Single Store Owner

APR 2016

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APRIL 2016 / singlestoreowner.com / 33 concurred. "Ensure you have other categories that drive customers to your location (hot and frozen dispensed beverages, sweet and salty snacks, etc.), and stay on trend with dispens- ing systems (Coke's Freestyle, Pepsi's Spire, Cornelius Pro Touchscreen, etc.) that offer visual appeal, more variety and customized flavor offerings." Hot, Hot, Hot There can be no argument that hot coffee is the leader in the c-store dispensed beverage arena. Ac- cording to the CSNews 2015 Industry Report, hot coffee generates 74.4 percent of all sales in the hot dispensed beverages category. Indeed, a profitable hot dispensed beverage program is widely seen as the foundation for the success of a foodservice program overall. "The profitability of the category gives the retailer a great deal of flexibility," said How To Crew panelist Mathew Mandeltort, vice president of foodservice strategy for Naperville, Ill.-based convenience distributor Eby-Brown Co. "It allows the retailer to focus on quality rather than engage in counterproductive waste-control practices that lead to declines in sales." Oftentimes, a retailer might be "penny wise and pound foolish" by keeping coffee that should have been disposed of to save a few pennies, when in fact they are losing money in the process, according to Mandeltort. One factor that is having a pro- found impact on the entire hot beverage segment — including coffee, cappuccino, latte, hot chocolate and, to a lesser degree, hot tea — is technology. Multipurpose hot dispensed beverage systems and Keurig-type single-serve ma- chines now dominate the retail landscape. "It seems like the next generation is go- ing toward single-cup machines that grind and brew coffee on the spot," observed Mur- phy USA's Prast. "Right now, the technology is slow and doesn't always offer the size of cup the customer wants. But as the technol- ogy improves, this could easily be the next potential refreshment customers, noted Larry Miller, president and founder of Sanford, Fla.-based Miller Management & Consulting Services, also a How To Crew member. Miller, though, added one important caveat: Keep your dispensers current. "If you have the same equipment and offer from 10 years ago, then chances are you have already lost most all of your dispensed beverage business to a competitor," he said. While convenience stores face an enormous amount of fierce competition in the foodservice arena from most other channels, c-store operators can win the war for the dispensed beverage con- sumer by offering their customers more variety than the competition. "Offering Pepsi, Coke, Dr Pepper and local fla- vors at the fountain gives c-stores a huge advantage over QSRs [quick-service restaurants] that only offer Coke or Pepsi products," explained How To Crew re- tailer Chad Prast, Murphy USA Inc.'s senior category manager of fresh foods and dispensed beverages. "It's the same with frozen beverages. QSRs that do dabble in frozen may only offer a couple variet- ies," Prast continued. "But c-stores can offer eight varieties of FCBs [frozen carbonated beverages] and four more of FUBs [frozen uncarbonated bever- ages]. That truly gives customers lots of choices." So, how does a c-store operator determine the optimal number of dispensed beverage brands and flavors to offer, without getting an advanced degree in differential calculus from M.I.T.? It's not as difficult as it may first seem, our How To Crew assures. "You do it the same way you do with every other product selection and space-to-sales ratios in the cold door. Try to carry everything that has market share, and try to get out front of new product intro- ductions," advised Miller, acknowledging the "new" piece is the hardest part because keeping up on new products and new equipment can be time-consum- ing and expensive. "If you want to sell all of the major brands, then you are going to have to own your equipment," continued Miller. "And that means you are respon- sible for maintaining the equipment. You also have to keep on top of the quality issues." Oh, and don't forget you are in competition for the cold dispensed dollar with virtually every food- service establishment in the immediate area. So, it is imperative that you offer consumers a point of dif- ferentiation from the competition, and then educate them as to why they should buy their cold dispensed beverages from your store. "That's where the differentiation — variety and customization — comes into play," Rutter's Krebs Foodservice 201: Call to Action Obesity has had the biggest nega- tive impact on bottled soft drink sales across all foodservice chan- nels over the past decade. But this hasn't been the case with dispensed beverages. Still, make sure you of- fer something for everyone. Dispensed juices? Energy drinks? Iced tea? Iced coffee? Always keep abreast of new products being of- fered in the dispensed categories, such as SoBe, and vitamin- and mineral-infused teas. Always be on the lookout for the next big thing.

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