C-Store Foodservice Market Factors for 2021

s the COVID-19 pandemic continues, it’s important to give consideration to the virus’s long-term impact on convenience store foodservice in a post-pandemic world.  2021 will open with constricted revenue, as COVID-related interruptions contracted the channel by 14 percent in 2020, according to consulting and insights firm Foodservice IP.  

Foodservice IP conducted a survey of 500 heavy-to-moderate foodservice users to assess their buying behavior, attitudes, perceptions and demographics and interviewed 150 operators, including major c-store chains and high-volume independent retailers.  The survey provides excellent insight into current state and future trends.

The survey found that 55 percent of c-stores have dedicated foodservice employees, compared to 30 percent who said the same in 2018. This was likely boosted by their quick pivot away from self-service early in the pandemic.  Dedicated foodservice employees offer retailers more control over food safety while allowing them to push their carryout and/or delivery offering to offset losses in prepared food sales.

Commissaries now account for 36 percent of prepared food sourcing for c-stores.  This includes both third-party (29 percent) and company-owned (7 percent) commissaries.  C-store distributors account for 19 percent and broadline foodservice distributors account for 14 percent.  The increase in the use of commissaries indicates that identifying and selling into central kitchens will become more important as the variety of prepared foods and c-store delivery expand.

Regarding the specific times customers are purchasing food, c-stores have observed an increase in late morning through late afternoon traffic compared to pre-COVID, likely an effect of increased remote work. Conversely, the period of 4 p.m. to midnight saw traffic decline. If companies continue to allow flexibility in remote work after COVID, these traffic levels are likely to remain.

The pandemic accelerated certain trends that were already occurring and are likely to continue, while other changes, such as traffic distribution shifts, could return to their former state if workers return to their normal place of business.

Customer interaction is also likely to face long-term change. C-store operators are concerned that the adoption of touchless and mobile technology will limit such interaction, but loyalty programs and increased hospitality training for both drive-thru and traditional retail areas should help stores maintain regular customer contact. This is likely to push training costs up.

Even with the overall decline, C-store customers have also exhibited recession behaviors such as a preference for private label products and single trips for multiple items.  Other possibilities emerge – including one-stop shopping and the potential to be a remote worker "break" destination.  Also, touchless technology and a younger, savvier user base should prove advantageous.  These factors will push it to exceed overall U.S. foodservice industry nominal growth through 2023, Foodservice IP noted.

The pandemic accelerated certain trends that were already occurring and are likely to continue, while other changes, such as traffic distribution shifts, could return to their former state if workers return to their normal place of business.  However, the pandemic will have a lasting effect on the c-store foodservice channel, particularly regarding labor and the need for broad-based restaurant training.

For a visual summary of Food Service IP's research - checkout their infographic.