9% 33.3%

1-10 STORES OPERATED

81.5% 26.5% 12.3% 11.5% 27.0%

11+ STORES OPERATED

70.9% 13.6% 14.8% 10.2% 45.0%

Source: Convenience Store News Market Research, 2017

sandwiches, pizza, salads, soups, bakery, and other items) make up 54.7 percent of total foodservice sales, on average, followed by cold dispensed beverages at 26.7 percent, hot dispensed beverages at 21.7 percent, and frozen dispensed beverages at 13.6 percent. In the prepared food segment, chicken is tops in the pecking order. While it is the most popular prepared food type overall, it is especially popular for small operators (generating 25.7 percent of their prepared food sales) compared to the larger chains (generating 8 percent of their prepared food sales). The next most popular prepared food types overall are breakfast sandwiches, hot dogs, pizza and hamburgers — all products that are quick and easy to consume on the go. In the hot dispensed beverages segment at c-stores, brewed coffee makes up nearly two-thirds of sales (65.1 percent), followed by cappuccino/specialty coffee (24.1 percent) and hot chocolate (11.7 percent). In the cold dispensed beverages segment, there’s an even more dominant leader: carbonated soft drinks (CSDs) command 78.5 percent of sales, followed by all other cold dispensed beverages (21.7 percent) and non-carbonated beverages (12.2 percent). C-stores with baristas on staff to make made-toorder dispensed beverages are still few and far between, with only 12.2 percent of respondents employing them. Likely due to the increased training and labor costs required, larger chains are significantly more likely to

10 Guide to Foodservice | WWW.CSNEWS.COM

have baristas, with 30 percent reporting they do compared to only 5.6 percent of small operators. Competition in the foodservice category is fierce and only seems to be intensifying as other channels take notice of the evolution happening in the c-store industry. C-store retailers still see other convenience stores as their primary competitor for foodservice dollars (cited by 63.3 percent of operators), but restaurants and other types of retailers are growing threats. The lines between competitive channels have blurred and there’s no going back — 45.6 percent of the c-store operators surveyed cite chain sandwich shops such as Subway or Quiznos as their biggest foodservice competitor; 35.4 percent name McDonald’s; and 26.6 percent point to grocery stores. That grocer figure is likely to increase in the coming years as grocery stores increasingly cater to consumers who want to buy food for immediate consumption. Not surprisingly, in tandem with the intensifying competition, c-store industry foodservice promotions are on the rise, with 44.6 percent of the total industry reporting an increase in the number of foodservice promotions they’ve run in the past year. Only 5.4 percent said their number of foodservice promotions decreased; 35.1 percent said they stayed the same. Larger chains were more likely to say they increased their foodservice promotions (75 percent), while small operators were more likely to keep them at the same rate (44.4 percent). However, the number of both small operators and larger chains that decreased their foodservice promotions was very small (5.6 percent of small operators and 5 percent of larger chains). To promote their foodservice programs, c-store operators most frequently use social media (43.2 percent), radio spots (37.8 percent), and loyalty programs (35.1 percent). Larger chains, though, favor proprietary mobile coupons/mobile apps (65 percent) above all other promotional methods, and they are significantly more likely to do any promotional activity. All larger chains participating in the study reported using at least one kind of media for promotions, while 22 percent of small operators said they’re not currently using any. Foodservice promotions that the convenience store industry finds to be most successful include bundling/ meal deals (cited by 43.8 percent), price discounts (38.4 percent), and buy-one-get-one (BOGO) deals (28.8 percent). Despite ranking third for the total industry, BOGO deals emerged as the most successful foodservice promotion for chains (60 percent). CSN

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Exchanging Insights

The 2017 CSNews Convenience Foodservice & Beverage Exchange event brought industry stakeholders together to tackle the $34.5B foodservice category By Angela Hanson & Melissa Kress

s with all categories in the convenience channel, foodservice has a lot of moving parts. From fresh-prepared foods to graband-go items to hot and cold dispensed beverages — and numerous segments in between — getting foodservice right can be tricky. And as competition heats up and other areas of the c-store struggle, it arguably has never been more critical to get it right. The 2017 Convenience Store News Convenience Foodservice & Beverage Exchange event, held in September, brought together leaders in the foodservice and beverage categories, both on the supply side and the retail side, to ask and answer two key questions: • What are the critical “pain points” convenience store retailers need to overcome in order to grow their foodservice business? • What consumer shopping behaviors around eating and drinking do c-store retailers need to know more about to meet their customers’ needs? The significance of the foodservice and beverage categories is staggering — the convenience channel rang up $34.5 billion in foodservice sales in 2016. In addition, 39 percent of millennials and Gen Xers said they last visited a c-store to purchase a cold fountain drink. With these stats in mind, the two-day Convenience Foodservice & Beverage Exchange examined: today’s hottest food and beverage trends and what they mean for the future; consumer shopping behaviors that are driving c-store foodservice purchases and continued growth; food safety, spoilage and labor challenges; strategies to beat the competition; and new areas of focus like health and wellness, ethnic foods, drive-thru, and overall innovation. During this year’s event, attendees also took time to recognize CSNews’ 2017 Foodservice Leader of the Year,

