Convenience Stores Crack Open the Catering Market: Frank Beard Explains [Podcast]
- 15 Min Read
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These days customers are buying much more than roller hot dogs and Twinkies at the convenience store. They’re also grabbing freshly prepared breakfast and ordering delicious catering. And it’s not only motorists who are shopping, but the local community. Some of the biggest “c-stores,” aka convenience stores, are betting that catering can be profitable. With convenience stores increasingly tapping into the quick service restaurant (QSR) and catering markets, these appear to be golden years for the c-store industry.
In Part 2 of this podcast, we go inside the mind of Frank Beard, an Analyst for the smartphone app GasBuddy, to explore the opportunity for convenience stores to nab a local base of catering customers. Frank shares how gas station and convenience store operators can take their business beyond their stores’ walls to capitalize on the booming catering market. Listen to Part 2 above, and if you missed Part 1, you can find it here.
Frank Beard is an Analyst for the smartphone app GasBuddy, where he looks at convenience store and retail trends. A thought leader in his field, Frank has helped convenience stores create a positive public perception of their food.
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Genevieve Babineau: Hi, everyone! Welcome back to the podcast. I am here again with Frank Beard. Hi, Frank, how are you doing?
Frank Beard: I’m great.
Genevieve Babineau: Here’s the thing. Apparently, when you bring Frank on, there’s just way too much for us to geek out about, and we couldn’t help it but make a second episode. So we are so excited that you are willing to stick around and chat with me.
Frank Beard: Yeah, thanks for having me back on the podcast.
Genevieve Babineau: What trends in the c-store industry right now would lead a really savvy independent operator to consider adding catering to their business.
Frank Beard: You know a lot of them [c-store operators] don’t think about it because they’re really busy, and they work hard and put a lot of time in. [These operators] may not have the idea that [they] should try [catering]. But when you look at the [c-stores] that do get into [catering, these stores] see an opportunity to fill a void that’s not there, and sell, and sell their food more. You know maybe they realize that the local weddings and the local—or even funerals…I mean funerals got to be catered, too. Let’s be honest.
Genevieve Babineau: A hundred percent.
Frank Beard: Maybe they realize that their fried chicken would be really great to start doing catering with, so they go ask or start and try it and it works. When you talk to some of the operators who’ve done [catering] though, maybe with something as simple as they decided to cater the food at a local high school event—because they wanted people to come back to their store and buy more of it, and that’s just another way to get the word out. Sometimes, it’s something as simple as that is how they get started. And it just goes from there.
Genevieve Babineau: We used to play a game with my old VP in marketing. That he would try to come up with some business in the community. That he could stump us where there wasn’t any opportunity for a catering relationship to pop up. But, I remember funerals came up, and we said, “No, there’s a repast every single time. People want to come together. They want food that they don’t have to think about whether it’s going to show up or what it’s going to be. They just want to have that nostalgic feeling and all come together in the community.”
Frank Beard: So speaking of catering though, here’s a good example. I actually knew this was going to come up, so I reached out to a friend of mine, Al Hebert, the Gas Station Gourmet. He’s written a column in our trade association’s magazine, Nacs Magazine, for years. We do an annual convenience-store food road trip together.
So here’s an example Al had given me, of a small retailer that he wrote about who does catering. It’s called P and J’s Mini Mart. It’s up in Minnesota. What happened is the highway—just the county highway that accessed [the] town—used to bring trucks [and] all these vehicles through town. Suddenly, an interstate was built nearby that sucked all the traffic away. So, so they’re like well we got to do something, and they got into food service. But, then they started noticing a trend too, where the owner said churches are getting bigger. There were funerals in town and they’re holding them in these big churches and then people gather and eat. [They] saw an opportunity: “Well, maybe they need food.” [P and J’s] started catering. So they started catering and started small and it just went from there.
Genevieve Babineau: Then that “halo effect” kicks in where suddenly they are getting exposure to that church and I’m sure their fuel sales went up, their retail went up, it just feeds all aspects of their business.
Frank Beard: There’s a lot of operators though. A lot of people don’t know this, but there’s this whole story out there about these independent retailers. So sometimes they own one store that’s getting into food service in a big way. Because maybe they can’t get a loan for a restaurant, but they can get a loan for a gas station. I’ve heard that story from owners. Sometimes it’s an issue of they move into a space that’s already in a convenience store that a quick service restaurant (QSR) had vacated. They [the store] know[s] that there is foot traffic that they can grow their restaurant off of rather than starting from scratch. No one even knows they exist.
