How Convenience Retailers Are Managing Foodservice Growth

HOW CONVENIENCE RETAILERS ARE
MANAGING FOODSERVICE TODAY
June 30, 2010

Presented at:

Foodservice Webcast Series

Participant Summary
117 South Cook Street #339
Barrington, Illinois 60010
phone: 847.722.2732
fax: 847.382.1801
Copyright © 2010 Balvor LLC. All Rights Reserved. davidbishop@balvor.com

Composition of Retailer Respondents
(Retailers completed online survey between 5/12/10 and 5/31/10)

Number of Stores Operated
(Percent of Retailers)
500+
Stores, 3%

201 - 500 Top-Line Characteristics
Stores, 6%
• # of retailers: 97
11 - 50 • # of store represented: 21,914
Stores, • 1-10 store operator share: 69%
14%
• Foodservice sales (APSM): $20,037
• Foodservice sales growth forecast: +2.6%

1- 10
Stores,
69%

Q: How many stores do you operate currently?
Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.

Copyright © 2010 Balvor LLC. All Rights Reserved. 2

PERFORMANCE METRICS

Copyright © 2010 Balvor LLC. All Rights Reserved.

Foodservice Dollar Sales – By Quartile
(Average per Store Month*)

$38,930

$25,163

$11,366

$7,552

Top Quartile 2nd Quartile 3rd Quartile Bottom Quartile
Q: What are your approximate foodservice sales on an average per store day basis? (Includes all dispensed beverage, food prepared on-site,
and commissary/packaged sandwiches) *Projected up to monthly figure based on weighted average response.

2010 Dollar Sales Forecast
(Percent Change vs. 2009)

Total Foodservice
Mean + 2.6%

3.0%
2.9%
2.6%

2.1%

1.7%

Cold Dispensed Hot Dispensed Food Prepared On-Site Frozen Dispensed Commissary/Packaged
Beverages Beverages Beverages Sandwiches
Q: What is your company’s dollar sales’ forecast in 2010 versus last year for each foodservice category?


2010 Dollar Sales Forecast
(Top vs. Bottom Quartile)

Total Foodservice*
6.1% Top Quartile + 5.0%
Bottom Quartile - 1.2%

3.8% 3.5%
2.9%
2.5%

0.5%

-1.0% -1.2% -1.2%
-1.8%

Food Prepared On-Site Hot Dispensed Cold Dispensed Commissary/Packaged Frozen Dispensed
Beverages Beverages Sandwiches Beverages

Top Quartile Bottom Quartile
Q: What is your company’s dollar sales’ forecast in 2010 versus last year for each foodservice category? *Estimated projection.


SHOPPER PERSPECTIVES


Demographics – By Quartile
(Percent of Retailers Perceiving Increases)

46%

33%
31%
29% 29%
25%
23%
20%
16% 17% 16%
12% 13% 12%

4%

Teenagers* Females White Collar Males Moms with Kids** Kids**
Top Quartile Mid Quartiles Bottom Quartile
Q: How have your demographics been changing over the last 12 months relative to the following shopper segments?
*13-19 years old **Under 13 years old

Shopper Interest In Healthier Products – By Quartile
(Percent of Retailers Indicating “Yes”)

73%

61%

37%

Q: Are your customers asking for your store(s) to sell healthier product offerings?


GENERAL STRATEGIES


Strategic Focus – By Quartile
(Index)

106
105
105
104 104 104
103
102
101
100 101
99 100 100 100
98 99
98 98
97
97
95 95 94

Lowering product Investing more in Improving in-store Upgrading in-store Expanding the Evaluating supply- Using more Offering more
supply costs off-site practices and fixtures & product range side alternatives limited-time-only value-priced deals
communications standards equipment offered items


Q: How important are the following strategies in achieving your objectives in 2010?

Core Foodservice Equipment – By Quartile

79%
75%
73%
69% 69%
67% 67% 65%
64% 64%
59%

50%

39%
33%
30%

Hot Cases Fryers Convection Ovens Open Cooler Fixtures Roller Grills
Q: What kind of equipment is driving your foodservice operations these days?


PROMOTIONAL TACTICS


Off-Site Communication Usage – By Quartile
(Percent of Retailers Indicating “More” or “About the Same”)

77%

67%
64%
60%

50% 48%
45%
41% 39% 41% 42%
35% 36% 35% 36%

27% 27%
25%
20%
15%
10%

Local event Website Radio spots Newspaper Social media Billboards Text messaging
marketing inserts

Q: How are you using off-site communications compared to last year to promote your foodservice offering?


Pump Signage Frequency – By Quartile
(Percent of Retailers Indicating “Monthly”)

50%

42%
41%
39%

32%
30% 30%
27%
25% 25%
23%
21% 21% 20%

15%

Food Prepared On-Site Commissary/Packaged Cold Dispensed Frozen Dispensed Hot Dispensed
Sandwiches Beverages Beverages Beverages

Q: How frequently do you leverage signage at the fuel pump to promote special deals or products available in-store?


New Product Introduction Tactics – By Quartile
(Percent of Retailers Indicating “Always”)

73%

58%

50% 50%

36% 36%
33%
27%
23%

15%

6%
0%

In-store signage Suggestive selling by store In-store special deal Coupon for discounted or free
team item via coupon

Q: How often do you promote a new foodservice product using the following tactics?


Combo Deal Duration – By Quartile
(Percent of Retailers)

23%

12%

Quarterly
30% Monthly

50%
45%

20%

Q: How frequently do you change foodservice-related combo deals in your store(s), e.g., buy a beverage and a food item and save $$?