12 Guide to Foodservice | WWW.CSNEWS.COM

Editorial Director Don Longo presents Rich Jacobs of RaceTrac with the Beverage Leader of the Year award (top) and Ryan Krebs of Rutter’s with the Foodservice Leader of the Year award (bottom).

Ryan Krebs, director of foodservice at Rutter’s Farm Stores. Krebs is a former executive chef who joined the York, Pa.-based convenience retailer four years ago. Also during the event, Atlanta-based RaceTrac Petroleum Inc. was recognized as CSNews’ inaugural Beverage Leader of the Year. Sharing the honor was Steven Turner, executive director of food programs and offers — in charge of hot, cold and frozen dispensed beverages — and Rich Jacobs, director of packaged beverages as well as tobacco. The Convenience Foodservice & Beverage Exchange, which took place Sept. 12-13 at the Donald E. Stephens Convention Center in Rosemont, Ill., also included boardroom briefings, a Solution Center, and speed networking between retailers and suppliers.

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The Future of Convenience Foodservice: iGen

drinks, and chicken items. he core convenience store demographic “Loyalists are more likely to buy three items or skews male and iGen. Known by many more,” she added. names, the iGen generation is also someWhen it comes to innovation in foodservice segtimes referred to as Gen Z, Centennials and ments, true loyalists want: Founders. The oldest members of this emerging gen• Pizza: personal size; delivery eration are 20 years old. • Coffee: flavored hot coffee; loyalty program “Even though millennials get a lot of attention, the • Roller grill: value meals; breakfast items next generation is the core customer,” Caleb Bryant, • Salad: fruit salads; salad bars; pasta salads senior foodservice analyst at Mintel, said while presenting the keynote at the Convenience Foodservice & Beverage Exchange on Sept. 12. DRIVING THE BUY Why iGen? Because they are frequent More than 90 percent of true loyalists say snackers and key consumers for beverage convenience store ready-to-eat food saves programs — attracted by customization them time vs. roughly 75 percent of general and flavor. c-store consumers. Other core convenience channel One in five consumers want kiosk ordering consumers are Hispanics, parents and in a c-store, according to Mintel’s research. urban dwellers. “We see c-stores at the forefront of Even with convenience foodservice sales innovation when it comes to kiosk ordertopping $34 billion, a lot of negative coning,” Bryant said, pointing to retailers such Amanda Topper of Mintel. sumer perceptions still exist around the as Sheetz Inc. and Wawa Inc. category. For example, according to Bryant, While convenience is “extremely imporconsumers think: tant” to a convenience store operator, it is a • The items contain too many artificial ingredients; point of entry. “Quality is the differentiator,” he explained. • It’s only good for cheap meals; and Quality centers around visual cues: • It often looks unappealing. • The store is clean. On the flip side, 31 percent of consumers would go • Food and drinks are made fresh. out of their way for c-store food, Mintel research found. • Food and drinks look appealing. Where the opportunities lie are with the 40 percent • Items are made with fresh ingredients. of consumers who are not making a foodservice pur• Items come in high-quality packaging. chase currently. Their reasons? They typically don’t “We found that focusing on quality issues can visit a c-store; they only visit for gas; or they don’t change the perception of food,” he said. think about buying those items in a convenience store, Bryant explained. COMING DOWN THE PIKE Looking ahead, convenience store retailers need to keep their eyes on two key areas: innovation and the TRIED & TRUE competitive landscape. Taking a deeper dive into the demographics, Mintel New concepts from other retail channels should be found that c-store “true loyalists” — those who are true fans of c-stores — are foodservice buyers and they on convenience operators’ radars, notably Amazon’s Amazon Go c-store concept that is testing in Seattle, skew male, millennial, urban, Hispanic, and from the and Dollar General’s DGX c-store concept in Pacific and Mid-Atlantic census regions. Nashville, Tenn. What are they buying? Pizza, according to Amanda “We’ve seen a lot of retailers who are not in this Topper, associate director of foodservice research at space enter the space,” Topper said. Mintel. They are also more likely to buy salads, tea

