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Convenience Store News May 2022

W H AT ’ S N E X T I N C O N V E N I E N C E A N D F U E L R E TA I L I N G

Standing at the Crossroads of Foodservice & Technology FOOD-FOCUSED CONVENIENCE RETAILERS MUST PURSUE TECHNOLOGICAL INNOVATION IF THEY WANT TO COME OUT ON TOP.

ARE DELIVERY & PICKUP SERVICES HERE TO STAY? Volume 58, Number 5

M AY 2 0 2 2

CSNEWS.COM

• • •

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VIEWPOINT

Not So Random Thoughts on C-store Foodservice Technology, inflation, and the meaning of convenience Convenience Store News’ annual Foodservice Issue, so let me share a few thoughts about this complex, enormously important, and potentially hugely profitable part of the c-store business.

THIS IS

• As pointed out in our cover story (see page 32), the success of a c-store foodservice program is tied tightly to delivering an exceptional guest experience. To many consumers, that experience is dependent on utilizing the right technology. From mobile apps to loyalty programs to the ability for storelevel employees to accurately and efficiently take and prepare food orders, technology is getting further and further entwined into the foodservice experience. Technology is also critical behind the scenes. Here is where digital data and artificial intelligence help the retailer build a foodservice program, execute it and evaluate it. Everything done in food operations today is enabled by technology. Technology allows foodservice operators to better engage with their customers and employees in a fast, efficient and profitable manner.

• There’s no bigger food story right now

than the rising rate of inflation. As CSNews reported last month, inflation is at the highest level it has been in 40 years. Retailers will not be able to pass rising costs on to consumers

indefinitely. And, as price inflation continues to rise, consumers will be more focused than ever on value. A recent report from research firm AlixPartners says that the current supply disruption and inflationary challenges are likely to endure for months at least. They think there will be increased consumer sensitivity around value. The report notes opportunity to drive supply chain benefits to ease margin pressure by leaning into strategic partnerships with foodservice vendors, taking advantage of changes in consumer behavior, capitalizing on the rising demand for sustainability, improving store-level forecasting, and embedding more agility into the supply chain. For more information on this report, contact the author Molly Harnischfeger at mharnischfeger@alixpartners.com.

• I’m convinced that in this post-pandemic era,

c-store customers’ expectations have dramatically altered. The rise of work-from-home, stay in and order delivery, and heightened preference for fresh food and better hygiene are pushing convenience channel retailers to reevaluate their foodservice operations.

Foodservice directors from across the country will converge in Savannah, Ga., next month to discuss strategies to meet consumers’ changing expectations of convenience. If the future of foodservice is important to you, don’t miss this year’s Convenience Foodservice Exchange. To register, go to csnewscfx.com. For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or dlongo@ensembleiq.com.

EDITORIAL EXCELLENCE AWARDS (2013-2022)

EDITORIAL ADVISORY BOARD

2021 Jesse H. Neal National Business Journalism Award Finalist, Best Infographics, June 2021

2018 Jesse H. Neal National Business Journalism Award Finalist, Best Editorial Use of Data, June 2017

2013 Jesse H. Neal National Business Journalism Award Best Single Issue, October 2012

2013 Jesse H. Neal National Business Journalism Award Finalist, Best Profile, August 2012

2020 Eddie Award, Folio: magazine Business to Business, Retail, Series of Articles, September 2019 2018 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Website Business to Business, Retail, Full Issue, October 2017 Business to Business, Editorial Use of Data, June 2017 2017 Eddie Award, 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

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

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

4 Convenience Store News C S N E W S . c o m

2020 Trade Association Business Publications Intl. Tabbie Awards Honorable Mention, Best Single Issue, September 2019 2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

Laura Aufleger OnCue Express

Ray Johnson Speedee Mart

Chad Beck Core-Mark

Ruth Ann Lilly GPM Investments LLC

Edward Davidson Ed Davidson & Associates (7-Eleven Inc., retired) Robert Falciani ExtraMile Convenience Stores Jim Hachtel Eby-Brown Co. Chris Hartman Rutter’s

Vito Maurici McLane Co. Inc. Matt Paduano Lakeport Markets Jonathan Polansky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger StrasGlobal

CONTENTS MAY 22

VOLUME 58 N UMB ER 5

COVER STORY PAGE 32

26 79 FEATURES

DEPARTMENTS

COVER STORY

VIEWPOINT

32 Standing at the Crossroads of Foodservice & Technology Food-focused convenience retailers must pursue technological innovation if they want to come out on top.

4 Not So Random Thoughts on C-store Foodservice Technology, inflation, and the meaning of convenience.

FEATURE

64 The New Normal Consumer demand for delivery and pickup services continues to grow.

10 CSNews Online

22 New Products SMALL OPERATOR

26 Seriously Fresh Neon Marketplace focuses on high-quality foodservice in New England. TWIC TALK

77 Melanie Isbill, RaceTrac The 2021 TWIC Woman of the Year believes in looking for every opportunity to grow. STORE SPOTLIGHT

79 Revamping the Original Daiquiris To-Go Store Eskimo Hut evolves with The Station, a full-service convenience store with fuel. INSIDE THE CONSUMER MIND

98 A Loyal Bunch C-store shoppers are slightly more devoted to a particular location vs. a specific brand.

6 Convenience Store News C S N E W S . c o m

THE NATURAL CHOICE

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CONTENTS MAY 22

VOLUME 58 N UMB ER 5

8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631 (773) 992-4450 Fax: (773) 992-4455 www.csnews.com

BRAND MANAGEMENT Vice President/Group Brand Director Paula Lashinsky (917) 446-4117 plashinsky@ensembleiq.com EDITORIAL Editorial Director

Don Longo dlongo@ensembleiq.com

Editor-in-Chief

Linda Lisanti llisanti@ensembleiq.com

Senior News Editor

Melissa Kress mkress@ensembleiq.com

Senior Editor

Angela Hanson ahanson@ensembleiq.com

Managing Editor

INDUSTRY ROUNDUP

CATEGORY MANAGEMENT

12 Wawa’s Growth Strategy Turns Toward the Southeast

FOODSERVICE

14 Extended Real Estate Pact Will Boost GPM’s M&A Power 16 Eye on Growth 16 Fast Facts 18 Retailer Tidbits 20 Supplier Tidbits TECHNOLOGY 68 Decoding the Top C-store Tech Trends Frictionless checkout, robotics, cryptocurrency and artificial intelligence take center stage.

46 Striking the Right Balance Convenience stores can find dispensed beverage success at the intersection of smart innovation and excelling at the basics. TOBACCO

52 Less Risky Business? Since 2019, the FDA has authorized 15 tobacco products to be marketed as modified risk. CANDY

58 The Outlook Is Sweet Candy category growth is expected through at least 2026, powered by product innovation.

Danielle Romano dromano@ensembleiq.com

Associate Editor

Sanestina Hunter shunter@ensembleiq.com

Contributing Editor

Renée M. Covino reneek@aol.com

Contributing Editor

Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS Associate Brand Director & Northeast Sales Manager (774) 212-6455

Rachel McGaffigan rmcgaffigan@ensembleiq.com

Associate Brand Director & Western Sales Manager (330) 840-9557

Ron Lowy 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 AUDIENCE List Rental (914) 309-3378

MeritDirect Marie Briganti

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PROJECT MANAGEMENT/PRODUCTION/ART Creative Director (973) 607-1320

Colette Magliaro cmagliaro@ensembleiq.com

Advertising/Production Manager (773) 992-4418

Ed Ward eward@ensembleiq.com

Art Director (973) 607-1321

Lauren DiMeo ldimeo@ensembleiq.com

CORPORATE OFFICERS Chief Executive Officer

Jennifer Litterick

Chief Financial Officer

Jane Volland

Chief Human Resources Officer

Ann Jadown

Executive Vice President, Content

Joe Territo

Executive Vice President, Production

Derek Estey

CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor

The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Subscription rates: Subscription rate in the United States: $125 one year; $230 two year; $14 single issue copy; Canada and Mexico: $150 one year; $270 two year; $16 single issue copy; Foreign: $170 one year; $325 two year; $16 single issue copy; Digital One year, digital $87; two year, $161. Periodical postage paid at Chicago, IL 60631, and additional mailing addresses. Copyright 2022 by EnsembleIQ. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or information storage and retrieval system, without permission in writing from the publisher. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295. POSTMASTER: send address changes to Convenience Store News, 8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631.

8 Convenience Store News C S N E W S . c o m

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MOST VIEWED NEW PRODUCT

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Nitro Pepsi

Menu Simplification: Where Less Is More A simplified menu can drive down operational cost by lessening some work in the kitchen and reducing product ingredients and inventory levels. It can also help operators meet the convenience needs of today’s c-store customers through improvement in speed of service, writes Tom Cook, principal of King-Casey. Menu simplification is the critical first step toward optimizing your menu. In its most basic form, menu simplification results in a pareddown menu through the reduction of SKUs. In other words, fewer menu items that your staff must prepare. To ensure you do this correctly, it is crucial when simplifying your menu that the process be driven by consumer insights and data. By doing so, menu item decisions will be based on knowledge and analytics.

10 Convenience Store News C S N E W S . c o m

Pepsi reimagines the cola experience with the introduction of Nitro Pepsi, the first-ever nitrogen-infused cola. Smaller bubbles, infused with nitrogen, create a smooth, creamy texture made possible by a unique widget placed at the bottom of every can. This marks the first time this type of widget technology, often seen in beer and coffee products, is being applied to the cola category, according to PepsiCo. Nitro Pepsi comes in two varieties: Draft Cola and Vanilla Draft Cola. Both varieties are available in single-serve cans and four-packs. PepsiCo Inc. Purchase, N.Y. (800) 433-2652 pepsi.com

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INDUSTRY ROUNDUP

Wawa’s Growth Strategy Turns Toward the Southeast The retailer’s goal is to operate a total of 1,800 convenience stores by 2030 to double its footprint within the next decade, Wawa Inc. is zeroing in on growth in the Florida Panhandle region, along with adjacent markets in South Alabama.

WITH PLANS

The convenience store retailer “is actively looking” into sites for new stores in the Florida markets of Pensacola, Panama City and Tallahassee, along with Mobile, Ala. Wawa currently plans to open up to 40 convenience stores in these markets. The first of these locations are expected to welcome customers in 2024. “Over the years, we’ve been delighted to hear from so many people from so many areas who are interested in having a Wawa closer to home. We couldn’t be more excited to bring Wawa’s one-of-a-kind brand and offering to these new markets in the near future,” said John Poplawski, vice president of real estate for Wawa. “We look forward to expanding beyond our current reach and serving these new markets with our quality fresh food and beverages and, as always, our deep commitment to the communities in which we operate.”

12 Convenience Store News C S N E W S . c o m

This summer will mark the 10th anniversary of Wawa’s entry into Florida. The retailer welcomed customers at the first store, across from SeaWorld Orlando, on July 18, 2012. Over the past decade, Wawa has expanded throughout the state and will open its 250th store in the Sunshine State later this year. In all, Wawa employs almost 10,000 associates in Florida. Along with new markets, Wawa plans to grow in its existing markets and is slated to open 54 new stores in 2022. It also plans to enter new adjacent markets over the next few years. CEO Chris Gheysens recently told the Philadelphia Business Journal that the retailer is preparing for its “most aggressive growth” in the company’s history. As a result, Wawa will just about double its store count in the next decade. Today, the Wawa, Pa.-based chain operates roughly 965 stores throughout Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Florida and Washington, D.C. It wants to operate approximately 1,800 locations by 2030, eventually cutting the ribbon on up to 100 stores a year.

