Keys To Growing Foodservice Profitably


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The CSD/Balvor Foodservice Survey found that top-quartile convenience store operators place a greater emphasis on creating value and executing a winning program.

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Keys To Growing Foodservice Profitably

  1. 1. FrontEnd By David Bishop, Contributing Editor Keys to Growing Foodservice Profitably The CSD/Balvor Foodservice Survey found that top-quartile operators place a greater emphasis on creating value and executing a winning program. HY ARE SOME RETAILERS prospering when More top-quartile retailers are working to protect W others are struggling? What are the keys to growing the business-even during tough economic times? How are successful retailers approaching the business differently than others? These are all questions that could be applicable to their base business than the rest. And, although they're only slightly more likely than the mid-quartile retailers to believe that improving in-store practices is extremely important to achieving their business objectives, they are 27% more likely to believe it when compared to bot- any part of the retail business.However,the questions are tom-quartile retailers. (See chart 1) extremely salient to foodservice programs as many retailers Having acceptable code dates on packaged foods, are intenselyfocused on leveraging categories in this area fresh coffee available, and well-maintained display cases to drive competitive differentiation and profitable growth. are examples of basic operational practices that you can The recent CSD/Balvor Foodservice Survey revealed monitor and manage every day. Beyond that, it's impor- that top-quartile retailers, ranked and categorized by tant to have clearly communicated policies that empower average foodservice sales per store month, are more the store team to win back a shopper when a breakdown likelyfocusing on improving in-store practices, enhancing occurs-as it will occasionally. shopper value and increasing off-site communications. Consider the Sheetz coffee guarantee, "If we don't These top-line findings help to reveal some of the have fresh coffee ready for you, we'll brew it and buy it." answers. However, it's clear that the differences go Thisexplicit customer promise provides clear direction to beyond what strategies they're pursuing to how they're staff as to how they should respond in that specific situ- executed in-store. ation. The guarantee also conveys a powerful sense of Here are three lessons learned that you can apply to hospitality that's prevalent with most food service opera- growing foodservice more profitably. tors, but not all convenience stores. A key factor why successful retailers are building the LESSON 1: DON'T LOSETHAT SHOPPER business is because they're not losing their current cus- When consumer spendinq is constrained like it is cur- tomers to the competition. rently, retailers grow mainly by stealing market share. Therefore, don't give your current customers any reason LESSON 2: HOLD ONTO YOUR PENNIES to spend their money elsewhere. Many retailers have learned that reducing retail prices, CHART 1: IMPROVING IN-STORE PRACTICES CHART ?: INTRODUCING SMALLER COFFEE CUP SIZE (Index = Responding 'Extremely Important" 10Achieving Objectives) (Index = Responding 'Yes' 10Adding in PoslYeor) source: CSD/Boivor Foodserv!ce Survey, May 20 10 source: CSD/Boivor Foodserv!ce Survey, May 2010 26 Convenience Store Decisions I October 201 0 CSDecisions. I
  2. 2. like on hot coffee, may help maintain competitiveness building the business while bottom-quartiles are"simply and even increase units sold, but it can also reduce trying to save theirs. profits more than expected. While social media and other electronic marketing Price negotiation and better procurement are two methods are still in their infancy, top-quartile retailers ways to hold onto more penny profits while another appear to have a jump on integrating communication involvesadjusting the product assortment. across these mediums. In fact, top-quartile retailers are Interestingly,only 35%of the retailers indicate that they three times more likely to reach consumers using a com- added a smaller sizecup to the hot coffee offering within bination of these methods versus the bottom quartile. the past year. Top-quartile retailerson the other hand are (See chart 4) 29%more likely than the average to have employed this Although reaching more consumers is important, pro- tactic, and even much more as compared to the bottom viding them with a compelling reason to visit iseven more quartile. (See chart 2) critical. Limited-time-only deals, whether for a specific Thissubtle shift in assortment is an important tactical product or time period, are effective tactics to leverage. move to maintaining a strong opening price point while protecting the penny profits. This is especially true today PUTTING IT INTO PERSPECTIVE as more convenience retailers have migrated to a larger To grow foodservice profitably you need to do many cup assortment, making many retailers more vulnerable things right every day. Top-quartile retailers excel at the to food service operators. basics and have built a solid foundation from which to Now if you're a retailer who believes that sizedoes mat- expand. ter,realizethat many coffee houses,doughnut shops and Retailers aspiring to become top-quartile perform- QSRsoffer cup sizesas small as 10 ounces or 12 ounces. ers need to prioritize where they focus bosed on the If this surprisesyou, it is likely due to differences between current state of their business.Imitating top-quartile retail- how convenience retailers and food service operators ers is no guarantee for success or creating competitive typically market their offering. differentiation. The answers to our questions are often far simpler than LESSON 3: COMPEL CONSUMERS TO SHOP YOUR STORE we realize. In foodservice, it often revolvesaround things Motivating current customers to spend more or attract- like having a consistent offering, good service,value and ing new ones to shop your stores is vital to growing the great people. business.Unfortunately,if you're experiencing above-aver- Retailers interested in gaining additional insights age sales declines, you're probably focused mainly on and perspectives on this topic can view Part 1 of CSO's improving current programs and operations. Foodservice Webcast Series,which is available free on- This may explain why top-quartile retailers are 74% demand at more likelyto believe that. it'sextremely important to invest more in off-sitecommunications in order to achieve their David Bishop specializes in convenience retail and is the man- objectives today. (See chart 3) aging partner at Balvor llC, a sales and marketing firm located In other words, top-quartile retailers are focusing on in Barrington, III. He can be reached at CHART 3: INVESTING MORE IN OFF-SITE COMMUNICATIONS CHART 4: PREVALENCE OF WEB SITE, SOCIAL MEDIA, & TEXTING (Index = Respondirg "Extremely Important' ta Achieving Objectives) (% of Retailers Using All Three) source: CSD/Balvor Foodservice Survey, May 20 10 source: CSD/Balvor Foodservice Survey, Moy 20 10 CSDecisionsO October 201 0 I Convenience Store Decisions 27 I