Sometimes people bring a food truck to a convenience store for the exact same reason. There are all of those examples out there, but one of my favorites, it’s actually a store called College Junction Mudbugs in Eunice, Louisiana. And what happened to the owner there is he was making great money on fuel. He’s a former McDonald’s manager, army veteran, amazing guy, and had great fuel sales when he got started.
But then, a couple of competitors moved in that started siphoning away his fuel sales. And he’s like, “I got to do something or otherwise I’m going to go out of business.” So he got into food, [but] not just any food, but backwoods Cajun food. Stuff that you don’t even find in the cities. There are times I have seen squirrel on the menu there or rabbit. I gotta say, that might be some of the best food I have ever had in my entire life. Whatever he does, it’s like two steps further than you would expect for the food that you are getting. It’s like two steps above. He has this custom smoker in the back of the rice dressing. He makes poutine. He makes all the good staples down there that the flavor profile is so complex. It’s amazing. He got into food service out of necessity because it was an issue of surviving as a business.
Genevieve Babineau: Yet again, though, that’s just a tale as old as time. This is what so many brands are seeing—trying to get off-premise and to find that unique product. What’s going to create that emotional reaction from their customers? That’s what differentiates them. That’s what makes them still thrive even in this incredibly competitive industry.
Frank Beard: It’s an interesting time for the industry where they really have to differentiate themselves. This is an industry that’s 154,000 stores across the United States. Ninety-three percent of the country lives within ten minutes of a fuel or convenience store and about half of Americans visit a convenience store daily. But there’s a lot of operators though—its interchangeable product offerings; [the] same from one store to the next, same consumer packaged goods (CPG), same beverages, same everything. No reason to visit other than impulse or necessity. So maybe that was fine, you know, back in the era of smokes, Cokes, and gas being kind of what the c-store was, but a couple of things are happening.
There are challenges in tobacco right now. People are eating on the go more. There’s also more competition coming into last-mile retail. You’ve got to compete with the dollar stores. You’ve got to compete with grocers. You have to compete with apps like goPuff. If they’re in your market, that’s a serious threat. You have to differentiate yourself, and food service is kind of the way to do this. You see the industry transitioning into becoming more like restaurants. If you look at the sales data—the in-store sales data from the past ten years—the biggest change from ten years ago has been in food service. If you break it down into four quarters and you look at the core tiles in terms of retailer performance, you’ll see that the top quartile is pulling way ahead from the rest of the industry and food service.
About half of the industry is still stuck in a ten-year-old business model where [it’s,] “Let’s get him in and out as quick as possible; sell them interchangeable products, smokes, Cokes, and gas.” But then you’ve got these innovators that are pushing ahead with food service and are starting to ask, “How can we maybe ask him to stay a bit longer? How can we make our stores more inviting? How can we create an experience? How can we give them a reason to drive out of the way to come here?” And all across the country, you’re seeing this play out in different ways.
Genevieve Babineau: Meanwhile, you’re seeing that split half-and-half between the industry. And similarly, you’re seeing that split with customers. Technomic’s report said recently that 50 percent of customers think that c-stores are just as capable as restaurants and offering fresh food and beverage. So on the one hand: 50 percent, that’s really incredible. And on the other hand: you’re dealing with shifting perceptions for that final 50 percent. Is that a huge challenge for those c-store operators?
Frank Beard: The presence of a fuel canopy for some people just immediately says something about the food that’s not positive.
Genevieve Babineau: It kills the foodie experience.
Frank Beard: Yeah, it brings up images of glistening roller dogs just turning and under that heat lamp. I mean some of those are pretty good. I mean, let’s be honest. There’s a reason why they sell because they taste great. The fuel canopy can create a negative perception like that. And that’s a real challenge that has to be overcome and it’s not easy at all.
Genevieve Babineau: How do those c-stores that want to get into food service and specifically catering really need to adapt to be more competitive, to be more profitable, or have this be a real sustainable line of business?
Frank Beard: I think the challenge a lot of people have is they don’t have a food service culture. I mean a retail culture and a food service culture are very different. I mean, you’ve worked in a restaurant. You talked about this before. I have, too. There’s a lot of waste in restaurants. You just have to be okay with that. It’s like the idea that maybe I’m going to switch from displaying some of my breakfast sandwiches to lunch soon, but if you have that like in that last 30 minutes, if you don’t have sandwiches sitting out, I mean it looks bad. That’s not okay. But you also know that you’re gonna have to throw [product] away because they’re not all going to sell at that time, but you can’t have your product offering look terrible for that past 30 minutes
Genevieve Babineau: And you’re anticipating that because the ultimate thing that’s king is the guest experience.