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INDUSTRY ROUNDUP

Extended Real Estate Pact Will Boost GPM’s M&A Power The Arko Corp. subsidiary adds one year to its agreement with Oak Street Real Estate Capital IT LOOKS LIKE GPM Investments LLC’s growth streak is going to continue.

The wholly owned subsidiary of Arko Corp. extended its existing $1-billion agreement with Chicago-based real estate investment firm Oak Street Real Estate Capital, a division of Blue Owl Capital, by one year. The extended agreement provides aggregate availability in the amount of $1.15 billion during the second year of the term. The two companies originally signed a one-year agreement in May 2021, in which Oak Street agreed to purchase and lease real estate to Richmond, Va.-based GPM or its affiliates. Under the agreement, Oak Street purchases and leases to Arko the underlying real estate associated with acquisitions of convenience stores and gas stations, while Arko owns and operates the related acquired businesses. To date, Oak Street has purchased $253 million of real estate under the initial agreement.

14 Convenience Store News C S N E W S . c o m

Another $130 million of real estate is expected to be purchased through GPM’s recently announced acquisition of the fleet fueling card lock and distribution assets of Quarles Petroleum Inc. This partnership boosts Arko’s and GPM’s financial flexibility and purchasing power and, as a result, allows GPM to be more aggressive with its M&A strategy. “Working with Oak Street has given us significant dealmaking flexibility,” said Arie Kotler, president and CEO of Arko. “We plan to continue our highly successful acquisition model with even more creative solutions for sellers, who we believe recognize that we are an acquirer of choice because of our proven strategy of preserving strong local brands while closing deals at highly attractive multiples.” GPM has made 20 acquisitions since 2011. Its planned purchase of Quarles Petroleum is expected to close in the second quarter of this year.

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INDUSTRY ROUNDUP

Eye on Growth

Circle K Stores inked a franchise development agreement with convenience store operator TA&S. The partnership will bring nine new Circle K locations to the Charlotte, N.C., area over the next five years. Alimentation Couche-Tard Inc., the parent company of Circle K, rebranded 181 locations to the Circle K fuel brand in the third quarter of its 2022 fiscal year. This brings the yearto-date total to 381 locations. TravelCenters of America Inc. completed the acquisition of two travel centers for $45 million. The Petro Raphine and TA Lexington travel centers in Virginia have been franchise locations since 2011.

These additions will double Foxtrot’s footprint in the region and extend its delivery range

Love’s Travel Stops is now serving customers in Newport, Tenn., and Ripley, N.Y., thanks to two new travel stops that opened in early March. These locations add a combined 164 truck parking spaces to Love’s network. Foxtrot plans to open four new convenience stores within the District of Columbia, Maryland and Virginia region by the end of 2022. The expansion will mark the chain’s entry into Maryland.

Clark Oil Co. Inc. acquired the convenience store assets of Laurel Oil LLC d/b/a Rapid Express. The deal also included Shellbranded distribution assets.

FAST FACTS

36.9

Billion

Store brand dollar sales grew 1 percent in 2021 to a record $199 billion across all U.S. retail channels.

Nearly six in 10 motorists said they would make changes to their driving habits or lifestyle if the cost of gas rose to $4 per gallon.

— Private Label Manufacturers Association (PLMA)

— AAA

16 Convenience Store News C S N E W S . c o m

Candy sales hit an all-time high in 2021 as the total confectionery category reached $36.9 billion in retail sales. — National Confectioners Association

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INDUSTRY ROUNDUP

Retailer Tidbits

slices, Yobe frozen yogurt, and smokeless tobacco products.

7-Eleven Inc. added its proprietary restaurant concepts to two Speedway stores in Ohio. The stores in the greater Cleveland and Columbus markets are the first to offer Laredo Taco Co. and Raise the Roost Chicken & Biscuits. BP entered into a global strategic convenience delivery partnership with Uber Technologies. Through a new pact, BP aims to bring the delivery service to more than 3,000 of its locations globally by 2025. Rutter’s expanded its fuel offering with premium diesel. The enhanced product is available at locations selling auto diesel and high-speed truck diesel throughout Pennsylvania, Maryland and West Virginia. GATE Petroleum Co. launched a new loyalty program. My GATE Rewards features frequent buyer clubs for beverages, pizza

18 Convenience Store News C S N E W S . c o m

Upon the customer’s arrival, the app notifies the gas station attendant so that someone can assist them.

CITGO is improving its fueling experience for drivers with disabilities. Through the fuelService mobile app, CITGO customers who need assistance can find nearby gas stations that offer help. Wesco Inc. launched an online electronic benefits transfer offering that lets Supplemental Nutrition Assistance Program (SNAP) recipients use their benefits online. The option is available at Wesco’s 55 c-stores in western Michigan. GPM Investments LLC formed a strategic partnership with Sbarro, the Original New York Pizza. The pact will bring new Sbarro restaurants to four Village Pantry store locations in Indiana.

INDUSTRY ROUNDUP

Supplier Tidbits

The company was originally slated to complete the spinoff in the second half of this year, at the earliest.

Altria Group Inc. signed its first-ever Virtual Power Purchase Agreement. The pact is part of the company’s goal to achieve 100 percent renewable electricity by 2030.

offering five limited-edition bags and a new version of an iconic baseball song.

Swedish Match suspended its plan to separate its cigar business. The decision by its board of directors was prompted by regulatory uncertainties facing cigars.

Sbarro plans to open more than 100 new company and franchise locations through the rest of 2022. It has established franchise relationships with GPM Investments LLC, EG America and TravelCenters of America Inc.

22nd Century Inc. and Circle K are piloting VLN cigarettes at 150 stores in the Chicago area. VLN cigarettes contain 95 percent less nicotine than conventional cigarettes. PepsiCo Inc. plans to be Net Water Positive by 2030, aiming to replenish more water than the company uses. Efforts include new technology to recover more than half of the water used in its potato chip manufacturing. Frito Lay North America’s Cracker Jack brand introduced Cracker Jill to celebrate women in sports. The Cracker Jill brand is

22_0862_Convenience_Store_News_MAY Mod: April 14, 2022 2:40 PM Print: 04/14/22 3:32:38 PM page 1 v7

Togo’s sandwich brand entered the convenience channel with the opening of a new location inside a c-store in Modesto, Calif. The nontraditional buildout operates within a Union 76 gas station.

Republic Brands won a major legal fight against counterfeiters. A federal jury awarded the provider of rolling papers and smoking accessories $11 million in damages from Gabsons Novelties and its owner Raj Solomon. Information Resources Inc. and The NPD Group signed a definitive merger agreement. The new combined company will offer a view of total retail purchasing and consumption trends powered by analytics.

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2. Hostess Boost Jumbo Donettes

Hi-Chew introduces the Fantasy Mix, featuring three new flavors fans have been waiting for, according to the company. The Fantasy Mix flavors are Rainbow Sherbet, made with layers of raspberry, lime and orange flavors; Blue Hawaii, made with notes of citrus and hints of pineapple; and true to flavor Blue Raspberry. Available in whimsically designed, colorful packaging, Hi-Chew Fantasy Mix is currently being sold in peg bags at 7-Eleven and Speedway locations nationwide, with wider distribution planned for later this year.

Hostess Brands expands its doughnut lineup with the rollout of caffeinated Hostess Boost Jumbo Donettes. They are available in two decadent varieties: Chocolate Mocha and Caramel Macchiato. Each hearty doughnut contains 50 to 70 milligrams of caffeine, or slightly less than the amount in one cup of coffee. Hostess Boost Jumbo Donettes come in 2.5-ounce single-serve packages for a suggested price of $2.49. Hostess Brands Inc. Lenexa, Kan. hostesscakes.com

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3. Dogfish Head 90 Minute IPA Single-Serve Cans Dogfish Head Craft Brewery’s 90 Minute IPA is now available in 19.2ounce single-serve cans. The continually hopped, 9-percent ABV Imperial IPA rounds out the company’s lineup of single-serve options that previously focused on lower-ABV beers. The addition of 90 Minute IPA in single-serve cans leverages two current growth trends within the convenience store marketplace: Imperial IPAs and craft singles, according to the brewer. Dogfish Head Craft Brewery Milton, Del. dogfish.com

5. Paytronix Handoff Paytronix Handoff, a new functionality in the Paytronix Order & Delivery platform, makes it easy for retailers to publish a menu of items out to the various delivery aggregators, and then manage inbound orders through a single tablet or point-of-sale (POS) system. It provides c-stores with complete control over how items are viewed, described and priced regardless of which channel those items appear, including DoorDash, Uber Eats, Postmates and Grubhub. Handoff works with the most popular POS systems and leading third-party digital delivery platforms to eliminate the need to continually check multiple tablets for information; digitally connect third-party aggregators with internal POS systems and store operations; and provide a single point of entry for all online orders as they come in. Paytronix Systems Inc. Newton, Mass. paytronix.com/platform/order-delivery

22 Convenience Store News C S N E W S . c o m

4. BIC Cutting Edge Lighter Series BIC’s latest special-edition lighter series helps consumers get their point across in style. Sick of shouting “You’re on Mute!” during video calls? Just flash your lighter from the refreshed Cutting Edge series. This is just one of the trendy designs in the lineup, which also features such sentiments as “Go With the Flow” and “Get a Life.” The lighters in this series have a suggested retail price of $2.19 each. All BIC Maxi Lighters are long-lasting, reliable, and 100 percent quality inspected. BIC USA Inc. Shelton, Conn. us.bic.com/en_us

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6. White Claw Hard Seltzer Passion Fruit Passion Fruit is the newest flavor addition to the White Claw Hard Seltzer line. It will replace Mango in the second edition of the White Claw Variety Pack, which also includes Watermelon, Lemon and Tangerine varieties. Crafted through the brand’s proprietary BrewPure process, White Claw Hard Seltzer Passion Fruit offers consumers a clean, balanced and refreshing taste that features a combination of sweetness and the right amount of tartness found in the popular tropical fruit, according to the maker. White Claw Seltzer Works Chicago whiteclaw.com

7. Rich’s Gluten Free Seasoned Cauliflower Pizza Crust & Flatbread Rich’s Gluten Free Seasoned Cauliflower Pizza Crust and Flatbread are now available in two new sizes, giving convenience store operators quality, reliable plant-based crusts in a convenient freezerto-oven format. The two new sizes are 7.5-inch Gluten Free Seasoned Cauliflower Pizza Crust (40 per case, 3.5 ounces each) and 12-inch x 5-inch Gluten Free Seasoned Cauliflower Flatbread (48 per case, 5.5 ounces each). Made with more than 20 percent cauliflower, they are suitable for a variety of applications including pizzas, sandwiches and appetizers.

