CStore Decisions September 2020

CStoreDecisions

ÂŽ

Solutions for Convenience Retailers

Foxtrot Unveils

National Growth Strategy As it looks toward a post-pandemic world, the Chicago-based c-store chain prepares to compete on a much larger stage while powering sales with digital disruption.

September 2020

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CStoreDecisions.com

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CONTENTS September 2020

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Number 9

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Volume 31

CStoreDecisions

®

28

EDITOR’S MEMO

10 Dealing With the New Normal FRONT END

12 Speed Mart: The Small Chain With Big Ideas 18 Quick Bites: Meeting Customer Expectations Amid a Pandemic 20 NAG Awards Five Scholarships 22 7-Eleven Acquiring Speedway 26 Circle K Pilots Autonomous Checkout CATEGORY MANAGEMENT

44 Snackers Bite Into Flavor 50 Dispensed Beverages Adapt 58 Smokin’ Smokeless Sales 64 Measuring CBD Opportunities 66 Hard Seltzer Sparkles

COVER STORY 28 Foxtrot Unveils

National Growth Strategy

FOODSERVICE

72 Digital Disruption Comes for Foodservice 78 Top 4 Tips for Growing Coffee Sales 84 Single-Use Foodservice Packaging: An Unsung Hero

As it looks toward a post-pandemic world, the Chicago-based c-store chain prepares to compete on a much larger stage while powering sales with digital disruption.

TECHNOLOGY

88 LEDs, Solar Bring Bright Outlook 92 Understanding Blockchain OPERATIONS

96 Real Estate in the Time of COVID-19

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CSTORE DECISIONS •

September 2020

BACK END 98 Product Showcase 105 Ad Index 106 Industry Perspective: Embracing the New World cstoredecisions.com

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EDITORIAL

CREATIVE SERVICES

VICE PRESIDENT, EDITOR-IN-CHIEF John Lofstock jlofstock@wtwhmedia.com

VICE PRESIDENT, CREATIVE SERVICES Mark Rook mrook@wtwhmedia.com

EXECUTIVE EDITOR Erin Del Conte edelconte@wtwhmedia.com

CREATIVE DIRECTOR Erin Canetta ecanetta@wtwhmedia.com

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ART DIRECTOR Matthew Claney mclaney@wtwhmedia.com

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CUSTOMER SERVICE

CONTRIBUTING EDITORS Mark Battersby Anne Ericksen Howard Riell

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COLUMNISTS Natha Dempsey John Matthews

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REGIONAL SALES MANAGER Patrick McIntyre pmcintyre@wtwhmedia.com (216) 372-8112

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31

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Chain of the Year Award

DIGITAL MEDIA/ WEB DEVELOPMENT VICE PRESIDENT, DIGITAL MARKETING Virginia Goulding vgoulding@wtwhmedia.com DIGITAL MARKETING COORDINATOR Josh Breuler jbreuler@wtwhmedia.com DIGITAL MARKETING INTERN Shannon Pipik spipik@wtwhmedia.com SENIOR MANAGER WEBINARS/VIRTUAL EVENTS IN MARKETING Lisa Rosen lrosen@wtwhmedia.com DEVELOPMENT MANAGER Dave Miyares dmiyares@wtwhmedia.com SR. DIGITAL MEDIA MANAGER Pat Curran pcurran@wtwhmedia.com EVENT MARKETING SPECIALIST Olivia Zemanek ozemanek@wtwhmedia.com DIGITAL PRODUCTION MANAGER Reggie Hall rhall@wtwhmedia.com DIGITAL PRODUCTION SPECIALIST Nicole Lender nlender@wtwhmedia.com DIGITAL PRODUCTION/ MARKETING DESIGNER Samantha King sking@wtwhmedia.com SOFTWARE ENGINEER DJ Bozentka dbozentka@wtwhmedia.com WEBINAR COORDINATOR Halle Kirsh hkirsh@wtwhmedia.com WEBINAR COORDINATOR Kim Dorsey kdorsey@wtwhmedia.com

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2011 - 2020

CStore Decisions (ISSN 1054-7797) is published monthly by WTWH Media, LLC., 1111 Superior Ave., Suite 2600, Cleveland, OH 44114, for petroleum company and convenience store operators, owners, managers. Qualified U.S. subscribers receive CStore Decisions at no charge. For others, the cost is $80 a year in the U.S. and Possessions, $95 in Canada, and $150 in all other countries. Single copies are available at $9 each in the U.S. and Possessions, $10 each in Canada and $13 in all other countries. Periodicals postage paid at Cleveland, OH, and additional mailing offices. POSTMASTER: Send address changes to CStore Decisions, 1111 Superior Avenue, 26th Floor, Cleveland, OH 44114. GST #R126431964, Canadian Publication Sales Agreement No: #40026880.

September 2020

Robert Buhler, President and CEO Open Pantry Food Marts • Pleasant Prairie, Wis. Lisa Dell’Alba, President and CEO Square One Markets • Bethlehem, Pa. Raymond Huff, President HJB Convenience Corp. • Lakewood, Colo.

Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas Patrick Lewis, Managing Partner Oasis Stop ‘N Go • Twin Falls, Idaho Reilly Robinson Musser, VP, Marketing & Merchandising Robinson Oil Corp. • Santa Clara, Calif.

Bill Weigel, CEO Weigel’s Inc. • Knoxville, Tenn.

NATIONAL ADVISORY GROUP (NAG) BOARD Doug Galli, Board Chairman Reid Stores Inc./Crosby’s • Brockport, N.Y. Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo. Greg Ehrlich, President Beck Suppliers Inc. • Fremont, Ohio Derek Gaskins, Senior VP, Merchandising/Procurement Yesway • Des Moines, Iowa Joe Hamza, Chief Operating Officer Nouria Energy Corp. • Worcester, Mass.

Brent Mouton, President and CEO Hit-N-Run Food Stores • Lafayette, La. Peter Tamburro, General Manager Clifford Fuel Co. • Marcy, N.Y. Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.

Garet Bishop, Chief Financial Officer BFS Cos. • Morgantown, W.Va.

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CSTORE DECISIONS •

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Jeremie Myhren, Board Chairman Road Ranger • Rockford, Ill.

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CSTORE DECISIONS does not endorse any products, programs or services of advertisers or editorial contributors. Copyright© 2020 by WTWH Media, LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, or by recording, or by any information storage or retrieval system, without written permission from the publisher. Circulation audited by Business Publications Audit of Circulation, Inc.

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8

Leading Through Innovation

Ryan Faville, Director of Purchasing Stewart’s Shops Corp. • Saratoga Springs, N.Y. Caroline Filchak, Director, Wholesale Operations Clipper Petroleum • Flowery Branch, Ga. Cole Fountain, Category Manager Gate Petroleum Co. • Jacksonville, Fla. Kalen Frese, Food Service Director Warrenton Oil Inc. • Warrenton, Mo. Alex Garoutte, Director of Marketing The Kent Cos. Inc. • Midland, Texas Sharif Jamal, Corporate Brand Manager Chestnut Petroleum Inc. • New Paltz, N.Y.

cstoredecisions.com

Editor’s Memo

For any questions about this issue or suggestions for future issues, please contact me at jlofstock@wtwhmedia.com.

Dealing With the New Normal The c-store industry was never for the faint of heart. The competition is aggressive, customers have extremely high standards, and any challenges encountered have to be overcome — and fast.

If the COVID-19 pandemic has taught us anything, it’s that retail is evolving constantly to meet customers’ needs.

This is not easy to do on short notice or with little planning. Prior to the pandemic, many well-established retailers were already in distress, from pressures like customer shifts toward online purchasing, as well as rent and other added costs of doing business in physical locations.

The impact of COVID has caused many stores to announce that they will not be reopening after lockdowns lift. At the same time, startup retailers are finding it harder to access capital, and a number of these new businesses simply won’t have the cash flow to continue operating, either, and will be forced to shut up shop early.

This of course means that those retailers who do survive can take advantage of reduced competition for the customer’s coveted dollar. In fact, many categories of products, services and offerings will see a spike in demand throughout and eventually coming out of the crisis — lifestyle products and services, and products needed for remote working or simply in spending more time at home, are all seeing a healthy uptick in demand already.

According to McKinsey & Co., the impact of the pandemic on consumer behavior has accelerated five trends in the retail sector that will have lasting impact. These trends include: Shift to online and digital purchasing. As shelter-inplace orders continue in some states, and consumer anxiety about infection persists, consumers across age groups have already shifted spend to online channels. The longer the crisis lasts, the greater the likelihood that online and omnichannel purchasing will become the next normal.

This will be especially pronounced in the grocery industry. Across food, drug and mass-merchandise players, the shift in consumer spending to online will pose a question about the future — and purpose — of their brick-andmortar locations. Driving unique in-store experiences will become even more critical than it has been to drive traffic and improve profitability.

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CSTORE DECISIONS •

September 2020

Healthy, safe and local. One of the biggest challenges facing retailers is the need to protect customers and employees from contracting or spreading COVID-19. Concerns about health and safety have never loomed larger for stakeholders across the value chain. The retailers with the highest degree of touchless automation, both in stores and in warehouses, may enjoy a clear competitive advantage, as they face lower risk to consumers, employees and their overall operations.

Shift to value for money. As in any economic downturn, a post-crisis downturn will probably lead consumers to demand value for money across retail sectors. This is already happening in essential categories, as private-label sales at grocers and pharmacies are increasing, and pricing and promotion strategies are emphasizing value.

Flexibility of labor. The COVID-19 crisis underscores the need for more flexible resource allocation that deploys labor across a broader range of activities. This could accelerate the move to self-checkout or robotics in the c-store sector.

Loyalty shock. The initial scarcity of products has spurred trial of new brands, as customers trade up and down. The McKinsey report said customers are much more likely now to switch stores and brands due to proximity, availability, ease of use and safety considerations, creating opportunities for new habit creation. The report also found said that many consumers have tried store or generic brands for the first time, with many saying they were satisfied with the product and would purchase it again.

Identifying what works for you is your next great challenge, but this industry is used to taking on great challenges. Despite the difficult economic outlook, there are opportunities for outstanding, financially sound operators to prosper.

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FRONT END Profile

:

The Small Chain With Big Ideas

Seven-store central Tennessee chain’s hands-on, can-do attitude helps it find savings and grow revenues.

Thomas Mulloy • Senior Editor

Crossville, Tenn.-based Speed Mart President Viral Patel has been working in convenience stores since he was a teenager, shortly after emigrating from India. Now, he and his extended family operate seven Speed Mart stores across middle Tennessee that employ family and nearly 30 others.

“Our family started with store one, and we got that going, and then expanded to the second store, and then the third, and then now we have seven operating,” said Patel.

He and his brother Sandeep, as well as his father and an uncle, are also very much involved with the business. Viral and Sandeep have grown into the business’ main operators, though. “We’re the youngsters, so we’re the ones who are expanding the legacy of it,” Viral Patel explained. “And with the technology we’re operating with, I have roughly 26, 27 employees working currently.”

Today, the chain is enticing customers with pizza offerings, rolling out Bitcoin kisoks that handle various financial transactions, implementing solar power and even handling store construction and renovations in-house.

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CSTORE DECISIONS •

September 2020

cstoredecisions.com

McLANE’S TECHNOLOGY WILL POWER YOU FORWARD McLane understands the competitive advantage technology can provide, and we’ve made substantial investments in building technology solutions to address the specific needs of c-stores.

Our hardware and software solutions help our customers improve order accuracy, reduce labor costs, optimize inventory and increase margins, just to name a few advantages. From the corporate office to the back office, McLane offers the technology solutions that help retailers buy better, sell smarter and profit more.

To learn more about McLane’s innovative technology solutions for c-stores, visit mclaneco.com/technology

© 2020 McLane Company, Inc. All rights reserved.

FRONT END Profile

Starting with one store and using hands-on building skills and innovative operations ideas, Speed Mart President Viral Patel and family members now operate a seven-store convenience chain.

FROM THE BEGINNING When Patel was 10, his parents and siblings left India for Illinois. His grandparents, an uncle and other family members were already in the U.S. After a few years living in Illinois, the family moved to Tennessee. That was around three decades ago.

“And since then, we’ve been helping family and now running the stores,” Patel said, “and everything is going smooth.”

He and other family members worked at his grandfather’s leased convenience store location three decades ago. When the building owner raised the rent, the family decided to move to a new location, purchasing a store in Crossville, Tenn.

“And that happened to be a good store,” Patel said. “And after that, we built one ground up. Bought land and got construction done and opened a ground up (build) — and that is our biggest store, Miller Mart One, out of Crossville.”

Patel and his family had no experience with new construction but were lucky enough to find good contractors who did. One builder handled all the forecourt aspects of the project — the canopy, fuel tanks, pumps and signage.

For his building contractor, Patel said that the family drew up a blueprint … of sorts. “Just a sketch — how we wanted it to look and lay out. It took, from start to finish, six months. And we had a good location up and running,” he said.

The experience inspired Patel and other family members to learn more about the construction process and the actual skills of a builder as well. Now they do their own store remodeling and even built a new home.

“If we can do something on our own, we usually do it on our own,” Patel said proudly. “It saves labor and gets it done a lot faster — and when we need it.”

GOING GREEN EARNS GREEN For Speed Mart, energy efficiency is a no-brainer.

The newly built Miller Mart One store incorporated a rooftop and canopy solar power system. Patel called it a good investment, providing a significant amount of the store’s power.

Patel operates on the principle that if the company isn’t expanding or improving the store, profits should still be reinvested. “And solar is a good, big investment,” he explained, “where it takes a big portion of the profit and puts it back into the building as an expense.”

Two Speed Mart chain stores carry the Miller Mart brand. One of those, the chain’s new build in Crossville, Tenn., also features a rooftop and canopy solar energy system.

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CSTORE DECISIONS •

September 2020

cstoredecisions.com

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Competitively stocking his stores, like his Jackson Mart in Cookeville, Tenn., led to Viral Patel’s active involvement with the Strategic Alliance for Affiliated Store Owners of America (SAASOA), a trade group that helps small retailers share business advice and combine buying power.

He’d like to expand similar solar configurations to other stores, but Patel said the hefty tax and grant benefits that made the first solar build possible are about to expire.

“It’s kind of pricey without that,” Patel said.

“And right now, when we installed at Miller Mart One, payback was eight years. And after that, it’s profit. But if the tax credit goes away, that payback is going to be 12 years.”

That’s too long of a time frame for Patel’s liking. But he still supports energy efficiency efforts. Patel is a firm believer in the benefits of LED lighting, both exterior and interior. “Yes, and it makes the store look 10 times newer, bright lights,” he said. (See the LED article on p. 88 for more on Speed Mart’s LED initiatives.)

When it comes to foodservice, for Speed Mart, simple is better. And so is pizza. Patel contracts with Hunt Brothers Pizza for one of his stores, and a new pizza vendor, Crazy Italian Pizza, for another five. “We don’t have anything like hot fries or anything (involving) major cooking,” added Patel.

Two stores offer Scoops Ice Cream. His stores also feature a solid grab-and-go island with items that can be consumed cold or warmed in a microwave.

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CSTORE DECISIONS •

September 2020

HANDS-ON LEADERSHIP Still, Patel subscribes to the old-school model of rolling up your sleeves and doing whatever it takes to keep the stores running smoothly.

