Article

Equipment launch creates fro-yo opportunity for c-stores

C-store operators are upping their foodservice offerings, and fro-yo has high margins and minimal maintenance.

October 25, 2013 by Alicia Kelso — Editor, QSRWeb.com

Research from Mintel shows that frozen yogurt sales jumped 74 percent from 2011-13. Donper America has reaped some benefits of this trend, providing equipment for numerous fro-yo concepts.

And with the launch of its new turnkey Frozen Yogurt Kiosks, the company is leveraging another emerging trend — the growth of c-store food offerings. Technomic research shows that 22 percent of consumers grab breakfast from a c-store during the week, compared to 12 percent three years ago.

The shift in focus to food in the c-store space has even grabbed the attention of Dunkin' Brands' CEO Nigel Travis. "Most of these convenience chains are very good and they've invested in new concepts. We do see convenience chains thinking about food and beverage; it's something we're very aware of," he said during Thursday's earnings call.

Donper launched its turnkey Frozen Yogurt Kiosk at the National Association of Convenience Stores Show in mid-October. The self-service kiosks include digital signage and specific branding components. Though the company insists the product isn't meant to compete with brick-and-mortar fro-yo concepts, having the option available in c-stores could tighten market share even further. QSRweb talked to Dan Doromal, Donper's VP of marketing, about the new machines and their potential to intensify competition.

QSRweb: Why did Donper develop something specifically for the c-store market?

Dan Doromal:Because the frozen yogurt self-serve model fits perfectly within the current convenience store set up. C-store customers today are accustomed to 'serving themselves' to coffee, sodas, slushies, and other foodservice or packaged products. Additionally, it is an interesting time for c-store operators and owners. They are looking for the next Slurpee, a product with high margins and minimal maintenance, because profits outside of the store (gasoline) are decreasing and so are profit margins on in-store packaged products.

Foodservice is a natural answer to the question, 'How do I grow my revenue and profits?' More and more companies, like Sheetz, Ractra and Wawa, are expanding through foodservice.

QSRweb: Why frozen yogurt?

DD:Frozen Yogurt has up to 80 percent profit margin and is still on an upswing. It is not because it is a trend, but because times are changing. The most lucrative markets for c-stores are now Millennials and Hispanics partially because they are more likely to snack. Self-serve desserts, like frozen yogurt, cater to those markets in the best way.

QSRweb: How does the machine work?

DD:The machine is a self-serve frozen yogurt machine, meaning that a customer can dispense the product themselves. There are three handles per machine, the left and right each dispense a separate flavor, while the middle handle will dispense a twist of the two flavors. The customers grab a cup on the left side of the kiosk, pick their favorite flavor, fill up the cup and then go to the toppings station on the right side of the kiosk to fill their cup up with toppings. (The kiosk itself holds room for 4 to 6 toppings. Additional toppings can be offered and placed near the machine). The customer would then take their cup to the cashier to weigh and pay for the cup. Once the transaction is complete, the cashier would then give the customer a spoon and the customer is on their way.

QSRweb: Can the kiosks be owned by independent operators? 

DD:This product is meant to be sold directly from Donper America to the c-store owner. However, those in other industries can successfully incorporate the frozen yogurt kiosk in their concept as well.

QSRweb: How much of a competitive threat does this pose to fro-yo concepts?

DD: It's not meant to compete directly with frozen yogurt concepts. Frozen yogurt is, and always will be a destination treat. People are willing to travel in order to get it. However, in a c-store setting, convenience is the name of the game. Frozen yogurt offers a healthier option to a c-store's dessert lineup. Even c-store customers are looking for ways to be healthier. It's meant to diversify the offerings within a convenience store. The biggest differentiator will be the convenience of attracting customers who are already getting fuel or purchasing other items in-store.

QSRweb: How does the kiosk benefit a c-store? What is the ROI?

DD: The kiosk benefits a c-store not only by attracting attention to the product itself, but by streamlining the start-up process through a 'plug and play' package. The kiosk makes training, cleaning and ongoing maintenance easy and effective.

ROI comes from the frozen yogurt itself which can be purchased for 10-12 cents/ounce and then sold for 39-49 cents/ounce.

QSRweb: What c-store brands have signed agreements so far?

DD:We cannot disclose that information at this time.

QSRweb: What is the average cost of this equipment?

DD: Prices range depending on the number of machines that are purchased in the turnkey package.

QSRweb: What are the maintenance requirements?

DD:Maintenance requirements are every third day. The turnkey package comes with a comprehensive training module which walks an employee through every step of the draining, cleaning, sanitizing process, etc.

QSRweb: How, and why, is digital signage incorporated into the kiosk?

DD:The digital signage accompanying the kiosk includes a monitor that can display flavor and toppings options, pricing, logo, images, etc. It's incredibly important because it is one of the main features that will attract customers to the product. It easily communicates what flavors are in the machine, the process for purchasing their own frozen yogurt, and current promotions for the product.

We've helped an endless number of frozen yogurt shops open their doors for business and one of the most important aspects of a successful foodservice business is proper branding. If the brand is not appealing, then the product does not sell. Frozen yogurt should not only taste great, but it should look great, too.

Read more about equipment trends.

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