8. Arnold Palmer Snacks Arnold Palmer Snacks are designed for both golfers and non-golfers who are seeking delicious and healthy snacking options while on the move. The initial launch includes four snack mixes: Protein Nut Blend, Healthy Heart Blend, Grille Room Mix — Sweet and Salty, and Grille Room Mix — Santa Fe Spiced. All four snack mixes are available in 2-ounce singleserve packages, as well as larger-sized standup packages. Arnold Palmer remains the most iconic golfer of all time, according to the company. Arnold Palmer Snacks Amelia Island, Fla. arnoldpalmersnacks.com

Rich Products Corp. Buffalo, N.Y. richsusa.com/plantbased-solutions

9. McCormick Culinary Guacamole & More Seasoning McCormick For Chefs is expanding its portfolio with the addition of McCormick Culinary Guacamole & More Seasoning. This premade blend of herbs and spices is designed to make it simple to prepare delicious guacamole, and can bring on-trend fresh flavor to other breakfast, lunch and dinner menu items, the company noted. No chopping or measuring is needed, enabling foodservice operators to save time and labor. McCormick Culinary is a collection of premium spices, herbs and seasonings specifically made for foodservice operators and chefs. McCormick & Co. Inc. Hunt Valley, Md. mccormickforchefs.com/ products/mccormickculinary

10. Vynamic Retail Platform The Vynamic Retail Platform is a new cloud-native platform that is based on an API-first design software environment to offer connected, flexible and efficient shopping experiences across all channels and touchpoints. By building in the cloud from the start and focusing on API integration as a core capability, the platform is more modular, more available and more open than other software platforms, according to Diebold Nixdorf. It offers modular microservices that can be deployed individually or used together, giving the retailer an end-to-end management solution. Functionalities include checkout, loyalty, retail management, and compliance. Each module can be hosted in the cloud or run in the store through embedded Edge technology with Vynamic-as-a-Service. Diebold Nixdorf Hudson, Ohio dieboldnixdorf.com/en-us 24 Convenience Store News C S N E W S . c o m

SMALL OPERATOR

Seriously Fresh Neon Marketplace focuses on high-quality foodservice in New England By Renée M. Covino

in a technology-driven atmosphere is the beacon of Neon Marketplace, a new prototype that aims to “dynamically change the perception of convenience stores.”

PREMIUM FOOD

Based in Providence, R.I., Neon Marketplace takes fresh food — its primary core competency — very seriously, especially the word “fresh.” “We’re very conscious of the fact that a lot of convenience stores have [touted] a fresh kitchen, fresh food, fresh everything. Some do it well, some don’t. It’s a tough perception to fight for as an industry,” said Peter Rasmussen, director of operations for the budding chain with four locations in Rhode Island and Massachusetts. “The word ‘fresh’ is somewhat bastardized in this channel,” added

26 Convenience Store News C S N E W S . c o m

Elise Babey, senior manager of product development at Neon Marketplace. “Our ‘fresh’ vs. someone else’s, there’s a big difference. And I’ve made it my goal to let the food do the talking.” In fact, Neon Marketplace could be considered a multifaceted quick-service restaurant (QSR), according to Babey, who cited its brick oven pizza program, made-to-order kitchen, sandwich program, hot express breakfast program, and “robust” barista program featuring customized espresso drinks and bean-to-cup coffee. “We take the concept and model of a quick-service restaurant, but we’re four of them — all-encompassing — under a food and energy marketplace,” she said.

Crafting the Perfect Pizza The pizza is “front and center” at Neon Marketplace’s two full-concept stores, which opened in December of last year and January of this year, one in Rhode Island and the other in Massachusetts. (There are also two Neon Marketplace Express stores, both in Rhode Island, which launched the brand in 2020 as “acquisition stores,” according to

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SMALL OPERATOR

Rasmussen, but they don’t offer pizza or the premium café.) The pizza is such an important part of the Neon Marketplace experience that even after being open for only a short time, tweaks were made to improve it. “We immediately transformed our pizza production,” Rasmussen explained. The retailer started with fresh pizza dough that employees shaped and pressed and “put the toppings on right in front of you,” Babey noted. “It worked too well; we blew through our volume projections. Basically, the pizza oven wasn’t able to handle all the orders,” she said, pointing out that they were averaging 200 pizzas a day per store. A few weeks later, the program was redesigned to “not lose the quality, but enable the pizzas to be prepared faster, get into the oven more quickly, and essentially into customers’ hands quickly,” she said. This was achieved by utilizing employees on the third shift to take the pizza dough and par-bake the shells ahead of time. “We’re still doing everything by hand, in-house,” she told Convenience Store News. “It would have been easier to go to a pizza dough manufacturer and buy them par-baked, but we’re all about serving the customer the highest quality we can and giving them the pizza they deserve.” Neon Marketplace also streamlined its fresh pizza-making process by doing away with a ladle to spread the sauce. Now, a squeeze bottle is used, which Babey said is much quicker and more consistent. The way toppings are calculated has also changed. “We have them calculate the portions in ounces now, so they can scoop it on in a quicker way,” she stated, noting employees no longer have to count out toppings, such as 35 pepperonis to top a large pie, its most popular pizza. “We’re learning things like this every day. The end product is the same high quality, but the customer is getting a better experience because they’re getting the food faster.”

A Quality Mantra Neon Marketplace can’t “harp enough on quality, quality, quality,” according to Babey. “We put it at the top of everything,” she said, along with taste. 28 Convenience Store News C S N E W S . c o m

From fresh pizza dough to homemade sauce, Neon Marketplace focuses on delivering the highest quality with its brick oven pizza program.

To emphasize this point, she discussed the differences between Neon Marketplace’s English muffin breakfast sandwich vs. other c-stores. “We source the highest-quality bacon, and our English muffins are baked fresh daily through a partnership with a local bakery distributor. We cook the English muffin and the egg protein separately; we don’t pop it into a TurboChef. Then, we assemble it. All that just for a little English muffin sandwich,” she said.

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“Neon Marketplace is a beacon propelling toward the future. It’s about being a trendsetter and ahead of the curve; a modern convenience company.” — Elise Babey, Neon Marketplace

This hands-on approach is carried throughout the retailer’s foodservice program. “We don’t buy pizza sauce by the can, we make it proprietary in-house,” she noted. Additionally, the Neon Marketplace café program is “a force to be reckoned with,” Babey added, pointing to the chain’s use of the highestquality beans and roast strengths that are based on the demographics of the New England area. “We spend a lot of time dialing in the coffee itself,” she said, which in industry terms means finding the ideal grind setting for a particular coffee and a specific brew method. What’s more, Neon Marketplace aims to offer the best of both worlds: coffees, espressos, lattes and other barista-style beverages of a premium level, but at a price more suitable for a convenience store or QSR. “We don’t choose the easy way out. We want to give our customers a quality experience they’ve never had in any convenience store,” Babey said.

Hospitality Hook To carry the focus on higher quality throughout its stores, Neon Marketplace works with designers and features elements associated with the hotel industry. “We recognize we’re convenience, but we’re also hospitality,” Rasmussen told CSNews, citing muted, warm color palettes that “help emphasize the quality of the food.”

A Luminary in the Making Neon Marketplace doesn’t actually feature its name in neon lights, but it does put a spotlight on “ahead-of-the-curve” trendsetting attributes, such as:

• Brick oven pizza • Premium café serving up customized beverages

• Fresh bakery • Drive-thru • Outdoor heated seating • Delivery via Uber Eats, DoorDash and Grubhub • Tesla Superchargers • Bitcoin ATMs • Self-checkout (by summer 2022)

30 Convenience Store News C S N E W S . c o m

Digital signage and touchscreens, video content at the pump, bright lighting outside, and cleanliness everywhere support the technologydriven aspect of the brand, while painted ceiling tiles and 15-foot-high ceilings provide what Rasmussen describes as an “open, airy feel.” The restrooms feature a curved design with no doors, and the operations director said even the stone and wood selected is meant to “denote a premium experience.” The company did toy with the idea of placing neon lighting outside to go with its moniker. “But it looked like a ‘70s disco; it wasn’t the right look for us,” Rasmussen recalled. Instead, the company decided to internalize the neon meaning. “Neon Marketplace is a beacon propelling toward the future. It’s about being a trendsetter and ahead of the curve; a modern convenience company,” Babey offered. The growth plan for Neon Marketplace is fairly aggressive for the foreseeable future. The retailer plans to open another seven locations by the end of 2022, bringing its total store count to 11. Then, for 2023, it is planning to add an additional 20 stores. All of these new stores will be ground-up, signature, prototype stores. CSN

COVER STORY

32 Convenience Store News C S N E W S . c o m

Standing at the

Crossroads of

By Angela Hanson & Melissa Kress

FOODSERVICE TECHNOLOGY FOOD-FOCUSED CONVENIENCE RETAILERS MUST PURSUE TECHNOLOGICAL INNOVATION IF THEY WANT TO COME OUT ON TOP

IN THE CONVENIENCE CHANNEL, succeeding in the

foodservice category can appear deceptively simple: offer good food for a good value, and make sure it is easy and convenient for customers to buy it. However, the reality is much more complex as the lines between competitive channels have grown so blurry as to appear nearly nonexistent, and consumers have more options and information at their fingertips than ever before.

Adding an explosion of recent technological innovation into the mix only increases that complexity, but to succeed in foodservice today, convenience store retailers must set the intersection of foodservice and technology as their destination.

MAY

20 22

Convenience Store News

COVER STORY

Asking what role technology will play in the future of foodservice is itself “a really big question,” according to Art Sebastian, vice president of digital at Casey’s General Stores Inc. “The role of technology is certainly here today and will continue to grow over time.” The Ankeny, Iowa-based c-store retailer, which operates the fifth-largest pizza chain in the United States through its 2,400-plus stores, has focused on making food the “hero” of its digital experience for several years now. This includes significant focus on consumer-facing technology, such as a revamped website and native mobile app that make it easy to place digital orders, as well as the Casey’s Rewards loyalty program, which celebrated its second birthday this year. Sebastian also pointed to an emerging focus on technology designed for storelevel employees who are taking orders and preparing and serving the food.

“They should work together as parts of an innovative foodservice strategy. If one link is missing among these factors, the entire approach could suffer,” he said. “If c-store operators are looking to attract longterm guests, equipment used by employees, guest-facing units and digital programs are all equally important to capturing valuable guest data and ensuring repeat sales.”

“It’s really starting to accelerate. All of it comes together,” he told Convenience Store News. “The better we can make the team member experience, the better they can serve guests and deliver the best guest experience.”

Unlocking the Benefits of Equipment Innovation & Automation

The Coca-Cola Co.’s director of digital strategy and capabilities, Josh Gurley, suggests that convenience retailers view different aspects of foodservice-related technology not as discrete entities, but as links in a chain.

Multiple experts point to beverage equipment as a good starting point, as unit upgrades can suit a foodservice program whether it leans toward made-to-order or focuses on grab-and-go.

Casey's focuses on making food the "hero" of its digital experience.

The most obvious way to lean into the benefits that technology can provide to the foodservice category is to upgrade equipment. While such investments are expensive, they can pay off in higher-quality offerings, reduced labor costs, waste savings, and more.

At GPM Investments LLC, the Richmond, Va.-based subsidiary of ARKO Corp. with approximately 3,100 locations, its recent rollout of a beanto-cup coffee program balanced practical store needs with evolving consumer desires. Today’s coffee drinkers are expanding beyond the morning daypart and no longer accept coffee that has been warming for hours inside an industrial urn. “This automation serves a few different purposes. It ensures our customers have 24/7 access to fresh and delicious coffee — whether it’s getting a cup with a pastry for breakfast, having a cup as a pickme-up in the afternoon, or enjoying the same coffee but iced and refreshing,” said Ruth Ann Lilly, senior vice president of merchandising and marketing at GPM. Bean-to-cup units also cut back on coffee-related tasks that are not individually lengthy but add up over the course of a shift, something that is extremely valuable to c-stores dealing with labor shortages. Lilly noted that without the new machines, store associates’ time “would otherwise be spent consistently monitoring and brewing coffee throughout the day.” Self-serve units additionally reduce the amount of training needed by new hires and cut down on overall waste, something many sustainability-minded consumers will take note of.

