The Future of C-Stores: Food Service

n past decades, convenient stores didn’t have a great reputation for providing high quality food service.  Most food was considered unhealthy, junk food.  This is changing rapidly as consumers have begun setting new expectation for the types of food that they can get from c-store brands.  

Prior to the COVID-19 pandemic, many c-store operators agreed that food service was on track to be a major industry focus.  At the time, about 85 percent of convenience store brands had identified food service as a key strategic priority for their company.  

The pandemic forced many retailers to change the way they offered fresh and hot food items.  It’s critical for c-store operators to understand how to adapt to these major changes to remain competitive and capture new segments of the market.  

Drivers Affecting C-Store Food Service

While many brands were already embracing new approaches to food service, the pandemic brought this to a screeching halt.  By July of 2020, more than half of US states had introduced emergency measures that forced businesses to shut down or greatly alter their food-related services. This greatly affected traditional, full-service restaurants which saw a decrease of sales by 74 percent as dine-in seating was eliminated in many markets.  

This also impacted the products and services that c-stores provided including self-serve food, roller grills, bakery cases, and soda fountain dispensers.  However, there were some benefits that c-stores saw during this time.  First, with restaurants closed, consumers needed to find alternatives to their food needs.  Second, many workers transitioned to working from home which means they spent more time in their local communities.  During the last two years, a third of consumers said that they used c-stores more often.

In addition to disrupted routines and consumer bases, new customers were bringing new demands.  With home delivery being an option for many food-related businesses, c-stores needed to step up the quality and types of foods being offered to remain competitive.  Products like fresh fruits and vegetables, plant-based options, locally sourced produce, and specialty products have become the expectation.  

Current Situation with C-Store Food Service

For many businesses, the c-store food service space looks completely different compared to a decade ago.  There are some very clear trends that are emerging as the world begins to put the global pandemic behind them.  

• Consumer Confidence – Health and safety concerns have impacted consumer confidence, especially as it relates to self-serve food service.  Nearly 75 percent of consumers have indicated that they plan to resume use of self-service beverages and hot foods once restrictions are lifted.  
• Delivery Methods – C-stores have traditionally relied upon foot traffic to drive food sales.  Today, technology has taken center stage in the way food is delivered to customers.  Use of delivery services for c-store food and products jumped nearly 50 percent during the pandemic.  Some c-stores are beginning to add features like drive-thrus and curbside pickup for added convenience.  
• Expanding Customer Base – Shifted buying habits and routines have brought in new customers.  This changing demographic has reset the typical expectations for types of products and way food service is provided.  
• Dayparts – Many food service businesses are ditching menus that are segmented for specific times of the day.  For example, more businesses are offering breakfast items outside of the typical breakfast timeframe.
• Locally Sourced and Specialty Products – Consumers are expecting to see higher quality and specialty products to fit their needs and lifestyles including healthy and plant-based options, fresh produce, and grocery staples like meat and cheese.  Some c-stores are beginning to think outside the box by offering things like hand-scooped ice cream, coffee clubs, and juice bars.  One of the top requests is for grab-and-go meal kits.  
• Enhanced Customer Satisfaction – C-stores overall adapted well to the additional pressures of the pandemic with 62 percent saying they were satisfied or extremely satisfied with c-store foodservice (an increase of 12 percent from 2019).  

Challenges with Food Service in C-Stores

While changes to food service offerings are bringing opportunities for revenue growth and exposure to new markets and demographics, there are some hurdles that c-store operators must be aware of and understand how to address.  

• Customer Service – With better quality options, c-stores now have a wider range of competition.  This means they must focus on other areas to make them stand out.  About 56 percent stated that customer service is extremely important (second only to location convenience).  Brands that miss the mark on customer service will find it difficult to keep customers happy.
• Increased Cleaning – Customers are expecting higher food safety standards and enhanced cleaning schedules.  This requires additional labor to keep up with more frequent cleaning schedules.  

“Elevated safety and sanitation measures really are crucial to generating trust and making consumers feel comfortable in patronizing c-stores for food service.”  Donna Hood Crecca, Principal, Technomic

• Inconsistent Reopening – As pandemic restrictions subside, brands that have stores across multiple territories may find it difficult to adapt to the influx of customers as markets reopen.  Also, each area may have different regulations regarding masks, food service guidelines, and social distancing which could lead to confusion as companies try to comply with various sets of rules.  
• Increased Competition – Changes to food service options for c-stores puts them in direct competition with many quick service restaurants and small grocery chains.  
• Individual Market Demands – Some food service items are more popular in certain markets.  For example, consumers in Texas may have a higher demand for Mexican food while consumers in the Pacific Northwest may care more about vegan or vegetarian options.  Brands will need to carefully evaluate and tailor their offerings to the specific tastes and preferences of the local community.  
• Store Layouts and Equipment – Some c-stores may need to make additional investments in changing store layouts or adding new equipment such as end-cap cooler units to showcase and store fresh food options.  

What the Future Holds for C-Store Food Service

The future of food service in the convenience store industry is expected to continue evolving.  C-stores in the future will likely look more like a hybrid between quick service restaurants and traditional convenience stores.  

More c-stores could take on the “ghost kitchen” model where high quality, fresh food options are prepared and sent directly to consumers by a third party.  This would enable the c-store to provide home delivery of the products consumers demand without having to make major changes to their physical store locations.  

Consumers no longer view c-stores as simply a place to pick up a bag of chips and a soda.  More and more people are leveraging convenience stores to provide food options for lunch breaks during the week or easy dinner options for the whole family.  To remain competitive, c-store operators will need to remain focused on what types of food service products consumers are asking for and be willing to adapt quickly.