14 Guide to Foodservice | WWW.CSNEWS.COM

e=mc2 KRUNCHY=

50,000 00

Focus on Innovation, Find Menu Success

stages: inception, adoption, proliferation and ubiquity, hen convenience store retailers with c-stores typically offering items in the latter two develop their foodservice programs, stages. The first two stages offer excitethey can always turn to ment, while the second two offer larger the tried-and-true hot volume. C-stores must determine what dogs, sandwiches and fried snacks their foodservice strategy is before decidc-stores are known for. But to stand out ing which stages to make their focus. as a foodservice destination, retailers need One size doesn’t fit all; both small to keep pace with trends and changing operators and large chains would benefit consumer tastes. from taking a hyper-local perspective and Ethnic food is one major trend to understanding how people eat differently capitalize on — and it’s not going away, by the metro area where they’re located. according to Datassential’s Erin Murray, Erin Murray of Datassential. For example, Chicago, Miami and San who presented the “Menu Innovation for Antonio all have completely different highC-store Gains” breakout session during the indexing foods, ranging from Italian beef to key lime Convenience Foodservice & Beverage Exchange. pie to chalupa. “Ethnic food is a huge megatrend,” Murray said. Murray also pointed out that “stories matter” when A desire for ethnic foods of many different origins it comes to food. Cracker Barrel’s Campfire Chicken is significantly on the rise, partially due to the changisn’t a complicated menu item, but the foil-wrapped ing demographics of America. A higher percentage of chicken and vegetables bring happy memories of sumthe younger generations is ethnic, compared to baby mertime camping trips to consumers’ minds, contributboomers, and younger consumers show a higher intering to the item’s incredible success. est in ethnic cuisines such as Korean, Vietnamese and Finally, Murray advises retailers to be mindful Indian than older consumers do. of the high frequency of food and beverage snack However, star menu items aren’t just of ethnic oriconsumption. In a study, more than nine in 10 congin. They are unique items that capture high levels sumers (94 percent) reported they had a snack food of purchase intent — and achieving both is no small “yesterday,” with the average number of snack foods feat. Recent examples of star menu items include eaten being four or five, and 91 percent had a snack ampm’s Agua Fresca Strawberry Guava beverage and beverage, with the average number of drinks being Wendy’s Bacon Sriracha Fries. three or four. As c-store retailers seek out the best prospective Additionally, it isn’t just the obvious snacks that menu additions, it’s important they understand the difare being eaten as snacks. While 31 percent said they ference between fads and trends. Some attributes that love fruit as a snack and 26 percent named salty Datassential identifies as being characteristic of fads crunchy snacks or ice cream, food items that are include exhibiting hyper growth and filling a limited typically part of a full meal were also named, includtrue need, while longer-term trends are likely to fill ing pizza (25 percent), French fries (22 percent), an underlying need and show a regional pattern of chicken wings/nuggets (20 percent) and burgers/slidgrowth, often driven by restaurants. ers (18 percent). For trends, the menu adoption cycle goes through

16 Guide to Foodservice | WWW.CSNEWS.COM

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What C-stores Can Learn From On-Premise Restaurant Behaviors

to improve their foodservice sales. n the hyper-competitive world of While not typically associated with retail, businesses are fighting it out c-stores, chalkboards — whether they for every scrap of market share. But are placed on the sidewalk outside or in the boxing ring of the convenience hung up inside the store — can drive market, foodservice fights above its weight, incremental visits, expand scope, increase according to John Oros, senior director awareness, and promote profitable items. of on-premise category management for Chalkboards can also effectively promote Anheuser-Busch. limited-time offerings. While the business model for conveOros shared examples of multiple chalknience foodservice differs from restaurant John Oros of Anheuser-Busch. boards with eye-catching and lighthearted operators seeking to drive on-premise context that focuses on particular desired items. sumption, c-store retailers can learn valuable He advised the retailers in attendance to “be lessons from best practices and challenges in intentional in how you use them.” the restaurant world. In his general-session presentation Menus are also critical to increasing overall check at the Convenience Foodservice & Beverage Exchange, or basket size, and retailers should make sure their Oros shared tracked shopping behavior data showing menu includes all the products and flavors they offer. that restaurants and c-stores have the same shoppers. “People don’t know about it if it’s not on the menu, The overall away-from-home eating experience Oros said. “Don’t know, won’t order.” is evolving, with the rise of delivered meal kits and He advised c-store operators to break the trend of grocerants as recent examples of change, but it is parwhat appears where on the menu, moving to the front ticularly important that c-stores stay competitive in items they want to push, regardless of category, and the category. Recent data shows foodservice makes up suggesting food pairings as the “fancy version” of a 21.7 percent of sales but 35.2 percent of gross profit. combo. While c-stores are less likely to have full printTo achieve success, convenience operators have to ed menus, menuboards can accomplish similar goals. always keep the name of their industry in mind. Retailers should also be mindful of the influence “Convenience stores must always deliver on convetheir employees have. Whether they are servers waiting nience,” Oros said. “It is their reason for being.” tables or store employees behind a counter, if properly While it is less critical for restaurants to lean in on the attribute of convenience, they share five key issues, trained, they can have a strong influence on foodservice sales. Active recommendations can steer customers or “pain points,” with c-stores: toward purchasing those items retailers would most • Growing traffic; like to sell, or just establish trust and credibility with • Increasing average basket size/check size; the customer by demonstrating product knowledge. • Being innovative; By taking active steps to stay relevant, c-stores will • Server training/labor; and be able to continue growing their foodservice opera• Managing commodity costs. tions, said Oros, noting that “the foodservice world is Accordingly, there are numerous traffic drivers resnot all equal.” taurants currently use that c-stores can likewise adopt