34 Convenience Store News C S N E W S . c o m

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COVER STORY

Brittany Tresemer, marketing director for Franke Coffee Systems Americas, expects to see a boost in the adoption of selfservice units. “A few years ago, retailers were not ready for the technology that Franke offered, but they are now able to visualize the benefits of a self-service platform vs. it being ‘a new toy,’” she relayed. Tresemer advises retailers to look for equipment that delivers consistency. For coffee units, this should be possible with every shot of espresso or cup of coffee. IoT technology is also important to allow retailers to pull information from — and push information to — their equipment. “IoT technology is something all of our competitors are talking about and something all of our customers are asking for because fleet management is so important,” she said. Other dispensed beverage units offer increased innovation, such as Coca-Cola’s Freestyle machines with an updated contactless pouring solution. Launched at the height of the pandemic, these machines allow customers to use their smartphones to choose and pour a drink in seconds through the use of QR codes and the cloud. In 2021, the company introduced the countertop 7100 Freestyle unit, which offers 80-plus beverage choices in a smaller footprint. Beyond using self-serve equipment to offset employee labor, some of the most effective changes technology can make to streamline foodservice operations will never be seen by the customer.

More retailers are embracing intelligent operations.

more people. What they need is visibility over their resources, rather than more people to do what they’ve always done,” said Steve Peck, president of intelligent operations platform provider ChekIt Inc. “If you understand what people are doing and why they’re doing it, you can organize yourself more efficiently.” According to Peck, retailers fall into three groups when it comes to implementing technology in their foodservice operations: • Businesses that aren’t capturing data; • Businesses that are capturing data that is not readily available; and • Businesses that are capturing data in real-time and guiding their employees on this basis. The largest proportion of retailers fall into the second category, he said, with their information split between paperwork, spreadsheets and siloed legacy systems, but more retailers are moving in the direction of the third category by embracing intelligent operations. “As we’ve seen, it gives them a significant competitive advantage in terms of cost and risk reduction, customer experience, brand consistency and employee engagement,” Peck said. Other back-end improvements that retailers can implement put modern technological spins on old-school systems. Casey’s recently

“In addition to the guest-facing experience, really lean into what’s happening in your store and in your kitchen. When you dig in there, you find many [manual] processes that might be taking too much time,” advised Sebastian. “With technology, you can automate, you have data.” Certain routine tasks, such as refrigerator and freezer checks, can easily be automated and tracked continuously using wireless sensors. Digital tools can flag problems that might otherwise go unnoticed because store managers are too busy with other, more urgent tasks. “I hear a lot from retailers that they need

36 Convenience Store News C S N E W S . c o m

Casey's uses its mobile app as the primary driver of its whole-pie pizza business.

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COVER STORY

completed a pilot program for a unified communications system. “In simple terminology, a much-improved phone system,” Sebastian said. Many corporate phone trees have a reputation for being difficult to use, but Casey’s new system makes it easy to reach a live person who already knows the intent of the call. Customers with a problem such as a wrong order are routed to the guest relations team, allowing store-level associates to only take calls that are relevant to them, freeing them up to focus on food preparation.

and data forecasts, and identify best- and worst-selling items. The Paytronix-Hathway report found that c-stores that are adopting digital innovations from their competitors — either within or across industries — will be the best positioned to build loyalty and engagement at a much faster rate than their peers. “The ideal customer experience within online ordering is converging across industries. Customers care less about where their order comes from and more about where they are getting good value and that the ordering experience is consistent and convenient,” DiLello explained. “With online ordering continuing to grow in popularity, it is remarkable that only 57 percent of retailers currently offer delivery services,” he continued. “A number that low means there is a real competitive

“It’s really a simple thing that technology can help solve,” Sebastian said. “I would say that not only does it make the phone experience better, but it gives team members time back.”

Tapping Into the Power of Digital Ordering

Undoubtedly, the aspect of foodservice technology most accelerated by the COVID-19 pandemic is the adoption of digital ordering. While online orders from a website have their place, apps are the primary driver: 65 percent of c-stores offering order and delivery services take in orders from a mobile app for in-store pickup, followed by mobile order for delivery at 46 percent and mobile order for curbside pickup at 36 percent, according to Ryan DiLello, a content specialist at Paytronix Systems Inc., a provider of customer experience management solutions. “It’s clear that regardless of the delivery method, there is a huge demand for mobile apps in the c-store online ordering space,” DiLello said. However, when it comes to mobile, c-stores have some work to do. Only 10 percent of convenience operators are considered technologically competent, he explained. The remaining 90 percent are considered inactive or in the initiation stage on a digital scale, according to a recent study conducted by Paytronix and Hathway. A key part of digital ordering success is setting the menu and reviewing the menu for optimization. According to DiLello, retailers can use tech-based management to conduct inventory counts, leverage sales

38 Convenience Store News C S N E W S . c o m

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COVER STORY

advantage in simply offering [order-and-deliver] services within the c-store industry.” While third-party food delivery services initially focused on the traditional restaurant space, in recent years they have increasingly recognized the value of convenience store foodservice and worked with c-store retailers to meet the channel’s unique needs. “Customers are always looking for ways to streamline their experiences in-store and online, and we believe it is important to provide a solution based on their expectations,” said GPM’s Lilly. GPM has found success in its partnership with third-party delivery service DoorDash. As of March, this partnership expanded to include a total of 960 stores across 24 states. The alliance also allows GPM to offer alcohol for delivery. “The feedback has been very positive since the launch, and it’s been a clear indicator that demand for delivery services are continuing to grow,” Lilly said. Casey’s also partners with services such as DoorDash and Uber Eats, but uses its proprietary mobile app as the primary driver of its whole-pie pizza business. “Mobile ordering really, really accelerated for us,” Sebastian reports. Investing in the behind-the-scenes side of delivery is key, he advised, describing how Casey’s order management system sits in the kitchen and consolidates all orders, whether they come from the c-store chain’s website, mobile app, delivery partners, or the phone. “The order management system is a device we’ve continuously upgraded for team members,” Sebastian said. “It’s a big focus for us.” Coca-Cola’s Gurley believes the immediate future of convenience retail and its relationship with digital ordering and payment should involve a hybrid strategy of offering order-ahead options while also maintaining easy solutions to capture spontaneous occasions. “Some occasions are difficult to digitize because of their spur-of-the-moment nature, but if c-stores are able to solve the pain point of making the plan-ahead process more immediate and seamless for guests, then they will be able to close the gap on where digital ordering becomes a problem solver instead of an occasion to plan around,” he said, noting that the resulting experience and enabling technologies will undoubtedly continue to evolve to meet the ever-changing needs of consumers. “Today’s winners have conformed their digital 40 Convenience Store News C S N E W S . c o m

Let Technology Do the Heavy Lifting EFFECTIVE PLANS COMBINE THE RIGHT AMOUNTS OF TECHNOLOGY AND CRITICAL THINKING Wynne Barrett, founder/partner of Jera Concepts LLC and vice president of business development at Supplyit, says there are four main steps retailers should follow when it comes to the foodservice space: build a foodservice program and plan; execute the plan; evaluate the execution; and make changes to the plan — repeat. Technology can help specifically with the first three steps, while making changes requires critical thinking, he explained. The same construct can be applied to meet labor challenges, Barrett pointed out. “Technology can be used to build forecasted production plans, which simplifies employee decision-making, which then expands the pool of qualified employee candidates,” he said. “A chain no longer needs as many critical thinkers. The goal is to provide what-to-make-when guidance or a what-to-make-when plan employees can follow without thinking.” Winchendon, Mass.-based Jera Concepts aims to digitize and simplify fresh food operations. It is the maker of Supplyit, a comprehensive fresh food management platform. Combining point-of-sale (POS) sales data with machine learning or artificial intelligence allows technology to do the heavy lifting. “Historical POS sales data can be turned into a forecast that includes waste factors. Each category forecast should reflect both the appropriate time to make the products and factor in when labor is available to execute the plan,” Barrett said. In addition, interactions with machines can be measured, whether it’s when a label is printed or a chicken fryer control board key is pushed. With waste, if a retailer is recording production and sales, they no longer have to manually record waste, he pointed out. “That’s data that was always bad data, when they recorded what they threw away,” Barrett said, noting that employees may have forgotten to write down the amount of sandwiches leftover after a shift or entered the wrong amount. By recording production and recording sales, the difference is the waste. Once a plan is in place, retailers can use interactive tablet-based software to measure execution. “The premise is the tablet (platform) shows the employee what to make and when, and when an employee touches the ‘task completed’ button, the event is recorded,” he said, adding that a report can then be generated to compare what was completed vs. the plan.

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COVER STORY

experiences to mirror traditional in-store experiences and need states,” Gurley said. “Tomorrow’s winners will transform the experience by meeting previously unmet needs in the convenience retail channel — especially as lines continue to blur between convenience, large-store grocery and foodservice occasions.”

Recognizing the Critical Importance of Data

Outside of digital ordering, retailer mobile apps are also extremely important for the wealth of detailed customer data they can gather, particularly in combination with a loyalty program. A properly executed loyalty program can build strong long-term relationships by catering to an individual customer’s preferences and shopping habits. “We believe that customer relationship marketing is a critical strategy that’s relevant in not only the convenience channel, but in retail overall,” GPM’s Lilly said. “People are shopping across multiple channels today more than ever, and we believe it is important that we stay engaged with our customers with robust enrollment offers, promotional activity, and an ongoing nurturing campaign.” GPM’s fas REWARDS loyalty program, which underwent a revamp in November 2021 and will get a new mobile app later this year, is a top strategic initiative for the company. And more than just a source for basic information about GPM’s various brands, the app is being developed with the goal of enabling deeper engagement and connection with customers to drive store visits, sales and overall enrollment in the rewards program, according to Lilly. “We want to ensure our customers have store banner customization — both their ‘favorite’ store and closest store, live visibility into our fuel prices, summary of their available points, fas BUCKS and fuel-cents-off balances, and a quick view of the robust offers in our stores,” she said. Looking toward the future, experts predict that machine learning and artificial intelligence (AI) will help c-store operators forecast what menu items they will sell and when they will sell the most. All predictions, though, must be based on good data or they’re useless.

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“Loyalty programs and mobile ordering can be an excellent way to create minable first-party data that a c-store operator can use to enhance their understanding of guests and how they interact with their store,” said Coca-Cola’s Gurley. “Because convenience retail is now competing in a broader immediate consumption landscape with traditional foodservice, it is more important than ever for c-store operators to maintain a competitive edge by investing in digital innovations now, or they may find themselves missing out on future guests.” The more data c-stores gather, however, the more cautious they need to be about data security, which is too frequently an afterthought. Casey’s, which last year hired its first-ever chief information security officer, is investing in data security by putting expanded

COVER STORY

“Because convenience retail is now competing in a broader immediate consumption landscape with traditional foodservice, it is more important than ever for c-store operators to maintain a competitive edge by investing in digital innovations now, or they may find themselves missing out on future guests.”

Create an irresistible new menu item with sliced sandwich waﬄes

— JOSH GURLEY, THE COCA-COLA CO.

cybersecurity in place and threat hunting, conducting application security scans with each deployment. “We also opened up a 24/7 security operations center through a thirdparty partnership,” Sebastian said. “This allows constant coverage of applications and systems.”

