CSN - May 2019

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

MAY 2019 CSNEWS.COM

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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

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HOW TO TURN AROUND TURNOVER

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your business LEGISLATION / REGULATIONS SALES STRATEGIES

COMPREHENSIVE RESOURCES

CONSUMER INSIGHTS

MERCHANDISING SOLUTIONS

SALES & PROFITS

COLLABORATION

At AGDC one of our goals is to help drive our customers’ LEADERSHIP BRANDS

success. We represent the Altria Operating Companies’ vast portfolio of industry-leading brands. We aim to develop sales strategies that align with current consumer insights and your operational goals. Work with us and take advantage of our comprehensive resources to evolve and elevate your business.

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VIEWPOINT

Foodservice: Not a Panacea, But Still a Necessity C-store operators must get better at executing their foodservice programs WHEN PREPARED FOODS (either

commissary-delivered or made fresh in the store) became the fastestgrowing product category within convenience stores, it was the perfect antidote to the longterm downward sales and profit trends in motor fuels and cigarettes.

It was a smart move by many c-store chains to focus more resources and innovation against growing the seemingly higher margins and accelerating growth trends in foodservice.

However, even then, many of the industry’s smart observers warned that foodservice, while important, wasn’t a panacea or cure-all for everything that might ail a c-store retailer. Foodservice could be lucrative, but it was also fraught with obstacles like higher food waste, more labor, access to trustworthy suppliers, employee training in hospitality culture, etc.

Fast forward to today and if you attended the recent NACS State of the Industry Summit last month, you heard that the c-store industry just completed a record-setting year in sales and profits in 2018. But those results were mainly due to a rebound in fuel prices and margins. Hidden beneath those record-setting figures is the concerning fact that foodservice sales growth has slowed considerably over the past two years.

According to preliminary results from the Convenience Store News Industry Report (set to be unveiled in our June issue), foodservice sales grew a paltry 2.3 percent last year.

That’s after a disappointing 3-percent gain in 2017. Both of those figures are significantly lower than the foodservice growth gains of 2016 (up 6.6 percent) and 2015 (up 7.1 percent).

Meanwhile, cigarette sales were down once again last year, this time by 2.9 percent, continuing the long-term trend of volume declines. With drugstore chains like Rite Aid recently announcing it is exiting the tobacco business and Walgreens testing tobacco-free stores, there should be a windfall for c-store retailers. But is it really going to reverse long-term negative trends?

What about merchandise sales? Merchandise sales, excluding foodservice, were up less than 2 percent last year, so with the exception of a couple of new potential hot categories (CBD products anyone?), merchandise sales aren’t going to carry your business.

Which brings us back to foodservice. The numbers show that foodservice growth is not easy, but the fact remains that finding a way to increase foodservice sales is critical for the success and growth of nearly all c-store operators, from single-store independents to thousand-store chains.

C-stores just need to get better at it as the competition heats up from other channels.

You can hear how several traditional convenience retailers are redefining the convenience foodservice experience on a panel at CSNews’ 2019 Convenience Foodservice Exchange, taking place June 19-20 in Dallas. For more information, go to https://events.ensembleiq.com/CFX19.

For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or dlongo@ensembleiq.com.

EDITORIAL EXCELLENCE AWARDS (2013-2018)

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

EDITORIAL ADVISORY BOARD

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 Awards, Folio: magazine Winner, Business to Business, Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business, Retail, Single/Series of Articles, June 2016 2016 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2015 Business to Business, Retail, Single/Series of Articles, August 2015 2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014

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

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

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

2013 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2012

Brett Atherton Bolla Management

Jack Lewis GPM Midwest

Rick Crawford Green Valley Grocery

Danielle Mattiussi Maverik Inc.

Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Jim Hachtel Eby-Brown Co. Ray Johnson Speedee Mart

Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger Strasburger Retail

Vito Maurici McLane Co. Inc.

2015 American Society of Business Press Editors, National Azbee Awards Silver, Best Profile (long form), February 2014 2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014 2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012

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

MAY

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CONTENTS MAY 19

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32 22 72 FEATURES

DEPARTMENTS

COVER STORY

VIEWPOINT

32 Join the Revolution As more convenience store retailers introduce new food-forward prototype stores, the rest of the industry must join the movement or get left behind.

3 Foodservice: Not a Panacea, But Still a Necessity C-store operators must get better at executing their foodservice programs.

COVER STORY

8 CSNews Online

28 Store Inspections Should Not Be a Surprise Become your own mystery shopper to raise your standards and improve customer service.

OUT & ABOUT

STORE SPOTLIGHT

18 Emerging Trends on Display at Natural Products Expo West CBD-infused items, alternative proteins and oat milk were prominent on the show floor.

72 An Experiential Testing Ground 7-Eleven’s new “lab store” allows customers to try and buy the latest innovations.

OUT & ABOUT

NEW HORIZONS

20 Banding Together to Fight Obesity Partnership for a Healthier America Summit spotlighted best practices across industries.

74 The Invisible Woman Women are out of sight, out of mind of senior executives.

44 Opportunity-To-Order Our exclusive consumer research shows there is still room to grow in convenience foodservice if retailers focus on freshness.

FEATURE

66 Turning Around Turnover Hiring right and maintaining open communication can lead to a steady workforce.

OUT & ABOUT

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22 Disruption & Digital Experiences Impacting State of C-store Industry The 2019 NACS State of the Industry Summit tackled a variety of pressing issues.

24 New Products SMALL OPERATOR

INSIDE THE CONSUMER MIND

90 The Buzz Around Cannabis Consumer interest in legal cannabis and CBD products is only expected to keep growing.

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

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8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631 (773) 992-4450 Fax: (773) 992-4455 www.csnews.com Direct Mailing Address for Convenience Store News: 11-43 Raymond Plaza West, 16th floor, Newark, NJ 07102 BRAND MANAGEMENT Vice President/Group Brand Director Paula Lashinsky (917) 446-4117 plashinsky@ensembleiq.com EDITORIAL Editorial Director (201) 855-7606

Don Longo dlongo@ensembleiq.com

Editor-in-Chief (201) 855-7608

Linda Lisanti llisanti@ensembleiq.com

Senior News Editor (201) 855-7618

Melissa Kress mkress@ensembleiq.com

Associate Editor (201) 855-7619

Angela Hanson ahanson@ensembleiq.com

Associate Managing Editor (201) 855-7604

INDUSTRY ROUNDUP 10 New Circle K Banner Spreads Across the Globe 12 EG Group Expanding Its U.S. Footprint

CATEGORY MANAGEMENT

Tammy Mastroberte tmastroberte@gmail.com

Associate Brand Director & Northeast Sales Manager (508) 385-2524

FOODSERVICE

TOBACCO

62

Contributing Editor (201) 280-2614 ADVERTISING SALES & BUSINESS

16 Supplier Tidbits 16 Competitive Watch

Renée M. Covino reneek@aol.com

50 What’s Hot on C-store Menus?

Berries prove berry appealing in this month’s limited-time offers.

14 Retailer Tidbits

14 Eye on Growth

Contributing Editor (303) 741-3377

FOODSERVICE

52 Today’s Special: Technology From food safety to mobile ordering to robot automation, foodservice tech continues to advance.

12 Fast Facts

Danielle Romano dromano@ensembleiq.com

58 Setting a Tobacco Trajectory The convenience channel explores new ways to bank on the category’s future.

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 EVENTS Executive Vice President, Events & Conferences Ed Several (860) 830-8321 eseveral@ensembleiq.com AUDIENCE ENGAGEMENT Director, Audience and Data (224) 231-6363

Gail Reboletti greboletti@ensembleiq.com

List Rental (847) 492-1350 ext.318

MeritDirect Elizabeth Jackson

Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net

CANDY & SNACKS

62 Make Your Mark Private label is one of the biggest drivers — and areas of opportunity — in the candy and snacks categories today.

PROJECT MANAGEMENT/PRODUCTION/ART Vice President, Production (877) 687-7321 Creative Director (973) 607-1320

Derek Estey destey@ensembleiq.com 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 Executive Chairman Alan Glass Chief Executive Officer David Shanker Chief Financial Officer Dan McCarthy Chief Operating Officer Joel Hughes Chief Innovation Officer Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conferences Ed Several CONVENIENCE STORE NEWS AFFILIATIONS

52

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. Editorial & Advertising offices: 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Subscription rates: $125 for U.S. addresses; $190 for Canadian addresses; $275 for all other addresses. Single copies (pre-paid only): $20 in the U.S. Foreign single copy sales (pre-paid only): $85.00. Periodical postage paid at Chicago, IL 60631, and additional mailing addresses. Copyright 2019 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,, PO Box 3200, Northbrook IL 60065-3200.

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SPONSORSHIPS ARE NOW AVAILABLE!

TOP

W MEN IN CONVENIENCE PRESENTED BY CONVENIENCE STORE NEWS

The 2019 Convenience Store News’ Top Women in Convenience awards program recognizes the integral role women play in convenience retailing. Women will be honored from the retailer, wholesaler and supplier communities in four different categories:

AWARD CATEGORIES* Women of the Year

Senior Level Leaders

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SPONSORSHIPS AVAILABLE! CONTACT: PAULA LASHINSKY Vice President and Brand Director 917-446-4117 • plashinsky@ensembleIQ.com

KELLY FISCHER Associate Publisher/Midwest 847-894-8134 • kfischer@ensembleIQ.com

RON LOWY Associate Brand Director/West Coast 330-840-9557 • rlowy@ensembleIQ.com

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RACHEL MCGAFFIGAN Associate Brand Director/Northeast 508-385-2524 • rmcgaffigan@ensembleIQ.com

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CSNEWS ONLINE

ONLINE EXCLUSIVE

TOP VIEWED STORIES

1

Eby-Brown to Be Acquired by Performance Food Group

The acquisition will allow PFG’s Vistar segment to strategically expand in the convenience channel where there is significant overlap with suppliers and product categories, as well as opportunities to use PFG brands for unique solutions in the prepared/made-to-order foodservice market, according to the company. Combined, Vistar and Eby-Brown will service more than 75,000 locations.

2

7-Eleven Celebrates National Pi Day With Pizza Specials

Customers could download the convenience store chain’s 7NOW delivery app and order a whole pie for just $3.14 all day long on March 14, or purchase a single slice in-store for just 50 cents when they scanned their 7Rewards loyalty program app at checkout. Additionally, 7Rewards members who purchased a whole pie in-store received 314 bonus points.

3

How Target, Whole Foods & Lidl Are Going After the Convenience Market

Competition is rapid in the convenience store channel, as retailers of all kinds introduce new formats, offers and amenities in an effort to compete.

4

Illinois & Washington State Raise Tobacco Purchasing Age to 21

On April 5, Washington State Gov. Jay Inslee signed legislation raising the state’s legal minimum age to buy tobacco products from 18 to 21, while Illinois Gov. JB Pritzker signed his state’s legislation into law on April 7.

5

Juul Labs Advocates for Federal Tobacco 21 Legislation

Juul Labs Inc. is running ads in support of Tobacco 21 laws in several states as it makes a push to raise the legal minimum age to buy tobacco products to 21. “We know Tobacco 21 policies work. In areas where they are already enacted, smoking rates are falling. In the months after California enacted Tobacco 21 statewide, for example, tobacco sales to minors dropped by 45 percent. High school smoking rates in Needham, Massachusetts plunged 47 percent after they raised the purchasing age to 21 years,” the company said in a statement on its website.

EXPERT VIEWPOINT: EMV Conversion Is Costly, But Post-EMV Fraud Could Cost More Gas station and convenience store owners have until October 2020 to make their pay-at-the-pump card readers EMV compliant, and they’ve had several years to plan and prepare. Still, some experts say many fuel retailers may miss the EMV deadline. That’s risky because card skimming fraud is rampant at gas stations across the United States, exposing consumer payment data to thieves, hurting fuel retailers’ reputations, and costing card issuers an estimated $400 million per year, said Rafael Lourenco, executive vice president for ClearSale. After the EMV liability shift in 2020, gas stations and convenience stores that haven’t made the switch will bear the cost of card fraud at their pumps.

How to Gain Greater Adoption of Alternative Checkout Options

When it comes to checkout and payment, new technologies are abounding and retailers across all industries are trying to keep up.

Whether it’s payment via a mobile wallet, mobile app or emerging in-vehicle payment technologies for fuel, the options continue to increase.

Convenience store operators and fuel retailers are responding to the changes with upgraded mobile apps, wider adoption of the various mobile wallets available, and both Shell and Chevron are now offering in-vehicle payments, with Shell partnering with General Motors and Chevron with Honda. Others are following Amazon’s lead and offering cashierless checkout for a frictionless experience.

But how can c-stores gain greater consumer adoption of their new, alternative checkout offerings?

For more exclusive stories, visit the Special Features section of www.csnews.com.

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INDUSTRY ROUNDUP

New Circle K Banner Spreads Across the Globe Couche-Tard’s rebranding efforts have reached nearly 5,000 locations in North America By Melissa Kress ALIMENTATION COUCHE-TARD INC.’S efforts

to bring its new global Circle K brand to all of its locations are moving full-steam ahead, with the banner now adorning more than 6,800 convenience stores worldwide.

In North America alone, more than 4,900 locations now carry the new Circle K brand and in Europe, the number of newly rebranded sites top 1,900, according to Couche-Tard President and CEO Brian Hannasch.

“In Ireland, our last remaining market in Europe, we rebranded nearly 300 locations and are progressing nicely on the plan to have 360 completed by the end of this fiscal year,” Hannasch said during the company’s third-quarter fiscal year 2019 earnings call on March 20.

Turning to the United States, the retailer has rebranded roughly 120 sites in its Arizona Business Unit this fiscal year and the goal is to reach more than 200 by the end of the fiscal year.

