As revenues from gasoline and tobacco products fall, foodservice sales are increasingly becoming convenience stores' most profitable category.
New research from Technomic projects that c-store foodservice will continue to grow by 2.5 percent throughout each of the next two years. The segment is particularly benefitting from consumers' increased demands for convenience, portability and speed of food service.
Some brands are taking advantage of this better positioning and developing a ubiquitous presence at c-store chains. One such brand is Kahala-owned Blimpie. QSRweb recently discussed the brand's c-store strategy with Jillian Clothier, Kahala's director of franchise development.
QSRweb: Have you witnessed a trend toward c-store footprints?
Jillian Clothier: For sure. We were one of the first brands to enter the c-store space. Of our more than 750 locations, about one-third — 250-plus — are c-store locations. Most of our competitors have now entered the segment.
QSRweb: How has Blimpie evolved with the growing trend?
JC: Back in the day, we'd squeeze a Blimpie into small space for the benefit of us and the c-store. Now we want customers to get same experience as they do in traditional (restaurant). If a c-store doesn't have the space to offer that, we have to consider our options. We used to take small spaces within c-stores and offer a limited menu — sort of like a Blimpie Express concept. Now it's almost the opposite. We have a large footprint within a large c-store. We're looking at c-stores that are now building out at 5,000 to 6,000 square feet. Ultimately, instead of limiting our menu, we're now broadening it.
QSRweb: Why did your model change within the c-store setting?
JC: This is part of a larger trend of c-stores offering more devotion to foodservice. The money isn't in gas and cigarettes like it used to be, so they're focusing on food. Plus, people trust c-stores more than they used to. The bathrooms are cleaner, they can purchase healthier food now and it's more of a one-stop shop than ever. Now, you don't have to stop at the grocery store, then the gas station and then Blimpie for lunch; you can do all three in one space. Our model change is absolutely based on demand.
QSRweb: In what ways has Blimpie responded to the increased competition in this space?
JC: I think it's a good thing we've been there for awhile. And, competition in any way is a good thing; it confirms what we've been doing all along is right. But to keep pace, our position has changed from the way it used to be, not only by taking up more space, but also with offering breakfast, pizza and more dayparts overall. C-store customers go there three to five times a week, so we want to offer them selection.
QSRweb: How does pizza fit in with Blimpie's traditional sandwich offerings?
JC: The pizza program is offered to the system, but it's especially been a big push for our c-store footprint. It's an option for the traditional system and standard for c-store now. Pizza (in c-stores) is our point of differentiation. It offers guests more menu options and that is a big part of this segment.
QSRweb: How does your company work with partner c-store companies to make this model work?
JC: At one point, we had chains, like BP, that owned hundreds of stores. When they sold those stores off to individual franchisees, we saw our number decline too because those franchisees thought they could do the foodservice part by themselves. Now, they realize branded foodservice is the way to go. There aren't a lot of challenges with this because our end goal with the Hess' and the BPs and the other c-stores is the same: We want our sales to be up.
QSRweb: Is there a potential conflict because c-stores offer some food items?
JC: We're really good at taking a look at what's in the store and looking at what will compete with our product and making sure we're complementing what the c-store has. If they have a grab-and-go sandwich, for example, we'll explain why ours is better. Most of the time they switch over because it ends up being lower in cost than bringing in pre-made sandwiches.
QSRweb: Why is the c-store model a good fit for Blimpie?
JC: Because of the diverse range of customers we cater to and the portability of our product. Most of our business is on the go anyway. And from an ownership standpoint, this segment is on the low end for startup costs. There are no hoods, you're not spending tens of thousands on equipment, etc. That's the big benefit with c-store partnerships in general — they have refrigerators, storage racks, hand washing sinks. We can utilize part of that space and it's a big cost benefit.
QSRweb: What initiatives are planned for Blimpie's c-store system moving forward?
JC: We are pushing owners to separate from the rest of the c-store and operate as closely to a traditional store as possible. The old mentality is that if a cashier is free, then he or she can make a sandwich. Well, people going inside for food now don't want the same person to ring up their beer and then make their sandwich.
Other than that, we're focused on expanded menu offerings like the pizza program. And we expanded breakfast, which is more popular at our c-store units. We want more diverse offerings because c-store customers tend to come in more.
Finally, one of the biggest things we're pushing in the c-store segment is helping owners understand how they can benefit from some programs that traditional units offer, like marketing and catering. A lot of times they have the mentality that customers are only at the pump and there's no sense in doing local store marketing. Want them to get more involved in the community because they are offering the same experience as a traditional unit.
QSRweb: What types of challenges do you see in accomplishing these initiatives?
JC: The biggest challenge is probably with some of the c-store owners that have been in the business for a long time. They're not resistant to the (c-store) footprint, but they maybe just don't believe in it yet. It'll come to them eventually that customers now want more than just gas. They want choices. They want to come in and get exactly what they want and there is an increasing amount of value in c-store space because that's where customers are.
Photo from Blimpie's Facebook page.
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Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.