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Even when there has been no security breach by bad actors, retailers still need to be cognizant of how they are using customer data and keep up with evolving legalities. Zerrick Peterson, chief information officer at Five Guys Enterprises and a veteran of both IT and foodservice, pointed out that a number of states are starting to have conversations around what data is operational, what data is related to privacy, and how to empower consumers to control what retailers are doing with their data. “What data do you want? Everything? That can’t be the answer anymore, especially when it comes to customer data,” Peterson cautioned during a recent presentation at NRF 2022: Retail’s Big Show. “If you are not a big enough shop to have someone who can be focused on security, find the right partner who can. You don’t want to wild card this.”

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He advises retailers to take four general steps: encrypt the data; establish baseline controls and who has access to what information; classify the data; and do not keep all data together.

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With so many technological innovations coming at an accelerated pace, some foodservice retailers may find themselves gripped by decision paralysis, or simply hesitant to believe that the difference technology can make is worth the cost and effort of investment.

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Rob Grimes, CEO of the International Food & Beverage Technology Association, says that while he is not a person who advises someone to develop technology for technology’s sake, he “very much” believes that technology follows the need, and the need is there now. Everything done in food operations today is enabled by technology, even if technology is not the focus, Grimes said at NRF 2022. Technology allows foodservice operators to engage better with their customers and employees, provide convenient service, and more. “A lot of CIOs [chief information officers] I talk to today say they don’t have an unlimited budget, but no one is questioning their budgets and people want them to put the technology in faster,” Grimes explained during the event’s “State of the Food Tech Industry” session. “There used to be this saying that the budget never moved as fast as the technology. Well, it’s the opposite now.” CSN

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Striking the Right Balance Convenience stores can find dispensed beverage success at the intersection of smart innovation and excelling at the basics By Angela Hanson THE PAST two years have been challenging for all convenience store product categories, but particularly so for dispensed beverages. Hot, cold and frozen dispensed beverages all experienced notable declines during the COVID-19 pandemic, at the same time that many consumers opted to quench their thirst with packaged alternatives.

With most c-store operators now predicting that dispensed beverage sales will see little improvement in 2022, it makes sense to temper expectations — but there is room for optimism if retailers make the most of the opportunities that still exist. “One of the biggest challenges in our industry is to change the customer’s habits and create a new habit in our stores,” said Chad White, foodservice category manager at York, Pa.based Rutter’s. He noted that while the 80-store chain saw a hot beverage decline during the pandemic as customers made significant changes to their daily habits, a return to more normal work habits has brought many of them back, presenting Rutter’s with the opportunity to become part of their new schedules. “With customers out of their normal routine, we are working to bring them into our stores and build loyalty with our offerings and quality products,” White explained. In the still-developing new normal, dispensed beverages can serve as an often-overlooked yet key contributor to the c-store industry’s ability to compete with quick-service restaurants 46 Convenience Store News C S N E W S . c o m

(QSRs). This competition intensified during the pandemic as consumers explored new options for away-from-home food and drink purchases. Prepared food often gets the spotlight when it comes to c-stores vs. QSRs, but beverages can be a tiebreaker for those customers seeking both. “If they can come to you for a warm breakfast sandwich and make their perfect cup of coffee, you offer something most QSRs can’t and you win the business,” pointed out Heather Davis, director of foodservice for Savannah, Ga.-based convenience store chain Parker’s. To get customers back, c-stores must offer condiments that allow them to make their coffee the same way they would at home.

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When it comes to c-stores vs. QSRs, prepared food often gets the spotlight, but dispensed beverages can be a tiebreaker for those customers seeking both.

To make the most of dispensed beverages, experts suggest retailers rigorously execute on the basics, and then build onto that established reliability to add innovation, which itself should be carefully planned. “In order to successfully innovate, you must have a station and the product should be a quality item that the customer wants to come back for. If those areas are not met, innovation will do nothing,” White said. “Innovation on the dispensed beverage station may look a little different than food; it may not be new products, but new marketing or promotions that bring value to the customer.” Dispensed beverages are also a relatively bright spot in the ongoing supply chain woes. Retailers report that the segment has experienced less of a negative impact than other categories, with steady procurement of supplies aside from cups and straws. Being able to offer a reliable beverage program makes it more likely that consumers will add it to their usual routines, and sets operators up to be able to boost innovation when supply chains have stabilized. “Work closely with your supplier partners to understand their capabilities now and over the next year,” Davis suggests. “Things will improve and while you may not be able to execute now, you can absolutely plan now, so you are ready when you can execute.” Retailers also should look for ways that make it easier for customers to order. After installing self-ordering kiosks at some locations, Temple, Texasbased CEFCO Convenience Stores saw 9-percent growth in cold dispensed

48 Convenience Store News C S N E W S . c o m

beverage sales compared to non-kiosk stores. Experts shared insights on the best paths to take for each dispensed beverage type:

Reviving Hot Dispensed Beverages Hot dispensed beverages experienced the largest sales decline in the segment due to the pandemic. That said, it could also be the dispensed beverage type most primed to bounce back due to coffee’s longtime status as a pillar of the convenience channel offering. A key factor in whether that happens is whether consumers who grew accustomed to making their own coffee at home, exactly how they want it, will go back to making regular c-store coffee runs. Some industry insiders have suggested that the coffee consumer base may be permanently diminished due to the rise in working from home. However, opinions are mixed on how likely this is to be a permanent shift. “There will be a small percentage of people who never come back, but I think a majority of people will return,” Davis said. “Providing them with bean-to-cup coffee and condiments that allow them to make it the same way they would at home are important factors to get them back in the door.“ She views bean-to-cup coffee as a “must-have” for retailers looking to capture the at-home coffee consumer. “They get the same experience they get at home, which makes you an easy choice for them,“ she noted. Reorganizing the coffee area to emphasize minimal contact and individual servings can help reassure consumers who want to feel that a store has adapted in response to the pandemic. “We’re seeing equipment manufacturers continue to address this issue with touchless beverage technology that allows consumers to return to their favorite dispensed beverages while feeling confident about their health,” said Chris Travisano, senior vice president of sales and marketing at Sugar Foods Corp., a supplier of coffee bar products. “Removing multi-use canisters and pump-style containers of flavored syrups and liquid whitener/ creamers provides an upgraded cleanliness and sanitary solution to condiment stations.” Offering a wide variety of sweeteners, whiteners and flavors

FOODSERVICE

is also a must-do to provide the customization level that consumers want today. “We see key mainstay flavors such as French vanilla, mocha and hazelnut maintain popularity with consumers,” Travisano noted. “Additionally, research shows customers are looking for ways to limit or avoid sugar and carbohydrate consumption.” Cold brew coffee and single-origin, sustainably sourced coffee like 7-Eleven Inc.’s premium 7-Reserve line are growing in appeal as well. However, experts caution that c-store operators who aren’t prepared to offer these types of coffee should focus on doing well with standard brewed coffee rather than overextend themselves. “You can still have a high-quality cup of coffee with the offering centered around brewed coffee,” White said. “While these items have a lot of positives, there are also some challenges.”

Reviving Frozen Dispensed Beverages Whether it’s through a proprietary program or a vendor partnership, the frozen dispensed beverages segment is a space for both classic favorites and opportunity to trial new flavors. At Parker’s, the Fresh Blends program lets customers choose from 30-plus flavors, but the top two smoothie varieties are the classic strawberry-banana and strawberry. “What we are seeing from Fresh Blends is the choices are not outside of the box,” Davis said. “Consumers are sticking with familiar flavors.” At the same time, operators should keep an eye on demographic flavor preferences as 68 percent of Generation Z consumers and 46 percent of millennials drink frozen beverages, according to research from The Coca-Cola Co. Retailers looking to innovate in this segment can consider launching a spiked slushies program if it is legally permissible where they operate. Rutter’s and Pittsburgh-based GetGo Café + Market both found success with and expanded their frozen alcoholic treats over the last year. “Our spiked slushy program has been a huge success for us. Customers are enjoying the option of getting their 50 Convenience Store News C S N E W S . c o m

“There will be a small percentage of people who never come back, but I think a majority of people will return. Providing them with bean-to-cup coffee and condiments that allow them to make it the same way they would at home are important factors to get them back in the door.” — Heather Davis, Parker’s favorite beverage in a slushy format,” reported Rutter’s White. “As the program has evolved, we began introducing seasonal flavors to continue bringing attention to the spiked slushy program. We believe we have only scratched the surface of the potential for this program and will continue to look at new and exciting flavors.” Spiked slushies may be required to be kept in a separate area from regular frozen beverages, and staff will need to be trained to check IDs as they do with other alcoholic beverages. “We have placed a focus on ensuring the units are cleaned regularly and filled with product at all times and this requires additional hours for the store location,” White added. “However, the successes of the program far outweigh the challenges.”

Reviving Cold Dispensed Beverages The future of cold dispensed beverages is strongly tied to prepared food, as consumers are more likely to buy a fountain drink alongside their meal or snack purchase, especially if a bundle deal is offered. It could serve c-store operators well to reexamine the mix of fountain beverages they have available and question whether they meet consumer demand. While popular favorites like CocaCola and Pepsi will always have a place, many consumers are looking for more, such as dispensed sports drinks and vitamininfused water. According to research from The Coca-Cola Co., 83 percent of c-store shoppers are willing to pay more for dispensed beverages with functional benefits. “We have worked hard to bring value to the self-dispensed program through both marketing and elevating the self-dispensed program,” White said, pointing to Rutter’s addition of Pure Craft Beverages. “These items are made with real sugar and come in many unique flavors such as Orange Dreamsicle, Ginger Beer and Blood Orange.” Cold dispensed beverages are also a prime opportunity for special promotions that encourage repeat purchases, such as Rutter’s Fountain Fridays program, which gives customers double fuel rewards when they purchase a fountain drink. “These efforts have helped bring attention to the programs while also bringing value to the customer,” White said. CSN

TOBACCO

Less Risky Business? Since 2019, the FDA has authorized 15 tobacco products to be marketed as modified risk By Renée M. Covino WHEN DID the

tobacco industry get into risk management? It began with product names bearing adjectives like “light” and “mild.” But legislators thought these terms might give consumers the false impression that the products posed less of a health risk than other tobacco products. Hence, the term “Modified Risk Tobacco Products” (MRTP) was born, and the Family Smoking Prevention and Tobacco Control Act of 2009 made it illegal for tobacco products to be marketed as such unless the Food and Drug Administration (FDA) specifically authorized it. Fast forward more than a decade to 2022. Thus far, the FDA has authorized only 15 products to be marketed as MRTPs — and the first weren’t granted until 2019, an indication of the lengthy process and rigorous scientific analysis that each product seeking MRTP status must go through. To obtain the designation, a manufacturer must demonstrate to the FDA that the product “will, or is expected to, benefit the health of the U.S. population as a whole.”

granted for fixed time periods (no more than five years). To continue marketing the product as an MRTP beyond that time, the manufacturer must submit a new application that shows it still satisfies the requirements of MRTP authorization. The good news is that after a period of nearly 18 months with no new MRTP authorizations, the FDA has granted three since December.