“See, I usually run around and handle any repairs,” he said. “I do anything, besides running the cash register. I try to get enough employees so I don’t have to be stuck behind the counter, because I am more hands-on.”

But he knows when to delegate, too. Patel admitted he isn’t terrific with computers, so he lets his store managers handle much of that type of work, as well as making sure the stores are well staffed. But he credits technology with simplifying many of the stores’ operational tasks.

“Without technology, we wouldn’t have made it,” Patel said. “Because remotely we can change prices, remotely we can do payroll, and it’s just been a good experience.”

Patel is also heavily involved with a trade group he said helps small operators like Speed Mart consolidate their buying power to help them stay competitive. Strategic Alliance for Affiliated Store Owners of America (SAASOA) also helps operators with understanding new technology, marketing strategy, working with vendors on issues like tobacco scan data and more. cstoredecisions.com

When it comes to foodservice, the Speed Mart chain keeps it simple. Five locations offer Crazy Italian Pizza, while another serves Hunt Brothers Pizza. Two stores also satisfy customers’ sweet cravings with Scoops Ice Cream menus.

He and several other operators represent members in Tennessee and act as a resource for those who have operational questions and other concerns with running their businesses.

BRANCHING OUT Patel’s latest venture grew out of his use of ATMs and Bitcoin kiosks in his stores. He partnered with DigitalMint on the initial installation of the Bitcoin machines, which has now led to a separate business that offers multi-function ATMs. “We tested it at our stores — two of my stores first,” Patel said. “This kiosk can do ATM (transactions). It can do check cashing, and it can do bill payment — thousands of bills. You name it. … It can do money transfers to 50 other countries. It

can do bitcoin. It can do phone cards, gift cards, Verizon prepaid minutes. It’s got like 10 different items on one machine, which runs by itself.”

In addition to his own stores, Patel has contracts now to place the machines in 13 locations near him. Patel saw an opportunity to provide something nobody in his region offered.

In seizing these types of opportunities — whether buying or building stores, learning how to make improvements themselves or taking advantage of money saving energy efficiencies — Speed Mart and the Patel family continually find ways to better serve central Tennessee’s c-store customers.

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quickBites MEETING CUSTOMERS’ EXPECTATIONS AMID A PANDEMIC CUSTOMER SATISFACTION WITH COVID-19 PRECAUTIONS BY CHANNEL

PLEASE, WE’LL WAIT TO BE SEATED

Q: How soon from now would you be comfortable going out to eat at restaurants?

Percentage of respondents who answered six months or more on each given date: Aug. 11 38%

Below is the combined percentage of respondents who answered “Very Satisfied” or “Somewhat Satisfied” when asked how they felt about the COVID-19 precautions taken by each channel: 87% Grocery • 88% Pharmacy • 73% Gas & Convenience

Aug. 4 41%

July 14 42%

June 30 30%

June 17 28%

Source: CivicScience Coronavirus Check-In: Aug. 12, pulse taken once per week; responses based on seven-day rolling average; topline data 95,017 responses from May 14 to Aug. 11, 2020, weighted

by U.S. Census 18+

Source: Bond Brand Loyalty, “COVID-19 and the State of Consumer Loyalty,” 2020.

Source: Bond Brand Loyalty, “COVID-19 and the State of Consumer Loyalty,” 2020

DIRECT-TO-CONSUMER SHOPPING SOARS Direct-to-consumer (D2C) channels, i.e. online platforms that allow purchases to be shipped directly to consumers’ homes, are growing in popularity during COVID-19.

PANDEMIC LETS MILLENNIALS GAS & GO

Millennials have struggled with high fuel prices. Now, the COVID-19 pandemic is causing pump prices to fall and bringing some relief to millennial wallets. Here are the percentages of millennials — by region — who have reported that high gas prices have prohibited them from paying for other goods and services: Southwest 79% Southeast 78%

Midwest 73% Rockies 67%

Northeast 66% Pacific 64%

60.6% Share of consumers who increased their use of online D2C channels to purchase food and beverage products during the pandemic 44.5% Portion of D2C shoppers who used the channel because it allowed them to find a full range of products in stock 51.7% Share of consumers who made CPG purchases from new brands since the pandemic’s onset Source: PYMNTS.com, “D2C and the New Brand Loyalty Opportunity,” consumer survey examining the use of direct and indirect channels to purchase consumer-packaged goods amid the pandemic, August 2020

18

CSTORE DECISIONS •

September 2020

Source: GasBuddy “2020 Consumer Sentiment on Gasoline Study,” July 14, 2020, study findings were collected from a survey sent to 1,973 GasBuddy members

cstoredecisions.com

Why 5-hour ENERGY ? ®

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On-trend flavor innovation Tropical Burst Extra Strength 5-hour ENERGY ranks #12 in sales Coming in early 2021: Watermelon Extra Strength 5-hour ENERGY

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See www.5hourenergy.com for more details. ©2020 Living Essentials Marketing, LLC. All rights reserved. Sources: (i)Mintel. (ii)IRI & Nielsen. (iii) US-XAOC INCL CON 52 WE 12/28/19. (iv)US-CON 52 WE 07/11/20 - Sales by Item. (v)Convenience IRI retail audit, Nielsen 52 weeks ending 5/18/19 and NACS margin report.

FRONT END News

NAG Awards Five Scholarships The McMullen-Ketchum Memorial National Advisory Group (NAG) Scholarship has been supporting the higher education needs of NAG member companies since 1998.

A CStore Decisions Staff Report

The National Advisory Group (NAG) has been supporting higher education for the past 22 years.

The association is proud to continue that support with the announcement of five $1,000 scholarships to members who work in the convenience store and petroleum industry or are children of an employee of a NAG member company. This year’s scholarship winners are:

in Florida for the past seven years.

She has been a mainstay on the dean’s list and is active in volunteer work in Florida and Pennsylvania.

• Kaylee Miller Kaylee is a medical technology major at Marist College entering her junior year. She is a member of the Marist Honors Program and has been on the dean’s list all four of her semesters at the New York college. Her father, Richard Miller, works for Clifford Fuel in New York.

• Jordan Valdez Jordan is a first-year student at at LeTourneau University in Longview, Texas, where he was recruited to play baseball. He will also pursue a degree in engineering. Jordan’s father, Joe Valdez, is a general manager for Toot’n Totum in Amarillo, Texas.

• Loreta Murataj Loreta is a senior at Penn State University, majoring in human resources. Loreta has been a Gate Petroleum employee 20

CSTORE DECISIONS •

• Maya Reichenbacher As a junior at St. Mary’s University of Minnesota, Maya is studying life sciences. She also plays for the university’s women’s soccer team and volunteers both as a tutor and for the campus ministry. Maya is working her way through college as an employee at Kwik Trip.

• Daniel Rice A wildlife biology major entering his freshman year, Daniel attends Colorado State University in Fort Collins, Colo. Daniel’s father, David Rice, works for Redi Mart in Richmond, Ky. September 2020

“The National Advisory Group’s Scholarship Program is important to NAG because college graduates earn, on average, $25,000 more per year than someone with just a high school diploma, according to a report by The College Board,” said John Lofstock, NAG’s executive director. “The cost of attending college may seem daunting, but that’s exactly why finding, applying for and receiving scholarships are essential to avoiding big student loans. Scholarships are no longer a bonus; they’re crucial for bridging the gap between the increasing cost of tuition and what families can afford to pay out of pocket.”

Among NAG’s core mission is to help prepare the convenience store leaders of tomorrow. In keeping with that theme, NAG has now distributed more than 105 scholarships totaling nearly $116,000 to deserving students.

NAG’s Scholarship Fund is managed by the NAG Board of Directors, CStore Decisions and Scholarship America, and sponsored by the retailer and supplier members of NAG. This program is financed through the annual dues paid by NAG members, the annual NAG golf outing and conference sponsorship allocations.

To learn more about the NAG Scholarship, please contact NAG Executive Director John Lofstock at jlofstock@wtwhmedia.com.

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7-Eleven Acquiring Speedway Industry experts weigh in on what 7-Eleven’s Speedway deal could mean for the convenience store industry.

Thomas Mulloy • Senior Editor

In early August, news broke that Irving, Texas-based 7-Eleven was set to acquire Speedway — the No. 3 chain in the U.S. by store count — from Ohio-based Marathon Petroleum Corp. for $21 billion. The purchase includes approximately 3,900 Speedway stores in 35 states and marks 7-Eleven’s largest acquisition to date.

With the acquisition of Speedway, 7-Eleven, which is already the largest c-store chain in the U.S., will expand its fleet of stores to 14,000 North American locations. Following the transaction, which is set to close in the first quarter of 2021, 7-Eleven will have a presence in 47 of the top 50 most populated metro areas in the U.S. The move has prompted questions as to how the combination of the two c-store behemoths will affect the rest of the industry.

The acquisition is part of a trend that has been shaping the c-store industry for some time, noted Convenience Industry Consul22

CSTORE DECISIONS •

September 2020

tant Frank Beard. The buying power and operational efficiency of larger chains will continue to give them a competitive edge.

“We’re just going to continue to see consolidation in the industry, and anyone who’s running a very traditional c-store operation is going to face increased competition from these consolidators,” Beard said.

7-Eleven’s footprint doesn’t have a lot of overlap with Speedway’s, especially in the Midwest, Beard pointed out, noting this could be an important aspect of the deal — and mean fewer regulatory hurdles to sort out.

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FUEL ADVANTAGE The consolidation of buying power may provide 7-Eleven an edge at the gas pump as well, giving it “just a little bit more room to compete on fuel,” Beard said.

But even more significantly, the fact that the Speedway chain is coming from the Ohio-based Marathon Petroleum Corp. could act as a wedge against another large company entering the Midwest c-store market. The deal gives 7-Eleven significant advantages in fuel supply and pricing on the economy of scale side, according to Independent Fuel Industry Consultant Brandon Lawrence.

“Especially on the supply side, and it’s also basically from a consolidation perspective,” Lawrence said. “They basically boxed Couche-Tard out of the Midwest from making a major play because, at this point, (Couche-Tard) is going to have to cobble together multiple chains to even come to a fraction of the size of the Speedway footprint.”

Couche-Tard had been rumored to be the top suitor vying for the Speedway acquisition in the weeks before the sale to 7-Eleven was announced.

Depending on the structure of 7-Eleven’s deal with Speedway, Couche-Tard’s Circle K stores may find it difficult to match 7-Eleven’s volume. Lawrence said that when 7-Eleven purchased Sunoco c-stores, it contained a 10-year “take or pay” agreement.

“And I would imagine it would be a similar one here,” Lawrence said, meaning that if that were the case, the higher volume of 7-Eleven’s buying power guarantees it first dibs on fuel at a lower cost. “When all of the racks (wholesale fuel supply points) are out, (7-Eleven is) still going to have supply. And that’s go24

CSTORE DECISIONS •

September 2020

ing to make it hard to compete with given the rack volatility you see in the Midwest.”

Lawrence pointed out that this won’t affect the smaller operators because that system is already in place, so their fuel costs and access won’t change much if at all.

But the deal is another factor that will force smaller convenience store chains to further differentiate themselves from the largest chains, Lawrence said.

SPEEDWAY TO DISAPPEAR? Don’t assume 7-Eleven will rebrand the Speedway banner, either. While it’s probable, it’s not a foregone conclusion. Beard advised not to overlook the value of the Speedway name.

Don’t underestimate 7-Eleven’s ability to adapt, either, he said. It may be big, but it’s proven that it can be nimble, too. 7-Eleven has long been at the forefront of innovation.

“They’ve always been really good about really pressing the envelope and testing some of the most ‘out there’ and creative ideas, which I think is awesome,” said Beard. “People forget that they actually beat Amazon to the first drone delivery.”

cstoredecisions.com

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Circle K Pilots Auton Experts Richard Crone and Heidi Liebenguth of Crone Consulting LLC urge retailers to develop a check-in strategy before considering autonomous checkout.

Isabelle Gustafson • Associate Editor

Alimentation Couche-Tard is riding the wave of digital disruption, launching touchless, autonomous checkout at its Circle K stores via Standard Cognition technology. The pilot program, announced this August, is set to begin in the Phoenix area, with more stores to follow.

Richard Crone, CEO of Crone Consulting LLC, said the news is big for c-store retailers and point-of-sale (POS) vendors alike; this Arizona store will mark the first-ever retrofit of an existing c-store with autonomous checkout technology.

Richard Crone, CEO of Crone “Everybody will be Consulting LLC watching this,” Crone said, “especially the legacy POS vendors because they will see a huge pent up demand to replace these aging systems evaporate, if the store retrofit actually works.”

However, he emphasized that a pilot program is a far cry from full implementation across all locations.

“This is a liminal deployment for the industry,” he said. “But it also should be a wake-up call to get your check-in strategy in order because you can be doing that now in advance of whatever proves to work.”

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September 2020

CHECK-IN FIRST

A check-in strategy makes the customer known and contactable, Crone explained.

To know the customer is to personalize their visit, to better serve them. It can help to increase order value and frequency, which is especially important now that COVID-19 has reduced fuel sales and in-store visits.

“First focus on check-in,” Crone said, “because you have to nail that before you worry about autonomous checkout.”

Whether c-stores are launching order ahead, curbside pickup or mobile payment, they must prioritize check-in and “think beyond the store.”

“It’s about focusing less on autonomous checkout — because it’s unproven — and more on something you could actually do something about,” Crone said, “and that’s autonomous check-in.”

Crone emphasized order ahead has to be a part of the value proposition of an autonomous check-in strategy.

Heidi Liebenguth, managing partner and research director of Crone Consulting LLC, added that quick-service restaurants (QSRs) that offer mobile ordering see a 50% higher ticket value per order. There’s no reason, she said, c-stores can’t follow the same model.

“You have to have a really near four-starrated app and order-ahead capabilities and a contactless way to deliver the items to the pump, or to the car — without somebody going into an enclosed area; it’s very hard to maintain socially distanced requirements inside,” Crone said.

Personalizing the service is key.

“If I know what you want to get before you

cstoredecisions.com

tonomous Checkout come to the station, and it can be waiting for you ... then you can meet the customer on their terms for what they wanted,” Crone said.

sights in impulse buying in order to optimize the new technology.

While c-stores may not have as DATA RIGHTS many SKUs as There’s another major factor to consider: data. grocery stores or Standard Cognition will integrate with Circle big-box retailers, that K’s existing systems and work with its current store SKU mix is valuable. layout, fixtures and lighting, as well as its existing 7-Eleven, which now inventory management and replenishment prooperates, franchises and/ cesses. There will be no shelf sensors in the Circle or licenses more than 71,100 K store; instead, Standard Cognition leverages stores in 17 countries, was the Heidi Liebenguth, managing ceiling-mounted cameras as well as proprietary partner and research director, first convenience store chain AI and machine vision software to associate each Crone Consulting LLC to develop proprietary techcustomer with the items they pick up.

“There is a risk in piloting with an AI-driven, nology for a fully frictionless computer vision startup because they need shopping experience. data to build their business,” Crone said. “BeMobile checkout was piloted in 2018 at locafore piloting, retailers must aggressively protions in Dallas. It’s now available in Utah and at tect their data rights when working with new select stores in New York. And in February, the entrants.” company announced that it was testing its first But Standard Cognition Vice President of Stratcashierless store concept among employees at its egy & Finance Evan Shiue said its appproach is headquarters in Irving, Texas. The technology was different from other “sensor fusion-based stores,” created in-house, the company said, custom-built like Amazon Go. by 7-Eleven engineers.