18 Guide to Foodservice | WWW.CSNEWS.COM

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Gaining the Edge in a Hyper-Competitive Market

Dzwonczyk acknowledged that this is “easy he foodservice space is to say, probably a little tougher to do.” increasingly complex. With By focusing on price, quality, speed innovation driving differentiation and variety, c-stores will target the facand competitive advantage, tors that consumers consider to be the convenience store operators will need most important parts of selecting a to find ways to get an edge, accordc-store to purchase a meal, ahead of locaing to AlixPartners’ Eric Dzwonczyk, tion and convenience. who presented a general session entitled On the technology front, mobile loyalty “What C-stores Should Do to Win in programs are critically important, parthe Hyper-Competitive Foodservice & Eric Dzwonczyk of AlixPartners. ticularly with millennials and members of Beverage Market” during the Convenience Generation X. Foodservice & Beverage Exchange event. Approximately 70 percent of consumers are “There’s a lot of competition, and it’s competition also interested in delivery, but most prefer to order from really strong players,” he said. directly from a c-store and schedule the delivery, C-store operators should consider pursuing four rather than go through a third-party mobile service parallel strategies, Dzwonczyk recommended: like UberEats. 1. Focus on enhanced execution of foodservice proAlong with making improvements and expandgrams — Improving value products, quality and ing, c-store operators need to focus on growth and number of food options, especially for breakfast cost management to win in the current environment. and lunch. Cost management and productivity need to be a focal 2. Improve the customer experience — New offerpoint at the enterprise level, Dzwonczyk said. On an ings to drive throughput, including delivery and individual store level, improved management of hourly drive-thru; develop an integrated digital platform. labor through staffing levels can yield significant cost 3. Growth strategies, both organic and through savings, which could be banked or used to fund foodacquisition — Continue to build new, differentiservice or second-order initiatives. ated units in selective markets, keeping in mind Other winning strategies for growth may include: that many markets are heavily saturated. tiered pricing to maximize profits in high demand/low 4. Develop comprehensive corporate productivity price elasticity regions; the use of digital media tools to programs — Commodity strategies across food drive customers toward more in-store purchases; using and non-food categories, and focus on supply data analytics to develop more custom solutions based chain excellence. on consumer preferences and behavior; and rigorous One challenge c-store retailers face is that many testing of new and different formats. Cost strategies can consumers still view snacking as the primary reason to include team-based service with targeted metrics and an visit. On the positive side of that, though, the opportuemphasis on “lean” culture, among other plans. nity exists to “trade up” consumers to other dayparts —

20 Guide to Foodservice | WWW.CSNEWS.COM

Are You Ready to Add a Drive-Thru?