“Helps You Smoke Less” In December 2021, the FDA granted 22nd Century Group Inc., an agricultural biotechnology company focused on tobacco harm reduction, the first MRTP designation for combustible cigarettes for its VLN King and VLN Menthol King products, both of which have significantly reduced nicotine content. The company maintains that in contrast to costly extraction and “de-nicotinization” technologies that strip out not just nicotine, but also flavor and aroma compounds, 22nd Century’s reduced nicotine tobacco “naturally grows with very low levels of nicotine resulting in products that smoke, taste and smell like conventional cigarettes, but contain 95 percent less nicotine than conventional, highly addictive cigarettes.”

If the application is authorized, the manufacturer is then directed to conduct certain studies to determine how the modified risk authorization order impacts consumer perception, behavior and health, giving the FDA the ability to review whether the basis for its granting of the MRTP application was indeed correct.

The FDA authorized the marketing of VLN with the following MRTP claims: • “Helps you smoke less.” • “95% less nicotine.” • “Helps reduce your nicotine consumption.” • “Greatly reduces your nicotine consumption.”

What’s more, MRTP designations are only

It is the “helps you smoke less” authorized marketing

52 Convenience Store News C S N E W S . c o m

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claim that James A. Mish, CEO of 22nd Century Group, refers to as “the shot heard around the tobacco world.” This “means that every time an adult smoker goes to the store to get a pack of cigarettes, sitting on the shelf right next to the other premium cigarette brands will be a pack of our VLN staring them in the face with the statement ‘helps you smoke less’ printed boldly right on the front of the package,” Mish said, speaking during the company’s March 1, 2022 earnings call. “We took a collaborative, patient and thoughtful approach to our interactions with the FDA and cannot have asked for a better result.” VLN is also the first and only combustible cigarette to come to market that complies with the FDA’s proposed nicotine cap for conventional cigarettes, laid out in the agency’s Comprehensive Plan for Tobacco and Nicotine Regulation. “Our mission is to find ways to stop tobacco-related disease and death. We know that three out of four adult smokers want to quit and the data on these

products show they can help addicted adult smokers transition away from highly addictive combusted cigarettes," Mitch Zeller, director of the FDA's Center for Tobacco Products, said at the time of VLN authorization. “…If adult smokers were less addicted to combusted cigarettes, they would likely smoke less and may be exposed to fewer harmful chemicals that cause tobacco-related disease and death." VLN cigarettes are now available exclusively at more than 150 Circle K convenience stores across Chicagoland. Participating pilot launch stores are located in Chicago, suburban Cook County, and the collar counties. The three- to six-month pilot will be the first U.S. sales of VLN King and VLN Menthol King cigarettes. From there, the company expects to roll out VLN to more than 7,000 Circle K stores nationwide, as well as other regional and national trade partners. A pack of VLN cigarettes will be similarly priced to full nicotine premium brands, approximately $9 to $12 depending on tax, according to the manufacturer. Illinois is the second most expensive cigarette retail market in the United States.

The New Generation of IQOS On March 11 of this year, the FDA issued its latest modified risk authorizations for two next-generation versions of products already granted the status. Philip Morris Products S.A. can now market its IQOS 3 system holder and charger with the following

The MRTP 15 In October 2019, the Food and Drug Administration authorized the first products permitted to use the modified risk tobacco products (MRTP) designation. As of March 11, 2022, 15 products from three companies have been granted MRTP status. They are: PRODUCT NAME

MANUFACTURER

DATE APPROVED

IQOS 3 System Holder & Charger

Philip Morris

3/11/2022

VLN King

22nd Century Group

12/23/2021

VLN Menthol King

22nd Century Group

12/23/2021

IQOS System Holder & Charger

Philip Morris

07/07/2020

Marlboro HeatSticks

Philip Morris

07/07/2020

Marlboro Smooth Menthol HeatSticks

Philip Morris

07/07/2020

Marlboro Fresh Menthol HeatSticks

Philip Morris

07/07/2020

General Loose

Swedish Match

10/22/2019

General Dry Mint Portion Original Mini

Swedish Match

10/22/2019

General Portion Original Large

Swedish Match

10/22/2019

General Classic Blend Portion White Large 12ct

Swedish Match

10/22/2019

General Mint Portion White Large

Swedish Match

10/22/2019

General Nordic Mint Portion White Large 12ct

Swedish Match

10/22/2019

General Portion White Large

Swedish Match

10/22/2019

General Wintergreen Portion White Large

Swedish Match

10/22/2019

MRTP designations are only granted for fixed time periods (no more than five years). 54 Convenience Store News C S N E W S . c o m

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MRTP claims: • “The IQOS system heats tobacco but does not burn it.” • “This significantly reduces the production of harmful and potentially harmful chemicals.” • “Scientific studies have shown that switching completely from conventional cigarettes to the IQOS system significantly reduces your body’s exposure to harmful or potentially harmful chemicals.” This reduced exposure information is the same as the information previously authorized by the FDA in July 2020 for an earlier version of the device. The IQOS 3 device is similar in design to the previous version with mainly aesthetic changes. It uses the same tobacco source, and the company requested to use the same exposure reduction claims as authorized for the previous version of the device. Given these similarities, the FDA said it largely relied on past evaluations in determining that the IQOS 3 met the criteria to be marketed as an MRTP. Since November 2021, IQOS and Marlboro HeatSticks, which were also granted MRTP status in July 2020, have been banned for sale and import in the United States by the U.S. International Trade Commission. The ruling followed a finding that IQOS infringes on two patents by British America Tobacco Group, the London-based parent company of Reynolds American Inc. The recent MRTP authorization does not override that ruling. Rather, it allows Philip Morris to consider the approved reduced exposure claims in the future marketing of IQOS 3. The authorization is effective through July 7, 2024, barring any finding that the order is no longer expected to benefit the health of the population. “At the present time, we do not expect to have access to IQOS devices or Marlboro HeatSticks in 2022,” Altria Group CEO Billy Gifford said during the company's recent fourth-quarter and full-year 2021 earnings call. (Altria is responsible for IQOS manufacturing). “However, we remain focused on returning IQOS to the market as soon as possible. Our teams are actively working on re-entry plans and we expect to be ready to bring IQOS back to U.S. consumers when available.” Altria has long maintained that heated tobacco products will play an important role in U.S. harm reduction efforts. 56 Convenience Store News C S N E W S . c o m

Select Circle K stores are piloting VLN cigarettes, which contain 95 percent less nicotine than conventional combustible cigarettes.

“We have gained significant knowledge from our IQOS commercialization efforts, which we expect to use going forward,” Gifford said during the January call. “Our teams learned how to educate U.S. smokers on a brand-new tobacco category and how to effectively support their transition journey to smoke-free alternatives. We demonstrated improved performance in each successive market and gained valuable knowledge on leveraging MRTP claims to transition smokers.”

The Evolving Backbar Convenience store retailers need to start thinking about how their backbar will evolve and incorporate modified risk tobacco products, if they haven’t already, according to Don Stuart, managing partner at Wilton, Conn.-based Cadent Consulting Group. He predicts that well over half the backbar space will be devoted to “non-combustible, tobacco-like products,” potentially with a modified risk classification. C-stores need to continually aim to differentiate their backbars through new and emerging categories and forms of tobacco that qualify as reduced risk, agrees Matt Domingo, senior director of external relations at Reynolds Marketing Services Co. C-stores that take chances in the category “are typically the ones who end up capturing the bigger slices of the volume that becomes available from market to market,” he said. CSN

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CANDY

The Outlook Is Sweet Candy category growth is expected through at least 2026, powered by product innovation By Brian Berk IF THE CANDY category’s performance in 2021 is any indication of the results that will be seen this year — which industry insiders believe will be the case — then convenience store retailers have reason to be as enthusiastic about the category as “a kid in a candy store.”

The total confectionery category reached a record $36.9 billion in retail sales in 2021, according to the third-annual State of Treating report published by the National Confectioners Association (NCA), the trade association that supports the U.S. confectionery industry. Convenience stores enjoyed the largest growth in confectionery products of any retail channel last year. Sales at c-stores totaled $6.8 billion, an increase of 12.6 percent compared to the prior year. The convenience channel is fast approaching supermarkets and food stores, which accounted for the most confectionery sales last year at $7.6 billion. Anne-Marie Roerink, principal at 210 Analytics, who collaborated with NCA on the report, acknowledged that inflation was certainly a factor when comparing 2021 candy sales to 2020. However, even without the impact of inflation, candy had an excellent year in 2021. “Candy sales got a boost from price increases across items, and while the industry was and is certainly not immune to the supply chain disruptions, out-of-stocks seem to be a little better than in departments such as frozen 58 Convenience Store News C S N E W S . c o m

foods,” Roerink told Convenience Store News. “All of this helped candy achieve a record year with doubledigit increases.”

What’s Selling According to Roerink, non-chocolate candy had “an enormous year” in 2021, which contributed to strong sales for convenience store retailers. Chocolate also managed to grow over a strong 2020, and gum and mints staged a full comeback from a difficult 2020. “An all-around win” is how Roerink described the convenience channel’s results. In the chocolate segment, dark chocolate keeps vanishing quickly from retailers’ shelves, noted Molly Jacobson, director of business development at Frankford Candy, known for its eponymous brand, as well seasonal treats such as Peeps and Elf on the Shelf. “There is increasing demand for dark chocolate as it has less sugar and a stronger cocoa taste than milk or white chocolate,” she said. The chewy non-chocolate segment is also having a moment, Roerink stated, pointing out that overall non-chocolate sales saw a year-over-year gain of 19.6 percent in 2021. “Chewy non-chocolate is an amazing story. [It] represents half of all non-chocolate sales,” she explained. “Usually being that big of a segment means that your growth rate is going to be small, but not for chewy. Chewy candy still had a massive year and that’s on top of having a tremendous 2020, 2019, and

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so on. Chewy candy has done a great job in innovation — whether package, flavor, ingredients, callout; you name it.” In particular, sales of gummies have been robust in the non-chocolate segment, Jacobson reported. “The pandemic has spurred growth of the gummies segment, as gummies are a popular candy variety among kids and parents who use these sweet treats as a reward for their kids. According to Market Research Future, the global gummy and jellies market is expected to grow at a 4 percent compound annual rate to $44 billion by 2027.” Lou DiMarco, executive vice president at Hilco, known for its novelty candy products featuring such brands as Paw Patrol and Kool-Aid, said his company has experienced “extreme growth in popping candy innovation, gum as candy vs. functional breath fresheners, and candy with high numbers of times to the mouth (TTMs).” Roerink also noted that in convenience stores, the morning meal occasion has been very different since the onset of the COVID-19 pandemic, and is still very different. “That has an impact on items that are bought along with that morning cup of coffee,” she said. Additionally, a lot of convenience stores are doing more business out of their grocery set and “that affects items such as larger bags and even seasonal that weren’t big sellers for convenience stores before,” she added.

The Innovation Story Innovation is a chief component of candy’s impressive rise these days. 60 Convenience Store News C S N E W S . c o m

Hot chocolate bombs, new forms of gum, popping candy, functional candy with high fiber, cotton candy that turns into gum, and low-calorie chocolate have all entered the market recently and become popular, noted Hilco’s DiMarco. Consumers are increasingly interested in trying new, innovative flavors and are seeking products that enhance their sensory satisfaction through a combination of texture and taste, said Frankford Candy’s Jacobson, who shared a similar sentiment regarding hot chocolate bombs. Meeting those needs starts with new flavors and exciting packaging, according to Clark Taylor, senior vice president of sales and marketing for CandyRific, known for its novelty candy products featuring brands such as Disney, M&M’S, Marvel and Nickelodeon. “Candy is a treat and consumers are looking for ways to create small personal events around these ‘treating’ opportunities,” Taylor said. The NCA’s latest State of Treating report found that 78 percent of all adults believe it is perfectly fine to occasionally treat themselves with chocolate or candy. Year after year, candy’s role as an indulgence for consumers is unwavering. “We know that consumers are snacking for indulgence and we expect this momentum to continue. Eighty-five percent of consumers snack for indulgence at least once a day, per the State of Snacking 2021 report,” cited Annie Faile, portfolio marketing manager for Kellogg Co.