“With Standard’s system, retailers continue to “7-Eleven said that data is so important to them own and maintain full control of their own data; that they developed their own solution,” Crone the data resides on-site in the retailer’s system, not reasoned. with Standard,” explained Shiue. “Circle K is not Ultimately, retailers must analyze their options only keeping ownership of the data they have now, — and consider the value of their data. Because, as they are actually unlocking new data and analytStandard Cognition Co-founder and CEO Jordan ics about shoppers to which they never previously Fisher predicts, c-stores are poised to be the had access. In addition to the actual SKU mix first major market to quickly adopt autonomous and the velocity at which they move assortments, checkout. they’ll now get fully anonymized behavioral and But, Liebenguth said, “before that really takes intent data.” hold, we’re going to see a lot more of the orderShiue said Standard has also partnered with ahead and drive-through capability. … And that Mars to help Circle K leverage its expertise and inrequires a check-in strategy.”

cstoredecisions.com September 2020 • CSTORE DECISIONS

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Foxtrot Unveils national Growth StraTegy As it looks toward a post-pandemic world, the Chicago-based c-store chain prepares to compete on a much larger stage while powering sales with digital disruption.

Erin Del Conte • Executive Editor

At a time when many convenience stores were reeling amid the emergence of the COVID-19 pandemic, Chicago-based c-store chain Foxtrot watched its revenues double from January to May. Key to that success was Foxtrot’s ability to elevate its existing digital platform — which has been evolving since the company began as an e-commerce app seven years ago — as social distancing rules sent customers online for essentials.

Now, Foxtrot is aggressively pursuing national expansion, far beyond its Second City roots, while transforming its brick-and-mortar c-store business to include a heightened digital experience via e-commerce.

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February 2020

cstoredecisions.com

Foxtrot

Foxtrot began as an e-commerce app that delivered beer and essentials to college students. Now a growing convenience store chain, its digital roots are helping it thrive during the COVID-19 pandemic.

In February 2020, the chain received $17 million in funding powered by a number of its existing investors and joined by venture capital firm Imaginary. This round of investment is expected to drive the chain’s expansion, in terms of increasing its footprint as well as building its capabilities on the e-commerce end.

In early July, Foxtrot debuted its eighth Chicago c-store, opening on the first floor of a high-rise apartment building in the city’s Streeterville neighborhood. It’s also slated to open two new locations in Washington, D.C., in the Georgetown and Mount Vernon Triangle neighborhoods. Originally planned for this fall, due to the pandemic, the Washington, D.C., sites will now open in Spring 2021 and will bring Foxtrot’s store count to a dozen locations. But the chain’s growth trajectory is only beginning. Foxtrot has big plans to introduce more c-stores across the U.S. in 2021.

Foxtrot’s modern corner stores measure 2,500-3,000 square feet and offer a hybrid brick-and-mortar/e-commerce model, complete with a fresh prepared foods menu.

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September 2020

Foxtrot ventured outside of Chicago for the first time in 2019, opening two c-stores in Dallas.

“Next year, we are looking at several more openings in Chicago, several more openings in Washington, D.C., hopefully another opening or two in Dallas, and then we’re doing the work this year to figure out the next markets beyond that,” said Foxtrot Co-Founder and CEO Mike LaVitrola, who began the company with CoFounder and Chief Technology Officer Taylor Bloom in 2013. “We don’t have any specific markets pegged, but we’re doing a lot of the background work on the most obvious targets there.”

Among the target cities under consideration are hot spots like Austin, Boston and New York City.

FROM APP TO MARKET

When Foxtrot debuted in 2013, it began as an ecommerce app that delivered beer as well as essentials to students at the University of Chicago. From there, Foxtrot expanded its core customer base to include young professionals and families — aged 25 to 45 — living in walkable urban areas.

“We were trying to reimagine what the corner store could be, curating that online and delivering it in under an hour,” LaVitrola explained.

Then, in 2015, the company introduced its first brickand-mortar location in Chicago. Despite its move into physical retail, the company never stopped expanding its digital expertise.

Today, Foxtrot’s modern corner stores measure 2,5003,000 square feet and offer a hybrid brick-and-mortar/ecommerce model, complete with a fresh prepared foods menu, which it has been refining since it began its retail journey.

“If you look at the business now, roughly half of the revenue is retail, and half of the revenue is through our online platform,” LaVitrola said. “But it’s broadly the same customer shopping across both. They might come in and get their morning coffee in the store, and then get their wine delivered at night.”

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Due to the COVID-19 pandemic, Foxtrot has added curbside pickup and now includes its coffee and café menu online and in-app for the first time.

It has also adapted its product mix to meet changing customer needs during the pandemic. The chain’s e-commerce platform saw its traffic and sales soar during shelter-in-place mandates this summer.

PIVOTING IN A PANDEMIC

When COVID-19 reared its head in March, Foxtrot found itself perfectly positioned to double down on e-commerce as shelter-in-place rules began.

“When the pandemic hit, because we hold grocery licenses, we — like most people in the industry — were classified as an essential business,” LaVitrola said. “So, while we had to dramatically alter what that retail experience looked like, we were able to keep operating and serving the neighborhood.”

Foxtrot instituted major changes to operate safely during COVID-19. Among the usual safety precautions like plexiglass and social distancing decals, it removed indoor seating and closed the self-serve coffee bar as well as its café. While customers continued to shop the stores for grocery items, the chain saw slight dips in in-store sales in the spring due to the pandemic. Meanwhile, its e-commerce business soared.

“E-commerce was always roughly half of the business. That business quadrupled in the couple months since COVID-19 started,” LaVitrola said. “This massive, massive shift of our customers towards online is what allowed that growth to happen.”

Foxtrot was quick to transform digital opportunities 32

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September 2020

amid changing customer demands. For example, a couple weeks into the pandemic, Foxtrot instituted curbside pickup and began offering its coffee and café menu both online and in-app for the first time.

“Previously, customers could either just walk in and shop the store or hop on the app and get (their order minus food and coffee) delivered in under an hour,” LaVitrola explained.

Because the stores are in cities, curbside pickup looks a bit more like ‘door-side pickup,’ with customers walking up and employees running the order to the sidewalk.

The chain also rethought its product mix. With parties on the backburner during the pandemic, Foxtrot saw customers switch from stocking up on cold beer to loading up on frozen veggies, bread and the basics.

“We’ve been adjusting our merchandising mix — really, on a week-by-week basis — to adapt to what we’re seeing sales trends come in at, and making sure we’re as relevant as we can be to our customers,” LaVitrola said.

Now that Foxtrot offers its full coffee menu — from cold brew to lattes — and its prepared food menu online, customers have grown accustomed to

cstoredecisions.com

Foxtrot finds the same customers buy both in-store and online.

A customer may swing by the store to pick up a latte in the morning but order wine for delivery later that evening. Or they may order breakfast for delivery but stop in for lunch.

ordering via the app and swinging by the store to grab their beverage.

“It’s a super quick, usually contactless experience,” he said.

Moving its café menu, which features items like spicy chicken, avocado toast and grain bowls, to a pickup and delivery format took extra consideration. The Foxtrot team tested various types of packaging for each food product to ensure it would travel well during delivery.

“We ultimately posted a menu online, which is up there now, of items that we feel really confident can stand up to delivery,” LaVitrola said. “It’s not the complete full expression of what our café menu looked like in-store, but it approximates about 75%. Customers have been able to find most of their favorites on there. It’s been going pretty well.”

The approach was clearly successful. By July, Foxtrot’s retail business re-stabilized, but the huge uptick in online customers has continued.

LaVitrola attributes part of the retail resurgence to the chain’s ability to pivot to meet customers’ needs for a different set of products during COVID-19.

As COVID-19 numbers dropped in Chicago in time for the July Fourth holiday weekend, Foxtrot was able to open its patio seating.

“Obviously, there’s a lot less seating in order to maintain social distancing guidelines, but the patios are definitely being well used, which is really great to see,” he said. “That helps both our coffee business, our café business, and really just brings some life back to the stores.”

“Seating in-store is going to be a lot slower to come back,” LaVitrola added. “Chicago, and also Dallas, to a certain extent, have really relaxed guidelines on (the amount of seating capacity you can now include in the dining area) within stores.”

As it moved its café and menu online, Foxtrot took great care ensuring each product had packaging that would help it travel well. Today, it’s offering about 75% of its original menu for pickup or delivery.

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cstoredecisions.com

Foxtrot

The consumer drive for an experience-based shopping trip has informed Foxtrot’s model.

It sees the corner store as the center of the neighborhood where customers can get quality food, local coffee, explore new products and spend some time.

THE MODERN CORNER STORE

For Foxtrot, the pandemic has reemphasized the strategy its leadership team has been building over the past six years.

“We always had this notion of an omnichannel customer,” LaVitrola said.

“Retail isn’t dead. It’s not dying. Crummy retail is. But people still want to get out of their house. They still want to walk in and experience things.”

That consumer drive for an experiencebased shopping trip has informed Foxtrot’s model. The chain has reenvisioned the corner store as an inviting hospitality-driven site where customers can get in and out quickly, but might prefer to spend time — complete with locally roasted coffees, a highquality prepared-food menu and interesting wines.

“Really it’s a place where you can see yourself morning, noon and night,” he said.

It’s a vision he calls the “anti-Amazon approach.”

Simultaneously, e-commerce is also accelerating.

“While we think that there’s going to be a robust market for retail, e-commerce needs to play a key part in any retailer strategy, if it’s going to be successful,” he advised.

Through its proprietary Foxtrot app, customers can conduct transactions both in-store and online.

“We are agnostic as to whether a customer’s shopping in-store or getting products delivered,” LaVitrola said.

“What we’re seeing, in our data and in our customershopping patterns, is that most customers are actually shopping across platforms, but just at different times.”

Some customers stop in for morning coffee and in the evening get wine and dinner delivered. Others might 36

CSTORE DECISIONS •

September 2020

stop for a salad and beer on their way home but order bagels on Saturday mornings.

“Customers expect retailers and brands that they support to be equally native both in-store and online,” LaVitrola said. “The model we’ve built really is designed for that.”

LaVitrola felt the time was right to grow the brand because Foxtrot has a model customers are demanding today that allows them to shop across platforms — in-store, online and in-app for pickup or delivery — in order to get their shopping needs met in a variety of ways.

Foxtrot looks to offer both the essentials customers need along with luxuries and upscale surprises like local pastries or new, trendy ice cream brands.

“What we’re seeing is this bifurcation of retail, where there’s so much buying power going toward Walmart and Amazon — these big stockup places,” he said. “When people are looking

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Foxtrot

At press time, seating at both Chicago and Dallas-based Foxtrot locations had been allowed to reopen with specific spacing guidelines.

for a pick-me-up, or want to have a little fun or explore something new, there’s not a lot of retailers focused on that area. That’s where we spend a lot of time.”

In addition to upscale surprises, the chain also focuses on making price points approachable and delivering value in a bevy of ways. LaVitrola thinks of the model as hearkening back to the days of the general store as the center of the neighborhood. “If you needed something, they had it,” he explained. Meanwhile, the chain’s digital capacity provides options.

“

“

Customers expect retailers and brands that they support to be equally native both in-store and online. The model we’ve built really is designed for that.

– Foxtrot Co-Founder and CEO Mike LaVitrola

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September 2020

“We had the digital corner store for two years before we opened up our first physical one. That’s really at the heart of everything we do,” he said.

Customers can find the same products both online and in-store, but online merchandise shifts by time of day. Mornings focus on coffee and breakfast tacos, while at lunchtime the app showcases healthy salads, kombucha and pick-me-up snacks. In the evenings, the app features fun products like wine and ice cream for shoppers looking to relax.

LaVitrola advised that c-store retailers interested in opening an e-commerce solution will find that many offthe-shelf solutions exist. “There’s services who will deliver it. There’s services who will make your store,” he said.

The hard part is giving customers a reason to shop with your online site amid increased competition from giants such as Amazon, Walmart and Instacart.

“That reason can be your merchandising take, your private label or some sort of loyalty integration,” he said. “We spend most of our time internally making sure we’re giving customers a reason to shop with us and check in on us.”

Local relationships are also key. Foxtrot has a network of more than 200 small business vendors in each market with whom it partners.

cstoredecisions.com

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Foxtrot

Foxtrot plans to expand both its fleet of c-stores and its online platform in the coming year. It’s scheduled to open two new stores in Washington, D.C., in 2021, and is planning to expand into more cities across the U.S.

“This has really been part and parcel to our launch,” he said. “If you’re going to start a corner store, it should really be a platform for all these great makers in the community.”

For example, in Chicago, the chain works with popular local pie maker and restaurant Bang Bang Pie & Biscuits.

“We’re able to give Bang Bang Pie a lot of shelf space in our stores and online, bringing delivery capabilities to his business without any additional overhead, because we treat it like a normal partnership,” LaVitrola said. “We do that certainly with our coffee roasters, and with all the local craft beer guys.”

The chain is constantly on the lookout for the best products.

“A lot of times, that means they’re coming from local mom-and-pop shops that don’t have the infrastructure to set these things up themselves, but they can tap into Foxtrot, and it’s a win-win,” he said.

“The Greater Chicago Food Depository and the North Texas Food Bank are two organizations that a lot of our team members have been working with for a long time and that I’ve been familiar with. They were really doing great work in the communities in a lot of different aspects before COVID, and then certainly their need increased during the pandemic,” LaVitrola said. “We donated 10% of our e-commerce sales over a period of time and hit that max of $60,000. It was great to be able to give there, and then really rely on them to use that money the most effective way they can through their organization. I think it allowed our customers to feel good that they are using our service to get groceries delivered during the pandemic, but they’re also helping out a great cause along the way.”

Going forward, there’s growth on Foxtrot’s horizon as far as the eye can see.

“In a concrete way, we’re lining up new store openings and new neighborhoods for the markets we’re in,” LaVitrola said. “You’ll see a lot more from us in Chicago, in Washington, D.C., and also down in Dallas. Then we’ll be continuing the expansion of our online platform — welcoming new vendors, new features and maintaining that as a central part of what we do.”

Each year Foxtrot has been in operation, it has more than doubled its store count.

“Certainly, that would be at least the goal for 2021 as well,” LaVitrola said. “As a rough target, that’s where we’re headed.” CSD

GIVING AND GROWING

Foxtrot is also giving back to the community amid the pandemic. Through April 19, it donated 10% of its total sales from delivery orders to the Greater Chicago Food Depository and the North Texas Food Bank up to $60,000.

40

CSTORE DECISIONS •

September 2020

cstoredecisions.com

SWISHER’S BOLD NEW FUTURE EMPOWERS CONVENIENCE RETAILERS With more than 200 million adult consumers in the U.S., there is no doubt that this segment is the largest and most important for today’s convenience John J. Miller retailer. It should President be no surprise that business growth is intrinsically tied to how a company pivots and evolves along with (and ahead of) the changing preferences of those adult consumers.

While Swisher has always been centered on relationships with valued trade partners, particularly in the C-store space, today Swisher is more focused than ever on being the source those partners turn to for the insights and products that create direct connections with adult consumers. Innovative products are one important way to build the future, but they have to be matched with adult consumer insights, superior customer relationships and action to truly achieve the goal of becoming a leading adult consumer lifestyle brand.

