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Jan 12, 2011

C-stores Well Positioned to Take Advantage of Restaurant Rebound

PrintC-stores Well Positioned to Take Advantage of Restaurant Rebound  

By Linda Lisanti

NEW YORK -- Consumers are returning to restaurants -- albeit cautiously -- and convenience stores are well positioned to capture share of stomach given the food quality upgrades and increased marketing that’s occurring throughout the channel, according to the authors of the just-released "AlixPartners North American Restaurant & Foodservice Review."

"A lot of convenience stores have taken advantage of quick, low price and healthy, and that’s a good combination for today’s consumers," Eric Dzwonczyk, co-author of the study and director in the Restaurant & Foodservice Practice of Alix Partners, told CSNews Online.

According to the research report, the restaurant industry is beginning to rebound after several years of sluggishness, however challenges remain. A continued downward trend in per-meal spending is expected over the next 12 months, meaning menu pricing will have to remain flat to continue the traffic rebound. In addition, traditional promotions and heavy couponing will continue to be the most effective ways of enticing new and existing customers to dine.

The good news for convenience stores is their food offerings carry that lower price point consumers are still seeking, said Adam Werner, the study’s other co-author and managing director, head of the North American Restaurant & Foodservice Practice for Alix Partners.

In fact, c-stores are doing such a good job of investing in foodservice that they’re making it quite difficult for quick-service restaurants (QSRs) to get ahead. On top of high unemployment taking its toll, QSRs are getting squeezed on both sides, according to Werner. Health-conscious consumers who can afford it are trading up to fast casual restaurants, while customers who used to frequent QSRs are going to c-stores instead now that their food quality has been upgraded.

A lot of quick-serve chains are still doing well, though, Dzwonczyk noted.

For 2011, he expects fast-feeders to focus on putting healthier items back on their menus, and make a greater push in generating late-night sales (after 10 p.m.). Meanwhile, Werner said he expects QSRs to continue with their high/low strategy, which has proven effective. He also believes breakfast will remain a major trend, and anticipates more innovation in that daypart.

"But as long as unemployment stays high, it will be harder for that to bear fruit," he added.

Given these factors, same-store sales for QSRs are expected to be negative in 2011. C-stores, on the other hand, can expect to see their food sales continue to grow, the researchers stated.

The research report offered the following c-store figures:

-- 5.5 percent same-store growth for c-stores, vs. 1 percent for QSR and fast casual.

-- 48 percent increase in promotional spending on food sales.

-- 43 percent increased food sales in 2010.

-- Top 49 percent of c-store customers purchase food at least once a month.






Find Reports & Data

CSNews 2009 Foodservice Study

Foodservice sales rose 7.7 percent on a per store basis in 2008, and prepared foods led the way with a 9.1 percent sales gain per store, according to Convenience Store NewsĂ˝ 2009 Foodservice Study.

CSNews 2010 Industry Forecast Study

CSNews' 8th annual Forecast Study includes a macroeconomic projection of market conditions in 2010 and the impact they will have on sales and growth of key convenience store categories: motor fuel, tobacco, malt beverages, confectionery, and snacks.

CSNews' 2009 Industry Report Study

Industry sales climbed 11.4% to an all-time high of $633.9 billion last year, according to the Convenience Store News 2009 Industry Report, the longest-running compilation of sales and operational results in c-store retailing. 40 pages, including 69 charts.

CSNews' 2009 Realities of the Aisle Consumer Study

Food quality and in-store execution greatly impact a consumer's choice to purchase and consume prepared food from a convenience store, according to the new Realities of the Aisle consumer research study conducted by Convenience Store News, in partnership with Nielsen Homescan. Study is 11 pages and includes 14 charts.

CSNews 2010 FIRST LOOK Report

CSNews' 2nd annual FIRST LOOK report provides convenience store retailers with a first glimpse of industry dollar and volume sales changes in five major product categories, based on data provided exclusively to CSNews by The Nielsen Co. The report includes sales, unit and regional market share percentage changes for packaged beverages, other tobacco products, candy and snacks, and beer.

CSNews 2010 Industry Forecast Study

The Great Recession has caused a fundamental shift in consumer spending. How will this affect the c-store industry and your business in the year ahead? The CSNews 2010 Industry Forecast Study provides a glimpse of the rough conditions ahead and critical insight for you to make the right buying decisions.

CSNews HR & Labor Study 2010

Likely owing to the economic recession, 40 percent of retailers responding to the Convenience Store News 2010 Human Resources (HR) & Labor Study said store associates turnover decreased over the past two years.


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