Better-for-You Treats Along with indulgence, though, comes a growing desire for moderation as industry insiders report significant sales growth in the “better-for-you” candy segment. Craig Cuchra, vice president of marketing for Perfetti Van Melle USA and Canada, noted that the company recently introduced Fruit-tella Soft Gummies, a fruit-first brand that calls out fruit puree as the first ingredient. Also, lower sugar brands and products that remove artificial colors and flavors are becoming increasingly popular, according to Cuchra.

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“While these areas are still often small, they are rapidly growing and likely something that all retailers should consider in terms of their assortment in this area,” he advised. CandyRific continues to expand its candy offerings into the organic and natural categories as well, as it offers licensed products with low sugar and organic options, stated Taylor. Not all better-for-you claims are a positive for the industry, however, DiMarco believes. Companies stating that fiber is a better-for-you ingredient because it “cancels out carbohydrates” is sending the wrong message, he maintains. “We as an industry have increased fiber and use some products like Monk fruit sugar but, at the end of the day, carbs are carbs,” he said. “Candy was not meant to be functional and the more educated our consumers become, the more transparent false functional food becomes.”

Environmental Stewardship

“Candy has always been known as an affordable treat and a look at the price per unit across other items that people think about when treating themselves shows that indeed, candy is one of the most affordable treats.” — Anne-Marie Roerink, 210 Analytics for every industry, with the confectionery industry being no exception. Retailers are having a hard time promoting products not knowing what will be in stock. Hence, there are fewer promotions happening now, as well as prices that just aren’t as enticing as they have been due to inflation. For the foreseeable future, Roerink believes the biggest challenge for all food-related industries will be inflation. She pointed to higher gasoline prices as one example.

Today’s consumers are not only seeking healthier products, but a healthier planet as well. As such, they expect manufacturers to be good stewards of the environment.

“Filling up the tank is so much more expensive than it was last year,” she said. “Consumers have to offset that spend somewhere else. That could be eating out at restaurants less often or watching a movie at home instead of going to the movies. Or that could be buying ground beef instead of a steak, or skipping the candy bar and cup of coffee when filling up the car.”

Frankford Candy is always looking for ways to reduce waste and plastics in its packaging, noted Jacobson. “We are also streamlining production efficiencies and ramping up domestic production in the United States,” she reported.

Still, the candy category is expected to continue growing despite the challenges. The most recent State of Treating report projects considerable sales growth through at least 2026, with confectionery sales projected to reach $44.9 billion by 2026.

Environmental stewardship is very important to Perfetti Van Melle as well, Cuchra stressed. The company’s global organization is committed to taking meaningful measures to eliminate plastic packaging where possible.

“Candy has always been known as an affordable treat and a look at the price per unit across other items that people think about when treating themselves shows that indeed, candy is one of the most affordable treats,” Roerink said. “When interviewing shoppers, we heard things like substituting a bakery cupcake for a bar of chocolate. So, between the record engagement in 2021, the growth in online sales and consumers’ love for the category, continued growth is highly likely.”

“We have a global holistic approach on packaging development and innovation with considerable focus on its environmental impact,” said Cuchra. “In fact, a recent example, which we’re very excited about, is the unique, widely recyclable Mentos Pure Fresh Gum 90% Paperboard Bottle. It is now available to U.S. customers and is beginning to launch in other parts of the world.”

Growth in Spite of Adversity Candy sales have been enjoying a great run as of late, but that doesn’t mean the future is without adversity. Supply chain disruptions are proving to be a challenge 62 Convenience Store News C S N E W S . c o m

Cuchra agrees with this outlook. “Candy is a staple of how we celebrate many life moments, it’s a key factor in many major holidays, and something that is simple and affordable to lift spirits during times like the pandemic and recessions,” he noted. Fueling candy sales for the next four years will be the hunt for “new and different products,” predicts Taylor. “Packaging will continue to evolve with new colors and designs,” he said. “Consumers love the ‘treasure hunt’ that the candy category can offer.” “Sweet heat,” defined by the NCA as flavors such as chili, sriracha, jalapeño and habanero, is being eyed as just one emerging trend that will be appearing in candy aisles more often, presenting consumers with even more opportunity for exploration. CSN

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FEATURE

THE NEW NORMAL

Consumer demand for delivery and pickup services continues to grow By Tammy Mastroberte WHILE THE PANDEMIC accelerated the adoption of delivery and curbside pickup in the retail and restaurant industries, two years later, the demand for these services continues to soar.

Convenience stores offering these services now find themselves uniquely positioned to not only offer foodservice delivery to compete with quickservice and fast-casual restaurants, but also make grocery items available, including tobacco and alcohol in certain states. “We are continuing to see growth in delivery, and we keep rolling out the option to more stores,” Jodi Riggs, external business development manager at Wesco Inc., a Pittsburgh-based chain of 55 c-stores, told Convenience Store News. Wesco actually started offering delivery using Vroom Delivery in 2019 prior to the pandemic, and each year has seen tremendous growth in the offering — which is now available at 14 stores, with plans to roll it out to 20 more locations by July 2022. In 2020, Wesco saw delivery grow 233 percent over the prior year. Last year, it grew another 177 percent compared to 2020, according to Riggs. “We also saw about a 25-percent increase in sales within the first year of rolling out delivery at some of our stores, and we see higher rings or basket sizes [for delivery] vs. in-store purchases. In some cases, this is up to 5 times higher,” Riggs reported. Consumer research done by Hathway, a consulting firm focused on digital solutions, found that today’s shoppers want delivery as an option for c-stores and will use it when it is available.

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In February 2022, the company surveyed 2,000 adults equally distributed among age groups and locations across the United States and found that an average of 49 percent had ordered from a c-store in the past 12 months — up 6 percent from a survey done three months prior. Among those who ordered via delivery, 18- to 29-yearolds were the highest percentage to use this option (75 percent), followed by 30- to 44-year-olds (60 percent). “The study also showed there are a lot of consumers who are trying to order delivery from a c-store only to realize they don’t provide the option,” noted Kevin Rice, president and chief marketing officer for Hathway. Approximately 42 percent said they attempted to order delivery in the past 12 months, but the c-store didn’t provide it. Then, 62 percent of those who could not make the purchase tried again within a few months, Rice shared, noting how the data shows a gap between consumer expectations and what is being offered. Additionally, 81 percent of consumers in the survey said they anticipate ordering via delivery more in the future. “People want this and the data is showing it,” Rice said. “Demand will continue to grow, and it creates so much opportunity in the c-store space because delivery skews toward the dinnertime daypart and that is a daypart c-stores have historically struggled to capture.” Competition in the “convenience” space is increasing as well, with DoorDash opening Dash Mart stores that bring both household essentials and local restaurant favorites to customers’ doorsteps; and companies like Gopuff, which uses its own app, offering delivery of food, home essentials, snacks and alcohol. “Gopuff is making big investments in foodservice, drivers and technology infrastructure, and they own the stores,

which is c-store competition,” said John Nelson, CEO and founder of Vroom Delivery, an e-commerce solution provider.

The Ins & Outs of Delivery In the past two years, both delivery and pickup exploded at an amazing pace across all industries. Although many assumed this option would mainly be embraced by the younger generations, research shows there are a variety of age ranges using these services. “What was expected to take five or more years to roll out happened in six months, and even the older generations that were more reluctant to try these options have become used to it and are now regular users,” Nelson explained. However, as c-store operators began incorporating these services into their offering, they were met with a variety of challenges. Many are still evolving their practices around delivery and pickup. And, of course, there are still those that are reluctant to dive in — especially smaller chains that either don’t know where to start or don’t have the staff to take it on. “So many small operators don’t deliver because of the barriers to entry,” said Adit Gupta, founder and CEO of Lulu Delivery, which connects c-store operators to multiple third parties and handles onboarding and fulfillment. “It’s not just getting the data and products into a system, but also updating it and keeping it synced that scares a lot of people away.” Once a retailer signs up with Lulu, the company takes on the task of adding their products and images to the system and then syncs the stores up with every delivery service available to them, including Uber Eats, DoorDash, Grubhub and more. This includes foodservice, as well as other items in the store, such as tobacco and alcohol where permitted. “We handle the fulfillment and any transactional issues that come up, and the store just has to pick and pack the order,” Gupta explained, noting that there is no commission for their service. Instead, it works on a monthly subscription fee. Whether working with third parties or opting for in-house delivery, there are technology considerations and integration needs that will inevitably pop up. At Wesco, the company manually adds items for sale to the Vroom Delivery system and must stay on top of outof-stocks, so the Vroom database is not showing items that are unavailable at the time, according to Riggs. Store employees also must manually add orders into the Verifone point-of-sale (POS) system as they come in, so they are recorded in the PDI back-office system. “If a customer orders on the Vroom site, our associates get the items and ring them through the POS, but we are currently working on an integration for this to make it easier,” Riggs said, adding that Vroom is integrated into

Choosing the Right Delivery Option Convenience store operators have a few routes and combinations they can choose from: 1. Third-Party Providers Many c-store operators start in the delivery world by partnering with third-party providers such as DoorDash, Uber Eats and Grubhub. These providers can handle both the ordering and delivery, so the convenience store only has to get the order ready for pickup and make sure the items available for delivery are uploaded into the third-party system and current. By working with a third party, a c-store retailer can add delivery quickly and put its stores in front of an audience they might not have had prior. The chief drawback of this route is that the retailer will not own the customer loyalty and data. “When choosing this, you are handing over the relationship with the customer to the third party because they own the transaction and the data and can continue to market to these customers,” said Kevin Rice, president and chief marketing officer at Hathway. “C-stores should be deliberate about using them as an acquisition channel and then getting [customers] to order directly through their brand if and when that is available.” For retailers that find the task of uploading all its offerings onto these third-party platforms and managing the process too large of a task — especially for smaller chains — there are also companies like Lulu Delivery that will handle this part for a monthly fee. 2. Outsourcing the Drivers For c-store operators that want to remain in control of the ordering process and retain the customer data and loyalty, they can work with certain third parties using a white label solution. This route allows the c-store to take the orders and handle the transactions on their end, and then outsource the driving part to the third party. “DoorDash and Uber Eats are the two biggest providers with white labels and are the easiest to work with because they are so big,” said John Nelson, CEO and founder of Vroom Delivery. 3. Taking It in House For convenience store operators with the capital to invest and the resources to dedicate to it, creating an online ordering and delivery system in-house using employees as drivers is yet another alternative. This can get complex from a technology perspective, but there are options available to the c-store industry today to make it work in a seamless way. “The most advanced players in our industry, like 7-Eleven and Casey’s, have moved to trying to own more of the process and do it on their own,” said Kay Segal, founding partner of Business Accelerator Team. “That doesn’t mean they don’t use third parties too, but it goes back to owning the data, the consumer and the process.”