In the Rocky Mountain Business Unit, Couche-Tard has rebranded 240 locations with a target of finishing 300 sites by the end of the fiscal year.

“Texas is moving forward to meeting its goal of 400, so we are making some great progress inside that CST network,” Hannasch noted.

The chief executive also reported that the trends in these newly rebranded stores are strong and lifting results across the company’s divisions.

“The key learning is: I should have done it a decade ago.

There are just a lot of wins in this space,” Hannasch said.

“I will start with culture. That’s what I have always said was our secret sauce. Having one brand gives us a platform to communicate across 135,000 employees what we stand for, what we want to become and the journey we are on.”

Couche-Tard is also rolling out a newly designed Circle K layout to nearly 50 locations in Europe this fiscal year.

Its target is to have more than 90 open by the end of the year. “These are newly remodeled stores and are a big step up in terms of the look and feel of the offers. They feature wide aisles, inviting décor, attractive lighting and provide new customer experiences to grow traffic and basket size,” Hannasch said.

As part of its global rebranding initiative, the retailer also introduced Top Tier Circle K fuel in April 2018, beginning in Florida. The number of Circle K Fuel locations has grown from an initial 20 to now nearly an additional 250 locations across North America as of the third quarter.

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INDUSTRY ROUNDUP

EG Group Expanding Its U.S. Footprint The U.K.-based retailer will acquire Fastrac Markets in upstate New York EG GROUP, which

entered the U.S. convenience market last year, is adding 54 more c-stores and gas stations to its U.S. portfolio. Its pending acquisition of Fastrac Markets also includes the Syracuse, N.Y.-based company’s wholesale fuel business. “[Fastrac President and CEO] Tom Waddle and his fellow shareholders have built an outstanding portfolio of large, modern facilities run by a team of associates who are connected to the communities they serve,” said Jay Erickson, president of EG America. “We are very impressed by the Fastrac operation, from their unbranded fuel procurement and transportation department to the well-developed signature pizza program offered. These stores are highly complementary to EG Group’s existing U.S. operation and we are very fortunate to have Fastrac join our EG America family.”

The transaction will bring EG Group’s U.S. store count to 1,042 locations across 24 states.

The company previously made major inroads into the United States through its purchases of The Kroger Co.’s convenience store business and TravelCenters of America’s Minit Mart chain.

“For the past 18 years, we have had a vision of becoming

a leading gas station/convenience store operator around the world. This is another exciting addition to the U.S. portfolio as we continue on our growth journey,” said Zuber Issa, founder and co-CEO of EG Group. “The Fastrac acquisition, in addition to multiple land purchases made in 2018 for new-to-industry stores, builds on our foundational network as we bullishly explore further real estate development prospects and, more importantly, provide growth opportunities in the [U.S.] for all our colleagues.”

The transaction is subject to regulatory approval and customary closing conditions. Matrix Capital served as exclusive advisor to Fastrac Markets.

FAST FACTS

8.9

%

Overall, U.S. c-store sales surged 8.9 percent to $654.3 billion in 2018, led by a 13.2-percent increase in fuel sales.

In-store sales rose 2.2 percent to a record $242.2 billion.

Two-thirds of all family travelers will go on a summer getaway this year, and 53 percent of those traveling families will pack up their cars for a road trip.

— AAA Travel Survey

Millennials with children made 7.3 billion visits to quick-service restaurants in 2018.

Convenience distribution sector activities totaled more than $102 billion in overall spending in the United States in 2017.

— The NPD Group — Convenience Distribution Association

— NACS, The Association for Convenience & Fuel Retailing

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INDUSTRY ROUNDUP

Eye on Growth

Chevron Corp. reached a definitive agreement to acquire all of the outstanding shares of Anadarko Petroleum Corp.

The deal is valued at $33 billion. The transaction will significantly enhance Chevron’s upstream portfolio.

QuikTrip Corp. opened its 800th convenience store on April 6. The milestone store is in San Antonio, a market the retailer entered this past fall.

A subsidiary of GPM Investments LLC closed on the acquisition of Town Star Stores LLC. The 18-store purchase moves GPM into the Florida market.

The 800th store opened less than five years after QuikTrip welcomed customers to its 700th store in Overland, Mo.

Wawa Inc. plans to open its smallest store yet at the corner of 16th and Chestnut streets in Philadelphia this fall. At just under 3,000 square feet, this location will serve as a test store for new products.

Marathon Petroleum Corp. is acquiring 33 NOCO Express convenience stores from NOCO Energy Corp. and converting the upstate New York locations to the Speedway banner. The deal also includes a light product and asphalt terminal.

Retailer Tidbits

RaceTrac Petroleum Inc. broke ground on its first store in the greater Nashville, Tenn., area.

The store in Murfreesboro, Tenn., marks the retailer’s entrance into the middle Tennessee market.

South Tennessee Oil Co. dba Quik Mart Convenience Stores purchased two Rick’s Barbecue and Country Stores in Ethridge and Leoma, Tenn. Terms of the deal were not disclosed.

SAMCO convenience stores partnered with fuel jobber Flyers Energy LLC to reimage three locations. Under the contract, the locations will transition to the Shell brand.

Each reimage package includes a

Sheetz Inc. launched an initiative to hire 2,500 new employees across the company.

The retailer held interviews for full- and part-time positions on March 27.

Kwik Trip Inc. opened a test kitchen to develop new foodservice products in Onalaska, Wis. The leased site is not open to the public.

TravelCenters of America LLC (TA) tapped CORD Financial Services LLC as its exclusive ATM solutions provider. The multiyear pact covers all TA, Petro Stopping Centers, TA Express and Quaker Steak & Lube locations.

10-year distribution deal to be High’s introduced lowerserviced by Flyers Transportation. emissions E85 flex fuel and 88 octane at a location in Jessup, Md. The retailer is working with Protec Fuel and plans to add E85 and 88 octane to the forecourt at more of its stores.

Phillips 66 released outdoor EMV acceptance at the forecourt. The company tested Gilbarco Veeder-Root’s Passport version 11.02 software over a six-month period.

Aloha Petroleum Ltd. joined the Partnership for a Healthier America as a member of its new Sustaining Partners Program.

Aloha will serve as a bronze-level partner.

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INDUSTRY ROUNDUP

Supplier Tidbits

The Ferrero Group is acquiring Kellogg Co.’s cookie and fruit snack businesses for $1.3 billion. As part of the transaction, Ferrero will acquire a cookie portfolio that includes the iconic Keebler and Famous Amos brands.

Orion Food Systems LLC and Land Mark Products Inc. signed a definitive merger agreement to create a comprehensive foodservice company to serve c-store operators. Financial terms of the deal were not disclosed.

Reynolds American Inc. tightened restrictions on the online sale of its Vuse vapor products. Online sales are now limited to a maximum of $80 per week per customer and three devices per quarter.

Mondeléz International Inc. made a minority investment in early-stage startup Uplift Food, which focuses on prebiotic functional foods.

This marked the company’s first venture investment as part of Snack Futures, its innovation and venture hub.

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The business operates on an independent proprietary card network with acceptance at more than 5,000 retail sites.

WEX Inc. plans to acquire EG Group’s fuel card business, Go Fuel Card. Go Fuel Card has approximately 200,000 proprietary cards in circulation across the Netherlands, France, Belgium and Luxembourg.

Old Trapper Smoked Products completed the commissioning process for its new 80,000-square-foot production facility in Forest Grove, Ore. The facility will significantly increase production of the company’s handcrafted meat snacks.

Competitive Watch Walgreens Boots Alliance Inc. is testing Despite the 12- to 18-month pilot tobacco-free program, Walgreens stores in the said it does not intend to remove United States. tobacco from all of The test its locations. includes one location near its headquarters in Deerfield, Ill., as well as 17 stores in Gainesville, Fla. Rite-Aid Corp. has decided to remove all electronic cigarette and vapor products from its stores over the next few months.

In addition, the drugstore chain began testing cannabidiol (CBD) products in April.

Dollar General plans to open 975 new stores, remodel 1,000 mature stores and relocate 100 stores during fiscal year 2019.

It will also introduce DG Fresh, which is designed to enable self-distribution of fresh and frozen products.

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Amazon Go will start accepting cash across its 10 locations. Massachusetts, New Jersey and Philadelphia currently mandate that all stores accept cash payment.

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People have always loved our

ICONS They have embraced what’s

NEW Everyone will want what’s

NEXT TIMES CHANGE. SO DO WE. Our brands have tremendous appeal and play a big role in the lives of generations of consumers. From our iconic soups, delicious snacks to fresh and organic products, we offer the foods and beverages people love and reach for time and again. As we move into the future, we’ll focus on continuing to delight today’s and tomorrow’s shoppers, while providing innovative products in the entrepreneurial spirit of our founders. ©2019 Campbell Soup Company

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OUT & ABOUT

Emerging Trends on Display at Natural Products Expo West CBD-infused items, alternative proteins and oat milk were prominent on the show floor By Don Longo BEET BURGERS. Mushroom burgers. Anythingbut-meat burgers. Keto ice cream. Superfoods. CBD-infused water, beverages, and health and beauty products. Food and drinks to promote gut health.

These were just a few of the products and trends on display at the 39th annual Natural Products Expo West, the world’s largest natural, organic and healthy products event, which took place March 5-9 at the Anaheim Convention Center.

Approximately 86,000 members of the natural products industry gathered in Southern California to view products from more than 3,600 exhibitors, including 600 first-time exhibitors of goods designed for natural grocers, supermarkets, gourmet shops and even convenience stores.

“Every year at Expo West, we foster the connection between emerging brands that are impacting the landscape and industry pioneers who have paved the way for decades,” said Lacey Gautier, group show director for New Hope Network, the event’s organizer.

While CBD and hemp-based emerging products drew a lot of attention, there were plenty of mainstream natural and organic products on display, too — from plant-based proteins to organic snacks to functional beverages.

On the snacks front, Expo West featured lots of companies showing off products made with organic, clean-label ingredients that are currently being sold in grocery stores, but are also likely to find their way onto convenience store shelves.

KIND, a familiar convenience store brand in the bars category, displayed several new items that extend the brand’s wholesome image into new areas. Jon Lesser, vice president of marketing, pointed to several items that will be ready for retail launch in May or June of this year.

KIND Simple Crunch — available in Oats & Honey, Peanut Butter and Dark Chocolate & Oats — features 100 percent whole-grain oats as its No. 1 ingredient, one of only seven ingredients total. Also set to be unveiled this spring are KIND Breakfast Bars with probiotics. Made with five grains, these bars are

Natural Products Expo West is the world’s largest show for natural, organic and healthy products.

gluten free and enhance the company’s growing breakfast platform.

“One-third of consumers are interested in gut and digestive aids,” noted Lesser.

Also on the expo floor, Conagra Brands displayed its wide-ranging portfolio of natural and better-for-you brands, including Duke’s meat snacks, Angie’s Boom Chicka Pop ready-to-eat popcorn, Udi’s gluten-free sweet potato crust pizza, Glutino gluten-free foods and Gardein meatless products.

“We are showing more new products than we traditionally do as we’ve made a commitment to have a bigger innovation pipeline and bring more things to market faster than in previous years,” company spokesperson Burke Raine told Convenience Store News.

In the beverages arena, kombucha drinks not surprisingly were all over the Expo West show floor. California-based Revive was showing new shelf-stable sparkling kombucha in 12-ounce cans. The line boasts lower sugar and calories, and comes in four varieties: Cherry Hibiscus, Citrus Ginger, Mango Orange and Strawberry Lemon.

“We see opportunities to grow this business as traditional carbonated soft drinks decline,” said CEO Sean J. Lovett.

Previously, the company produced 12-ounce refrigerated glass bottles, but Lovett feels the new cans open up opportunities for growth.

Plant-based beverages also were a big trend at this year’s event. Califia Farms launched Ubermilk, a line of oat milk beverages billed as a good source of protein and other essential nutrients. Available in spring 2019 in three varieties, Ubermilk has 8 grams of plant-based protein per serving. CSN

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Banding Together to Fight Obesity Partnership for a Healthier America Summit spotlighted best practices across industries By Don Longo “CONSUMERS ARE DEMANDING healthier choices, and businesses that don’t respond risk being left behind,” Dr. James Garvin, board chairman of the Partnership for a Healthier America (PHA), said during the organization’s 2019 Summit, held April 1-2 at the Swissôtel in Chicago.

With the theme of “Accelerating a Healthier Future,” the aim of the Summit was to bring together community and healthcare organizations with business and industry leaders to discuss ways to end the national epidemic of obesity, “which is robbing our children of a healthy future,” Garvin said.

Among the Summit’s sponsors were McLane Co. Inc., Giant Foods, PepsiCo Inc., National Confectioners Association, Harold Levinson Associates and The Honest Co. Convenience Store News and NACS, the Association for Convenience & Fuel Retailing, were among several media sponsors of the event.

The 2019 Partnership for a Healthier America Summit set out to bring together community and healthcare organizations with business and industry leaders to discuss ways to end the national epidemic of obesity.

The Summit consisted of both general and breakout sessions spotlighting best practices across industries that address healthier living, particularly for distressed or lower-income consumers.

The Summit also featured the presentation of the PHA Partner of the Year Award. This year’s winner was NACS, which became the first retail-focused association to make a commitment with PHA in 2017. Five specific elements of NACS’ commitment to PHA are:

“Obesity is not a character flaw,” noted Bandine Lacroix of premier sponsor Novo Nordisk, who talked about the need to change how the world sees, presents and treats obesity.

PHA Chief Marketing Officer Blythe Thomas showed a video detailing Giant Foods’ groundbreaking efforts to help its customers make more nutritious food choices. These include front-of-package nutrition labels, the launch of its Guiding Stars ratings, and a fruits and vegetables program.