SUCCESS SIMPLIFIED: A SERVICE MODEL BUILT AROUND YOU An important component of Swisher’s evolution is – Success Simplified – a platform that makes success easier and more profitable for trade partners.

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innovation, insights, action, reliability and shared success. These are delivered through a one-stop-shop offering of products, creative packaging, advanced manufacturing technologies, product guarantees and shared performance programs. This is just one example of how Swisher makes doing business easier. Ultimately, the Success Simplified approach is a win for Swisher’s valued partners.

INNOVATION

leader. Expertise, product knowledge and growth opportunities are delivered in one relationship through the recent alignment of the company’s offerings

“ The business partnerships that trade customers have formed with Swisher’s knowledgeable sales team will only be amplified further by this expanded effort.”

INSIGHTS ACTION RELIABILITY SHARED SUCCESS

BRANDS YOU TRUST, BACKED BY CATEGORY FOCUS & EXPERTISE Since 1861, Swisher has always been driven by an entrepreneurial spirit and a passion to create. Throughout the decades, strategic acquisitions, technology improvements and product innovations have enabled Swisher to maintain its position as an industry

into five focused strategic businesses: Swisher Sweets Cigar Company (Cigars & Cigarillos); Fat Lip Brands (Smokeless); Drew Estate (Premium Cigars); Hempire (Hemp Products); and Rogue (Modern Oral Nicotine). In each category, trade partners have access to the strategies, product innovations and relationships that drive success.

THE WAYS SWISHER WORKS WITH YOU ARE UNCHANGED The business relationships that trade partners have formed with Swisher’s knowledgeable sales team will only be amplified further by this expanded effort. The evolution will enhance the category expertise, product knowledge and data-driven strategies that benefit customers. A renewed purpose celebrating human connection, fostering creative expression and strengthening community, along with the unwavering commitment to evolve with the tastes of adult consumers, will guide even deeper connections with partners and their customers. Swisher continues to evolve in order to keep you ahead. Learn more at Swisher.com/SuccessSimplified.

THEY NEVER STOP EVOLVING.

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Category Management | Snacks

Snacke

Into F

kers Bite

o Flavor

With many consumers still living under lockdown conditions, desires for both indulgence and health are motivating snackers to reach for savory treats.

Thomas Mulloy • Senior Editor

Category Management | Snacks

With the nation enduring COVID-19 lockdown conditions, consumers are spending more time at home working and playing, and they’re reaching for snacks that make them feel good.

Indeed, the salty snack segment as a whole has been relatively flat for the year, seeing a 4.7% dip in convenience channel sales during the 21-week period ending July 25, 2020, compared to last year, according to Nielsen data. Conversely, meat snacks have seen an annual 5.9% lift and muscled an impressive 8.1% boost for that 21-week period — which roughly parallels the pandemic’s timeline.

One reason could be that, COVID-19 or not, manufacturers are staying aggressive with flavor innovation.

SPICY CHOICES HEAT UP

“Spicy is dominating everything, whether it be in meats or snacks,” said Robyn Gettleson, category manager for United Pacific, with 453 companyoperated stores and 56 fee-operated locations along the West Coast and in Colorado. She said

that holds true especially in urban areas with more culturally diverse markets.

April Gelber, category manager for Chapel Hill, N.C.-based Holmes Oil and its 26 Cruizers stores throughout the central region of the state, has observed the hotter snack trend as well.

“Because, as you well know, right now people are looking for a lot of spicy flavors,” she said.

As far as consumers’ meat snacks preferences, those can vary regionally. “We are particularly a meat sticks rather than jerky seller,” said Gelber.

“We have the four core that we sell, the main stuff, obviously with the Jack Link’s.”

Because United Pacific’s footprint is so large, Gettleson said she sees the differences even within her chain. “I know Denver is very much more in the jerky versus sticks,” she observed. “(The Pacific) Northwest is very heavily locally branded.”

Impact of covid on salty snacks

Short-, medium- and long-term impact of COVID-19 on salty snacks, April 2020

Source: Mintel

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CSTORE DECISIONS •

September 2020

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Category Management | Snacks

Nielsen Salty Snack Sales Total U.S. Convenience Channel

FOR THE 52 WEEKS AND 21 WEEKS ENDING JULY 25, 2020

PERCENTAGE CHANGE IN DOLLAR SALES VS. PREVIOUS YEAR

DOLLAR SALES DESCRIPTION

52-week period ending 7/25/20

21-week period ending 7/25/20

52-week period ending 7/25/20

21-week period ending 7/25/20

SALTY SNACKS (TOTAL)

$6.85 B

$2.79 B

0.2%

-4.7%

POTATO CHIPS

$1.73 B

$691 M

-3.4%

-9.8%

MEAT SNACKS

$1.51 B

$672 M

5.9%

8.1%

TORTILLA CHIPS

$1.05 B

$417 M

0.8%

-6.2%

CHEESE SNACKS

$681 M

$272 M

3.2%

-5.7%

SNACK MIXES

$441 M

$173 M

-5.5%

-13.4%

CORN CHIPS

$411 M

$164 M

-1.1%

-8.3%

POPCORN

$253 M

$103 M

-0.8%

-4.2%

PORK RINDS

$201 M

$79.3 M

-5.2%

-12.4%

PRETZELS

$160 M

$65.0 M

2.3%

-3.1%

MULTIGRAIN SNACKS

$80.3 M

$32.9 M

5.5%

-1.1%

VEGETABLE BASED SALTY SNACKS

$38.9 M

$15.2 M

2.4%

-8.7%

Source: Nielsen, Salty Snack Sales Total U.S. Convenience Channel

But the spicy trend, Gettleson said, is cutting across the entire category.

“I think it’s just going more to bold, spicy-type flavors; (I’m) seeing a lot more mixes out there,” she said. “So not just your plain old potato chip anymore — combining a couple different textures and flavors and that kind of thing within the salty.”

One prime example, according to Cruizers’ Gelber, is the Takis chip.

“The Takis Fuego (flavor) is one of the hottest items,” Gelber said. “I know they sell them out west, but here in our market area, it’s very, very popular. It does really well for us.”

An often-overlooked snack item is also grabbing flavor attention at United Pacific stores.

“It looks like the ‘chicharrones,’ or the pork rinds, are coming back and in new flavors,” Gettleson said. “They’re doing Korean barbecue and Himalayan sea salt. So those are coming back. I think that has a lot to do with keto and low carb (trends).”

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fast facts: • Annual meat snacks dollar sales are up 5.9% through July, according to Nielsen.

• Spicy flavors are dominating innovation.

• Snackers are balancing health and indulgence amid the pandemic.

Takis — a spicy, rolled tortilla chip brand from Mexico — has led the charge in satisfying consumer demand for spicy snack flavors.

HEALTH VS. INDULGENCE

Gettleson observed that the pandemic may have many consumers fighting the internal “health vs. indulgence” battle with their snacking choices.

“Everyone’s straddling that fence,” Gettleson said. “They know they need to be eating healthier, and especially, they want to stay healthy so they don’t get sick; but I think people are stressed out.”

Multigrain snacks, generally perceived as “healthy snacks,” for example, have seen a slight dip in the 21 weeks ending July 25, 2020, according to Nielsen, but were up a strong 5.5% for the 52 weeks.

Cruizers’ Gelber said that for her stores, energy bars are weathering the pandemic lockdown storm quite well.

“They’re actually holding strong,” she said, “which means that even due to the traffic decrease, we haven’t seen a huge decline.”

That said, snackers are still embracing indulgence, especially during lockdown. Market research analyst Mintel found the pandemic is driving salty snack sales, which customers are turning to as a comfort food to alleviate stress. cstoredecisions.com

And while category managers across the nation and product spectrum have had to compensate for pandemic-driven supply chain disruption, other products like popcorn and pretzels are filling in the snack aisle nicely at both United Pacific and Cruizers locations.

Cruizers is holding strong in the subcategories within salty snacks, too. And while some manufacturers are pushing promotions back until there’s more clarity with the pandemic situation, consumers in general are still buying. “In fact, two weeks ago, we had the highest selling day since the opening of our company,” said Gelber.

United Pacific’s Gettleson sees similar robust business coming back to c-stores and in nearly all categories. “Washington and Oregon, we’re not seeing any declines,” she said. “We’re actually up over last year.” CSD September 2020 • CSTORE DECISIONS

49

Category Management | Dispensed Beverage

Dispensed Beverages Adapt

Self-service bans and contamination concerns prompted by the pandemic force c-stores to adjust dispensed beverage operating practices.

Howard Riell • Contributing Editor

Selling cold and frozen dispensed beverages used to be a fairly simple proposition. But as summer turns to fall in the year of COVID-19, convenience store operators have had to improvise to bolster consumers’ confidence.

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CSTORE DECISIONS •

September 2020

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Category Management | Dispensed Beverage

As some regions see lockdowns easing while others deal with a re-emergence, social distancing and the heightened need for sanitizing have made selling cold dispensed drinks a bit more complicated. That said, nothing is going to dampen the popularity of these drinks for long.

“As you know, the c-store channel has been relatively soft through the pandemic, especially in the second quarter,” said Gary Hemphill, managing director of research for Beverage Marketing Corp. “But as more things have reopened and more people are driving, the channel has seen improvement.”

He expects to see continued sales improvement in the dispensed category in the second half of the year.

CHANGING ‘THE HOW’

The pandemic is not only impacting sales trends, but also operating practices.

“The biggest impact of COVID-19 on all of our dispensed beverage programs is not so much in what we offer but how,” explained Joshua Clark, category manager, fresh foods, for Worcester, Mass.-based Nouria Energy Corp., which operates more than 140 c-stores.

“A lot of the geography in which we operate outright banned self-serve beverages, so we have had to staff our beverage areas and make them a full-service operation.”

The move has paid off for Nouria. The c-store chain’s cold and frozen dispensed program is satisfying the afternoon snacking occasion, with “an overwhelming majority of our sales coming in the early to midafternoon,” Clark said.

Nouria’s cold and frozen dispensedbeverage offerings include iced coffee, Frazil, f’real, and fountain soda in select stores, which pair well with the chain’s made-to-order foodservice options.

In stores where self-service is again allowed, some customers may still be wary of selfserve areas, warned Ryan Mathews, principal of Black Monk Consulting in Royal Oak, Mich.

“If c-store operators really want to capture their fair share of this potentially exciting category, the first step is to do everything they can to allay any of the fears about possible contamination customers may have,” Mathews said.

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CSTORE DECISIONS •

September 2020

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Category Management | Dispensed Beverage

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CSTORE DECISIONS •

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“Developing a standard operating procedure that shows consumers the area is routinely monitored should provide consumer confidence that the area is clean and sanitized,” said Jenny Stanley, senior policy program manager for the Army & Air Force Exchange Service (AAFES), which operates 479 convenience stores.

She added that c-store operators that put strong cleaning procedures in place and execute against them shouldn’t have any hygiene issues around the dispensed beverage section.

“It’s no different than pre-packaged beverages that are inside the cold vault, with people touching the door handles,” Stanley said.

But communication is also key in maintaining consumer confidence.

“You have to let the customers know you're doing it through signage, saying something like, 'These machines are sanitized after every use,’ or ‘every 15 minutes,’ or whatever time frame makes sense where you are,” Mathews said.

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Category Management | Dispensed Beverage

CONSUMER CONFIDENCE

“For convenience stores to increase sales of dispensed beverages, the key will be to increase the consumer belief that it is as safe to dispense their own beverage as it is to buy one that is prepackaged and sealed,” said Don Burke, senior vice president for Management Science Associates in Pittsburgh.

Burke suggested keeping all cups and straws behind the counter until a drink is purchased so consumers see that they have not been exposed to the public.

“Put the entire dispensed beverage section behind the counter in the foodservice area, and only have them dispensed by store personnel — or only provide individually wrapped cups, straws and utensils in the dispensed-beverage sections.” CSD

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CSTORE DECISIONS •

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fast facts: • Keeping cups and straws behind the counter until a customer requests them can help inspire confidence in selfserve dispensed during COVID-19.

• Nouria turned its dispensed beverage offering into a full-service program after the pandemic prevented selfservice in its operating area.

cstoredecisions.com

Category Management | Smokeless Tobacco

Smokin’ Smokeless Sales Not even a pandemic can extinguish smokeless tobacco’s momentum, which is getting an extra boost from tobacco-free nicotine pouches.

Anne Baye Ericksen • Contributing Editor

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CSTORE DECISIONS •

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smc-csd-march2019Ad.pdf

C

M

Y

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MY

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Category Management | Smokeless Tobacco

For years, snuff, or loose tobacco, dominated the smokeless tobacco category.

Then came snus — tobacco pouches that produce less spit — which added new life to the other tobacco product (OTP) segment. But the category really received a boost four years ago when Swedish Match launched ZYN, a tobacco-free nicotine pouch, often referred to as an all-white pouch.

This OTP addition has generated a reliable revenue stream for convenience stores. IRI, a Chicago-based market research firm, reported spitless tobacco sales in c-stores, including snus, posted noteworthy dollar gains this summer compared with the same time last year: more than 75% for the four weeks ending July 12, 2020, and slightly more than 77% for both the 12 weeks and 52 weeks prior. Although

60

CSTORE DECISIONS •

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snuff continues to tally more in total dollars, revenue growth for the legacy product line has been stymied at less than 5% for each of the time periods.

POWER OF THE POUCH

Initially available on the coasts, ZYN has consistently expanded its retail profile throughout the country. Swedish Match reported shipments in the U.S. for the first six months of this year exceeded total U.S. shipments for all of 2019.

“ZYN has been especially strong. I think adults are looking for alternative nicotine delivery devices,” said Bailey Lyden, vice president of retail for True North Energy, which operates 143 c-stores in Illinois, Michigan and Ohio.

“It’s great to see some increase on such a new SKU,” added Dan Dunstan, vice president of retail for Parkland USA. The Minot, N.D.-based company includes 58 retail sites.

A year ago, British American Tobacco released Velo, its all-white pouch brand.

Originally available in 70,000 stores, it successfully expanded the company’s modern oral category, which earned more than $162 million in 2019, signifying a 273% year-overyear increase, per Bloomberg.

Altria also entered the all-white pouch market in 2019 with on!, tested in 28,000 retailers, including five c-store chains. Its successful reception has prompted the company to scale up its retail presence later this year. Plus, Altria submitted a premarket tobacco application to the Food and Drug Administration (FDA) for on! in June.

“We’ve decided 40% of our stores will carry it,” said Lyden.

cstoredecisions.com

Category Management | Smokeless Tobacco

Consistency is Key

Spitless tobacco dollar and unit sales sustain substantial growth.

SPITLESS TOBACCO U.S. CONVENIENCE STORES

DOLLAR SALES 1-YEAR % CHANGE

UNIT SALES 1-YEAR % CHANGE

4 weeks ending 6/14/2020

77.3%

77.4%

12 weeks ending 6/14/2020

79.7%

78.4%

52 weeks ending 6/14/2020

74.9%

72.4%

DOLLAR SALES 1-YEAR % CHANGE

UNIT SALES 1-YEAR % CHANGE

4 weeks ending 7/12/2020

75.2%

78.8%

12 weeks ending 7/12/2020

77.8%

78.5%

52 weeks ending 7/12/2020

77.1%

75.4%

Source: IRI, a Chicago-based market research firm (@iriworldwide), Total U.S.-Conv. July 8, 2020 and Aug. 10, 2020

“I think the all-white appearance of nicotine pouches may set these products apart from traditional smokeless tobacco when it comes to perceptions of risk,” said Alex Clark, CEO for Consumer Advocates for Smoke-Free Alternatives Association (CASAA).

