C-Stores Morphing into QSRs
Shifting far from the traditional c-store image as a destination for gas and cigarettes, two leading chains, Wawa and Sheetz, are strongly positioning themselves as eateries in a move to take more share from quick service restaurants.
Sheetz’s latest advertising campaign uses the tagline, "Just because we don’t look like a restaurant doesn’t mean we’re not one" with customers shown sitting at high-tables in a dining area.
Sheetz has been offering made-to-order sandwiches for 20 years with touch screen technologies now installed to speed the process. But Louie Sheetz, EVP of sales and marketing for the company, told Convenience Store News that the chain’s image as the "old gas station" is not gone.
"We are a great gas station, but we are also trying to make our image as a place with restaurant-quality food and beverages," said Mr. Sheetz.
The quirky ads, which target males ages 16-24, are running in the North Carolina market where Sheetz has stores with drive-thru windows. Newer stores will all contain special dining areas as part of a deeper focus on foodservice.
"Our roots are in quality," Mr. Sheetz said, "and giving people choices has helped pave our way into the quick-serve market."
At the same time, Wawa has redesigned its prototype, upgraded its menu and ramped up service to target the "fast-casual-to-go" opportunity.
Among the changes Wawa is bringing under its new formats is offering the smoothie and espresso business with a plan to soon bring in full-service barista service. Soup, stews, stuffed pretzels and more signature sandwiches are being added to the menu, along with in-store prep kitchens. Clutter is being cleared and better displays installed akin to a QSR along with digital signage and touchscreen terminals.
Discussion Questions
Discussion Questions: Are Sheetz and Wawa ready to compete with QSRs? Is this a strategy that makes sense for most convenience store operators?
Sheetz and Wawa are already competing with QSRs. While they are two of the most talked about c-store chains regarding their foodservice offer, the entire industry is focused on increasing its share of stomach.
The National Association for Convenience Stores recently held its State Of the Industry meeting in Chicago where it revealed that based on its survey of same stores 17% of inside (non-fuel) sales came from foodservice in 2011. This represents an almost 11% increase over 2010. C-stores have some unique advantages when competing against QSRs. They more often open 24 per day, are the source for snack occasions and have more transactions per day.
With the growing impact of credit card fees on gasoline net margins and declining sales of cigarettes c-store operators are realizing that they need to improve their foodservice offers. This is illustrated by the number of articles, seminars, etc., on foodservices in the c-store trade press and conferences.
Isn’t that what they’ve been doing for years? I find this question a tad ancient around the edges. What we are talking about is refinements in tactical executions, not really a major change in strategy. That said, the answer to the first question is, “Yes.”
The answer to the second question is, “No.” To successfully pull off this kind of strategy you have to have incredible in-store discipline, the right trading area dynamics and some real culinary creativity. “Most convenient stores,” might have one out of three of those bases covered, but that’s not enough to win the game.
Wawa rocks! Their store in Cambridge, MD is the go-to delicatessen in town, not just because the selection is broader than that of most QSRs, but also because it’s very fresh. This competition for the public’s food dollars is a win-win.
C-stores have been doing this for decades, and in many regions have been tapping into the local QSR market share. The food is closer to homemade in nature, as compared to the typical QSR.
C-stores need to build more drive-through windows to take this business to the next level.
C-stores have long been the largest “Hot Dog” outlet in the USA. They are a favorite stop for anyone in a pick up truck as they offer a complete line of staples (gas, beer, hot dogs and coffee). It is truly a one stop shopping experience. Seeing as hot dogs can be loaded up with nitrates, it is fairly safe eating. The roller grill was a godsend as even the lowest C-store employee could throw a few hot dogs on. Wawa is a different breed of cat and actually seems to want to run a suburban oasis (clean and relatively fairly priced) as opposed to the average C-store which seem more concerned with selling lottery tickets!
I’d say they’ve been ready for some time now. These two remarkable companies have driven each other forward competitively for years.
