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Building food service sales at convenience stores

Updated on August 4, 2015

Introduction

The food service area of the modern convenience store is the area with the largest gross profit inside the convenience store. This department is still in the development stage, and therefore does not represent the area of the store with the highest gross sales.

Inside the store the area with the largest sales is the cigarettes and other tobacco sales area. Together these two account for about 37% of inside sales at most convenience stores.

The food service area offers three time periods during the day when sales have a good potential. The breakfast time, the lunch period, and the dinner period, each of these periods offers unique opportunities for food service sales.

The breakfast period has the most potential and brings in the customer in a hurry to the convenience store. He probably just filled up his car with gas, and is in a hurry to get to work. The fast food places usually get this customer at breakfast time, because he is in such a hurry.

As a new convenience store you have a chance to make this consumer a steady customer, and to do this you will need two things. The first is a food service drive thru, and the second is a way for this customer to place his order over his mobile phone.

That way he orders his food as he pulls into the station, and it is being made while he pumps gas. He can then go through the drive thru to get his food, and speed off to work. As long as you have good coffee and decent breakfast sandwiches you will probably have this person as a steady customer.

The noon hour offers more opportunities to deal with customers that are in a hurry. During the lunch period you can expect the orders to be larger, because the customer will probably be picking up lunch orders for some of his fellow workers also.

This time the consumer will probably get on his smartphone at work, order the food for everyone, pay for it with his debit card, and let you know when he needs to pick the order up.

He then swings through the drive thru, gets his order, and hurries back to work. If you are in the right location these are the type of customers you will get over the lunch hour.

People picking up food during the dinner period will probably order the food while still at work, and pick it up on the way home. The orders will come in throughout the afternoon by smartphone, and the customer will state the time they need to pick up the order.

This time though you will have the opportunity to make extra sales if you allow your customers the opportunity. These consist of the gallon of milk, 12 pack of beer, or pack of cigarettes that they also need, and they will get from you if they can pick it up at the drive thru.

Keep one thing in mind as you build your convenience store about 54% of the business that the fast food places do is through their drive thru. The reason is that it is more convenient that way. The majority of people see themselves as being too busy to go inside, and will only do it when forced to.

The second reason is that most millennial customers really like to order things with a smartphone. They don't like having longer conversations, that is why they text so much.

If you work with their ways of doing business by supplying them with smartphone apps they will give you the majority of their business. They are concerned with both food quality, and with convenience. If you give them both they will reward you with a lot of their business.

When I ran a pizzeria in Dekalb Illinois which is the home of Northern Illinois university, I use to watch the kids at 2am going through the drive thru at MacDonald's.

There would be a line of over twenty cars picking up late night snacks. It was the convenient way to do it. If you offer these young people the most convenient way to get something, they will give you more of their business.


What to sell in food service

The breakfast period is the most important one to start with, and according to a recent survey there are five things that are very important. The most important was fresh tasting food, second was great tasting food, third was a clean location, fourth was a convenient location, and fifth was good value for the money.

In the same survey the reasons given for not going to a convenience store at breakfast time were most importantly a lack of freshness and quality, second was lack of variety, third was a lack of things like a drive thru, and finally there was not enough of a price/ value proposition.

If the convenience store had a made to order breakfast food program 56% of customers were well satisfied with the offerings. This means that whatever you offer at breakfast time has to be fresh and made to order. That means breakfast sandwiches are fine as long as they are made to order.

The consumers would also like a drive thru for speed and convenience, and at least as important is a good value for the money spent. Of course having good, hot coffee is extremely important at breakfast time. The away from home breakfast market is very important to daily food service sales. Since 2001 this breakfast market has swelled from $57.5 billion to more than $90 billion today in this country.

The lunch program needs about six different sandwiches that are popular in your area. You also need at least three hot sides to go along with the sandwiches such as french fries, onion rings, and mozzarella sticks.

Also at least three different salads, one of which you could make a meal out of. You should also offer soft serve milkshakes in at least four different flavors for those who want them. Also things like oversize cookies, brownies and such items are good for dessert offerings.

The things that are important at lunch time are the same as at breakfast time they are fresh good quality food, fast service, and a good value for their money. If you offer these values your food service area should do good no matter what time of day it is.

The dinner hour should be the period that you offer larger meals in, and if done right this time period can be the biggest money maker for food service sales. Right now the dinner hour is the slowest time in food service sales, because of what the stores offer.

First you want to continue with the offerings from the lunch menu, and to this you will add two other food offerings, which are chicken and pizza. These two dinner offerings along with the lunch menu will offer a very good chance to build a large dinner business.

The same people who go to both chicken and pizza fast food places will buy from your store. You just have to make sure that your food quality is good. Casey's general stores has a chain of 1700 convenience stores throughout the greater Midwest area, and sold tens of millions of pizzas in 2012.

Also 7-11 is offering fresh hot pizza and chicken wings in about half their stores. These big chains can see the value in offering pizza and chicken at their stores to increase sales in the higher profit food service sales area.

You will be dealing with people who can't afford to go out to restaurants, and the younger crowd that doesn't want to cook at home. Within a few years food service will be the biggest area of sales, and offers the ability to increase the gross profits at your convenience stores.


Summary

The current state of the convenience store industry is that cigarettes are the major sales item inside the store with about 33 percent of current inside sales. Food service sales are second after cigarettes at the present time, but catching up quickly.

The breakdown on food service sales are as follows, prepared food 63.4%, hot beverages 23.8%, cold beverages8.4%, and frozen beverages 4.13%. The prepared food should move up to around 75% in the near future if the store is operated right, and then with increased sales in beverages food service should take over as the leader of in store sales.

When you combine increased food service sales with a drive thru it should also help to increase the other four leading product categories which are cigarettes, packaged beverages, and beer/ malt beverages. These three combined with food service bring in the majority of instore sales and gross profit.

When food service sales goes up these three others should also, thus increasing the in store sales and gross profit. This will increase the bottom line net profit even though gasoline sales are declining. This is the future of the convenience store industry, and it can be yours if you build your store right.

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      David Thompson 3 years ago from Kingman Arizona

      Thank you for your comment, its appreciated, and you are right it took quite a bit of research

    • Francesca27 profile image

      Francesca27 3 years ago from Hub Page

      Good research, thanks for sharing.