Another presenter, Kevin Curry, founder of Fit Men Cook, shared his story of how he turned his own misfortune — out of work, lost girlfriend, out of shape, moved back into parents’ house — into a successful healthy eating business, which includes two apps, a bestselling cookbook and a blog.

“Three things I learned on this journey are: people want to be healthy; people want to be inspired, not sold to; and people want a consistent voice,” Curry said, noting that his

message is appealing for its focus on consistent calorie-control, rather than any kind of fad diet.

1. Continue

to encourage appropriate NACS members to engage with PHA. 2. Disseminate a web-based nutrition resource that could help c-stores identify products as being healthier options and assist them in defining their better-for-you sets.

3. Continue to engage small-format stores — specifically corner stores — that are often the only food source for residents in highly rural or urban settings.

4. Develop and disseminate Drink Up marketing materials that encourage c-store customers to stay hydrated.

5. Emphasize wellness at the NACS office and at its industry-specific events.

“This award recognizes both the efforts of our industry to make the healthy choice the convenient choice and the power of PHA to provide the connections and resources to make a difference in communities,” said NACS President and CEO Henry Armour. “Convenience stores serve 165 million Americans per day, and most customers are in and out of our stores with their food and beverage purchases in about three minutes. That is why it’s so important for retailers to provide cues that can help their customers make healthier choices.” CSN

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OUT & ABOUT

Disruption & Digital Experiences Impacting State of C-store Industry The 2019 NACS State of the Industry Summit tackled a variety of pressing issues

By Melissa Kress

DISRUPTION IS EVERYWHERE — from the increase in e-commerce to outside economic factors to competitive channels inching further into the convenience channel’s turf.

“Disruption should make us think about opportunity,” Andy Jones, president and CEO of Sprint Food Stores Inc., said at the 2019 NACS State of the Industry Summit, which took place April 2-4 in Rosemont, Ill. Jones serves as vice chair of the NACS Research Committee.

One area where disruption is especially hitting convenience stores hard is in the number of customer trips being made.

Excluding fuel, convenience store trips were down 2 percent in 2018, according to fellow presenter Jason Lobel, CEO and co-founder of SwiftIQ. The downward trend in trips can be reversed through promotions, he advised.

Consumer packaged goods companies spend approximately $225 billion annually on trade promotions — and that amounts to more than 30 percent of their marketing and advertising budget.

“There are a lot of dollars floating around,” Lobel said.

What’s currently working in the convenience channel are non-traditional missions; food bundles and meal deals; first to market with innovative products; and tactical displays.

On the other hand, what’s not moving the needle are items bundled from opposite dayparts; no support (like signage); too many promotions; and small temporary price reductions, he explained.

Still, it is not enough just to run a promotion.

Retailers need to know if the promotion is working. “You need to ask yourself if you are using the wrong measurement tools for the modern world,” Lobel said, noting that measuring units per week is just the tip of the iceberg.

C-store operators can mine a lot of trip data from store receipts, including basket size and items, loyalty information, and day and time of purchase.

From left to right: Andy Jones, Jim Lecinski and Jason Lobel were among the presenters at the 2019 NACS State of the Industry Summit.

“You really have to understand your stores, your assortment and your customers,” he said.

There are several “moments of truth” along a shopper’s journey, according to speaker Jim Lecinski, associate professor at Medill’s Integrated Marketing Communications Program at Northwestern University.

They include: the stimulus, the first moment of truth — at the retail store and point-of-sale, and the second moment of truth — the consumer’s experience. Mobile devices, however, add a zero moment of truth between the stimulus and the retail store: pre-shopping.

With that zero moment of truth in mind, convenience store retailers need to create digital experiences that remove friction. Those digital experiences, according to Lecinski, need to satisfy a consumer’s curiosity, understand the demand, and relieve impatience.

Citing Google findings from January 2015 to June 2015 vs. January 2017 to June 2017, he noted that there was a two-time increase in searches for same-day shipping, a three-time increase in “open now” searches, and a 150-percent increase in travel searches including the words “today” and “tonight.” All those point to a lack of patience among today’s shoppers, he said.

“Convenience stores have been historically successful in relieving impatience, but the bar gets higher because of mobile,” Lecinski explained.

He advises c-store operators to review their digital platform through three strategies: • Know me faster. How does your mobile-site speed stack up to consumer expectations?

• Know me better. How does your data strategy predict and personalize consumer needs?

• Wow me everywhere. For what “jobs to be done” could you better assist your consumer? CSN

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UNLOCKING THE FUTURE OF COMMERCE FOR ENTERPRISE GROWTH

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NEW PRODUCTS

1

2 3 4

1. 26.2 Brew

2. Starburst Duos

Marathon Brewing, a new endeavor from The Boston Beer Co., unveils 26.2 Brew. The golden, hazy ale offers athletes a reward for their hard work that tastes as satisfying as their accomplishments feel.

Brewed with Himalayan sea salt and coriander, 26.2 Brew provides drinkers a crisp body and refreshing finish with a 4 percent ABV, 9 grams of carbs and 120 calories. It is available nationwide in six-pack bottles (for a suggested retail price of $9.99), 12-pack slim cans (suggested price of $16.99 to $18.99), a 24-ounce can (suggested price of $2.99) and on draft. Prices vary by market. 26.2 Brew was the official beer of the 2019 Boston Marathon. It evolved from the original Boston 26.2 Brew, available for the past seven years in and around Boston during the marathon.

The Boston Beer Co. Boston bostonbeer.com

Each two-in-one pack of Starburst Duos includes chews that combine two popular Starburst flavors into one. Combinations include strawberry with watermelon, and blue raspberry with lemonade.

Starburst Duos are available in 2.07-ounce single packs with a suggested retail price of 99 cents, or 14-ounce laydown bags for a suggested retail price of $3.19. The product launch will be supported by a summer campaign that includes digital, public relations and in-store support.

Mars Inc. Hackettstown, N.J. starburst.com

3. Stouffer’s Chicken Pot Pie Stouffer’s Chicken Pot Pie offers busy foodservice operators a ready-toeat, labor-saving, classic comfort dish that can be served either as a dine-in or grab-and-go item. The scratch-style product combines classic comfort with premium ingredients. A flaky pastry crust envelops filling made with tender white meat chicken, gravy made with real cream, and vegetables seasoned with salt, sugar and spices.

Stouffer’s Chicken Pot Pie contains no artificial flavors or colors.

Nestle Professional Solon, Ohio (800) 288-8682 nestleprofessional.us/ stouffers

4. Rice Krispies Treats Snap Crackle Poppers Rice Krispies Treats Snap Crackle Poppers are the treats customers know and love in the form of an unwrapped, bite-sized snack. Each piece is dipped in silky smooth, chocolatey coating. Varieties include Chocolatey, Cookies ‘N’ Creme and Vanilla Creme.

Portable and shareable, Rice Krispies Treats Snap Crackle Poppers are packaged in five-ounce resealable stand-up bags, which are available in six-count cases.

Kellogg Co. Elmhurst, Ill. (800) 962-1413 kelloggcompany.com

5. Odwalla Smoobucha Odwalla offers consumers health-conscious ingredients without sacrificing taste with the debut of the Odwalla Smoobucha line. These beverages combine the delicious taste of smoothies with pasteurized kombucha, serving as the perfect blend of flavor and function, according to the maker. Three Odwalla Smoobucha varieties are available: Citrus & Guava, Berry & Ginger, and Apple & Greens. The drinks feature a unique mix of fruits and vegetables, fiber and 500 millimeters of CFUs (colony-forming units). They contain 40 percent less sugar and fewer calories than top smoothie items. Each variety retails for $2.99 per 15.2-ounce bottle.

Odwalla Inc. Dinuba, Calif.

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7. Ready-to-Serve Cold Brew Coffee

American Snuff Co. relaunched Grizzly Dark, a family of four dark-fired, 100-percent American moist snuff tobacco styles.

Grizzly Dark is now available nationally in redesigned, distinctive cans that reinforce its premium-tier position within the Grizzly brand portfolio. Cured by dark firing for weeks, Grizzly Dark is exceptionally soft, always moist and offers a perfect balance of flavor and rich tobacco character, according to the maker.

Grizzly Dark styles include Long Cut Wintergreen, Wintergreen Pouch, Long Cut Mint and Long Cut Select. The relaunch is being supported at retail with updated point-of-sale materials and an online sweepstakes.

American Snuff Co. Memphis, Tenn. americansnuffco.com

S&D Coffee & Tea is making the growing cold brew trend accessible to operators everywhere with the launch of a ready-to-serve cold brew coffee line. The product is shelf-stable and ready to serve, removing the need for in-house measuring or brewing. The cold brew coffee comes in a convenient bag-in-box format, which provides a turnkey solution to outlets that want to satisfy demand without adding to their labor costs. Available varieties include Black & Bold, Café au Lait, Salted Caramel, Horchata and Café a La Mode.

S&D Coffee & Tea Concord, N.C. (800) 933-2210 sdcoffeetea.com

9

8. FORGED

by Quaker Protein Bars

9. Extra Refreshers Gum

FORGED by Quaker is a new line of protein bars that hit convenience stores nationwide beginning in February. These delicious protein bars are made of whole grains that provide protein and fiber that can fuel any hard worker, according to the maker.

FORGED by Quaker bars feature 15-16 grams of whole grains and 12 grams of protein, and are a good source of fiber with at least 7 grams of fiber per serving.

The product is available in Milk Chocolate and Peanut Butter varieties.

The suggested retail price is $1.99.

The Quaker Oats Co. Chicago quakeroats.com

Extra Gum introduces Extra Refreshers, the first-ever soft chew added to the brand’s portfolio.

Bursting with intense freshness, Extra Refreshers come in three varieties: Spearmint, Polar Ice and Tropical Mist. The new product was slated to roll out to retailers nationwide in late April. Pack sizes include a 40-count bottle (suggested retail price of $3.49) and a 120-count stand-up pouch (suggested price of $7.69). The launch will be supported by a full-scale marketing campaign, including TV, print, online, public relations and in-store support.

Mars Inc. Hackettstown, N.J. extragum.com

10. Regatta Craft Mixers Regatta, the maker of Regatta Classic Bermuda Stone Ginger Beer, is expanding its brand with the introduction of Regatta Craft Mixers, its first entry into the craft mixers category. The Regatta Craft Mixers line includes three varieties: Regatta Dry Citrus Sparkling Tonic, Regatta Royal Oak Ginger Ale and Regatta Pacific Sea Salt Club Soda. Featuring complex yet well-balanced flavor palates that mix well with any spirit, Regatta Craft Mixers are expertly crafted in small batches, according to the brand. The products are American-made, Non-GMO Project verified, and use only the finest natural ingredients and no artificial preservatives. Regatta Craft Mixers come packaged in four-packs of 8.4-ounce “perfect-pour” slim cans.

Regatta Craft Mixers Locust Valley, N.Y. info@regattacraftmixers.com regattacraftmixers.com

10

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S

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Store Inspections Should Not Be a Surprise

UE

SMALL OPERATOR

RE RES

C

Become your own mystery shopper to raise your standards and improve customer service

By Roy Strasburger, President, Strasburger Retail

WHEN I WAS GROWING UP,

one of my tasks was to keep my room clean and tidy.

Every day, I was to pick up my clothes, books and toys and put them in their proper places. I tried. I really tried.

Seriously.

one store or 100 stores. The condition of your site is one of the main drivers of customer loyalty and increased sales. Maintaining a high standard is hard to do. Working in a store every day makes it difficult to see the areas that need to be improved.

Before being allowed out to play on a Saturday morning, my room had to pass inspection. Inevitably, as I stood by the front door, I would be told that I needed to clean my room. “But Mom, my room is clean,” I’d protest. I would then be led back to my room and items that I hadn’t noticed would be pointed out to me. My being in the room on a day-to-day basis had blinded my objectivity and I didn’t see what others saw.

The best way to have an objective eye is to imagine yourself as a professional inspector. A professional inspector has a checklist that he or she uses to make sure that every item is checked during a visit.

Leaving the inspection to memory causes items, and problems, to be overlooked because they are taken for granted.

Sound familiar?

The title of this article is not completely accurate. I think surprise store inspections are important and very helpful.

Thanks to the power of the English language, the statement “store inspections should not be a surprise” can have two meanings. What I actually mean is that the result of store inspections should not be a surprise. You must be able to objectively see what your store looks like.

You may not realize it, but your store is inspected multiple times a day. Every customer who walks into your shop is a mystery shopper grading your store on cleanliness, out-of-stocks, pricing and customer service. Unlike the professional mystery-shopping companies, however, your customers won’t leave you with an inspection report. If you fail any of the categories, the customer will vote with their feet — and their wallet — by going somewhere else.

The eternal question is: How do we keep our store at the standards we expect?

It is important whether you own

We use a checklist called Every Store Every Visit (ESEV). A store inspection is performed at least once a week. The store is graded based on the inspection, and the report is reviewed with the team members running the store. We leave the report in a binder at the store and review it after the next inspection to see what items were fixed and what areas still need to be worked on.

“What a great idea,” you are probably thinking, “but how do I get one of these checklists?”

If you are already having mystery-shop inspections because of your fuel or store brand, ask your brand owner for a copy of the inspection checklist and use it as the basis for your own list. Add to it items that you think are important for the success of your business.

If you don’t currently have a mystery-shopping program, don’t despair.

You can make your own checklist.

The next time you visit a competitor’s store, pay attention to what you are seeing. What do you look for? What do you notice? Where are your competitor’s flaws?

What do you think they can improve on? What are they doing right?