Sheetz’s amazingly efficient made-to-order sandwich business is enabled using touchscreen ordering kiosks that not only enable selection, but also up-sell. They are linked to an order fulfillment system behind the counter that assures accuracy and speed. Wawa has its own, similar system.
Both companies understand how profits and customer visit counts are influenced by speed of throughput during critical lunch and morning coffer hours. Perfect orders are an essential component of this formula — a standard that QSRs struggle to match.
Other highly competent C-store/G-store operators, like QuikTrip here in the Southwest, don’t even try to deliver a made-to-order option. It’s not easy — not without considerable investment in systems, facilities and people.
Wawa and Sheetz in their core markets are formidable rivals for the likes of Subway and Wendy’s.
The fundamental principle here is that shoppers come to all stores to get their needs/wants filled. Retailers typically look to the merchandise on their shelves to define who they are. Forward thinking retailers look to their customers needs/wants to define who they are.
Adapting Maslow’s hierarchy of need to this scenario, we find that air, water and food are the top 3 needs, period. So any store should have their “atmosphere” as their highest priority, followed by something to drink, and then something to eat. These are the first priority, even if you are in the shoes, ships or sealing wax business.
I notice that Nordstrom’s for example, is doing a bang-up job with a coffee kiosk at the entrance of our local store, and a really nice restaurant further into the store. I hope these operations provide reasonable direct profit, but if all they do is meet the highest priority needs of the shopper, encouraging them to buy more clothes, cosmetics or whatever, they will be properly servicing the first priority human needs.
So the continuing evolution of the C-store to QSR is an absolute no-brainer. One wonders how long it will take for the rest of the industry to follow the trend as far as Wawa and Sheetz, who have long been at the cutting edge of this movement.
On that score, most of my practice has been from spotting practices just such as Wawa and Sheetz, and then wondering why others aren’t finding ways to do the same things, possibly even better. Then I realize that the best way to know what people are going to do NEXT, is to see what they are doing right now. Mostly, they just keep doing the same things over and over, while the future happens to them, rather than being any kind of causative influence on the future. C’est la vie! 😉
Sheets and Wawa are already competing with QSRs whether or not consumers think of them as a restaurant or a gas station. When consumers purchase food at these outlets, the outlets are competing with QSRs. Whether other stores should follow this direction depends upon their consumers, market, and strategy.
This is a strategy that makes sense for the right convenience store operators. All need not apply.
Consumables, such as the type that Sheetz and Wawa are delivering, take a great deal of attention to detail. They require good volume, which flows from traffic. And, operations that focus on details, details, details, of speed, quality, convenience, and value make things successful for both c-store and the consumer.
The vast majority of c-stores aren’t equipped to follow-through on this model. It’s a highly profitable one for those who can meet the standards acceptable to consumers.
“Retailers typically look to the merchandise on their shelves to define who they are. Forward thinking retailers look to their customers needs/wants to define who they are.”
Nicely put Herb.
Said another way: Retail is fluid. Shoppers transact with any outlet that surprises and delights.
Or as we like to say, “retail ain’t for sissies.”
Sheetz has shown it is a leader in the c-store biz. Their innovative QSR concept is a hit at every location I have visited! A combination of clean stores, friendly service 24/7, great merchandising, quality products and exceptionally well lit stores makes Sheetz the brand to follow and learn best practices from.
The convenience store industry is long an industry that has two breeds of operators: those that are corporate operated facilities, and those that are franchise facilities.
With ANY c-store chain, I can immediately tell if I am walking into a corporate operated site or a franchise the second I walk in.
These chains that do a good job with food service: Sheetz, Wawa, Quik Trip (their new prototype does have some made to order food…): everything is corporate operated with tight controls. Same for Casey’s with their pizza and sub windows. And Maverik with their baked in store or take-and-bake prepared food options. Again, all corporate owned.
When you get 7-Elevens or Circle Ks with their franchise networks, smaller store buildings, and very loose standards, it becomes clear that this is an industry that has a long, long way to go.