“Our managers said straight cigarette users are the biggest pull on the product. People may think the non-tobacco product is better for you. They’re looking for a good alternative when they feel the need,” said Dunstan.

REPLACING FLAVORED VAPE

Flavor selection for both snus and all-white pouches could be another factor driving sales since the FDA banned most flavored vaping products earlier this year. Currently, on! is available in seven flavors, ZYN offers nine, including flavor ban-approved Chill, and Velo comes in citrus and mint.

“I think that vaping flavor bans create a hole that nicotine pouches might fill,” said Clark. “In some places, like Massachusetts, gas stations and c-stores filled slots on tobacco racks left empty by Governor Baker’s vapor sales ban in response to lung injuries linked to illicit THC products. I suspect that seeing those products where vapes used to be may have piqued the interest of many people and maybe inspired them to try something different.”

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CSTORE DECISIONS •

September 2020

“All three (moist, snus and white pouches) have seen increases over prior year. Is that due to the ban? Possibly, but I’m not saying that is the exact reason,” said Layne Stuckey, vice president for C.E. Taylor Oil Inc., which owns and operates 28 Chuckles convenience stores.

Still, such a strong showing during a disruptive COVID-19 market suggests the power of the pouch is well positioned to keep producing profits for c-stores. CSD

fast facts: • ZYN U.S. shipments for the first six months of 2020 exceeded all U.S. shipments for 2019.

• British American Tobacco’s modern oral category cashed in more than $162 million last year.

• Spitless tobacco dollar and unit sales grew by more than 77% for the 52 weeks ending July 12, 2020, according to IRI. cstoredecisions.com

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Category Management | CBD

Measuring CBD O Despite the global COVID-19 pandemic, innovation in cannabidiol (CBD) is booming, with CBD companies continuing to innovate and grow their core offerings in this category.

Brightfield Group, a consumer insights and market intelligence firm for the CBD and cannabis industries, pointed to several factors contributing to the next generation of CBD prodThe U.S. hemp-derived CBD market is projected to ucts, including improvereach $4.7 billion in sales in 2020, with 14% growth ments in branding, packover 2019 sales of $4.1 billion. aging and product quality (dosage, texture, flavor), and shared the following statistics on this burgeoning category.

CBD SALES ARE GROWING

PANDEMIC CONSTRAINS GROWTH POTENTIAL Full-year 2020 retail sales are not expected to reach levels anticipated prior to the emergence of the COVID-19 pandemic. Economic pressures facing customers, temporary store closures and inaction by the Food and Drug Administration (FDA) are slowing the growth of the U.S. CBD market.

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CSTORE DECISIONS •

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cstoredecisions.com

D Opportunities SOURCE: The statistics on this page are from Brightfield Group, August 2020.

BY DEMOGRAPHICS

WHY USE CBD?

• Of millennials and Gen Z consumers, 47% plan on using more CBD in the months to come.

Depression and insomnia • both expected to rise over the coming months • rank No. 2 and No. 6 respectively

• Younger consumers are more likely to increase their CBD usage in response to the COVID-19 pandemic.

No. 1 ailment of CBD users: anxiety (42%)

39% of customers are using more CBD due to COVID-19, according to a Brightfield Group survey of 5,000 CBD customers from June 2-24, 2020.

E-COMMERCE COMPETITION • 45% of CBD consumers surveyed in June 2020 have moved their CBD purchases online as a result of COVID-19.

• Millennial shoppers are the most likely to have switched to e-commerce for CBD. • 54% of millennials have switched from brick-and-mortar stores to online CBD purchases. cstoredecisions.com

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51%

48%

40%

17%

September 2020 • CSTORE DECISIONS

65

Category Management | Beer & Adult Beverages

Kim Cuellar of OnCue stands beside 18 feet of local craft beer.

Hard Seltzer Sparkles

s

fast facts: • Multi-packs of beer, wine and hard seltzer are in demand as customers stock up.

• Hard seltzer is a huge and growing trend in the alcoholic beverage category.

• Customers want sessionable beverages or those with low alcohol content that are easy to drink. .

Customers select multi-packs of beer, wine and hard seltzer as they seek ‘sessionable’ drinking options.

Erin Del Conte • Executive Editor

With a majority of customers staying home due to the pandemic, alcoholic beverage shoppers are seeking bulk beverage buys from convenience stores.

Multi-packs of hard seltzer or beer, and large boxes of wine are in high demand.

But above all, hard seltzer shines as the star of the alcoholic beverage category as c-store customers seek ‘sessionable’ drinking options. In other words, refreshing beverages that are low in alcohol content, allowing several to be consumed in one drinking session or across multiple sessions.

Category Management | Beer & Adult Beverages

Hard seltzer purchasing amid pandemic far exceeds 2019

Alcoholic beverage sales have been soaring during the pandemic, according to Kim Cuellar, category manager, beer and wine for OnCue Express, which operates 60 c-stores in Oklahoma, with plans to expand into Houston in November.

“It’s spurred a lot of growth,” Cuellar said. “It’s brought in a ton of traffic to our stores. We continue to grow year over year. We’re seeing record sales in terms of beer and wine and in terms of overall inside sales.”

United Pacific saw similar sales upticks as alcoholic beverage customers altered their buying preferences amid the pandemic.

“We’ve definitely seen a shift into larger pack sizes — basically to 12-packs and up, and people shifting to what we call ‘the comfort packages,’” said Kelsey Capellino, category manager of adult beverage for United Pacific, which operates 453 company-operated stores and 56 fee-operated locations. The company’s primary banners include We Got It, My Goods Market, Pump Eat Drink and Rocket.

Customers are gravitating toward brands they’re familiar with and beverages that are light, low-calorie and easy to drink — a far cry from the craft beer experimentation craze of the past few years, Capellino explained. “It’s the sessionability of these packages that people are looking for.”

While customers aren’t experimenting in the same way as usual during COVID-19, they are willing to pay a bit more for a premium beverage.

“We’ve cut down a bit on our promotional activity, and we didn’t see a decrease in traffic in our beer selection,” Capellino said. “Consumers, especially the younger generation, are understanding that by paying a bit more, you have a better liquid than you necessarily would bargain shopping.”

Meanwhile at OnCue, premiums and below premiums are down in terms of the total share of beer dollars, but super premiums are “on fire” — another sign customers are willing to spend a little more.

Cuellar also concurred that sessionability is driving purchase decisions.

“I would say the trend of the summer is sessionable,” she added. “Customers want to be able to drink all day and go into the evening. People want to be able to drink a little bit lower alcohol by volume and be able to make it last all day.”

Still, the growth in 12-pack and larger-size packs isn’t causing a dip in singles or smaller-pack purchases.

“We didn’t see a trade-up from singles — just incremental sales, and so it probably is attributed to more frequent shopping or new customers coming into our stores because of the ease of convenience,” Capellino said.

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Dollar sales of hard seltzer in U.S. off-premises for each one-week period

Source: Nielsen Total U.S. off-premise measured channels, one-week periods from the week ending March 21, 2020 through the week ending June 13, 2020 (and the one-week periods in 2019 that occured one year prior); week of July 4, 2019.

SELTZER SOARS

Hard seltzer fits the trend of an easy-to-drink, light, lowcalorie beverage, and its sales have been skyrocketing.

Hard seltzer is categorized as part of the flavored malt beverage (FMB) segment, but 60% of hard seltzer shoppers and 70% of millennial drinkers — the base hard seltzer buyer — consider it its own category, Nielsen reported.

Fewer than 10% think hard seltzer is a type of beer.

Hard seltzer off-premises sales in U.S. retail quadrupled on a year-over-year basis during the 15 weeks ending June 13, 2020 — an increase of $900 million, according to Nielsen. Total hard seltzer sales hit $2.7 billion for the 52 weeks ending June 13, 2020, with dollar share of total beer, FMB and cider surpassing 10% for four consecutive weeks, and more than twice the 4.4% share it held as of the 52 weeks ending Feb. 29, 2020. Nielsen predicted hard seltzer’s share of total beer sales will continue to grow.

“White Claw has been on fire,” Capellino said. United Pacific expanded its hard seltzer lineup at the beginning of the pandemic, adding Corona Hard Seltzers and Truly Lemonade Seltzer, as well as expanding its White Claw section and adding the 12-packs.

“We’ve encouraged stores, and we’ve been working with our distributors, to build ambient stacks of those items (12-packs) for holding capacity purposes,” she said.

“With the pandemic, customers want to be quick in and quick out, and they’re identifying with these brands that they know, not sitting there browsing. So as long as we have White Claw and Truly stacked on our floor and in our cooler, it’s a quick in and quick out for the consumer, and that’s why we have them keep coming back to us,” Capellino said. cstoredecisions.com

During the pandemic, customers are buying in bulk, even at c-stores, and therefore reaching for large boxes of wine and multi-packs of beer and hard seltzer. C-store beverage category managers are increasing space for these sections and seeing sales soar as a result.

OnCue is also seeing hard seltzer sales skyrocket.

“The hottest trend in the world right now is hard seltzers,” Cuellar said. “Right now, that’s making up a little over 7% of total beer dollars, which doesn’t sound like a lot, but that’s huge considering it was only about 1.5% last year.”

OnCue is also bringing in local seltzers. Import beers are usually a huge percentage of the chain’s total beer share, but COVID-19 has caused supply issues with some import brands specific to OnCue’s region.

With seltzers growing so fast, OnCue has been filling in any merchandising holes due to supply issues with hard seltzer, which has helped keep sales trending upward despite out-of-stocks on imports. “It seems no matter what seltzer I put in, it’s going to move,” Cuellar said.

CRAFTY BEER SETS

Pre-pandemic, Capellino planned to bring in a wide variety of craft selections playing on “hazy.”

“Hazy IPAs are different IPA-flavored beers (with fruity, citrus notes),” Capellino said. “Fruit beers are such a huge hit right now, especially with the millennial generation.”

Due to distribution uncertainty and not wanting to put the stores through the stress of a reset during the onset of a pandemic, it’s waiting to implement that set.

“I hope, once everything settles down, we can bring in more of that variety and beef up the craft selections for that consumer in months to come,” Capellino said.

“But during the pandemic, we’re not necessarily seeing people purchase craft as frequently as pre-pandemic in what we had planned for in 2020.”

While national trends point to craft beer sales dipping, OnCue is going in the opposite direction and allocating more space to the craft segment.

“Because we’re a local company, we really are leaning in hard to support our local craft brewers because they’re being hit so hard by the pandemic,” Cuellar said. “We’ve also allocated a bunch of space to support them and to try to help their distribution. Our communities have really rallied around supporting local craft because we’re supporting it.”

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WINE FOR THE WIN

Wine sales are also climbing at convenience stores during the pandemic.

United Pacific traditionally offers one shelf of wine, plus a section featuring wine Tetra Paks and take-home packages.

It also introduced cans of wine about a year ago. But in the last few months, it has expanded its Tetra Pak section to support the demand for take-home packs of wine.

“We just deployed a new program for take-home wine with smaller Tetra Paks for the remainder of 2020 because we are seeing an uptick in wine, along with all of the other alcohol beverages,” Capellino said.

OnCue is seeing a similar demand for take-home packs of wine. “Three-liter boxes (of wine) are flying off the shelf,” Cuellar said.

OnCue features a large wine section, with most stores devoting at least 12 feet of space to the segment.

“We have some stores that have $60 bottles of wine.

Every store pretty much has at least one $20 or $25 bottle offering,” she said.

The three-liter wine boxes were so popular, Cuellar recently added a special display rack to feature them. In the neighborhood stores specifically — as opposed to the chain’s interstate sites — three-liter boxes are in such high demand, it’s hard to keep them in stock. “They want something that’s going to last a long time,” she added.

Cuellar has also introduced wine-based, ready-to-drink cocktails, including margaritas. “Those are just on fire,” she said. “And then, Barefoot is coming out with winebased seltzers that are really a lot smoother. They have a lot less bite than some of the hard seltzers.”

The demand for sessionable drinking options — and with it the hard seltzer trend — is likely to continue into fall.

“Customers want to be able to extend their drinking time,” Cuellar explained. “Even though people have fewer dollars, they’re trying to stretch their dollar as far as they can and wanting to have as much fun as they can for as long of a period as possible. That’s why we’re seeing all the 30-packs and the large-pack sizes selling more.” CSD

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Foodservice | Pickup & Delivery

Digital Disruption Comes for Foodservice The COVID-19 pandemic has proven a true catalyst for tech adoption, with retailers working to launch new forms of technology, adding features like pickup and delivery to better serve customers and make up for fewer visits.

Isabelle Gustafson • Associate Editor

While the importance of tech adoption has been mounting in recent years, the COVID-19 pandemic pushed implementation of ‘future tech’ into lightspeed. C-stores are now racing to roll out digital solutions as they adapt to newly formed customer behaviors that materialized at record speed — especially in the foodservice realm.

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According to Euromonitor’s “Digital Consumer Survey 2020,” almost half of connected consumers order foodservice for takeaway or delivery on a smartphone (48%), as opposed to in person. What’s more, 57% of global consumers report using a mobile app and 40% a mobile website to pay for their foodservice delivery or takeaway orders.

While many retailers had been exploring new technology in the months and years prior, the pandemic put those plans into motion. cstoredecisions.com

However, some retailers — like Choice Market — were ahead of the curve. The Denver-based chain has been using technology, operating with what Founder and CEO Mike Fogarty calls an “omnichannel approach,” since its first store opened in 2017. The chain offers order-ahead, delivery and kiosk ordering.

With the recent opening of its third store, Choice is updating its mobile app and e-commerce website to allow customers to order not only prepared foods, but the c-store chain’s entire SKU selection for delivery.

September 2020 • CSTORE DECISIONS

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Foodservice | Pickup & Delivery

While moving forward with the openings of four new and refreshed locations in four different states amid COVID-19, MAPCO launched and improved several initiatives, including a new app that enables customers to pay directly through their phones.

And the chain’s fourth location, set to open later this year, will pilot self-checkout via artificial intelligence (AI) visionbased technology, which tracks products as customers select them. Having technology in place pre-COVID, with more on the docket, put the company at an advantage, said Fogarty.

“We're not reacting to this new normal; we were already prepared,” he said. “Relative to (other) convenience stores, we do feel like we've been a little bit more progressive and innovative on that front.”

Claudio Daguerressar, vice president of marketing at MAPCO, with more than 300 corporate-owned stores, said innovation has always been central to the company, but he added that “the COVID-19 pandemic has forced the industry to rethink some of its strategies.”

While moving forward with the openings of four new and refreshed locations in four different states amid COVID-19, MAPCO launched and improved several initiatives, including a new app that enables customers to pay directly through their phones, a temporary full-service fueling program, as well as the addition of Amazon Hub at select locations across Tennessee and Alabama.

Amazon Hub is a self-service kiosk that allows customers to pick up packages at the store, rather than having them left outside their door while they’re away.