Frank Beard: Exactly. Restaurants get this because they’ve been doing food service for a long time but coming from a retail mindset is not easy. One thing people had to get over, even something as simple as a brewing fresh coffee every hour or every 30 minutes. But you can’t just brew it once and let it sit out there all day. I mean then it’s not going to be any good. It’s hard for some people to dump that coffee away. But the way I see this—one area that this plays out a lot—here’s a good example is they’ll invest in high-quality indoor seating, but then they won’t wipe the tables down. Now [to] any restaurant worker, that’s just like nails on a chalkboard. No self-respecting restaurant would bring a customer in to see a dirty table. That is just Restaurant 101, right? But I’ve seen this happen in so many c-stores. Now they’re going to figure this out. Some of the major brands are bringing in people with a real culinary and food service background—people who have worked at casual dining restaurants and manage them, and people who know food service, right? So they’re gonna get there. There’s just a lot of rookie mistakes being made right now, but I think the challenge for QSRs—c-stores are going to figure this out. Some of them probably have, to be honest, and that’s a huge competitive threat.
Genevieve Babineau: Do you feel like they’re also seeing the opportunity for delivery? I mean when you think about shifting toward focusing on experience within four walls. But where is that opportunity, back to that concept of the last mile, to bring the food to their customers?
Frank Beard: I think delivery is a huge opportunity. Convenience stores, the industry as a whole, is really sitting on the largest untapped distribution network in the country. They occupy the best streets, the best corners of every town across the United States. They have proximity to customers. They have the ability to deliver. The challenge is, how is that going to play out and what’s that going to look like? If you talk to some retailers who work with third-party delivery companies, they don’t like the fact that they might take a third of their sales. That’s a real problem. Then you have others who are saying, “Yeah but that person wasn’t coming to my store in the first place.” Then you’ve got some who are understanding that those are actual marketplaces that people go to and that’s where they make their buying decision.
If I go to this app and I’m looking for available restaurants because I don’t wanna get off the couch because I discover Game of Thrones, or because I’ve worked a long day. They’re making the decision based on what’s available there, so maybe it’s good to be there because that person is not coming to your store otherwise. But I know a number of brands that have experimented with delivery. Some have seen some really good results. But by and large, it hasn’t become as pervasive as it probably will be in the next five years.
Genevieve Babineau: I think of the pharmaceutical sales rep, too, where we often hear them talking about having sandwich fatigue. They feel like they’re trying to differentiate themselves.
They’re trying to do something to connect with that local office or that local client. And when you think about something like Wawa or Buc-ee’s, if you had the ability to bring in this fan favorite, mix things up a bit, it’s going to separate you. So people actually take those 20 minutes to talk to you about you or your product.
Frank Beard: Here in Boston, imagine going to an office meeting and how fun would it be if you had catered in coffee from both Dunkin’ and Cumberland Farms? That in and of itself would start some fun conversations because those are two brands that people love. And you say, “Cumbie or Dunks?” And that starts a real argument. But that’d be fine. I mean, that’s a real thing that could happen.
Genevieve Babineau: One other question I have again—you know, my background was in local restaurant marketing—and so often these national brands are trying to figure out, “How do you kind of de-chain the chain? How do you connect with that local community, drive traffic back in, or identify and target big sales opportunities outside the four walls?” Do you see c-stores investing—other than that woman who is doing the tasting—do you see any c- stores investing in a sales team or people kind of getting out and pounding the pavement in the community?
Frank Beard: Everyone’s got their own approach but I think a good example would be Yesway. Yesway is interesting because they acquire convenience stores and convert them to Yesways. They’ve done an absolutely amazing job of trying to become part of that community. Where a lot of their stores are located are more rural areas. That store might have a real presence in the community and now it’s changing brands. So they essentially want to come in and throw a party when they open the store and have a celebration there. They’ve done a really good job trying to integrate themselves in the community. I know when they created their coffee program, what I heard is that they did blind taste testing on all the different coffees that they were thinking of including because you know, you’re in a rural area. It’s a store that can’t do a Rudders– or Wawa-style coffee offering, where you’ve got all these choices. You have to kind of limit it a bit. But they basically built the coffee program off of listening to the customers and that was a smart move.