Next, go to your site. Pretend you are someone from another

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SMALL OPERATOR

planet trying to figure out what the building is and what goes on inside. Stand outside the property (but not in traffic!). Start at the curb with your eyes and slowly make a mental movie of the parking lot and the front of the store. Are the trash cans empty and clean? Is there litter in the parking lot? Are the weeds growing up through the cracks or over the curb? Are the fuel dispensers clean and working? Are the lights working?

Does the air and water work? Do the building, curbs or canopy need painting or repair?

As you enter the building, check to see if the windows are clean or cracked. Inside, slowly look around. Is the floor clean? Do the lights work? Is there any old food smells? Are customers greeted when they walk in the door and thanked when they leave?

As you walk around the store, notice if the shelves are clean. Is everything priced? Are there any empty spaces on the shelves? Is there trash on the floor?

How about the foodservice? Is the foodservice area clean? Are the cups and supplies stocked? Is the food being kept at the right temperature? Is the food being stored properly? Are the coolers and freezer holding temperature correctly?

How’s the staff? Are they in uniform? Are they attentive to the customers (greeting and thanking them)? Are they working the floor when not waiting on customers?

Do they have a name tag on?

And, always fun, how does the bathroom look? Is it clean? Does it have soap, towels and toilet paper?

Is the hot water working? Does it smell?

Finally, how about the things the customer doesn’t see?

Is the store room tidy? Is the cooler clean and tidy? Are the air filters clean? Is the office space in order? Are the proper cash controls being followed at the point-ofsale? Are all permits and licenses posted?

As you are walking around, list everything you notice on a sheet of paper. I suggest you organize the items into categories such as cleanliness, customer service, products, outside appearance, etc. Another option is to list them in the order you would see them when walking around. In either case, the more detail you add to the list, the better. A good inspection list should take 30 to 45 minutes to complete. This doesn’t include the time it takes to fix the mistakes.

Once you have your checklist completed, add a space at the top for the date and who was on duty. Make

a dozen copies of the checklist and put them on a clipboard. Carry the clipboard around and do your first inspection. In addition to feeling very professional (carrying a clipboard will do that to a person), you will be setting the standard for future inspections.

If you are honest with yourself, the first inspection will be terrible. No matter how good we think we are as operators, there is always room for improvement.

If you look hard, with an objective view, you will find areas that need improvement. Anytime you find a new issue or problem, add it to your checklist.

The good news is that each inspection will get better if you use them as a training opportunity. Don’t immediately fix the problem yourself, unless there is a safety issue. Walk the store with whomever is on duty, with the checklist in hand. Point out the areas that need improvement, as well as the areas that are done to perfection. Fix any issues as a team so that everyone can learn what is expected and what needs to be done.

After the next inspection, compare the newly completed checklist with the previous one. If the same areas continue having problems, it is a strong indicator that more coaching needs to be done. Go over the list again with the team members on staff. Once they understand there is a written standard they are being held to, they will be more motivated to achieve it.

As a training side note, providing people with definitive goals and targets is an excellent way to improve performance. Once someone knows what is expected of them, they find it easier to meet, and exceed, that expectation.

Becoming your own mystery shopper is a quick and inexpensive way to raise your store standards and improve your customer service. It makes your site ready for when the real inspectors — your customers — arrive. CSN

Roy Strasburger is president of Strasburger Retail (previously Convenience Management Services Inc.), a privately held retail consulting, operations and management provider serving the small-format retail industry nationwide. Strasburger Retail operates retail locations for companies that don’t have the desire, expertise or infrastructure to operate them.

Learn more at strasburgerretail.com.

Editor’s note: The opinions expressed in this article are the author’s and do not necessarily reflect the views of Convenience Store News.

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your business LEGISLATION / REGULATIONS SALES STRATEGIES

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COVER STORY

As more convenience store retailers introduce new food-forward prototype stores, the rest of the industry must join the movement or get left behind

BY ANGELA HANSON

The PAST YEAR has seen many convenience store retailers introduce brand-new store concepts or newly updated store prototypes that are focused foremost on fresh food. The names include Pilot Flying J, Global Partners, Nouria Energy Corp., Dash In, Facetrac Markets, FriendShip Food Stores, Shell and more. The c-store industry seems to have reached a turning point with foodservice where retailers realize it’s either sink or swim — you either update your stores to reflect the new age of “fresh convenience” or you risk not being in business for much longer.

“Absolutely no question,” Jerry Weiner, convenience foodservice veteran and president of Jerry Weiner Consulting, said when asked whether the industry has reached a turning point.

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He believes the shift began occurring as far back as the mid-1990s when consumers in the Northwest started paying more attention to c-store chains doing fresh foodservice right. Weiner pointed to 2015 as a “sea change” when chains like Salt Lake City-based Maverik Inc. and La Crosse, Wis.-based Kwik Trip Inc. began driving the importance of better foodservice in regions of the United States that hadn’t previously had significant category drivers.

Today, consumer expectations of fresh convenience have been firmly established.

For several years running, the annual AlixPartners Convenience-Store Consumer Survey has shown that the presence of healthy and better-for-you items is a top factor for customers when deciding whether to buy food at a c-store.

C-STORE SHOPPERS CITE “FRESHLY MADE IN STORES” AND “LOCALLY SOURCED/FRESH INGREDIENTS” AS THE MOST IMPORTANT ATTRIBUTES THEY SEEK. “In our most recent survey, when asked what specific attributes are most important, consumers cited ‘freshly made in stores’ and ‘locally sourced/fresh ingredients,” said John Benson, a director in the restaurants, hospitality and leisure practice at AlixPartners LLP. “Looking at the demographics of our respondents, we see this as being driven by millennials.”

With profits from c-store industry mainstays like fuel and tobacco shrinking, and foodservice opportunities increasing, it should be a no-brainer for retailers to decide to recalibrate their strategic direction. However, logistical challenges often result in hesitation.

“With that comes great risk. … If you figure out how to operationalize a robust food program, the potential is sky high; whereas if you don’t, you could end up with lost profits, unhappy customers and shrinking sales,” said Joseph Bona, president of Bona Design Lab. “So, it is not for the faint of heart, but convenience stores are more and more becoming a destination for highquality food on the go.”

Defining Fresh So, what does “fresh” really mean to consumers today?

The quality and sourcing of ingredients matter, but so does the customer’s perception. This doesn’t mean that the appearance of freshness is more important than its actuality — as consumers will quickly detect inauthenticity — but presentation is absolutely critical for conveying freshness.

“I’m a gigantic fan of open kitchens,” Weiner said, explaining that watching an order be made or assembled is an important part of conveying freshness. “Do everything in front of the customer.

Let them watch!”

Benson agrees, noting that “by far, the best way to showcase ‘fresh’ in your foodservice program is to make food in-store — either prepared in-store or, even better, made to order,” he said. “We see c-store chains incorporating this into most of their new-build and

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Fastrac Markets

Store Location: Elmira Heights, N.Y. remodel designs, featuring kitchen equipment and preparation stations front and center in full view of the consumer.”

Other methods for conveying freshness include retailers communicating the shortness of their supply chains and highlighting local sourcing programs, such as Rutter’s policy of labeling its local offerings in-store and online. This is one area where smaller retailers may have an advantage over the largest c-store chains.

Highlights: Fastrac Markets, which announced

in April that it will be acquired by EG Group, entered a new market at the same time that it launched a new, contemporary concept. Its 4,500-square-foot Fastrac Cafe features the retailer’s full menu with an emphasis on its signature fresh-baked pizza, which is made to order, never frozen and offers a variety of innovative specialty and breakfast styles, as well as 26 different toppings and the option of beer dough crust.

“Operationally, it can often be easier for a smaller, regional chain with less than 100 units to source locally than for a large, national chain with thousands of units,” Benson pointed out.

Common upgrades being made by convenience retailers that are getting serious about fresh food include changes to marketing, in-store presentation and improved merchandising. The most successful

INDUSTRY EXPERTS AGREE THAT THE BEST WAY TO SHOWCASE “FRESH” IN YOUR FOODSERVICE PROGRAM IS TO PREPARE THE FOOD IN FRONT OF CUSTOMERS.

FriendShip Food Stores Store Location: Elyria, Ohio

Highlights: In July 2018, the chain opened its first

FriendShip Kitchen location, its largest store yet at 5,500 square feet. The goal of the prototype design is consistency. By standardizing its offer, the retailer said it can now provide a reliable experience that customers can count on and return to regularly. The FriendShip Kitchen store includes extra space to accommodate different workflow and preparation processes, as well as new investments in equipment. The food-focused store prepares fresh items onsite, including its featured Famous Chicken, which is prepared in small batches and offers selections for all dayparts.

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operators, though, are making changes in company culture, too.

And experts add that excelling at fresh food also means having a well-thought-out coffee program established first, as this is a point of entry for many customers.

Hy-Vee Fast & Fresh

Store Location: Davenport, Iowa and elsewhere Highlights: Grocer and c-store operator Hy-Vee Inc.

combined its expertise in both channels to create Hy-Vee Fast & Fresh. The hybrid concept offers gas, grab-and-go items and other convenience products, but also serves as a small-scale grocery store that targets busy consumers in need of a more convenient grocery and meal experience while on the go. The retailer’s Mealtime Kits line offers fresh ingredients and simple instructions, allowing customers to prepare fresh meals on their own timeline without dealing with the planning and prep work. For a quicker hot meal, Mia Pizza is a wood-fired pizza station that lets customers pick their own toppings and get a fresh pie in six minutes.

“I always believed that coffee is the economic driver of any good food program. Customers know that if you can’t [offer] a good cup of coffee, then you probably won’t get much credit for moving into sandwiches or other advanced food offers — so get coffee right,” Bona said.

The Power of Design For many c-store operators, joining the fresh food revolution has meant eventually coming face to face with what some view as the most significant challenge: executing a quality program in a physical space that was not built to accommodate such a workflow.

Numerous chains have responded to this obstacle by opening new store models designed with foodservice top of mind.

Still, not all retailers have the resources to make such a drastic change, and some that do are playing catch-up in terms of building and opening them.

Not being among the first to arrive at the party doesn’t make joining in any less important. If anything, it’s even more critical to get started right away.

Those that can’t start from scratch with their store design still have options. “There are many different options on how to execute, from building kitchens in stores, to utilizing centralized commissaries, to leveraging third-party co-packers and partners,” Benson said.

nouria

Store Location: Lewiston, Maine Highlights: The fresh food offering at Nouria Energy

Corp.’s new retail brand, nouria, is designed around the principle of being a one-stop shopping experience where consumers can get both grab-and-go items and the essentials for making fresh take-home meals.

While the store caters to on-the-go shoppers with its grab-and-go selection and a drive-thru, the nouria Café also invites them to stop and relax with full-service hot coffee, espresso drinks and iced coffee.

“There’s likely not a one-size-fits-all solution and, in the short- to midterm, many chains will likely have to pursue a hybrid strategy that leverages different solutions for different store formats,” he continued. “The backend of foodservice isn’t the only important part of store design.”

Design must always serve a purpose, Bona stressed.

“I have always felt that great design can’t save a bad idea or poor execution. With that said, customers today are pretty savvy and are always looking for an experience,

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so how you curate your message should be very precise and focused on what you stand for and then making it easy to understand,” he advised.

The most effective fresh food-focused store designs put food at the center of everything. This includes lighting that presents food in an appetizing way; display cases that are created with consideration for how food is presented; and an overall design that supports the retailer’s food story in an authentic and credible way, according to Bona.

Retailers will inevitably have to wrangle with logistics and practicality, but imagination is just as important, Weiner added.

“There are limits to what you can do, but no limits to what can be created in terms of impression,” he said.

Pilot Express

Store Location: Steubenville, Ohio and elsewhere Highlights: Pilot Express, the newest store

banner of Pilot Flying J, serves as a way for the chain to enter areas where a major travel center doesn’t fit, and spotlights the company’s commitment to food and beverage innovation. Chief Merchant Brian Ferguson describes Pilot Express as “food first,” offering a combination of homestyle meals, graband-go or made-to-order sandwiches and salads, weekly limited-time offers and a bean-to-cup coffee experience.

Shell Select

Store Location: Louisville, Ky. Highlights: Shell Select, the first Shell-branded

convenience store in the U.S., debuted in Louisville specifically due to the city’s vibrant local culture and reputation for unique food and beverage offers. The store design and layout are intended to highlight a strong food and beverage presentation and direct customers’ focus to the consumable offerings.

The combination of modern architecture and an upscale outdoor seating area, which is screened in by greenery and covered by an awning, signals to passersby that this is a more upscale destination for convenience food and drinks. Interior materials and lighting, as well as an open ceiling and layout, also help to create a warm, welcoming ambiance.

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SPECIAL SERIES ON FRICTIONLESS ENGAGEMENT

Sponsored by

How Frictionless Shopping Works for Family Express A new technology ecosystem links critical consumer touchpoints across four business areas By Debby Garbato plans to open 3,000 cashierless stores by 2021 have prompted many convenience store chains to rapidly deploy out-of-the-box, self-checkout solutions. Many are using consumer smartphone-enabled apps to eliminate the pain point of waiting in line.

REPORTS THAT AMAZON GO

Valparaiso, Ind.-based Family Express, though, is taking frictionless shopping beyond the level of most convenience stores to create a true 360-degree, frictionless shopping experience.

By integrating products from several providers, its new technology ecosystem links major touchpoints of its fuel, car wash, foodservice and general merchandise business segments through a single app and one loyalty program. The initiative includes scan-and-go payments, a smart kiosk for purchasing car wash codes, and the ability to place digital food orders remotely or while inside the stores.

Across the four business segments, the system collects shopper data and insights, generating a single customer profile and sending customized offers across categories.

Therefore, if a gas customer makes in-store purchases, he/she could also receive a fuel discount. Since the data collected is customer-specific, the system can send shoppers personalized discounts. As of press time, most components of the system were up and running, with the app slated to go live April 15.