MAPCO also partnered with DoorDash to provide delivery services at 30-plus MAPCO stores across Tennessee, Alabama, Mississippi, Arkansas and Kentucky, with plans to expand the service to additional locations in the near future.

DoorDash has been a popular delivery partner among c-store retailers. In April, the company launched a new ‘Convenience’ category on the app, at which time more than 1,800 c-store locations nationwide had partnered with 74

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DoorDash, including 7-Eleven, Circle K, Wawa and Casey’s General Stores.

Now, DoorDash’s Convenience category includes more than 2,500 stores across more than 1,100 cities nationwide.

In August, the company announced the launch of grocery delivery as well as ‘DashMart’ stores — available in eight cities to start — which the company called “a new type of convenience store,” owned and operated by DoorDash itself.

South Carolina-based Spinx, which operates more than 80 stores across the state, added delivery in the spring in select markets through DoorDash along with other regional third-party operators, Uber Eats and Bite Squad, with plans to add new initiatives like curbside pickup and online ordering down the line.

“It's certainly been a year to reevaluate and really strategize,” said Spinx Director of Marketing Hayley Bledsoe.

ELEVATING THE MENU

Spinx has found other ways to safely offer its foodservice amid COVID-19, with the recent launch of its food truck, The Cluk Truk, which will be open to the public for booking across upstate South Carolina, enabling socially distanced, outdoor dining.

Ironically, Bledsoe said, plans for the food truck were formalized long before the pandemic began.

“It was in the works way before (COVID-19), but it's also lining up really well,” she said. “We thought we would be launching at festivals and really big events like the state theater, things of that nature, but it's really turned into more localized, very personable events.”

cstoredecisions.com

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• Having technology in place pre-COVID put some c-stores at an advantage.

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September 2020

Menu items will include Spinx customer favorites like original and spicy chicken tenders, Buffalo snack wraps, sliders, french fries and more.

Good Oil Co., which operates Good to Go c-stores in Indiana and Illinois, is also taking a food-forward approach with its newly rebranded foodservice program, It’s All Good Cafe, which offers a wide menu including pizza, sandwiches, sides and more.

In addition, the c-store chain is planning to launch a broader coldcase grab-and-go offer and is exploring other types of cuisines like Asian and Mexican. It’s also rebranding its fountain and coffee programs, and rolling out bean-to-cup coffee across its locations.

All this will coincide with its partnership with Vroom Delivery to enable take-out and curbside pickup — followed by delivery — of the It’s All Good Cafe menu and much more.

“We put in somewhere around 1,200 or 1,500 SKUs, which includes tobacco, alcohol, center-store items, cold vault and, of course, foodservice,” said Mike Jones, director of marketing and foodservice for Good to Go. The company chose to partner with Vroom Delivery after talking with other retailers who had good experiences with the service. Plus, the program integrated well with Good to Go’s current digital app provider, ensuring full functionality with its existing app.

For Good to Go, the timing was right for new technology and foodservice expansion.

“We are in growth mode for sure,” Jones said, “and foodservice is leading the charge.” CSD cstoredecisions.com

Foodservice | Coffee

Top 4

Tips for Growing

Coffee Sales

s

Just as the best days start with coffee, the best c-store food programs start at the coffee bar.

Isabelle Gustafson • Associate Editor

Today’s customers want more from their coffee.

They expect it to be high quality, fresh. Hot and iced. They want to try new flavors; if they like it, they’ll grab the pods. Convenience retailers must know the trends and provide options.

Customers also want to feel good about where their coffee comes from and how it’s made. Is it sustainably sourced? Does it come from a local supplier? Leaning into these labels will draw today’s coffee connoisseurs.

New York-based Cliff’s Local Market offers Utica Coffee, a local brand, which Director of Foodservice Derek Thurston said is a “point of separation” for the c-store.

“You’ve got all the big boys in the marketplace, but we’re the closest local markets,” he said. “We’re a 19-store chain, and we offer local coffee; I think there’s support for that.”

At New Jersey-based QuickChek, quality and freshness are key, along with a commitment to customer service.

The c-store chain, with more than 160 locations in New Jersey, New York’s Hudson Valley and Long Island, appoints a “coffee host” at its stores: an employee who’s responsible for managing the coffee department, dedicated to making sure that coffee is brewed fresh, and the milks and creamers are stocked.

“Our employees really help make that difference for us,” said QuickChek Director of Food Services Chris Smyly.

Here are four more tips to take any coffee program from good to great:

Foodservice | Coffee

1

ADD NEW FLAVORS AND LTOS

New brews and limited-time-offer (LTO) flavors can help to keep customers interested in a coffee program and engaged with the brand.

QuickChek is known for its LTO flavors. Summer LTOs at QuickChek include Rainbow Cookie — inspired by the red, white and green Italian rainbow cookies — as well as Kris Kringle, a holiday flavor that the company brings back every winter and again in summer for a ‘Christmas in July’ theme.

Overall, Smyly said QuickChek plans its LTOs in advance but maintains flexibility to pivot to new trends as they arise.

“A lot of times you’ll find, mid-year, there’s a different trend going on,” he said.

But pumpkin? Pumpkin’s a given.

As of Aug. 24, QuickChek is offering its Pumpkin Spice LTO, which is a few days earlier than last year’s release, for the simple reason that customers are asking for it, said Wendy Lyman, senior category manager of dispensed beverages and bakery for QuickChek.

Cliff’s Thurston gives a similar reason for the earlier release of pumpkin products this year, 2020, the year of all years.

“I think people need this,” he said.

The c-store added pumpkin on Aug. 10, up from Aug. 21 in 2019.

Other popular LTOs at Cliff’s are Chocolate Cannoli, Apple Pie in November, Mocha Mint around the holiday season and Dark Chocolate Raspberry Truffle to coincide with Valentine’s Day. “I had a lady tell me she’d walk 20 miles to get the Dark Chocolate Raspberry Truffle,” Thurston said.

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2

INCREASE TAKE-HOME OPTIONS

As customers practice social distancing during COVID-19, working from home rather than heading to the office, they are stocking up on essentials — which, for many of us, includes coffee. Retailers are stocking more K-Cups and bags of ground coffee to appeal to these consumers and make up for a dip in morning traffic.

According to a CivicScience survey of nearly 2,400 U.S. adults in July, 77% of Americans said they brew coffee at home. And among the coffee-brewing crowd, nearly eight in 10 say they mostly do it in one of two ways: either with a standard drip pot (48%), or with a single-serve ‘pod’ coffee maker (29%).

Nielsen Total U.S. Convenience data shows that for the “pandemic period,” or the 21-week period ending July 25, 2020, total packaged coffee dollar sales were up 10%, and pod sales specifically were up a massive 22%.

At Cliff’s, take-home coffee sales — including Uticabranded bags as well as K-Cups — were up around 28%, Thurston said, which has helped offset the fact that overall hot dispensed sales were down.

“It makes sense because the morning daypart, that’s the daypart we’re still struggling with the most,” he said.

According to Nielsen, while pods were selling big and ground coffee was steady at a 0.7% increase, whole bean coffee was actually down 11.7% — perhaps explained by the fact that it had been up a massive 18.8% for the 2019 calendar year.

The shift to at-home brewing, of stocking up on pods and beans, may be more or less temporary, depending on how the pandemic plays out. But Thurston said it just works well to have a take-home option coincide with the hot dispensed program.

“We’ll always have the featured flavor that we’re brewing, and then we’ll have it available for sale in the back as well,” he said. “It’s a nice relationship; people try it, they like it. Then they buy the retail bags.”

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Foodservice | Coffee

3

DON’T FORGET COLD COFFEE

Iced and cold options like cold-brew coffee are more popular than ever, and not just in summer. Young customers especially may look for iced coffee well into the fall and winter months.

Cliff’s offers a cold-brew program with Bunn Nitron machines, available at six of its 19 locations so far.

“The one side is nitrogen-infused cold brew, and the other side is black. And that program’s pretty strong,” Thurston said. “The stores that sell the cold brew will have tenfold more sales than if you’re just brewing it into an urn and having it sit there.”

QuickChek has had less success with cold-brew coffee, but Smyly said iced is stronger than ever.

“We honestly see that as one of the biggest growth opportunities for us,” he said.

The c-store chain has added iced options to LTOs to meet customer demand, along with smoothies and other cold offers.

“We’re trying to be flexible and adapt to how the new, younger customer wants their offers,” said Smyly. “Our traditional coffee business has always been a real strength for the company, but we are also trying to keep that strength and expand into new, different ways to do coffee.”

fast facts: • Limited-time-offer (LTO) flavors add excitement to a coffee program and keep customers engaged with the brand.

• Total packaged coffee dollar sales were up 10%, and pod sales were up 22%, for the 21-week period ending July 25, 2020, according to Nielsen Total U.S. Convenience data. .82

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4

GET SOCIAL

It can’t be overstated that social media is a great advertising tool. Make sure your customers know about your offers by promoting them across social media channels in addition to more traditional venues like in-store signage. But social media is also the place to find out about new and upcoming trends.

According to Nielsen Total U.S. Convenience data, instant coffee was up 30.9% for the 21-week period ending July 25, 2020 — likely due to the recent dalgona coffee trend. The drink is made by whipping together instant coffee, sugar and water to make a foam that’s spooned over milk. The recipe went viral on TikTok and other social media sites. According to Google Trends, searches for “dalgona coffee” increased by 1,800% in mid-March and grew a further 1,700% in mid-April.

For QuickChek, social media’s a great way to find out which LTOs customers love — and what they want to see next. “We have a lot of people that send in requests or guesses for what the next LTO flavor’s going to be,” said Eric Rush, QuickChek’s digital marketing and advertising manager. “Wendy’s ability to nail LTO flavors keeps the coffee customer coming in.”

The chain has also gained some new customers from its recent partnership with DoorDash, racking up sales of smoothies and espresso-based drinks at non-traditional times.

But ultimately, Rush said, the best way to attract customers is to have the best coffee.

“The best thing we have is our brand equity,” he said.

“Being the No. 1 coffee in our area for 50 years is a pretty good advertising tool.” CSD cstoredecisions.com

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Foodservice Column | Packaging

SINGLE-USE

FOODSERVICE

PACKAGING:

AN UNSUNG HERO Single-use foodservice packaging is proving a safe, sanitary and sustainable option that is helping c-stores offer food options to customers amid the pandemic.

Natha Dempsey • Foodservice Packaging Institute

Convenience store operations across the country have come to depend on single-use foodservice packaging to keep their businesses operating during the COVID-19 pandemic. These are everyday staples, like soda cups, take-out food containers and cutlery that have become ubiquitous in our lives.

That’s why, in a busy world where providing fresh, healthy and fun food options — plus a great customer experience — is a must, single-use foodservice packaging has become the best choice.

Single-use foodservice packaging not only allows your on-the-go customers to enjoy healthy meals and snacks anywhere, it provides the flexibility to serve thousands of customers daily. Plus, the ability to print on the outside of foodservice packaging can be a top-flight branding opportunity, not to mention a convenient communications tool to con84

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vey important messaging to customers, such as “Don’t litter” or “Please recycle or compost.”

During the COVID-19 pandemic, singleuse foodservice packaging has proven itself sanitary for customers, which — along with social distancing and other methods — makes your location a safe place to do business. Foodservice packaging is manufactured, packed and shipped so it arrives clean at your location. That means it greatly reduces the likelihood of foodborne illnesses and the spread of infectious diseases like the coronavirus.

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Foodservice Column | Packaging

What’s more, single-use foodservice packaging is supported by the Food and Drug Administration (FDA), which mandates its use in certain circumstances. Foodservice packaging materials are evaluated by regulatory agencies such as the FDA and Health Canada to ensure materials meet stringent safety standards.

A HISTORICAL PERSPECTIVE

Foodservice packaging has been an unsung hero in many atypical situations and is the reason it came into existence.

More than a century ago, Dr. Samuel Crumbine, a Kansas doctor and public health officer and reformer, started a campaign to end the use of the “Common Cup.” After witnessing a healthy child drink from this publicuse metal cup immediately after a patient suffering from tuberculosis, he led the crusade to have this public drinking cup banned.

His campaign caught on to end their use, and the “Health Kup,” the first paper cup, aptly named for its purpose of preventing the spread of disease, was invented.

Since then, single-use foodservice packaging has held the same sanitary benefits for foodservice operators Dr. Samuel Crumbine and their customers.

In addition to the world’s current coronavirus crisis, foodservice packaging has played a critical role in past events. When the Spanish flu hit Kansas in 1918, Crumbine advised the public not to spit on sidewalks or drink from common drinking cups, which would spread germs.

SAFE, SUSTAINABLE CHOICES

More recent studies confirm the sanitary benefits of single-use packaging. Conducted by winners of the Samuel J. Crumbine Consumer Protection Award, health departments in Sacramento County, Calif., and Maricopa County, Ariz., further proved this after finding evidence of coliform bacteria and significantly higher microbial levels on the reusable items tested, compared to their single-use counterparts.

Consider also that single-use foodservice packaging is an environmentally sound choice.

It reduces consumption of water and energy resources because it doesn’t have to be washed and dried, and when recycled, materials found in foodservice packaging can be turned into new products. According to data from the Environmental Protection Agency, paper and plastic packaging items make up only 1.4% of municipal solid waste.

The benefits of single-use items are undeniable. Convenience stores, whether chainoperated or independent, are realizing that these go-to products are minimizing the threat of foodborne illnesses and infectious diseases, like COVID-19, and ensuring the safe and sanitary delivery of foods and beverages to their customers. CSD Natha Dempsey is president of the Foodservice Packaging Institute, the trade association for the North American foodservice packaging industry. She advocates for the interests of the industry and champions its efforts to expand recycling and composting of foodservice packaging.

For seven years, she administered the Crumbine Award.

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“WHEN YOUR SHELVES ARE EMPTY, I ROLL UP MY SLEEVES.” PAUL OBOS MERCHANDISER

Shelves don’t stock themselves. Predictable stocking times used to make stocking easy, but now, every day is totally different. And absent employees leave no one to do the job. Paul Obos gets it. He’s doubled his own workday, visiting twice as many stores to help with planning, stocking and even cleaning. Having a partner on-site so often has helped restore some normalcy to the shelves and stores.

CanDoDoneDaily.com for the full story Del Monte word mark and the Del Monte Shield Logo are registered trademarks used under license from Del Monte Foods, Inc. © 2020 Del Monte International GmbH . All rights reserved.

Technology | LED Lighting

LEDs,

Solar Bring

Bright Outlook Whether a 1,400-store chain or fewer than 10, energy efficiency savings add up to a better bottom line.

Thomas Mulloy • Senior Editor

LED lighting is quickly becoming the norm at convenience stores across the nation, especially at locations owned by the larger chains. The Cenex brand has begun an LED upgrade program designed to brighten its affiliated stores outside and in.

“Consumers are evolving regarding their expectations of convenience stores,” said Akhtar Hussain, director of refined fuels marketing for CHS, the parent company of the Cenex energy brand that owns 30 Zip Trip convenience stores, primarily in Montana. “We thought the time was right to transform the brand and modernize and elevate that brand in the eyes of the consumer.”

Cenex also owns another couple of dozen c-stores under other flags, including Cubby’s in Nebraska and Eagle Stop in Missouri. The overwhelming majority of Cenex-branded 88

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September 2020

stores, though, are independently owned — and there are a lot of them. In total there are 1,450 Cenex-affiliated stores throughout 19 states in the Midwest and Pacific Northwest.