Genevieve Babineau: Always a smart move. I think it’s really interesting to hear those stories because I never knew there was so much commonality between the restaurant industry and the c-store world. I think of those restaurant openings where you bring the mayor, you’ve got the red tape, you’ve got the local school marching band coming out. You used to have balloons and get the whole community involved. This c-store is creating just one more opportunity for [the] community to come together and that’s what’s so magical about the whole food service industry.
Frank Beard: A really interesting thing—so during Hurricane Irma, I went down to work out of their state operations center. Gas Buddy actually crowdsources fuel availability during [the] hurricane, so people can know where stations do or don’t have gas. We get a lot of that data from retailers who submit it to us, which is really cool. One of the things I noticed down there is even in a time of crisis, the convenience store is the hub where people are coming together to talk because they’re waiting out a hurricane or that’s the gathering place. C-stores are the last [to] close [and] the first to open. That’s just where people come together.
The best brands integrate themselves into the community effectively. I remember there’s an operator I know in another town. The best Mediterranean food in that town is at his convenience store. When he was creating his food, he can cook anything, but he did taste tests for like little ideas that he had at the counter and decided he’d just go into whatever the customers liked the most. They decided on Mediterranean, so that’s what he got into. He had some outdoor seating, but he had customers walk over and say, “Do you mind if I just bring a bottle of wine over, and we hang out and have some food outside?” “Yeah, go ahead.” They built it on the back of their community by essentially working together and listening to them.
If you go to Miami, El Carajo is the place to go eat and they have a fuel canopy outside. It looks like a stereotypical gas station but you go inside and you have chefs walking around in full chef uniforms and white hats. You can get a bottle of Penfolds Grange or a Grand Cru. You can spend a couple thousand on a bottle of wine there if you want to, honestly. They’ll have magnums of different ones that are really hard to find. But an amazing restaurant I had—it’s a high-end tapas restaurant, but I had a seared octopus. I had filet. I had all of this and this was in a c-store. I talked to the owners, I think it was one of his sons—the person in charge of marketing there. They really have no marketing budget there. They don’t even spend any money on marketing. This has all been through word of mouth in their community and maybe the most they’ve done—I think he said they might have sponsored something at a high school. That’s about it. These are just community stores.
Genevieve Babineau: When you build sales relationships, you create that evangelist following. The results are exponential when you’re able to create that response in the community.
Frank Beard: In some of the larger chains though, it’s a little trickier with some of them. I think where they’re really succeeding—in terms of integrating into the community, even as a chain—is by hiring good people. This is an industry with a lot of turnover. I mean, retail in general is, right? Let’s be honest.
Right by the Iowa State Fairgrounds, I think the guy at that counter—I think I’ve seen him for like the last 20 years there—knows everybody in town. You walk in and you’ll see him just greeting people by name. And this is at one of our major chains in our industry. But they’ve got people like that and they’ve got such a good company culture. They treat their employees well. I mean, no one is ashamed to say they work at a QuikTrip at all because why would you? It’s a good company.
Genevieve Babineau: You’ve got pride in that brand.
Frank Beard: This is a challenge for QSRs though—because let’s be honest, we’ve all had that negative experience with bad employees at [a] QSR, or they’re supposed to be open at 2:30 in the morning. It says so on Google Maps that they’re supposed to be open and the employees have just shut it down. Because I’ve dealt with that, or they can’t get your food right, or whatever.
Hiring good people is just one of the best ways to differentiate yourself and the leading c-store brands really truly get this, and they’ve invested a lot into their employees.
Genevieve Babineau: And the smart QSRs, who really see the value—not just in staying in their own lane and focusing on their own channel, but who are seeing these other industries: how they’re growing, how that’s going to affect their business, and again getting involved with companies like GasBuddy. So I think personally, it’s really exciting for me to see the overlap between these two industries. I love what you said about it being a $650 billion industry that no one knows about and I want to thank you because after today, we all got to learn a lot more about it and your passion is just incredible.
Frank Beard: Yeah, it’s honestly a really fun industry. They say, when you dig deep enough, anything gets interesting. But once you dig into this industry, it really gets interesting. There are so many layers and so many facets to it and it’s a lot of fun.
Genevieve Babineau: Yeah I promise you that on my next road trip, I’m going to be calling you to have you tell me where to go. We’ll go check out some catering.
Frank Beard: Well if anybody wants to know more about it, definitely follow me on LinkedIn. That’s like just where I share most of my stuff now.
Genevieve Babineau: Thank you so much for joining us, Frank.
Frank Beard: Yeah. Thanks for having me on the podcast this. This was fun.
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