wo deceptively simple questions arise when a handful of brands — such as Parker’s, Swiss Farms, convenience store retailers consider addSquare One Markets and Farm Stores — have added ing a drive-thru to their store: Could they? them, and few of them focus solely on foodservice. Should they? But foodservice is the future of convenience, The answer to both may be “yes” — but only if according to Cook, with the category accounting for retailers follow best practices and approach drive-thrus 22 percent of sales and 35 percent of gross profits with a willingness to tackle their challenges and take in 2016. With average profit margins as much as 20 advantage of their opportunities. During his “How to percent higher for foodservice items than for general Compete with Fast-Food Drive-Thrus” presentation at merchandise, and with more c-store chains looking the Convenience Foodservice & Beverage past fuel to emphasize their food and bevExchange, Thomas Cook, principal at Kingerage offerings, now may be the time to Casey, walked attendees through what they seriously consider adding a drive-thru. can expect to face. For c-store drive-thrus to work, the operIn the current state of drive-thrus, ator must not view adding one as merely quick-service restaurants (QSRs) are vet“gluing” it onto an existing store. Driveerans, having used them on a grand scale thrus require increased staffing, as well as since the 1970s. Drive-thrus represent 50 new store designs and logistics to accommopercent to 70 percent of QSRs’ total busidate it. Retailers may also err by trying to ness. However, drive-thru strategies have sell everything through the drive-thru, rather Thomas Cook of King-Casey. not stood still, with fast-casual restaurants than focusing on foodservice and beverages. such as Starbucks and Panera recently seeWhen considering whether they could ing the growth potential. add a drive-thru, Cook advises retailers to consider Drive-thru best practices of fast-food leaders — questions such as whether one fits with the core against whom c-stores compete — include: brand values; whether they are willing to invest the • A willingness to invest in improvement; time and money necessary to succeed; who within the • Taking the time to do it right; company will champion the effort; and what the suc• Demonstrating continuous reinvention and cess metrics will be. improvement; and As for the question of whether they should add • The same design and operations focus on the a drive-thru, he noted that c-stores with drive-thrus drive-thru as on the interior. can outperform those without, and the convenience Accuracy and speed of service are key, but there’s of drive-thrus is something today’s consumers want. more to drive-thru success. Cook pointed to In-N-Out Additionally, profits from drive-thru foodservice sales Burger and Starbucks as standouts in superior customcan surpass in-store general merchandise sales. er service and a unique brand experience, respectively. C-store operators that do plan to add drive-thrus When lines get long, In-N-Out Burger employees should learn from fast-food leaders and “copy shamewill bring tablets to car windows to take face-to-face lessly,” Cook said. They must also take the time to orders, while Starbucks has begun to provide the inteplan carefully; start small and scale up as they learn rior customer experience to drivers by adding a video from experience; start with a laser-focus on foodserbarista at the drive-thru menu screen. vice; and be willing to make the investment in store For c-stores, drive-thrus are in their infancy. Only layout, operations and personnel.

22 Guide to Foodservice | WWW.CSNEWS.COM

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The Fountain of C-store Sales

he numbers speak for themselves: The fountain is where it’s at when it comes to getting consumers through the door. According to a 2016 consumer survey by Q1 Consulting LLC, 39 percent of millennial consumers said they last visited a c-store for a cold fountain drink, 19 percent said it was for a hot dispensed drink, and 20 percent said it was to buy a frozen dispensed drink. The numbers were similar for Gen Xers, at 39 percent, 25 percent and 17 percent, respectively. The real question, however, Tim Powell of Q1 Consulting. is how does a retailer turn that fountain visit into a larger basket ring, said Tim Powell, vice president, senior analyst at Q1 Consulting. Speaking at the Convenience Foodservice & Beverage Exchange, Powell noted that consumers are making more beverage purchases in the convenience channel overall. Specifically, 42 percent of consumers said they are buying more beverages than last year vs. 15 percent who said they are buying less. Taking a close-up look at dispensed beverages, Q1 Consulting found that Generation X tends to be the most loyal consumers and the most frequent. Notably, 53 percent of Gen Xers visit a c-store two to three times a week specifically to purchase a dispensed beverage. This surpasses millennials (44 percent) and baby boomers (32 percent). These numbers put the beverage generation on campus, where, according to Q1 Consulting, the top graband-go offerings are: prepackaged sandwiches, readyto-eat hot foods, fountain beverages, freshly brewed coffee, and handheld baked goods.

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Bundling complementary prepared food items with dispensed beverages is one way to drive consumers who enter a c-store to quench their thirst to purchase other categories as well. Attendees took part in general sessions, concurrent educational breakouts, and targeted discussion groups.

So, how can a retailer maximize sales? Bundling complementary prepared food items with dispensed beverages is one way to drive consumers who enter a c-store to quench their thirst to purchase other categories as well, Powell said. “Bundling purchases with coffee will continue to be a successful strategy for retailers,” he explained.

In addition, the one advantage convenience stores have over other food retailers is the 2 p.m. to 5 p.m. snack period. However, c-store operators can use their beverage and fountain programs to bring consumers in during other dayparts, too, Powell pointed out. Having well-known beverage brands helps drive sales, Powell added, except for coffee, which has been “a real growth area for private label.” CSN

26 Guide to Foodservice | WWW.CSNEWS.COM jdf007799_CSN_Nov_Ad.indd 1

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