“It’s not what these platforms can do individually, but what they can do together,” said Gus Olympidis, founder, president and CEO of the regional Family Express chain, which operates 74 stores in Indiana. “The idea behind integration is to eliminate points of touch and not make the consumer do four exercises. You can have a robust food-ordering platform, but if it doesn’t integrate with loyalty, you can’t receive loyalty rewards.”

Outside of self-payment apps, Olympidis believes most

Family Express’ new technology ecosystem links major touchpoints of its fuel, car wash, foodservice and general merchandise business segments.

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convenience stores are far behind other channels in implementing consumer-interfacing technologies.

“Our channel has been kind of asleep at the wheel,” he said. “We convinced ourselves we own convenience. But we don’t own convenience the way it’s evolving.”

Today’s consumers — particularly millennials — have redefined the convenience concept. They want to eliminate steps to make processes quick and simple.

“It has to do with removing friction or points of touch,” Olympidis added. “How simple is it? Are you asking for my credit card more than once? Do you know what I bought a month ago, a year ago? Are you sending me energy drink coupons if I buy coffee?”

“It’s not what these platforms can do individually, but what they can do together.”

— Gus Olympidis, Family Express

Olympidis points to Amazon Go’s 11 pilot stores and Starbucks as examples of companies that have accomplished many of these goals. “Amazon Go has removed friction to a monumental degree. At Starbucks, 30 percent of orders are digital and seamless. Technology is emerging where you don’t need to stop at a cash register,” he said.

Creating Family Express’ ecosystem has involved far more than partnerships. It has meant joining forces with multiple companies that, in simple terms, have the capability and willingness to link their parts and pieces to connect systems and processes. Olympidis describes these companies as “connectivity inclined.”

“Most technology in our space is facilitated by portals, which provide a one-stop shop for technology solutions,” he said. “They do a great job, but it’s not where innovation lies. Integration is a complex process. At Family Express, we created a constellation of best-inclass technology providers that have connectivity in their DNA. They’re designed to coexist harmoniously with whatever progressive solution is out there, including what we may be talking about a year from now that we’re not talking about today. Portal providers often resist integration.”

Customers who participate in Family Express’ loyalty program can collect and redeem points across all four of the chain’s key business segments.

No More Silos In the past, many of the functions Family Express brought together were disparate. For example, loyalty points could be awarded for fuel purchasing, but customers had to enter the store to accrue them, according to Thierry Lyles, digital marketing manager for the retailer.

Now, customers can download the app and join the loyalty program through any digital device. They are immediately tapped into all loyalty applications and can collect and redeem points across all four key businesses: fuel, car wash, foodservice and general merchandise. No plastic cards are involved. Paytronix, which specializes in customized loyalty solutions, is the chain’s loyalty provider and a critical component of the ecosystem.

Implemented four months ago, the loyalty program, along

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Family Express’ Ecosystem Partners • Paytronix is responsible for customer engagement management, which includes the loyalty program, customer relationship management (CRM) and digital guest engagement.

A text-to-join feature allows consumers to join the loyalty program simply by providing their email address. Paytronix’s mobile phone app provides one-click ordering for foodservice and processes payments. Customers can reorder a previous order (e.g., hold the onion) or use one-click ordering to choose from a list of favorites. Digital orders can be placed in advance for pickup.

• Olo is a mobile and online food ordering platform that allows people to order food from online menus and prepay from their mobile or desktop devices.

• Big Club Digital is handling website development.

• eGenuity is the provider of smart car wash kiosks that are integrated with Paytronix’s mobile app. The kiosks accommodate loyalty members and let consumers procure and redeem car wash codes with a wave of their smartphone.

• National Car Wash Solutions/Ryko provides the hardware for the car wash solution.

linked to Paytronix’s mobile app. With a wave of their smartphone, customers can process loyalty information and purchase and redeem car wash codes.

“We’re collecting data in real time and integrating the car wash into a mobile app,” said Lyles. “I don’t know anyone else that has an integration like that.”

The new Family Express mobile app provides one-click ordering for the retailer’s foodservice offerings.

with Paytronix’s one-click food ordering, is integrated with NCR’s point-of-sale system. Paytronix’s ability to collect customer data is giving Family Express insights “we never had before,” Lyles said.

In addition to sending tailored offers to individual customers, Paytronix’s one-on-one marketing capabilities identify “defectors,” or customers who have not shopped Family Express in recent months, noted Courtney Williams, vice president of food and beverage.

“We send them offers in hopes of getting them back,” she said.

Another distinctive element of Family Express’ ecosystem is its car wash perks. Smart kiosks from eGenuity are

Unlike in the past, today’s system allows codes to be redeemed at any Family Express location with a car wash — regardless of the store where they were purchased. This alleviates a former pain point. Consumers often purchase codes in bunches or they buy them for later use because purchasing them provides an immediate fuel discount.

Since some aspects of Family Express’ frictionless, integrated ecosystem went live just recently (other applications went live late last year), it is difficult to judge the full impact on customer service and the bottom line. Still, January sales were up 8 percent, “although you can’t know 100 percent the cause of that good news,” said Olympidis.

The ecosystem will continue to grow, he revealed, adding that he is already researching other capabilities, including integrated back-office technologies and food delivery through one or more third parties. The latter should occur within the next six months.

“We want to create a culture allergic to friction,” he said. “Total connectivity is the new religion.”

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SPECIAL SERIES ON FRICTIONLESS ENGAGEMENT

Sponsored by

Paytronix Solutions Boost Customer Loyalty ANDREW ROBBINS, president and co-founder of Paytronix, was conducting onsite research at a Family Express store when an associate asked if he would like to try a latte.

“He told me, ‘They’re really good’ and gave me one for free,” Robbins recalled.

This level of customer service and employee empowerment are cornerstones of Family Express’ business. But when it comes to customer-specific marketing, there is only so much humans can do.

Andrew Robbins

If Robbins was a member of the retailer’s newly integrated loyalty program, Family Express would have a record of his favorite coffee beverages — along with a record of how often he fuels and washes his car and which general merchandise categories he shops. Via his smartphone, the retailer might send him a discount doughnut offer to accompany the coffee.

Paytronix specializes in customized loyalty solutions. It is a critical component of Family Express’ new technology ecosystem, which links major touchpoints of its fuel, car wash, foodservice and general merchandise business segments through a single app and one loyalty program.

engineers who are very talented at working with the customer and POS companies.”

Paytronix’s mobile phone app also offers one-click foodservice ordering. Customers can reorder a past order or use one-click ordering to select from a favorites menu.

Digital orders can be placed in advance for pickup.

This integrated ecosystem takes customer service to a whole new echelon.

1. A real-time, rules-based engine generates customer

“You have to interact with customers in ways they want to communicate,” said Robbins. “They want to use apps to make life more convenient. Family Express, for example, has wonderful food. You may want to order ahead for pickup. Tech-enabled people expect mobile apps to do this.”

The new ecosystem benefits Family Express’ vendor relationships, too. By presenting suppliers with results of pinpointed customer marketing incentives, the retailer can procure more special deals. “If 200 people buy Red Bull who never bought Red Bull, they’re likely to get better funding,” Robbins explained.

Integrating Family Express’ technology functions was not easy since it uses three major point-of-sale (POS) providers: NCR, Verifone and Gilbarco Veeder-Root.

“POS systems are tough for a third party to integrate into,” said Robbins. “But we employ a special group of

Paytronix’s loyalty platform encompasses four key systems: offers based on past purchasing patterns.

2. A CRM database compiles personal shopper

information, including home and email addresses and everything shoppers purchase.

3. A campaign tool sends timely messages to specific

customers. “It reminds them to use rewards before they expire in seven days,” said Robbins.

4. A predictive analytics tool runs machine-learning

algorithms that choose the next best offer to send.

“If it’s a coffee-only buyer, the next best offer may be a doughnut,” said Robbins. “But a customer who only buys Slim Jims and Doritos wouldn’t care about that message.”

Several other convenience store chains partner with Paytronix for loyalty and promotions, including Maverik, Yesway, NOCO Express and Thorntons. CSN Andrew Robbins is the president and co-founder of Paytronix Systems Inc., a SaaS company that specializes in helping brands deliver exceptional program impact through frictionless guest experiences — online ordering, loyalty, gift, mobile payment, apps, messaging and more.

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Our exclusive consumer research shows there is still room to grow in convenience foodservice if retailers focus on freshness By Angela Hanson

CONVENIENCE STORE RETAILERS can rest easy when it comes to evaluating the long-term prospects of their foodservice customers. Not only is the number of c-store shoppers who don’t purchase prepared food a minority, but those who do buy it tend to make a habit of doing so.

Younger generations, though, are also more likely to make multiple c-store prepared food purchases in a given month, with Generation Z leading the way with an average of 4.07 purchases per month, followed by millennials (3.78 purchases) and Generation X (3.65 purchases). That’s compared to an average of 2.67 purchases per month made by baby boomers.

According to the findings of the 2019 Convenience Store News Realities of the Aisle consumer study, 69 percent of the U.S. c-store shoppers surveyed said they purchased prepared food within the last month, compared to just 31 percent who said they did not make such a purchase.

Shoppers are also generally happy with what they receive, as two-thirds said they were extremely or very satisfied with their most recent prepared food purchase, while only 3 percent were not satisfied. Additionally, 70 percent of those who identify themselves as healthconscious were extremely or very satisfied, compared to 60 percent of non-health-conscious shoppers.

Among those who did not purchase, their chief reasons why were: they didn’t plan to do so (44 percent) or they prefer not to buy prepared food at c-stores (44 percent), which indicates that convenience store retailers can still do more to demonstrate they have an enticing offering. Millennials and members of Generation X, as well as health-conscious shoppers, are more likely to point to unappetizing food as a reason for not purchasing.

When, Where & What While just more than half of prepared food purchases at c-stores (52 percent) are made after 2 p.m., consumers buy food consistently throughout the day until 10 p.m., which should incentivize retailers to have a robust offering during all dayparts.

In the evening, millennials and Gen Xers are more likely to make purchases from 7 p.m. to 10 p.m. compared to baby boomers, and Hispanic consumers are more likely to make purchases from 4 p.m. to 7 p.m. than non-Hispanics.

MOST IMPORTANT FACTORS WHEN PURCHASING PREPARED FOODS AT CONVENIENCE STORES 62%

Price/value 49%

Food quality 42%

Taste 38%

Freshness Convenience/on-the-go

34%

Sanitation

27%

Location

23%

Speed of service

19%

Menu choices

14%

Customer service

11%

Portion size

10%

Presentation Selection of brands available Availability of healthier options Drive-thru available

7% 5% 5% 3%

Base: 1,029 U.S. c-store shoppers aged 18+ who purchased prepared foods in the past month Source: Convenience Store News 2019 Realities of the Aisle Study; EIQ Research Solutions

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Many hungry customers buy c-store food as part of their on-the-go lifestyle, as indicated by the 49 percent of recent prepared food purchases that were consumed in the car, while one-third of such purchases were consumed at home. Interestingly, men are more likely than women to eat their purchases at home (37 percent vs. 30 percent, respectively), while women are more likely than men to eat their purchases in the car (53 percent vs. 45 percent).

additional item with their prepared food purchase. Nearly one-third add on a fountain drink.

When it comes to add-on items, notable demographic differences include: • Women are more likely than men to add on the purchase of a fountain drink (38 percent vs. 26 percent), bottled water (31 percent vs. 24 percent) and a packaged sweet snack (18 percent vs.

12 percent).

Sandwiches/deli are the most popular prepared food items at c-stores (29 percent of surveyed shoppers purchased in the past month), followed by pizza, breakfast sandwiches and hot dogs, all at 24 percent, and fresh-baked goods at 20 percent.

• Millennials are more likely than baby boomers to add on the purchase of bottled/canned soda (30 percent vs. 21 percent), bottled water (31 percent vs. 16 percent), candy (27 percent vs. 18 percent), a salty snack (25 percent vs. 16 percent) and a sweet snack (17 percent vs. 7 percent).

Fresh-made items continue to gain ground on products held in refrigerated cases.

When considering all their prepared food purchases made in the last month, 41 percent of surveyed shoppers said they bought only made-to-order items, 32 percent bought only grab-and-go products, and 28 percent bought a combination of both.

The generation most likely to exclusively purchase made-to-order food is baby boomers, with 48 percent saying they did so.

TIME OF DAY FOR LAST PREPARED FOOD PURCHASE 6 a.m. to 8:59 a.m.

10 p.m. or later 7 p.m. to 9:59 p.m.

12% 6% 16%

Notably, despite the fact that only 41 percent report having bought made-toorder food in the last month, 54 percent of all c-store prepared food shoppers prefer made-to-order over other options, while 27 percent prefer grab-and-go and 19 percent say they have no preference.

4 p.m. to 6:59 p.m.

21% 11%

2 p.m. to 3:59 p.m.

13%

9 a.m. to 10:59 a.m.

19%

11 a.m. to 1:59 p.m.