Cenex has embarked on an enormous effort to spruce up all of its sites. Hussain outlined the four-year initiative Cenex is calling LIFT — Lighting Image and Facility Transformation — designed to update Cenex-owned and affiliated c-stores to compete with its regional counterparts. He said the plan is to revamp about 350 sites per year.

The new look brings a cleaner profile to

cstoredecisions.com

forecourt elements like the canopy wraparound, a large LED Cenex logo and arch sign with the company’s signature red and blue colors.

“In addition to those elements, we’ll still be doing a forecourt remodel in terms of painting, reconditioning islands and redoing our price signs,” Hussain said. “A very robust plan there to address the forecourt.”

And the makeover isn’t just about a sharp, colorful look. Cenex knows the LED lighting upgrades will also mean the stores will be more financially competitive, too.

“What we’ve seen is, there’s a 30-40% energy reduction,” said Hussain. “The return on investment (ROI) is about two years. So if it pays for itself, and the cost over time has come down, this makes it a really attractive time to be making those upgrades and really capturing those energy savings into the future.”

cstoredecisions.com

fast facts: • Cenex’s four-year plan aims to upgrade 350 sites per year.

• Grants, tax benefits make solar energy systems affordable.

• Cenex is offering affiliates no-interest financing for interior upgrades.

September 2020 • CSTORE DECISIONS

89

Cenex is offering affiliated stores interest-free financing for LED lighting and other interior improvements to pair with its companywide forecourt refurbishment.

SMALL CHAIN, BIG SAVINGS

dors to make the interior upgrade program work in Contrasting the large footprint of Cenex’s operation, tandem with the required forecourt improvements.

Viral Patel is president of the seven-store Speed Mart That applies to foodservice concepts through the chain with locations scattered across central Tennessee. digital menu boards all the way to the back-office softFour of those fly the Speed Mart brand, two are ware and programs, Hussain said. “All of those items branded Miller Mart and another is a Jackson Mart. It are really what our retail consultants specialize in and didn’t take much to convince him of the value of enhelp our network on a daily basis.” ergy efficiency. (See the Speed Mart profile on page 12 The interior remodel program will also be available for more on the chain.) to operators who are looking for a new brand and Patel said that, as the chain purchased new locations, choose Cenex. The program, Cenex is hoping, will tip the first thing Speed Mart would do is upgrade to the scales in its favor and raise its affiliate numbers. outside LEDs. The exterior improvements, he said, get results. “If they’re usually run down, we get them up in SOLAR’S SUNNY OUTLOOK shape, and business usually follows.”

For Speed Mart’s Patel, energy efficiency doesn’t But when the company decides to do interior upstop with LED lighting, either. He has installed solar grades, those are LED-based as well. If the company power units on the roof of one of his stores in Crossadds a new a walk-in cooler, it adds LED lighting inside. ville, Tenn.

If it adds a new counter unit or shelving, it ensures It took eight years to recoup the cost of the system. there are LEDs to illuminate it.

The solar system was possible with the benefit of a “We usually take a store and remodel it and get it generous federal tax credit as well as a 25% grant. up and going — so it’s good for the next 10, 15 years,” “Solar, it’s a zero-maintenance investment. If you Patel said. And with a long lifespan, LEDs are a great have the cash, if you can get a loan, do it,” said Patel. addition to those remodels.

“It sits on top of the building and makes money after it’s paid off.”

TAKE IT INSIDE Patel said that without the tax and grant benefits, the While exterior lighting seems to be the place where time frame for the system to pay for itself extends to the biggest savings can be had through LED upgrades, 12 years. That’s enough for Speed Mart to think twice there are plenty of potential savings inside the store. about installing solar energy at more stores.

That’s why Cenex wants to give its affiliates an opportuFor Cenex’s independently owned affiliates, that’s nity to invest in interior improvements. the very financial help the company is offering should For independently owned stores, Cenex is offering those store owners opt in on the interior remodels. interest-free financing through its CHS Capital Group.

That’s an investment opportunity that can help improve Cenex has lined up a network of consultants and venthe bottom line for years to come. CSD 90

CSTORE DECISIONS •

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Technology Column | Blockchain

UNDERSTANDING BLOCKCHAIN Blockchain is a system used to track information, and it’s set to transform retail.

Erin Del Conte • Executive Editor

Blockchain has become a hot topic. But what exactly is it, how does it work, and how can c-stores begin implementing it successfully?

On a recent CStore Decisions Live podcast, I spoke with Jeremie Myhren, chief information officer for Rockford, Ill.-based Road Ranger convenience stores, and the chairman of the Young Executives Organization (YEO), to learn the answers.

Blockchain was invented in 2008 in response to the financial crisis, Myhren explained. Blockchains can be built and stored using computer networks, most commonly the internet and cloud service providers, depending on the application.

“Blockchain is like a set of glass boxes with contents everyone can see, verify and cannot change.

Everyone knows where the boxes are and what they contain. Transparency and security are at the heart of this system,” he said.

But, he added, it’s important to understand that blockchain isn’t a device, or a machine, and it’s not a cryptocurrency.

“It is a system, a method to keep track of information that prioritizes trust, transparency and an inability to be manipulated,” Myhren said. “With that said, cryptocurrencies — like bitcoin and every other cryptocurrency out there — work on a blockchain Jeremie Myhren, chief information officer at Rockford, Ill.-based Road Ranger platform.”

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cstoredecisions.com

EVERY WEDNESDAY THROUGH

SEPTEMBER 16

Register Online Today

THE 2020 NAG/YEO CONFERENCE IS GOING

VIRTUAL

Make plans to join the National Advisory Group (NAG) and the Young Executives Organization (YEO) as the conference moves to an online format.

2020 NAG/YEO CONFERENCE AGENDA INCLUDES: •

Burning Issue Sessions

• • • • • •

Executing a Safer Retail and Foodservice Program Data Privacy Requirements: What Convenience Stores Need to Know Effective Leadership: The Best Ways to Manage People Employee Recruiting and Retention Strategies Emerging Trends in Foodservice What is Blockchain, and How Will It Affect You?

•

Virtual Store Tours

•

Virtual Info Exchanges

• • • • • •

Fuels Technology/Loyalty Programs Local Lobbying and the Legislative Process Foodservice Human Resources Leadership for Young Executives (YEO)

Technology Column | Blockchain

But the applications for blockchain go far beyond just currency.

“Many companies and industries will rely on blockchain to create safe houses for sensitive data and information for which there’s no room for manipulation,” Myhren said.

Payments, inventory management, supply chain management, food safety, contracts, invoicing and billing, loyalty programs and customer data management are just a few of the ways convenience stores can use blockchain.

And it’s already in use now.

“Walmart pioneered the use of blockchain in the food supply chain to cut down on waste, improve tracking and to provide transparency into contamination,” Myhren said. “Starbucks is testing blockchain with a pilot program in Colombia, Costa Rica and Rwanda that is allowing them to track their coffee from field to cup.”

“The food-related blockchain applications are very much not a pipe dream at this point, and adoption rapidly continues. This is estimated to be a $20 billion market by 2026,” he said.

Myhren noted that it’s estimated that in the supply chain application alone, a lack of visibil94

CSTORE DECISIONS •

September 2020

ity is costing retailers worldwide $300 billion in U.S. dollars a year.

“There are real, bottom line and top line efficiencies and opportunities in the various applications of this emerging technology,” he said. “As our space continues to be hyper competitive, and disruptors and changes in fueling and consumption technology that are now just being accelerated by the pandemic threaten our future relevance and profitability, it is more important than ever that we as an industry pay close attention to the technologies that are transforming retail and ensure we are not late entrants.”

If all this has you wanting to learn more about blockchain, check out the podcast at CStoreDecisions.com/2020/08/21/podcastwhat-is-blockchain/.

Then check out Myhren’s deep-dive into blockchain in his National Advisory Group (NAG) virtual session on Sept. 9 at 2 p.m. EST, which will be available on demand at NAGConvenience.com following the session. The NAG session is free for retailers, so register today. CSD

cstoredecisions.com

As the convenience store and petroleum industry continue to evolve, training the leaders of tomorrow is more important than ever before. To help young executives have a group that is solely focused on exchanging personal experiences with peers in their age group, the National Advisory Group (NAG) is proud to be growing its Young Executives Organization (YEO).

YEO members are industry leaders who are approximately 40 years of age or younger.

Members are entrepreneurs, leading top businesses and actively pursuing a higher level of professionalism in the convenience store and petroleum marketing industry.

For additional information, contact John Lofstock at jlofstock@wtwhmedia.com or Board Chairman Jeremie Myhren at jeremie@roadrangerusa.com.

Operations | Real Estate Management

Real Estate in the time of COVID-19

CARES ACT

New laws are providing c-stores with increased deductions on business interest expenses, write-offs for store upgrades and more.

Mark Battersby • Contributing Editor

The COVID-19 pandemic is affecting every area of business, including real estate considerations. In fact, many new laws, programs and measures, especially the Coronavirus Aid, Relief and Economic Security (CARES) Act, have significant impacts on real estate.

Convenience store operators and owners are benefiting from immediate write-offs for the expense of fixing up their stores, an increased deduction for business interest expenses, new rules for rent concessions and debt restructuring, as well as new rules for net operating losses that can generate much-needed cash for troubled businesses.

THE CARES ACT

The CARES Act included a technical correction to the 2017 Tax Cuts and Jobs Act (TCJA), related to the manner in which the cost of certain improvements to existing buildings are recovered.

Under the TCJA, expenditures for interior, nonstructural improvements made to existing 96

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nonresidential real property (e.g., retail or office leasehold improvements) were denied status as Qualified Improvement Property (QIP) and given a 39-year recovery period.

The new rules mean that QIP expenditures prior to 2023 now qualify for bonus depreciation and are eligible for an immediate 100% write-off, with the write-off phasing down in 2023 or later tax years.

Plus, convenience store operators who elect to forgo the immediate write-off can generally depreciate QIP expenditures over a generous 15year recovery period. In order to claim the 100% bonus depreciation or the special 15-year recovery period for prior year QIP expenditures, most will file an amended tax return. cstoredecisions.com

fast facts: • The CARES Act offers a number of real estate management benefits for c-stores.

• Qualified Improvement Property (QIP) expenditures prior to 2023 now qualify for bonus depreciation and are eligible for an immediate 100% write-off.

The 2017 passage of the TCJA reduced the tax burden of many convenience store businesses. However, to offset those cuts, new limits were enacted on the amount of business interest deductible for tax purposes to no more than 30% of an operation’s EBITDA (earnings before interest, taxes, depreciation and amortization are added back).

Although small businesses were exempt from the business interest expense limitation, the CARES Act temporarily increased the amount of deductible business interest expense from 30% to 50% for the 2019 and 2020 tax years.

LOANS AND NOLS

Usually, when a debt is canceled, forgiven or discharged for less than the amount owed, the result is Cancellation of Debt (COD) income. Similar consequences occur when property secured by debt is taken in satisfaction of that debt and where the property is treated as having been sold.

However, as part of the Small Business Administration’s (SBA) debt relief efforts, businesses pay the principal, interest and fees of current 7(a), 504 and microloans issued prior to Sept. 27, 2020. Best of all, the six-month cstoredecisions.com

payment relief is not a deferment, but actual debt forgiveness.

What’s more, thanks to the CARES Act, any loan forgiveness under the $350 billion small loan programs can be excluded from income for tax purposes. For both measures, a threeyear lookback ensures that businesses cannot be broken up to come in under the $25 million “small business” threshold.

Net Operating Losses (NOLs) are typically subject to a taxable income limitation, and until now, they couldn’t be carried back to reduce income in earlier tax years.

The CARES Act, however, allows convenience store businesses to carry back NOLs from 2018, 2019 and 2020 for five years and temporarily removed the TCJA rule limiting losses to 80% of taxable income.

The new rules also modify loss limits for pass-through businesses and sole proprietors, which mean all business losses can now be used to generate badly needed cash refunds of taxes paid in earlier, hopefully more profitable years.

Some tenants are extending their leases in exchange for rent reductions, while some landlords are offering rent abatement. And then there are the many government programs, loans, grants and limits impacting c-stores — tenant or property owner alike.

In every situation, not only should the tax consequences be a consideration, but also the survival of the convenience store business. CSD September 2020 • CSTORE DECISIONS

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PRODUCTShowcase

Antibiotic-Free Chicken Brakebush is introducing two new items to add to its extensive no-antibioticsever (NAE) chicken portfolio: an NAE Panko Coated Portioned Tender and a Homestyle Pepper Boneless Wing. Both new items are fully cooked and can be baked or fried. Brakebush has a significant portfolio of chicken fed an all-vegetarian diet and raised with no antibiotics ever to help foodservice operators meet consumer demand. The full portfolio of Brakebush NAE options includes a wide variety of fully-cooked chicken products and ready-to-cook IQF (individual quick freezing) breast fillets, tenders and chunks, which provide excellent flexibility for numerous menu applications.

Brakebush Co.

(800) 933-2121 • www.brakebushchicken.com

18-Pack Countertop Display Bidi Stick, the premium-quality, disposable vaping device, now comes in an 18-pack countertop display, allowing retailers to show customers the product’s nine distinct varieties and position their stores as a destination for a wide range of electronic nicotine delivery systems (ENDS). The Bidi Stick’s sleek, readyto-use design is for adult customers interested in a disposable option with enough e-liquid and battery power to last for approximately 500 puffs. Available in a 10-piece pack and now an 18-piece pack (two sticks for each of the nine varieties), 1.4 milliliters of e-liquid per device. Fully integrated 280 mAh battery; no charging necessary; grab-and-go bags.

Bidi Vapor

www.bidivapor.com

Emergency Spill Cabinets MasonWays’ Outdoor Locked Emergency Spill Cabinets keep absorbent equipment for dangerous toxic spills secure, dry and handy for quick responses to spills in one convenient, secured location. Get pump islands up and running fast after dangerous toxic spills. Store clean-up materials to remove gas and oil outdoors near or at pump islands. Units come with a tiedown anchor kit for cabinets to remain permanently in place.

MasonWays Indestructible Plastics LLC

(800) 837-2881 • info@masonways.com

www.masonways.com

Zero-Alcohol Beer Budweiser unveiled its first zero-alcohol brew, Budweiser Zero. Developed and co-founded in partnership with NBA legend, entrepreneur and advocate Dwyane Wade, this zero-sugar, 50-calorie beverage has the same refreshing, full-flavored taste you can expect from Budweiser with 0% ABV. Budweiser Zero is available in 12-pack 12-ounce cans and 16-ounce single cans, with the addition of six-pack 12-ounce bottles coming in December.

Budweiser

www.budweiser.com 98

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cstoredecisions.com

CStoreDecisions.com is geared toward C-Store retailers, convenience store suppliers, and distributors looking to stay abreast of industry trends, new product offerings and category management best practices.

CStoreDecisions .com Making Connections that Drive Business

We use the latest media technology, delivering content the way you want it: print issues, digital issues, enewsletters, and videos.

Use CStoreDecisions.com to help you strengthen your peer network with social engagement through Twitter, LinkedIn, Facebook, YouTube, Pinterest, and Google+.

Browse, bookmark, share and interact with the most relevant industry content and people in the market.