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FEATURE

the chain’s app so that customers can also order directly from there. The company is working with Vroom to integrate its loyalty program, too. “The reality is one piece of technology is not going to provide all the functionality needed to be a best-inclass provider to the consumer,” observed Kay Segal, founding partner of Business Accelerator Team, a convenience retailing consultancy based in Phoenix, Ariz. “The retailer really needs to map out their development journey for delivery and pickup and look at what can we start with and what can we build onto that. It’s not a one-and-done.” Another lesson Wesco learned since launching delivery in 2019 is that customers want items available at their local stores that may not be available at all locations. Initially the chain launched delivery and pickup with products only available at all locations, but it is now working to expand and customize for different stores. “Our top category for delivery is pizza and grinders, and second is cigarettes,” Riggs noted. “Hot deli, hot combo meals, and then beer and liquor follow.”

“We see higher rings or basket sizes [for delivery] vs. in-store purchases. In some cases, this is up to 5 times higher.” — Jodi Riggs, Wesco Inc.

Handling Age-Restricted Items When delivery first became popular, alcohol was not always permitted. But now, it is an option in many states, with DoorDash adding the category to its menu as well. Richmond, Va.-based GPM Investments LLC, with 3,000 locations comprised of approximately 1,400 company-operated stores and 1,625 dealer sites where it supplies fuel, has been working with DoorDash as its main third-party delivery provider since July 2020 and recently added alcohol to its menu in Virginia, with other states to roll out soon. “Offering alcohol through delivery is a must-have for convenience stores where alcohol delivery is legal,” said Jim Rastetter, category manager for GPM. “Consumers who buy their favorite alcoholic beverages through delivery typically have larger baskets.” The addition of age-restricted items comes with its own challenges because age verification is needed. At Wesco, when a customer places an order, they enter their birthdate into the system and then, when an associate prints out the order, it has that birthdate listed. Upon delivery — done by Wesco’s own employees — that date is compared with the customer’s ID. “Because we have our own drivers, we can deliver anything we want, including alcohol and tobacco,” said Dan Sloboda, fresh research and development lead at Wesco. One of the reasons the company decided to handle delivery in-house was because many of the chain’s rural locations could not be serviced by the third-party delivery vendors. “Uber Eats, for example, could only service 35 percent of our locations,” Sloboda recalled. Wesco delivery drivers are store employees who are not only paid a delivery fee by the company, but also have the opportunity to collect tips on each order. There is no live tracking for delivery, but customers are notified along the way through the Vroom system. “Our associate clicks ‘OK’ to let the customer know we received the order, and then can click and send updates via text or email depending on [the customer’s] preferences saying the delivery is on its way,” Riggs explained. At the start of the pandemic, delivery may have been thought of as a temporary fix, but today it is an expected part of doing business for all retailers and restaurants, according to Rastetter. “Delivery is here to stay in the convenience store industry,” the GPM executive predicts. “Over the past few years, we have seen a great response from our customers and we plan to continue to invest in growing our delivery presence.”

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want to have someone show up and be confused with what to do to get their order.” When the pandemic hit, most fast-casual and quickservice restaurants began offering curbside pickup as an option, even those that already had a drivethru onsite, said Tom Cook, principal at King-Casey, a restaurant and foodservice consultancy based in Westport, Conn.

“Delivery is here to stay in the convenience store industry. Over the past few years, we have seen a great response from our customers and we plan to continue to invest in growing our delivery presence.” — Jim Rastetter, GPM Investments LLC

The Ins & Outs of Pickup The popularity of pickup vs. delivery varies from retailer to retailer. While some retailers are doing a lot with pickup, others are seeing delivery blow past this option. At Vroom, for every one curbside pickup order, the company sees 10 delivery orders come through, according to Nelson. This is definitely the case at Wesco, said Riggs, who noted that the chain averages 2.48 miles for delivery distance, although it’s offered up to seven miles. “We offer both curbside and counter pickup in our stores, but we are not seeing the growth in these areas that we are seeing in delivery,” she reported. However, some experts believe curbside — and even drive-thru — will continue to be an important piece of the puzzle to meet consumer demands. Some c-stores like Speedway have started adding drive-thrus, and even restaurant chains with drive-thru or curbside “weathered the pandemic storm much better than those who didn’t offer it,” said Hathway’s Rice. “It’s important to have a flawless experience with curbside pickup if you are offering it,” he stressed, noting Target does this well. The system tells a customer when their order is ready, which spot to pull into, and then has someone there to put the order in the trunk. “With pickup, location services and having everything really dialed in is so important,” Rice said. “You don’t

At c-stores, customers are looking for more than foodservice as part of the pickup experience. “Virtually every c-store I know offering curbside is offering more than just foodservice items, and some of them who tried foodservice only had to change it because customers were asking for other items,” Cook explained. “It’s the same thing with the drive-thru.” For those not offering delivery, curbside pickup has become a necessity — even if a store starts out slowly with taking orders over the phone and offering basic signage out front with a couple of designated parking spots, according to Cook. However, to be best-in-class, investing in a mobile app and geofencing technology is ideal, he said. In direct response to the pandemic, March Networks launched a mobile order pickup solution that uses artificial intelligence-enabled cameras that alert employees when someone is outside waiting for pickup. When a car pulls up, one option is to have a light connected to the camera that changes from red to green to let employees know someone is waiting, said Jeff Corrall, vice president of product management at March Networks. Another option is to have a message or alert sent to employees through a software system. “It’s a camera with a recording solution on sight, and then we have software that pulls it all together and is an extension of other features the software already offers like tying point-of-sale transactions to in-store video,” Corrall explained. Today’s convenience stores are competing with not just those in their industry, but also with restaurants, grocery stores, and even Amazon. Creating processes for a smooth experience, whether delivery or curbside, is necessary to keep up, said Segal. “It’s not a one size fits everybody. Because of where your stores are located, you might have to have different options to execute these services, especially delivery,” she said. “7-Eleven and Casey’s have their own operations, but they also partner with a mixture of third parties. The goal is to do everything you can to try and own the customer, the data and the relationship,” she added. “So, retailers need to think about how to set it all up to accomplish that.” CSN

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TECHNOLOGY

Decoding the Top C-store Tech Trends Frictionless checkout, robotics, cryptocurrency and artificial intelligence take center stage By Don Longo

CONVENIENCE STORE NEWS interviewed some of the major technology companies in the industry to find out what key trends they expect to affect convenience retailing in the year ahead.

Frictionless checkout continues to be a focal point among both retailers and suppliers. “Anything you can do to take friction out of the experience is valuable,” said Jeff Bradbury, senior marketing director for Hughes Network Systems. There are several different types of frictionless technology in use by retailers today. The Amazon Go model

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uses a phone app in conjunction with cameras and shelf sensors. Other solutions utilize RFID tags, some of which allow the customer to preorder on their phone either in-store or before entering the store. What type is “right” depends upon the particular retailer. “Whatever way they choose, it should be a reflection of the brand,” Bradbury said. “Amazon's solution is very elegant. 7-Eleven's is simple and direct. Each is equally relevant to that particular brand's customerfacing experience.” Brands are taking on technology so that it appropriately reflects the brand's promise. “You're going to see more digital capabilities presented in ways that reinforce the brand's premise," the Hughes executive noted. Speaking about the recent NRF Show, held in January, Bradbury said Continued on page 74

TECHNOLOGY FOR YOUR FRESH FOOD PROGRAM BOHA! calculates exactly how much food to prep each day AND lets you print,on-demand FDA compliant, Grab ‘N Go labels. And that’s just the beginning. Learn about how our cloud-based system can help your C-Store with temp taking, refrigeration monitoring, task management, even inventory management and food production.

Visit us at NRA, Booth 6657

www.transact-tech.com/cstore | boha@transact-tech.com

SPECIAL SERIES ON SPECIAL SERIESENGAGEMENT ON NEXT-GEN LOYALTY FRICTIONLESS

What C-stores Can Learn From Restaurants’ Omnichannel Experiences Integrate in-store and online promotional programs to gain a competitive advantage By Lisa Terry CONSUMERS ON average spend a third of their waking hours on their phones, even weaving them into dining and shopping decisions. When lockdowns hit, their convenience store shopping went online as well, as many operators introduced digital ordering along with curbside, drive-thru, in-store pickup, and even delivery.

market,” says Andrew Robbins, CEO and co-founder of Paytronix Systems Inc., a provider of SaaS customer experience management (CXM) solutions for c-stores and restaurants.

With these new behaviors now ingrained, c-stores are under increasing pressure to deliver the same frictionless omnichannel experiences those shoppers get at their favorite restaurants and retailers. But they face some unique challenges, as well as opportunities, to deliver an omnichannel experience that drives up basket sizes, visit frequency, and loyalty.

1. Build on a Solid Foundation

According to Convenience Store News’ 2022 Realities of the Aisle Study, half of shoppers who have tried c-stores’ online ordering services are using them more now than a year ago. More than half are using drive-thru and mobile services such as mobile pay at the pump, mobile pay-in-store and mobile coupons/discounts at the same frequency as during the pandemic. “When we look at Gen Z and millennials, they’re buying a lot more online than ever before,” says Greg Ehrlich, president of Fremont, Ohio-based Beck Suppliers Inc., which is steadily branding more of its 30 locations as FriendShip Kitchen stores. In 2021, the operator introduced online and mobile ordering, in-store pickup and curbside pickup for five of its food-focused locations, and will continue expanding those offerings. For FriendShip Kitchen stores, “the driver was our food items, but [shoppers] would fill in their basket with other items as needed,” driving a lift in average basket size, Ehrlich noted. Tapping Into Lessons Learned Convenience store adoption of omnichannel services such as mobile ordering lags industries such as dining, but operators can leverage this as an advantage. “You can take all the learning and mistakes and end outcomes and tailor them for the convenience store

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Some of those hard-won lessons include: It’s hard to recover from a customer’s poor first experience. So, ensuring a solid technology foundation is key to ensure consistency across physical and digital experiences. A customer accustomed to, say, ordering a sandwich and redeeming a special offer on a 2-liter bottle of soda and some gum in-store and paying for it all with loyalty points will expect the same functionality online. To achieve that, the ordering platform will require integration with inventory, kitchen display, loyalty, and marketing/promotion systems. Vendors can help facilitate these integrations. When New Albany, Ohio-based Englefield Oil Co.’s Duchess Stores added mobile ordering, curbside pickup and delivery to portions of its 120 locations, “we really had to upgrade some of those backend systems that we were using for those platforms just so that we were able to serve our customers in whichever way that they would like to be a Duchess customer,” explained Nathan Arnold, director of marketing. 2. Leverage the Omnichannel Loyalty Link

Omnichannel shoppers consistently account for greater lifetime customer value for retailers. A recent study of grocery shoppers, for instance, found omnichannel consumers shop more often and spend up to 20 percent more than in-store-only shoppers. Already, seven in 10 c-store loyalty members have used a program’s smartphone app, CSNews’ research found, so adding digital ordering and pickup options can turn these already-loyal shoppers into valuable omnichannel consumers. And because digital ordering requires the shopper to enter their name, cell phone number and/or email, it is easy to drive more loyalty enrollments as part of the ordering process.

CSN-0522

Articles inside

Decoding the Top C-store Tech Trends

The Outlook Is Sweet

Melanie Isbill, RaceTrac

The New Normal

Less Risky Business?

Striking the Right Balance

Retailer Tidbits

New Products

Extended Real Estate Pact Will Boost GPM’s M&A Power

Standing at the Crossroads of Foodservice & Technology

Seriously Fresh

Wawa’s Growth Strategy Turns Toward the Southeast

CSNews Online