Hungry for More The prepared food segment is a significant opportunity for c-store operators to grow basket size, as a whopping 94 percent of c-store shoppers include at least one

Base: 1,029 U.S. c-store shoppers aged 18+ who purchased prepared foods in the past month Source: Convenience Store News 2019 Realities of the Aisle Study; EIQ Research Solutions

PREPARED FOOD COMPARISON: CONVENIENCE VS. OTHER CHANNELS Casual dining

53%

21%

49%

Fast casual

Grocery/deli

35%

Fast food

34% Better

29%

51%

51% Similiar

Worse

15%

12%

11%

10%

7% 6%

12%

2%

Don’t purchase from

Base: 1,029 U.S. c-store shoppers aged 18+ who purchased prepared foods in the past month Source: Convenience Store News 2019 Realities of the Aisle Study; EIQ Research Solutions

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ITEMS PURCHASED WITH PREPARED FOODS 32%

Cold fountain/dispensed soda/drink 29%

Coffee/tea/other hot beverages

28%

Bottled water

27%

Bottled/canned soda Candy/gum

25%

Packaged salty snack

25%

Cigarettes

16%

Other bottled beverage

16%

Packaged sweet snack

15%

Milk

15%

Grocery item

11%

Ice cream

11% 9%

Beer/malt beverage Fresh product (fruits or vegetables) Nothing else, only purchased prepared food Newspaper or magazine

9% 6% 5%

Base: 1,029 U.S. c-store shoppers aged 18+ who purchased prepared foods in the past month Source: Convenience Store News 2019 Realities of the Aisle Study; EIQ Research Solutions

• Hispanic shoppers are more likely than non-Hispanics to add on the purchase of a grocery item (16 percent vs.

10 percent). • Health-conscious shoppers are more likely than non-health-conscious shoppers to add on the purchase of bottled water (32 percent vs. 22 percent), another bottled beverage (18 percent vs. 13 percent), coffee/tea/hot beverage (35 percent vs. 21 percent) and candy (30 percent vs. 19 percent).

The most important factors for shoppers when purchasing prepared food at convenience stores are price and food quality, cited by 62 percent and 49 percent, respectively. Taste (cited by 42 percent), freshness (38 percent) and convenience/ on-the-go (34 percent) round out the top five considerations. Additionally, women are more likely to rate sanitation as being highly important compared to men (32 percent vs. 22 percent).

When it comes to competitors, nearly twothirds of prepared food buyers (63 percent) say they will most likely visit a fast-food restaurant if they do not make a c-store purchase; 16 percent will prepare and eat food at home; and 10 percent will visit a fast-casual restaurant.

Home delivery services have not yet reached the mainstream, as just 1 percent of shoppers selected this option. However, 4 percent of Gen Z shoppers would opt for home delivery, which indicates the potential for this option to increase share of stomach in the future.

Health-conscious shoppers (12 percent) are more likely to select fast-casual restaurants than non-health conscious shoppers (7 percent). Generation Z (16 percent) and millennials (12 percent) are also more likely to select fast-casual than baby boomers (5 percent). Baby boomers are the most likely to buy food to prepare and eat at home (23 percent).

When comparing the convenience channel to other channels, 49 percent of shoppers perceive fast casual as being better than c-stores, and 53 percent said the same about casual dining. At the same time, 15 percent of shoppers describe prepared foods at casual-dining outlets as being worse than convenience food. Twelve percent of shoppers think both fast casual and fast food are worse than c-stores, and 7 percent think grocery/ deli foods are worse.

Overall, prepared food remains a significant area of opportunity for c-stores both in evolution and growth. Shoppers increasingly prefer made-to-order over grab-and-go, and retailers should continue to consider alternative meal and snack-deal promotions, especially those based on trends popular with younger and female shoppers, such as organic/non-GMO, high protein, low sugar, functional foods and unique flavor profiles. CSN

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FOODSERVICE

What’s Hot on C-store Menus?

Berries prove berry appealing in this month’s limited-time offers

Datassential recently reported that “berries are the bacon of beverage menus,” implying that the addition of berries to a drink is virtually guaranteed to drive purchase intent (PI).

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This month’s limitedtime-offer (LTO) contenders clearly agree.

Blueberry and blackberry were the leading berry additions to both beverages and pastry launches.

black and white consumers generally like the concept, Asian and Hispanic shoppers certainly do not, tallying PI scores of only 37 and 28, respectively.

And the Runner Up Is… Kum & Go may have deviated from the berry theme with its Cookies & Crème Ampersand Donut — this month’s LTO runner-up — but the chain did so with amazing success in shoppers’ eyes. The latest offering in its Ampersand shape scored two 100s for Draw and Frequency. Consumers find this item a reason to come back to Kum & Go stores. CSN

Triple Threat Casey’s General Stores dropped a Blueberry Fritter that takes the cake in almost every SCORES category. With a score of 90-plus in every category but Uniqueness (where an 85 is still quite good), this item is sure to do well — and could be a delicious addition to your breakfast case in the future.

Who’s Buying?

Surprisingly, Casey’s berry-forward treat is not a universal favorite. While millennials love it (a score of 99 for Purchase Intent), Gen Z is just cool with its deep-fried goodness (a PI score of 47). Also, while

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FOODSERVICE

Today’s Special: Technology From food safety to mobile ordering to robot automation, foodservice tech continues to advance By Tammy Mastroberte operators invest more money, time and square footage in foodservice operations, many are turning to technology for faster service, automation and an improved bottom line. Whether it’s online or mobile ordering, in-store kiosks, food safety technology or robots cooking in the kitchen, the latest advancements are allowing c-stores to keep up with the restaurant industry and better satisfy customers.

AS CONVENIENCE STORE

“Technology in foodservice is not a new concept, but we are starting to see more innovation. Because of the low unemployment rate and higher labor costs, there is a lot of automation technology being developed,” said Amanda Topper, associate director of foodservice research at Mintel, based in Chicago.

“Also, mobile ordering and delivery is coming about because we are seeing a shift of more consumers wanting to have off-location dining.”

In fact, 57 percent of consumers said they planned to use mobile ordering and pickup in 2019, according to Mintel’s Dining Out in 2019 report, published in December 2018.

In the convenience channel, a few operators are testing the concept, including 7-Eleven Inc. with its 7Now mobile app.

7-Eleven also partnered with Postmates

on delivery a few years back, Topper noted.

In terms of online ordering and delivery at c-stores, Mintel’s March 2019 C-Store Foodservice Report showed 23 percent of c-store foodservice customers want to see online ordering from a c-store and 21 percent want delivery options offered.

“We are seeing operators invest more in mobile and online ordering, and shifting to a store concept that meets the needs of consumers placing orders online,” Topper explained. “Dunkin’ has a few test stores with special pickup areas for online orders and a drive-thru lane just for people who ordered online. Chipotle is testing this concept, too.”

Technology for training is another area ripe with innovation. Many operators are using iPads or other tablets in the kitchen to feature recipes and provide training videos for kitchen staff on how to prepare meals, according to Jessica Williams, founder and CEO of the consulting firm Food Forward Thinking LLC. “With training, it’s critical to replicate in-person training as much as possible, so video training through iPads or filming recipes in those quick clips people see on Instagram is something that is helping right now,” Williams explained. “The digital training will also be key to offering consistent and accurate products across a chain.”

Many employees working in foodservice today are millennials and Gen Zers and, because they are always using their phones and on social media, they respond better to videos like this, said Francine Shaw, president and CEO of Savvy Food Safety Inc., based in Hagerstown, Md.

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FOODSERVICE

Shaw believes mini training sessions will be a game changer. With all of the information being stored electronically, there is a record of the data and this can minimize the time employees spend away from guests.

“Changing the way we work with our team members will likely achieve the results we are not currently getting within the industry,” Shaw stated.

Technology advances are leading to improvements in the way food is cooked and beverages are prepared, too. For instance, convection ovens and microwave ovens cook foods using infrared heat — not only to keep them warm, but also to retain quality. They can respond to the temperature and water amount in food and adjust accordingly, said Williams.

“It will adjust between crispy chicken tenders and mashed potatoes because of the different water content, and even for grilled vs. crispy chicken,” she added.

“This is an important aspect of food safety and also food quality.”

Food Safety Advances Years ago, food safety was not the topic of much discussion in the foodservice industry. Then, everything changed in 1993 when the Jack in the Box E. coli outbreak left 732 people sick, four children dead and nearly 200 people with permanent disabilities, including kidney and brain damage, recalled Shaw.

“When I first began in the industry, our technology was a manual fry timer,” she said. “Now, everything is digital — employee schedules, electronic inventory and product orders, digital cooking equipment and digital thermometers that automatically log temperatures on temperature logs with a sensor to notify the person in charge if the temperature of a specific piece of equipment enters the danger zone.”

One area in particular that’s gaining traction in food safety technology is blockchain food traceability, which enables a customer to track the entire lifecycle of a food product by scanning its QR code.

Blockchain covers every link of the supply chain, from raw materials to production to the final product on the shelf, Shaw explained. Blockchain also enables companies to track their own supply chain in a

secure and paperless way. Data that used to take seven days to collect can now be obtained in mere seconds.

“Blockchain will make tracking shipments much less complicated. Every logistical step of a product’s journey will have instantaneous information on who handled it, where and when, resulting in fewer stolen, lost or damaged goods. Suppliers could even trace the temperature and humidity throughout the shipping process,” Shaw said.

“This will be extremely useful in locating unsafe products or the source of foodborne illnesses, thus preventing costly mass recalls.”

Blockchain technology can also help prevent massive amounts of unnecessary food waste and all of the related costs that go along with it, including labor, storage, disposal of contaminated or mislabeled product, and more, she added.

Robot Automation Compared to other industries, the food industry has been slower to adopt robotics. However, it is now being incorporated into all areas of the supply chain — including the kitchen.

In December 2018, Walmart announced it is testing a robot named Flippy by Miso Robotics at its headquarters; Flippy works as a fry cook. And Creator, a casual burger restaurant in San Francisco, has a fully automated kitchen and robotic system to prepare orders.

“The use of robotics in the back of house is growing and with labor costs continuing to go up and the low unemployment rate, a lot of restaurants are turning to robots to keep menu costs low,” Topper explained.

The Flippy robot first debuted at Caliburger’s Pasadena, Calif., location in March 2018, and can also be found

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FOODSERVICE

at Levy’s Chick ‘n’Tots stand at Dodger Stadium.

The autonomous food assistant is NSF-certified and certified by the Department of Health for produce line use, according to David Zito, CEO of Miso Robotics.

“Flippy can cook burgers, and our frying capabilities can cook chicken tenders and tots. We also have mozzarella sticks in the works,” Zito noted. “Flippy also has Bluetooth-connected thermometers and computer vision to help avoid food waste.”

This robot does not replace human employees; it can operate tasks autonomously with humans working alongside it.

It can free up kitchen staff to spend more time with customers, Zito pointed out.

Over time, he expects that the company’s robotic kitchen assistants will be able to chop onions, cut other vegetables and even clean up the kitchen.

“There are definitely a few niches where robots can be focused in foodservice, like making burgers or salads, like the salad robot Sally by Chowbotics,” Topper

pointed out. “I can see both working well in a c-store.”

Sally is a robot that creates made-to-order salads, snacks, breakfast bowls and grain bowls and only takes up three feet by three feet of space.

Another robot to hit the market recently is from Blendid and known as Chef B. This kiosk robot is capable of making up to 26 12-ounce smoothies in an hour and features refrigeration systems, blenders, robotic arms and 20 temperature-controlled dispensers. The first Chef B unit debuted in March 2019 at the Market Café on the University of San Francisco campus.

Even Postmates, the on-demand delivery service, has added robots to its lineup, partnering with NewDealDesign in San Francisco to create an autonomous bot called Serve, which can carry up to 50 pounds and travel 30 miles on a single charge, according to a report by Fortune.

“Robotics will benefit from the overall transformation to cloud kitchens, which will be increasingly possible thanks to remote networking software and 5G support in urban areas,” explained Zito. “As these connected hubs merge with artificial intelligence, machine learning and IoT offerings, the ability to apply intelligent automation in the commercial kitchen will accelerate, freeing up workers to deliver more meaningful customer interactions.” CSN

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TOBACCO

Setting a Tobacco Trajectory The convenience channel explores new ways to bank on the category’s future By Renée M. Covino IN TOBACCO we trust?

Not completely, or at least not in the traditional tobacco sense, as convenience store retailers are evolving their tobacco mix to adapt to more smokers shifting to alternative tobacco products, particularly reduced-risk products (RRPs).

Finding the right mix of products can make all the difference, according to Don Burke, senior vice president of Management Science Associates Inc. (MSA). The data and information company recently found, after a years-long study, that about 30 percent of convenience stores are able to increase their tobacco category sales each year and “they typically do it by carrying the right products. That’s actually critical,” Burke said.

With that in mind, here are three strategies c-store operators are considering and/or implementing to better protect the longevity of their tobacco business:

Taking a Chance on CBD While not yet widely available in the convenience channel, cannabidiol (CBD) products are starting to get picked up by major c-store chains, aided by the passing of the U.S. Farm Bill in December 2018, which lifted restrictions on the sale of non-THC containing (lower than 0.3 percent THC) hemp-derived cannabidiol products at retail.

Several chains are currently in the testing stage, such as Sheetz Inc., which is reportedly testing CBD products in its 150 Pennsylvania locations. The Altoona, Pa.-based chain operates more than 575 c-stores throughout Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina.

“Interestingly, the cannabis ‘craze’ reminds retailers of the early days of e-cigs where, in the end, there were a lot more losers than winners — they were forced to write off a lot of product,” said Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities LLC. “This time, retailers are applying a more vigorous framework to their vetting system, analyzing CBD companies’ solvency, licensing and supply chain strength before partnering.”

The National Association of Tobacco Outlets (NATO) also reports that it is starting to get “a lot of questions” on CBD, prompting its board to discuss the topic during recent meetings.

C-stores must consider, too, that competitive channels are jumping into CBD product sales as well, especially drugstores. Even though CVS Health Corp. stopped selling tobacco products five years ago and Walgreens is currently testing tobacco-free stores, as Rite Aid Corp. has decided to remove electronic cigarettes and vapor products from its locations, CBD is on their radar. In fact, Rite Aid began testing the sale of CBD products in April — a decision driven by customer interest. Camp Hill, Pa.-based Rite Aid has 3,585 locations throughout the United States.