Thank you to our Key Partners:

PRODUCTShowcase

User Experience Platform The DFS Anthem UX user experience platform is making its debut in North America on DFS’ Wayne Ovation fuel dispenser. Featuring a 27-inch touchscreen display, super-intuitive functionality, personalized content, multi-language selection and multiple media options through DX Promote, part of the DFS DX connected solutions platform, the Anthem UX platform introduces consumers to a new kind of fueling experience. It is the first of its kind to give customers the ability to fine-tune their experience, while also providing retailers with the tools and data they need to maximize each customer interaction with targeted advertising and promotions, as well as integrate loyalty apps.

High-ABV, Flavored Malt Beverage Seagram’s Escapes Spiked, the high-ABV, flavored malt beverage brand, is expanding its profile with the addition of Spiked Blue Razberry. The product will hit shelves nationwide in 23.5-ounce single cans this month.

Blue Razberry is the newest flavor in the Seagram’s Escapes Spiked line, joining Jamaican Me Happy, Citrus Punch and Strawberry Blast.

The new SKU delivers a rush of raspberry, with a lingering sweet berry finish clocking in at 8% ABV. The Seagram’s Escapes Spiked line is a brand extension of the highly popular, lower ABV Seagram’s Escapes drinks, which have experienced 10 consecutive years of sales growth.

Dover Fueling Solutions

www.doverfuelingsolutions.com/anthemux

Probiotic Drinks Available in Lemon Ginger, Pineapple Turmeric, Peach Mint and Cherry Hibiscus tea ($3.79 per 14-ounce bottle), Chobani Probiotic beverages are plantbased, non-dairy, certified organic and are made with non-GMO ingredients.

Each bottle has 80 calories with 11 grams of sugar and contains billions of probiotics. Chobani Probiotic beverages don’t contain any sweetener ingredients; instead, the sweetness comes from the natural process of enzymes breaking down the whole grain oats, which makes for the perfect environment for the six live and active cultures to thrive.

Chobani

www.chobani.com

The Seagram Beverage Co. www.seagramsescapes.com

Innovative Packaging Refresh Inline Plastics has refreshed its popular Rectangles line of SafeT-Fresh products. Safe-T-Fresh Rectangles now feature smooth walls with a contemporary shape in a single-piece clamshell. The new design retains all the features of the original Safe-T-Fresh line, including patented Safe-T-Fresh tamper evident/tamper resistant technology, leak resistance, 100% recyclable, processor friendly and automation compatible and made in the U.S. In addition, the redesigned Safe-T-Fresh Rectangles are produced with energyefficient Reborn rDPET.

Inline Plastics

www.inlineplastics.com 100

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PRODUCTShowcase

Countertop Smoothie Machine smoodi launched a self-cleaning, self-serve, countertop smoothie machine that leverages the power of automation to bring healthy, delicious and all-natural fruit smoothies to c-stores with no operator required. The entire setup uses 10 square feet of counter space and blends a prepackaged cup of frozen fruit into a ready-to-drink beverage in under a minute. All 16-ounce servings are under 110 calories and come in three flavors: Tropical Vibes, Green Energizer and Brain Boost.

Machine installation requires a 120V electrical plug, freshwater hookup and drain connection. smoodi machine and freezer can be leased or purchased. The suggested retail price (SRP) per smoothie is between $5.99 and $7.99.

smoodi

contact@getsmoodi.com • www.getsmoodi.com

Bourbon BBQ Chicken Rollerbites Bring the wildly popular sweet-and-savory trend to your roller grill or hot case with tender, juicy 100% all-white meat chicken seasoned with a delicious blend of bourbon, brown sugar, molasses, smoky mesquite and cayenne. Get alternative heating instructions, secure label templates, free POS and learn about equipment rebate programs at www.

HMFfoodservice.com/resources.

Home Market Foods

Contactless, Mobile Pouring The new contactless Coca-Cola Freestyle solution allows consumers to choose and pour drinks from their phones in just a few seconds, without having to create an account or download an app. The mobile experience works on any smart device. CocaCola Freestyle app users can, however, opt to scan the QR code in the app for a similar experience, with the ability to pour presaved mixes. All Freestyle dispensers will be contactless-compatible before the end of year.

The Coca-Cola Co.

www.hmffoodservice.com

www.coca-colacompany.com

Limited-Edition Pumpkin Cold Brew Pumpkin spice season is upon us. This year, STōK is releasing a limited-edition pumpkin beverage, bringing the essential flavor to fridges this fall. STōK Pumpkin Cold Brew turns the delicate pumpkin flavor caffeine-lovers know on its head. The new limited-edition beverage is available nationwide, ready for pumpkin lovers to enjoy all season long, one sip at a time.

The suggested retail price (SRP) is $4.99 per bottle.

Danone North America

www.danonenorthamerica.com

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PRODUCTShowcase

Chicken Bacon Ranch Pizza Hunt Brothers Pizza is bringing back a fan-favorite limited-time offer (LTO), Chicken Bacon Ranch Pizza.

Beginning Sept. 21 and for a limited time, store partners can offer this specialty pizza while supplies last. Making its sixth appearance, Chicken Bacon Ranch Pizza is topped with a creamy ranch sauce, all-natural chicken breast, a blend of 100% natural part-skim mozzarella and cheddar cheeses, crispy bacon and a sprinkling of the company’s signature Just Rite Spice. Store partners can offer their customers two options — a made-to-order large 12-inch whole pizza or a grab-and-go Hunk A Pizza (one-fourth of a 12-inch pizza).

Hunt Brothers Pizza

www.huntbrotherspizza.com

Halloween Gummies This fall, HARIBO is unveiling a brand-new Halloween gummi pack, joining the ranks of tasty seasonal treats like Sweet or Scary Mix, Sour Vampire Bats and Switches’ Brew. The new treat, Scaremix, features a range of gummies, both sweet and sour flavors. The full list includes: Boo Bears (Watermelon, Blood Orange, Cherry, Blue Berry), Dracula’s Rings (Cherry and Blood, Watermelon and Blueberry), Spooky Twin Snakes (Cherry and Orange, Apple and Lemon, Blueberry and Black Currant), Blood Orange Cola and Black Cherries. Suggested retail price (SRP) is $1.29 for the four-ounce pack.

HARIBO

www.haribo.com

Crunchy, Candy-Coated Gummy Worms Trolli Crunchy Crawlers are the first-ever crunchy, candycoated gummi worm — a dual-textural spin on Trolli’s classic sour gummi worms that deliver a thin, crunchy shell and a chewy, fruity center. Each bag contains three, dual-flavored pieces in Strawberry-Watermelon, Raspberry-Orange and Lime-Cherry flavors, that pack just the right amount of sweet and sour. Trolli Crunchy Crawlers are available in a variety of sizes: 3.8-ounce bag with a suggested retail price (SRP) of $1, a 4.25-ounce bag with a SRP of $1.79 and a 6.3-ounce bag with a SRP of $2.29.

Ferrara

www.ferrarausa.com

Gluten-Free Licorice Jelly Belly Candy Co. has expanded its growing line of candy offerings to now include another classic candy staple, licorice, with the introduction of Jelly Belly Scottie Dogs. These bitesized Scottie Dog shapes come in two flavors: red licorice and black licorice. Unique to the licorice category, the delicious Jelly Belly Scottie Dogs are gluten free as well as naturally fat free, peanut free and OU kosher certified. Jelly Belly Scottie Dogs will be available in 2.75-ounce grab-and-go bags as well as in 10-pound bulk shipments.

Jelly Belly Candy Co. www.jellybelly.com

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PRODUCTShowcase

Relaxation Syrup Legal Lean Syrup is a mood-enhancement drink made to help consumers unwind after a stressful day. The natural relaxation dietary supplement comes in a two-ounce shot in grape and cherry flavors. Consumers tend to mix it with a soda, put it in a double Styrofoam cup and sip it slowly. The soda in the double cup has been a trend common in hip-hop culture. The effect of the syrup is a calming and relaxation feeling; eventually, the person consuming it will fall asleep and wake up feeling refreshed.

Legal Lean Co.

(408) 883-5326 legalleanstore@gmail.com

www.legallean.com

Four-Pack Egg Rolls Van’s Kitchen, a woman- and minority-owned and operated manufacturer, is now offering its 4-Pack Egg Rolls to convenience stores. Suitable for multiple meal occasions, these versatile offerings — meeting retailer and consumer demand for Asian flavors — are shipped frozen and sold from a refrigerated case to be microwaved for immediate consumption or taken home to heat and eat.

Offered in four varieties — pork, chicken, orange chicken and vegetable — they come in a microwavable tray with sweet and sour sauce packets. Roller grill options include pork and chicken.

Van’s Kitchen

www.vanskitchen.com

Heated Glass Merchandising Warmer Hatco Corp.’s Glo-Ray Heated Glass Merchandising Warmer uses patented heated glass technology and a thermostatically controlled heated base to hold hot wrapped or boxed foods at proper serving temperatures, while a curved top and full-view display place the products right at the customer’s fingertips. Available with dual or triple shelves.

Hatco Corp.

www.hatcocorp.com

Energy Shots VitaminEnergy plans to continue growing its line of shot extensions focused on diversity through vitamins, not just flavors. The proprietary blend of vitamins in each shot of VitaminEnergy is designed to support a specific health function, from immune support to recovery. VitaminEnergy is both sugar- and carb-free.

Each shot is designed to enhance energy levels for seven-plus hours with no sugar crash. Combined with healthy vitamins, VitaminEnergy is a functional extra-strength energy shot with 260 milligrams of caffeine to provide both powerful nutrients and a strong energy boost.

VitaminEnergy

www.vitaminenergy.com

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Classifieds/Ad Index 5-Hour Energy 5hourenergy.com

Altria Group Distribution Company CB Distributors

888.824.3256 / www.gcbprices.com www.hempbombs.com / www.naturesscript.com

19 2 6-7

Click It Inc.

21

The Coca-Cola Company

31

Danone North America

81

Del Monte

87

E-Alternative Solutions

57

drinkaha.com

888.620.9910 / www.DanoneAwayFromHome.com www.CanDoDoneDaily.com 877.373.0069 / www.Ealternativesolutions.com

Gulfcoast

727.449.2296 / www.gulfcoast.com

Hatco Corporation

888.815.8460 / www.hatcocorp.com

The Hershey Company www.hersheys.com

Home Market Foods, Inc.

800.367.8325 / www.HMFfoodservice.com

3 11 25 5

ITG Brands

37

J&J Snack Foods Corp.

47

JUUL

39

Kooler Ice Vending Machines

51

www.juul.com 800.858.3025 x1 / www.KoolerIce.com

Krispy Krunchy

800.290.6097 / www.krispykrunchy.com

17

Liggett Vector Brands

69

Loomis Armored US, LLC

91

877.415.4100

www.loomis.us/SafePoint

MasonWays Indestructible Plastics, LLC 800.837.2881 / www.masonways.com

13

Modern Store Equipment

53

Naughty Chili

76

877.532.8433 / modernstoreonline.com/cstore 303.329.0900 / www.naughtychile.com

North American Bancard

866.481.4604 / www.nynab.com cstoredecisions.com

Smokey Mountain

59

Smoodi

56

Solari Hemp

63

Swedish Match

800.367.3677 www.zyn.com www.gamecigars.com www.swedishmatch.com

9 23 61

Swisher International

41-43, 108

Trion Industries, Inc.

26, 55

800.874.9720 / www.swisher.com

800-444-4665 / info@triononline.com / TrionOnline.com/ZipTrack

U.S. Smokeless Tobacco Company

71

www.gopremier.com

www.masonways.com | 800-837-2881

105

McLane

www.mclaneco.com/technology

75

33, 77

Legal Lean

321.236.2619 / www.legalleanstore.com

Ruiz Food Products, Inc.

888.384.7333 / www.solarihemp.com

85

800.989.9534 x6140 / www.jjsnackfoodservice.com

15

www.getsmoodi.com

Inline Plastics

www.itgbrands.com

RJRV

www.smokeymountainsales.com

35

www.inlineplastics.com/clear

54

www.pcbakery.com

www.ruizfoodservice.com/TornadosResources

Hussman

800.592.2060 / www.hussman.com

Prairie City Bakery, Inc. www.velo.com

83

www.clickitinc.com

1, 107

www.pgconvenience.com

Chobani, LLC

www.chobani.com

P&G Convenience

104

Multi-Purpose Sanitizing Island for immediate access to face masks, wipes, and sanitizing hand gel.

September 2020 • CSTORE DECISIONS

105

IndustryPerspective

Embracing the New World Amid the COVID-19 pandemic, c-stores are implementing safety procedures, expanding transaction capabilities and doubling down on foodservice.

John Matthews • Gray Cat Enterprises Inc.

Raise your hand if you had the word “pandemic” in your 2020 strategic plan.

In a matter of a week, the world rapidly changed last spring. The COVID-19 pandemic is reaching further than any key worldwide event in the last several decades. How we interact with one another, how business is conducted, where we live and how we manage through all of this is, quite candidly, up for grabs. The changes to our lifestyles are deep and wide. No one is spared.

The convenience store industry is no different.

Retail has taken huge hits due to the lockdowns, but fortunately for the c-store industry, we were declared essential and able to minimize the economic damage in the short term. The long term, though, poses some greater challenges, including the following: Managing a Safe Environment: Safety has become the No. 1 attribute. If the employee and customer feel in harm’s way, nothing else will matter. Think about poorly lit canopies or a foodservice operation that has a foodborne illness. There are rarely second chances for safety. Developing detailed procedures to ensure safe practices and following up daily, weekly and monthly with training has to become initiative No. 1 in today’s environment.

Expanded Transactions: Again, with safety in mind, c-stores need to expand their transactions to include a combination of alternative checkout options. Touchless via an app, curbside pickup and delivery all need to become viable options to address the wide-ranging perspectives of our customers. Many customers will feel fine coming into the store, while others won’t go near you with a 10-foot pole. Options are a must.

Marketing Communications: With the constantly changing landscape, over-communicating to your customer base on how they can use your store is 106

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critical. Don’t assume the customer knows you are open, have changed hours or are limiting certain types of transactions.

You may want to consider a grand reopening when the time is right in order to reintroduce your store to the community.

Lastly, it never hurts to give back to the health care community in your trade area, so consider creating personal protection equipment (PPE) or feeding your local health care workers.

Future Store Design: Strategically, stores need to move even faster into foodservice as more restaurants close. There is clearly a race for ‘share of stomach,’ and the starting gun has already sounded. C-store retailers must consider the safety procedures around foodservice handling, socially distanced queuing, pickup/delivery options and non-traditional concepts.

Could the store of the future be a mini warehouse? How this all plays out will be a moving target, but c-stores need to overhaul their strategic capital expenditure going forward.

I wish I could say that we know what lies before us, but the pandemic is a moving target. And it is a far more reaching moving target than any of us imagined. Much like the significant changes we all experienced after 9-11 with regard to security safeguards, COVID-19 will have long-lasting impacts for the c-store industry and every other industry out there. The new normal will continue to evolve.

John Matthews is the founder and president of Gray Cat Enterprises Inc., a strategic planning, operations and marketing services firm. Matthews has recently written “Game-Changing Strategies for Retailers,” available on Amazon. His two step-by-step manuals, “Local Store Marketing for Retailers” and “How to Stage a Killer Grand Opening,” are available at graycatenterprises.com.

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