Club Programs – By Quartile
(Percent of Retailers Offering)

59% 58%

45%
41%

30% 32%

25% 24% 23%
18%
15% 14%

6%
0% 0%

Hot Dispensed Cold Dispensed Food Prepared On-Site Frozen Dispensed Commissary/Packaged
Beverages Beverages Beverages Sandwiches

Q: Do you offer a club program in any of the following categories, e.g., buy 5 and get your 6 th free?


ASSORTMENT TACTICS


Commissary / Packaged Sandwiches – By Quartile
(Percent of Retailers Offering Products in Store)

95% 97%
91% 91%
84% 85%
82% 82%
77%
74% 74%

47%

Sandwiches Salads & Sides Thaw, Heat & Eat Ready to Eat

Q: In Commissary/Packaged Sandwiches, what is the dominant branding strategy associated with your core offering in each sub-category?


(Branding Strategies Based on Percent of Retailers Offering in Store)

Sandwiches Salads & Sides

63% 63%

53% 55%
48% 48%
44%
38% 37%
33%
30%
25%
22%
15%
13%
9%
5%
0%

Proprietary/Self National/Manufacturer Wholesaler/Control Proprietary/Self National/Manufacturer Wholesaler/Control
Branded Brand Branded Branded Brand Branded

Top Quartile Mid Quartiles Bottom Quartile Top Quartile Mid Quartiles Bottom Quartile




Thaw, Heat & Eat Ready to Eat

82%

71% 71%

61%
56%

43% 44% 47%

29%

18%
14% 14% 14% 14%
11% 10%

0% 0%





Food Prepared On-Site – By Quartile
(Percent of Retailers Offering Products in Store)

100% 97% 95%

85% 86%
84%
82%
77% 79%

64% 63%

47%

Pizza Hot Dogs/Roller Grill Sandwiches/Wraps Bakery

Q: In Food Prepared On-Site, what is the dominant branding strategy associated with your core offering in each sub-category?



Hot Dogs/Roller Grill Sandwiches/Wraps

57% 59%
56%
50% 50%
47%
39% 39% 41%
36% 36%

25%
19%
11% 13% 11%
7%
5%






Pizza Bakery

65%
58%

46% 46% 47%
44% 42% 41% 44%
35% 33%
25%
22%
15% 17%
11%
8%
0%





Frequency of Limited-Time-Only Items – By Quartile
(Percent of Retailer Indicating “Quarterly” or “Monthly”)

55%
52% 52%

45%
42%

36%
32% 32%
30%
27% 27%

21%
16% 16% 16%

Food Prepared On-Site Commissary/Packaged Hot Dispensed Cold Dispensed Frozen Dispensed
Sandwiches Beverages Beverages Beverages

Q: How frequently do you introduce limited-time-only items onto the menu in the following categories?


Introduction of New, Value-Driven Products

55%
50%
45% 45%
41% 42%

37%
33%

26%

Food Prepared On-Site Hot Dispensed Beverages Commissary/Packaged Sandwiches

Q: Have you introduced any new products in the past 12 months that enable your store(s) to offer lower retail prices?


Putting it all into context
(What does this all mean?)

• Work continually on improving core products and practices
• Expand ways value is delivered to the consumer
• Focus on reaching a broader set of your target consumer
• Increase visibility of food-related promotions at the fuel pump
• Motivate store visits and product trial via special deals
• Leverage new products to maintain interests in offering
• Drive demand for new products by removing barriers to trial
• Remember it takes time, commitment, and resources to become a top performer


David Bishop
Managing Partner, Balvor LLC
Biography
David is the managing partner of Balvor LLC, which is a sales and
marketing firm that provides consulting, sales support, research, and P: 847.722.2732
analytic services to retailers, product suppliers, financial analyst and
other organizations. davidbishop@balvor.com
Balvor’s services support various food channels, covering both
foodservice and retail classes of trade.
David has helped many leading retailers evaluate new retail concepts, Notable Public Accomplishments
enhance annual category planning processes, and develop new White Papers
business support methods related to assortment rationalization, space
allocations, or branding strategies. • Are Retailers Doing Enough? Preventing Underage Access to Tobacco
at Retail, Center for Responsible Tobacco Retailing, Inc., 2009.
David leverages his experience to help product suppliers improve their
competitive positioning, trade programs, and category management • Accelerating Cigar Profits Through an Increased Strategic Focus, John
capabilities by better understanding what retailers’ value while also Middleton Inc., 2008.
benchmarking versus peer companies. • How to Succeed in Convenience Retaill:A Practical Guide for Product
He’s also has broad experience with activity-based costing, channel Suppliers, NACS, 2007.
sales strategy, merchandising assessments, trade communication, and Industry Research
custom analytical support for both consumer packaged goods and
• SKU Rationalization Survey, NACS/Balvor, March 2010.
foodservice industries.
• Motor Fuels Retailer Survey, Balvor/NACS, January 2010.
Prior to founding Balvor in 2008, David spent 12 years at Willard Bishop
in various positions, including most recently as partner. David began his • State of Foodservice, Convenience Store Decisions, 2008-2010.
career with The Levy Restaurants in operations for new store concepts • Private Label Trends in Convenience, NACS, 2008.
where he focused on beverage and financial programs.
Current Industry Affiliations
• Convention and Events Committee, NACS, 2007 - present
• Supplier Advisory Board, Convenience Store Decisions, 2006 - present
• NACSPAC Member, 2008 - present


How Convenience Retailers Are Managing Foodservice Growth

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