C-Stores Can Outcompete QSRs with Technology

-Stores are under constant strain to increase the food service revenues, more and more this involves competition with Quick-Service Restaurants (QSRs).  Even as conglomerate fast-food companies are ever-growing in popularity, foodservice remains the second-largest revenue source for C-Stores following tobacco.  

As such, C-Stores must create new and inventive ways to compete with QSRs if they want to expand their food service market share.  Technology is a vital part of convenience stores competing against QSRs.  Below we discuss how C-Stores are using technological innovation to change the game!

Current Competitive Environment

One major issue in the current competitive environment is that C-Stores faced a decline in their foodservice sales during 2020 because of the global COVID-19 pandemic which limited the number of people and cars on the road.

Legally, customers were restricted in where and when they could shop, and many convenience stores like gas stations generally rely on travelers, commuters, and holidaymakers. Consequently, there was a large shift to online shopping and takeaway delivery which allowed many QSRs to stay afloat during lockdown.  

Are C-Stores Taking Market from QSRs?

Despite this blow, C-Stores are now taking a page from the QSR book and coming up with a range of online and offline food services that are likely to attract new clientele.  This is blurring the lines between C-Stores and QSRs and has the potential to take Food Service market share from QSRs.

According to the National Association of Convenience Stores, 38% of C-Stores plan to expand their app-based ordering and payments in 2021. Another 14% have reported being focused on adding fast-food drive-throughs (commonly associated with QSRs).  This suggests that C-Stores have a very hopeful future in competing against fast-food companies.

C-Stores are using a variety of technological innovations to disrupt the competitive landscape. This includes online ordering platforms as touched on above.

While the addition of a drive-through option had certainly been on our radar with a steadily growing portfolio of restaurant concepts, it became even more critical for us during the pandemic

Delivering through companies like Uber Eats could be a great success for C-Stores in the future and thousands are already partnering with third-party delivery firms like Uber and Deliveroo.  Alcohol deliveries could also be very beneficial although this may create issues surrounding ID and age restrictions.  Likewise, C-Stores are at an advantage because they can offer CBD products through delivery.  

Drive-throughs are another game changer for C-Store innovation.  This feature has been trialed by the 7-Eleven C-Store in Dallas.  There, 7-Eleven introduced its own Laredo Taco Co. restaurant, best known for flavorsome tacos and salsas.

Chris Tanco, 7-Eleven Executive Vice President stated,  “While the addition of a drive-through option had certainly been on our radar with a steadily growing portfolio of restaurant concepts, it became even more critical for us during the pandemic”.

This has been an overwhelming success and sets the scene for the future of all C-Stores.  Wawa Inc. also did this in December 2020 although not as a response to COVID.  This plan had been in the works for some time and Wawa now offers drive-through services in its Pennsylvania and New Jersey stores.

Finally, loyalty programs are another big hit for C-Stores.  AlixPartners research found that 50 percent of customers visiting C-Stores three times per week or more called loyalty "very" or "extremely" important.  A further 18 percent increase in online ordering occurred when loyalty schemes were added.

Clearly, loyalty is becoming increasingly important for C-Store customers, especially considering that many QSRs already have loyalty apps.  Loyalty apps will enable more targeted marketing strategies.  They will also give customers discount deals and notifications that will keep them coming back and give them similar customer loyalty experiences that they can find in QSRs.  This will help C-Stores to keep up with QSRs.

Are QSRs Fighting Back?

QSRs are always coming up with new trends to enhance profits and 2021 is no different.  Taco Bell is now using “Go Mobile” technology that allows app users to be located when pulling up to the restaurant to allow for a smoother customer experience.

With two drive-throughs lanes, one for conventional ordering and the other for mobile pickups, contactless curbside pickups are also available.  This means that the food will be brought to the consumer and all of these updates makes the whole drive-through process much faster.

The “smart kitchen” app technology also suggests the best route for a nearby customer’s car to give consumers a seamless pick-up experience and streamlined guest access points.

Ghost kitchens are another option for large chains.  While controversial in that they reduce the number of stable jobs available for employees, they appear to be coming more common place as we progress through 2021.

These are food preparation facilities for delivery-only meals and have no storefronts or indoor seating for customers.   At first glance this may seem strange, they were very helpful during the pandemic and allow for faster delivery.  This may give QSRs an edge over convenience stores that deliver.

What Does the Trend Look Like?

These trends are showing a complete move towards technology-based sales, marketing and delivery services.  Although the technology trends listed above for QSRs are innovative, they do have some limitations that C-Stores could fill.

For instance, QSRs have little wiggle room with the products they can sell.  Often, they’re limited to only one type of cuisine whereas C-Stores have more latitude and are “nimble.”  C-Stores are also open later and in convenient locations which could inject another competitive advantage in the C-Store vs QSR dynamic.  

What Will the C-Store vs QSR Competitive Landscape Look Like In 5-10 Years?

Peering into the future of C-Store QSR competition, it will be interesting to see how things pan out given the current circumstances.  More people now living in large cities minimizes the need for a car and the rise of online shopping suggests that people will be going out less to shop looking forward.  These factors could inhibit C-Stores if they don’t fully make the move to digital apps and delivering.  This may cause many to go out of business.

However, C-Store sales of prepared food products in the United States before the pandemic were forecast to grow by 5.7 percent in 2020.  This projection bodes well for C-Stores who are set to make even bigger technological advancements in the future.  

Summary

Whilst C-Stores have faced some challenges in competing with QSRs, their future looks positive. By using loyalty apps, online deliveries, and drive-through services, and their inherent product flexibility – C-Store technology will surely take some of the market away from the fast-food multinationals!