Vapor Victorious Another way c-stores are ensuring a tobacco future is with vapor products.

Herzog said the fact that the Food and Drug Administration (FDA) is newly advocating a “continuum of risk” is very positive for the U.S. vapor market as this approach embraces lower, less harmful products, rather than abstinence. “We think the FDA’s new approach will encourage

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TOBACCO

consumers to shift more rapidly to vapor and RRPs,” she stated.

and contributes considerably to revenue growth in convenience,” he said.

While news of FDA regulation threats caused sales to initially fall off in the vapor category, once consumers realized any regulation was years away, sales normalized somewhat, according to Wells Fargo retailer research findings.

Anticipation Around Heat-Not-Burn

The Juul brand, in particular, has been in the vapor spotlight lately, especially since Altria took a 35-percent equity stake in the company and exited its own MarkTen e-cigarette business. Juul has reignited U.S. e-vapor category growth, according to Herzog, securing a more than 30-percent share of the overall e-vapor category across both open and closed systems and all classes of trade.

An early believer in the potential of electronic cigarettes and vapor products to impact the tobacco category, Herzog recently reiterated her belief that over the next five to 10 years, e-cigarettes, vapor and reduced-risk products will continue to take share in the overall nicotine business. Specifically, she predicts the segment’s share to grow 15 percent to 20 percent by 2023.

The target for c-stores in vaping is the dual-user — the smoker/other tobacco user who also vapes occasionally, pointed out Burke of MSA. He wants to see more c-stores embrace vaporizers, which typically retail for $20-plus. “That’s a high-cash-register ring for the tobacco category

If it’s not already, the heat-not-burn (HNB) market should be on every tobacco retailer’s radar, with Altria’s IQOS product way out in front. According to Herzog, IQOS’ share of the HNB nicotine pool is growing in every international market where it competes.

She also reports that the conversion rates for IQOS remain “incredibly high at about 70 percent, the highest of any HNB or e-cig product out there.”

IQOS features sophisticated electronics that heat the tobacco just enough to release a flavorful nicotine-containing tobacco vapor, but without burning the tobacco.

On April 30, Altria and its Philip Morris division received regulatory approval from the FDA to commercialize IQOS in the U.S. Sales of three HeatStick variants — Marlboro Heatsticks, Marlboro Smooth Menthol Heatsticks and Marlboro Fresh Menthol Heatsticks — will begin in the Atlanta market through a number of retail touchpoints, including convenience stores.

“I think iQOS is a different proposition that needs to be conveyed through social media as the closest thing to traditional smokes without the negative connotations. If they can create the same buzz Juul did, it will be hot,” one retailer commented in a Wells Fargo survey. CSN

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CANDY & SNACKS

Make Your Mark Private label is one of the biggest drivers — and areas of opportunity — in the candy and snacks categories today By Danielle Romano THE SNACKING CATEGORIES have primarily been the home of big brands. However, these days, given the rate of innovation in the convenience channel, private label candy and snack products are becoming more and more prevalent, changing shoppers’ quality perceptions and providing them with a greater value proposition.

From coast to coast, some of the biggest names in the convenience retailing landscape — both national and regional players — are making their mark when it comes to private label offers, especially in candy and snacks. Chief among them: Irving, Texas-based 7-Eleven Inc. with its 7-Select brand, which spans cookies, candy, nuts, potato chips, beef jerky, trail mix and then some; and New England’s Cumberland Farms Inc., which is known for its Farmhouse Premium private label brand that carries chocolate assortments in bars and treats; a

salty snack selection covering chips, bites, popcorn and trail mix; individually packaged sweet snacks and more.

In the middle of the country, Midwest-based convenience store chain Yesway has publicly stated a goal to be “the Aldi of the convenience channel.” The Des Moines, Iowa-based retailer kicked off its private label portfolio in May 2018 with the introduction of bottled water (spring and enhanced) under the Yesway Water label. From there, Yesway introduced a core catalog of single-serve private label products in November. This included loose bag candy and packaged bakery items under the Yesway Candy and Yesway Baked Goods labels.

The c-store operator kicked off a full promotional campaign in January, once the products were fully established in the stores and its team was comfortable with the sets.

Among the candy and snack products making up Yesway’s private label portfolio are:

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CANDY & SNACKS

• Salty snacks (chip singles and take-home) — 12 SKUs • Candy (loose bag) — 9 SKUs • Packaged bakery (doughnuts, fried pies, honey buns) — 12 SKUs • Meat snacks (sticks and bags) — 13 SKUs • Premium chocolate — 4 SKUs • Cookies (sandwich cremes) — 2 SKUs • Nuts and seeds (including snack mix and trail mix) — 14 SKUs Yesway currently has nine phase 1 private label categories that are either in-store or in production for store delivery in early summer 2019. Phase 2 is about to begin.

“Our next phase is to expand our existing categories with additional items,” said Darrin Samaha, vice president and brand manager for Yesway. “We will also continue to introduce new items throughout the stores as we learn about our customers and deliver more private label products to meet their preferences.”

Key Differentiators Competition for private brand share is heating up as consumers increasingly turn to private label products to stretch their dollars. Eight in 10 Americans buy private label products frequently or occasionally in order to save money, the IRI Private Label 2018 report found. In fact, 92 percent of millennials are turning to private label products to save money, compared to 86 percent of Gen Xers, 81 percent of baby boomers and 77 percent of seniors.

“Retailers tell us that their private brands’ role has evolved from margin [builder] to loyalty builder,” said Mark McKeown, principal of Client Insights/Gateways for IRI. “The key factor in differentiating the retailer from the competition is making their stores a destination for high-quality products. Consumers told us via survey that private brands are a large part of a consideration set.

Where they shop, quality and value is appealing.”

According to IRI data, private brands held 3-percent share of total store dollar sales in 2018 in the c-store channel vs. 18-percent share in the grocery channel.

What this should tell convenience store retailers is that delivering an experiential shopping experience supported by the availability of the right product at the right price is no longer a nice-to-have, but a need-to-have.

“For the price-conscious customer, we have national brand-quality products at value-driven prices,” explained Yesway’s Samaha. “The customers looking for a more elevated product and who want to indulge more will find that our premium products will fulfill that need.

Ultimately, we want both of them choosing our stores instead of a competitor.”

Private label also serves as a key connector between a convenience store retailer and its customers. To heighten the customer experience, retailers can tie in the purchase of private label products to their loyalty

program. For example, when Yesway began its private brand extension into candy and snacks, it began offering Yesway Rewards members extra benefits like a higher velocity on reward items, digital sampling, private label clubs and double points.

“Retailers tell us that their private brands’ role has evolved from margin [builder] to loyalty builder. The key factor in differentiating the retailer from the competition is making their stores a destination for high-quality products.”

— Mark McKeown, IRI

Packaging the Future As consumers continue to embrace private label products, the future of private label in the candy and snacks categories looks bright. According to the IRI Private Label 2018 report, as of November 2018, twothirds of consumers were planning to buy more private label products in the coming six months. This is more prevalent among younger shoppers: millennials (73 percent) and Gen Xers (71 percent) vs. baby boomers (63 percent) and seniors (54 percent).

“The future of private brands is promising. Due to private brands leading industry growth for the past two years (2017-2018), momentum is accelerating. Retailers are adding to their private brands assortment and updating and upgrading their brands’ identity and packaging,” IRI’s McKeown told Convenience Store News. “Younger consumers’ (millennials and Generation X) purchases of private brands is growing faster than nationally and [faster] compared to older consumers.”

McKeown offered the following pointers for convenience store retailers in regards to promoting their private label items in-store for maximum impact: •

•

•

•

Ensure product is visible where shoppers would look for it; Packaging is key to get noticed due to the short amount of time shoppers are in-store; Displays in an aisle or near the checkout are highly effective; and If the product is refrigerated, signage should be posted per door to communicate the product’s value. CSN

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FEATURE

TURNING AROUND TURNOVER

Hiring right and maintaining open communication can lead to a steady workforce

By Melissa Kress

WITH THE U.S. UNEMPLOYMENT rate low and minimum wage increases growing in popularity across the county, it’s no surprise convenience store operators are finding it challenging to not only find store-level employees, but also keep them.

Even knowing it’s a tight labor market, recent numbers presented at the 2019 NACS State of the Industry Summit were a bit surprising. Turnover among store associates in the convenience channel hit 118 percent in 2018, according to NACS, the Association for Convenience & Fuel Retailing. While that was down from 121 percent in 2017 — and a vast improvement from an industry high

of 133 percent in 2016 — the c-store industry’s turnover rate still soars above the total retail industry, which comes in at 59 percent.

“Jobs in the convenience store industry have differing demands and requirements than roles in other industries. … Schedules are part of the challenge. When you are running a 24-hour operation, trying to recruit people to work all of those shifts can play a factor in your ability to recruit and retain team members,” said Joanne M. Loce, managing partner of Fortify Leadership Group.

The number of opportunities available to job seekers today doesn’t help, either. “It’s a very tight labor market. Prospective and current employees can get jobs in multiple places, and they are potentially moving from role to role — that may even mean between competitors,” Loce explained. “Some of that turnover could be they move to work from one convenience store to another. There may be a perception of a better role, better hours, better career advancement, or potentially higher pay and better benefits at another organization.”

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VERC Enterprises puts a priority on having engaged employees. The retailer encourages its employees to host fun events in the stores.

Despite the challenges, some convenience store retailers seem to have found the secret sauce. Duxbury, Mass.-based VERC Enterprises is among them. The New England retailer has 269 store-level employees, including 29 store managers and 240 team associates. Those associates are evenly split between 121 full-time and 119 part-time employees. Compared to the overall convenience channel turnover numbers, VERC sees very little turnover. Last year, the company had just a 28-percent turnover rate among hourly associates.

Of VERC’s 29 convenience stores, 12 locations are open 24 hours. While some retailers find it difficult to staff the overnight shift, VERC actually finds the opposite to be true.

“We are lucky that we have some fantastic overnight people that have been with the company long-term that we don’t have to recruit for that position that often,” said Barry Ahern, vice president of operations, noting that VERC offers a $2 differential in pay for the overnight shift compared to a $1 differential at most other companies.

“Our overnight stores have not had large turnover for our full-time employee that works five days a week,” Ahern said.

“Knowing that we have a steady overnight person makes all the difference in the world.”

It’s similar to having a steady opener at a store that closes at night and needs to open in the morning. “That means so much to our business,” Ahern added-

Competitive Wages As more states and municipalities implement minimum wage hikes, c-store operators must follow suit — not only to be in accordance with the law, but also to keep in line with other retailers. This may even be the case if the hourly wage remains unchanged in their operating area.

VERC’s operating footprint is mostly in Massachusetts where it operates 27 convenience stores. Its other two stores are across the state line in New Hampshire.

The minimum wage in Massachusetts increased to $12 an hour on Jan. 1 of this year, but Ahern said the retailer reviews its employee compensation every year.

“When we look at the minimum wage increase, we take that into consideration when we give raises,” he said. “When Massachusetts went up to $12, we did not have to make a lot of adjustments because the majority of our employee base was far above the increase.”

New Hampshire’s minimum wage still matches the federal rate of $7.25 an hour.

Even so, VERC pays more because one of its locations borders Massachusetts in Nashua, N.H. “In reality, we have to pay Massachusetts wages at that location because it’s a quarter-mile from the border,” Ahern explained.

MAY

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Upping your base hourly wage is just one part of the equation in achieving a steady workforce, according to Loce.

“Each retailer is going to try a different strategy to get people to come work for them, particularly in dense markets where competitors are across the corner. In those markets where there is more than one choice, the question is what is going to differentiate you,” she posed.

Often, companies will use a total rewards approach — addressing what employees get paid in their paycheck, as well as offering additional benefits. “These benefits can include things such as bonuses, incremental pay, tuition reimbursement, time off or health benefits, to name a few,” Loce said. “Organizations need to determine the mix of pay and benefits to attract employees.”

Hiring Right At VERC, many successful hires have come through its employee referral pro-

gram. If an employee refers a new team member, that employee receives $100 on the day the new team member is hired and another $100 after 90 days.

“If it’s a good employee that has tenure and is engaged, they are going to refer someone who knows what the expectations are,” Ahern said.

Since finding success with its referral program, VERC has kept its hiring practices fairly steady — with the exception of hiring store associates as they are found instead of only when they are needed. This has proven to be a proactive approach in addressing time off, like vacations and sick calls, as well as turnover, Ahern pointed out.

And with the right fit, retailers like VERC find employees who stay on for the long term. Of its 29 team leaders, 27 started as hourly store employees. “We don’t hire a team leader outside of the company; they have to work their way up,” he said.

The Culture Club Finding the right employees will help drive a company’s culture. However, defining and maintaining that culture is not always an easy task.

Jim Knight, founder and owner of Knight Speaker, knows what culture is not. At the recent 2019 NACS State of the Industry Summit, during a presentation entitled “Culture That Rocks: How to Amp Up Your Workplace,” he explained that culture is not heritage.

“Heritage is about the past. There is nothing wrong with that,” said the training and development veteran.

“But people care about the here and now.”

The culture of a company is all about the present. At its core, culture is a collection of people, each with their own unique behaviors. As people join or leave an organization, the culture changes.

“Turnover is the root of all evil in this industry because you never get to the sweet spot,” Knight said.

To establish a successful company culture, he advised retailers to think about their favorite brands, regardless of industry; brands that are widely known for their company culture.

Then, he said, aspire to be among them as one of the most admired company cultures.

“It’s not going to happen by accident.

It’s not going to happen by changing the company logo. It’s about the people,” he emphasized.

The most successful businesses have a shared mindset among all associates and someone who knows the direction the company is going and can ensure everyone is headed in that same direction.

“Someone has to have the compass,” said Knight. “Individual agendas produce random actions and that equals a culture of confusion. A shared mindset produces aligned actions and that equals organizational productivity.”

Reaching that shared mindset takes communication and collaboration.

“Be like U2 — everyone singing off the same sheet of music,” he advised.

When talking about convenience store retailers that stand out for their culture, Knight cited Wawa Inc., QuikTrip Corp. and Sheetz Inc. as “culture warriors.” He said he loves the products these retailers offer in their stores, but he loves their people even more.

“Product and atmosphere are not enough. You have to bring the thunder when it comes to service mentality, and that requires humans,” Knight explained. “Service trumps product, price, theme, tech and convenience — it has always been like that.”

The one true path to culture nirvana, according to Knight, is through the right hires.

“Labor is a big deal, but it’s the only way you get to nirvana,” he said.

“Trends will change, but what doesn’t change is good people doing cool stuff.”

— Melissa Kress

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“Being a small [chain], you have to create career paths for people who want to grow. We are not a 600-store chain that offers many choices. When you have zero turnover, you want to be able to provide people the opportunity to grow.”

An Engaged Workforce Even though it may sound like “HR speak,” VERC believes in having engaged employees. To achieve this, the company does several things, including an annual survey of each employee group — hourly associates, shift leaders, team leaders, corporate staff — and follow-up meetings to discuss the survey results.

VERC Enterprises believes in promoting from within. Twenty-seven of its 29 team leaders started as hourly store employees.

“Each year we make changes. For example, the $2 overnight differential was a result of the survey,” Ahern said. “Every year, we do five to 10 different things.”

you don’t make changes, then what good was the survey?” Ahern asked. “We don’t talk about what we do well; we focus on the negative. That shows you are listening to your employees.

The retailer also uses the survey to gauge employees’ engagement level.

“Can we do everything they want us to do? No. But we can do things. We can make changes that are going to make their work environment better and their jobs easier,” he continued.

“People can do employee surveys, but if

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FEATURE

Two years ago, VERC added the position of manager of training and fun to its corporate staff. Among the fun events the company holds are team apparel days for local sports teams and a Halloween costume contest with prizes awarded.

Store employees are encouraged to come up with their own fun events, too. Such events, Ahern noted, do not cost the company any money and create a fun environment.

Another program that factors into VERC’s company culture is its commitment to have at least 20 percent of its workforce made up of individuals with intellectual and developmental disabilities.

“We think that’s a huge impact on the community and the culture of the store, not only from a customer perspective but also from an employee perspective,” Ahern said, noting that VERC’s first employee through this

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program is still with the company 26 years later.

Fortify Leadership Group’s Loce believes engaging employees starts during the recruiting process.

“If you look across the industry, there are a couple of organizations that have gotten very good at defining their employee value proposition — what it means to come and work here. When you are clear about what that means, it is usually aligned with the organization’s mission and values,” she explained.

If a retailer is clear about its mission, values and commitment to customer service, and they are able to communicate that in the interview process, they will have solved for a critical element in finding people who are going to stick around at a higher rate, Loce said.

“You should consider how your mission, values and commitment impact how you advertise open roles.

Often, customers become employees,” she added. “Our team associates are ambassadors for our brands. They are the ones who are basically saying, ‘This is what it is like to work here,’ with every customer interaction.

They become advertising for you.” CSN

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STORE SPOTLIGHT

An Experiential Testing Ground 7-Eleven’s new “lab store” allows customers to try and buy the latest innovations By Danielle Romano 7-ELEVEN INC.’S NEWEST CONVENIENCE STORE

in Dallas is a testament to the retailer’s commitment to enhancing customer experience. The first-of-its-kind “lab store” is an experiential testing ground where customers can try and buy 7-Eleven’s latest innovations in a revolutionary new store format.

At a Glance

7-Eleven Lab Store Location: Sylvan Avenue, Dallas Unique features: Laredo Taco Co. taqueria, an alcove dedicated to beer and wine, full-service hot and cold beverages, digital initiatives designed to enhance the shopping experience

“For more than 90 years, 7-Eleven’s customer-centric approach and tradition of innovation have redefined the future of convenience. 7-Eleven stays at the forefront by pushing boundaries and being unafraid to try new things,” said Executive Vice President and Chief Operating Officer Chris Tanco. “The lab store is an extension of that philosophy — a customer-focused store to test, learn and iterate new platforms and products simultaneously to see what really resonates with customers and how we can use those learnings to influence future store designs.”

Located at the Sylvan | Thirty retail and restaurant development on Sylvan Avenue, north of Interstate 30, the lab store is situated less than two miles from the original Southland Ice House in Oak Cliff, Texas, where 7-Eleven pioneered the convenience retailing concept more than 90 years ago, according to Tanco.

“Convenience retailing is light years away

from the days of bread and milk being sold from ice docks in 1927, and the industry is changing at a faster rate than ever before. … We started consumer research for this particular store about a year ago to fully understand the trade and what customers want,” the executive explained. “That basis of our core strategy is to give customers in a particular trade area what they want, when they want it.”

Innovation-Focused 7-Eleven broke ground on the lab store the first week of September 2018 and recently held a grand-opening celebration on March 22. Tapping its teams in fresh food, beverages and digital, almost all departments had a hand in the final result, according to Tanco.

The lab store is the first 7-Eleven location to include a Laredo Taco Co. taqueria, and the first Laredo Taco Co. location in Dallas.

7-Eleven acquired the Laredo Taco Co. brand as part of its purchase of 1,000 Stripes convenience stores from Sunoco in 2018.

The lab store’s menu features specialties not typically seen in quick-serve Tex-Mex restaurants, such as tacos, quesadillas and plate meals consisting of carne guisada, barbacoa, picadillo bistec and carnitas.

Breakfast tacos made with hand-cracked eggs are also served.

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When it comes to the store’s hot and cold beverage offers, customers can customize made-to-order coffee drinks, cold-pressed juices, smoothies and agua frescas in a full-service format. Novelty beverages are also on tap, including nitro cold brew, kombucha and organic teas.

The lab store additionally features the Cellar, an alcove dedicated to an expanded selection of wines and craft beers, plus a nearby growler station featuring a rotating selection of local craft beer, cider and ales on tap. At the growler station, customers can enjoy a draft beverage with their meal on-site or fill a growler to take home.

Other innovations at the lab store include: • A cold treats bar offering frozen yogurt, ice cream and multiple toppings.

• Cookies, croissants and more baked in-store daily.

• Indoor and patio restaurant-style seating in the Laredo Taco Co. area of the store, as well as bar seating across the front windows in the retail space.

• Digital initiatives designed to enhance the shopping experience, such as scan-andpay technology that allows customers to skip the checkout line and pay for non-age-restricted purchases using their smartphones.

• An “Innovation Station” spotlighting limited-time offers.

“A lot has changed in retail and continues to change rapidly, especially the shopping experience,” Tanco said. “This lab store is customer-focused and will explore new ideas that weren’t even on the retail radar a few months ago.”

More Labs to Come The Dallas lab store is just the first of six 7-Eleven lab stores that will open in geographically dispersed markets around the United States this year. The convenience store giant will study sales results, shopping trends and customer feedback to determine innovations that could launch in other 7-Eleven stores across the country.

“At 7-Eleven, we are always listening to our customers. … While there are not any immediate plans to make changes to current in-store concepts, there certainly will be in the future,” Tanco told Convenience Store News.

Based in Irving, Texas, 7 Eleven operates, franchises and/or licenses more than 67,000 stores in 17 countries, including 11,800 in North America. CSN

New innovations around snacks, grab-and-go foods and coffee are being tested at the new 7-Eleven lab store for possible rollout.

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NEW HORIZONS

The Invisible Woman Women are out of sight, out of mind of senior executives that flexible work arrangements — a shift in work hours, working remotely or jobsharing —are key to attracting, keeping and advancing talented women at all points in their careers, discussion around the relative importance of face time in the office vs. results is heating up.

WITH THE GROWING REALIZATION

By Sarah Alter, President & CEO, Network of Executive Women

Many managers are hanging on to outdated views about face time as a full measure of an employee’s value to an organization and are losing outstanding employees as a result.

Still, one type of face time is key to advancing a career — face time with senior leaders.

Employees who interact regularly with their company’s senior leaders are more likely to ask for and receive promotions, according to McKinsey & Co.’s Women in the Workplace 2018 report. They’re also

more likely to stay with their companies and aim to be leaders themselves.

Can You Hear Me Now? Makes sense. The problem is 33 percent of the women surveyed for Women in the Workplace said they’d never had a significant discussion with a senior leader about their work (compared to 27 percent of men surveyed). For some women of color, access is even more limited. Forty percent of black women reported never having a substantive work-related conversation with a senior leader.

Women are also less likely than men to socialize with their managers or other executives outside the workplace. Nearly half of women surveyed said they have never had an informal interaction with a senior leader, compared to 40 percent of men. Again, many women of color have even less face time with the men and women who create opportunities and open doors. Fifty-four percent of Latinas and nearly 60 percent of black women said they’ve never had an informal interaction with a senior leader.

At all points in their careers, women have fewer opportunities to demonstrate their skills, show off their work results or make strategic connections with their company’s careeropportunity gatekeepers.

The result: When managers are considering candidates for stretch assignments, leadership development or promotions, they’re more likely to choose a man because it’s more likely a man is on their radar. A known employee always has an advantage over an unknown employee.

Seeking Sponsors One way to level the playing field is to encourage

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senior leaders to sponsor women. A full 70 percent of the 70 organizations named 2019 Top Companies for Executive Women by the National Association for Female Executives have sponsorship initiatives.

Companies can support more sponsorship with these five actions put forth by Working Mother magazine: • Expose senior leaders to high-potential talents from different groups, especially underrepresented populations; • Link sponsorship to senior executives’ goals, performance reviews and compensation; • Have clear objectives for sponsor-ship and communicate to every-one involved; • Use employee resource groups to find high-potential women worthy of sponsorship; and • Measure promotion and retention rates of those who are sponsored vs. people not sponsored in similar roles.

The NEW Blueprint for Gender Equality, which NEW is sharing now with our corporate partners, lays out best practices for companies that are working to create a gender-diverse and inclusive workplace. While developing this action plan, we found a number of forward-thinking companies that are disrupting the status quo with other practices that promote women’s visibility with senior leaders.

One of our corporate partners, for example, is piloting a program that pairs individuals who are ready to move up to the next role with members of its leadership team for development discussions.

“It’s very straightforward,” the company’s vice president of human resources told us. “Women who may not have a sponsor already are getting that attention.”

Convenience Store News is pleased to continue this series of educational columns by the Network of Executive Women (NEW), coinciding with the annual CSNews Top Women in Convenience awards given out each fall.

Forty-one female managers, executives and directors who work in the convenience store industry will be honored in our 2019 program.

In addition to being a presentation sponsor for the Top Women in Convenience program, NEW and CSNews have partnered to develop this series of columns directed at helping corporate leaders drive more inclusive company cultures.

2019 SPONSORS Founding & Presenting Sponsor:

J.P. Morgan’s Women on the Move initiative’s 30-5-1 campaign brings women and men together for 36 minutes each week to support women’s growth and development. Participants commit to spending 30 minutes having coffee with a talented up-andcoming woman, five minutes congratulating a female colleague on a win or success, and one minute talking up the woman who had that win with other colleagues.

Platinum Sponsors:

“At JPMorgan Chase, we have a truly amazing group of female colleagues,” said J.P. Morgan’s Asset and Wealth Management CEO Mary Erdoes, co-sponsor of Women on the Move. “It’s up to each one of us — men and women alike — to ensure they have the support mechanisms they need to succeed, and this campaign is one of the most important ways we can do that.”

Formal, structured development programs that support face time with senior leaders benefit talented women and men, but especially those who may otherwise be unseen — or overlooked. CSN

Gold Sponsors:

Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing more than 12,000 members in 22 regional groups in the United States and Canada. Learn more at newonline.org.

Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.

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INSIDE THE CONSUMER MIND

The Buzz Around Cannabis Consumer interest in legal cannabis and CBD products is only expected to keep growing Cannabis and CBD, short for cannabidiol, are causing a lot of buzz in the food and beverage industry these days. To date, 10 states and Washington, D.C., have legalized marijuana for recreational use for adults over the age of 21; and the Farm Bill, which was signed into law in December, legalized CBD derived from hemp. CBD is a non-psychoactive compound found in the cannabis plant that promises to relax the body without altering the mind like THC, the psychoactive compound in marijuana. Study after study shows consumer interest in legal cannabis and CBD products is growing. Here’s a look at some of the latest consumer insights.

The cannabis-infused products consumers are most interested in trying are:

Baked goods:

Candy/gummies:

48

Snacks:

45

%

44

%

interested in trying

Non-alcoholic beverages:

%

interested in trying

interested in trying

41%

interested in trying

Source: Culinary Visions Cannabis Products Project

In the short-term, the main opportunity for cannabis within the soft drinks industry will be CBD-infused drinks.

These products can be positioned as naturally sourced relaxation beverages and provide a new functional angle.

We can expect the major beverage companies to acquire and create new CBD beverage brands over the next few years.

Buyers of legal marijuana primarily seek relaxation,

whereas CBD buyers are more likely to cite treatment of medical symptoms as a leading purchase factor.

— Howard Telford, Industry Manager, Soft Drinks, Euromonitor International

50

%

of consumers would prefer not being able to taste the cannabis flavor in a cannabis-infused product.

Source: IRI, Cannabis Attitude and Usage Study

47

%

of consumers say they would choose to consume cannabis for the effect, not the taste.

Source: Culinary Visions Cannabis Products Project

45

%

of men say they would consider ordering a cannabis-infused menu item at a restaurant vs. just 34 percent of women.

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