Almost Back

Recapturing lost coffee sales—and morning daypart traffic—just might pull foodservice out of the pandemic slump.

Almost Back

June 2022   minute read

By: Kim Stewart

Depending on the benchmark, the foodservice category in 2021 had a great year—or just an OK one. Compared with 2021 NACS State of the Industry (SOI) data, things are looking good overall, but throw 2019’s pre-pandemic performance in the mix, and it’s clear that things aren’t entirely back to normal.

Foodservice sales averaged at slightly over $50,000 on a per store, per month basis in 2021 and represented 23% of in-store sales, the largest component of total in-store sales and a 2.2-percentage-point uptick from 2020.

“We’re behind just a little bit,” Matt High, senior category sales manager for made to order, Sheetz, said of foodservice performance last year. “Compared with 2019, we’re still off about a sixth of a point of in-store sales overall as a percentage of sales.”

Turning around the coffee business might help.

Similarly, foodservice gross margin of 54.18% in 2021 gained 0.74 point over 2020 but was still 0.35 point lower than 2019’s gross margin.

“Turning around the coffee business might help,” High said, pointing to the subcategory that accounts for the second largest portion of foodservice sales at 13.2% behind prepared food at 66.7%. Hot dispensed beverage sales are still down 21% compared with 2019, highlighting the fact that the morning daypart hasn’t recovered for all retailers.

On an annual basis, foodservice sales increased 24.3% to $609,048 from $490,224 in 2020 but just 10.7% better than 2019’s $549,948 in total sales. Gross profit dollars increased 26.0% to $335,352 in 2021 from $261,828 in 2020 and represented 22.3% of total gross profits. Gross profit performance for 2021 eclipsed 2019’s total of $296,028 by 13.3%.

Prepared food turned in the strongest year-over-year sales growth in foodservice as shoppers in 2021 chose prepared food items more than the prepackaged commissary items they gravitated toward in 2020. Commissary—which enjoyed strong sales growth in 2020—saw the smallest increase in year-over-year sales.

Prepared food remains the largest sales and gross profit driver within the foodservice category, accounting for two-thirds (67%) of the category’s sales in 2021 at $37,333 on a per-store, per-month basis. This compares with nearly 65% of sales in 2020.


Across all foodservice categories for 2021, gross margin percentage was 54.18%, led by hot dispensed beverages at 65.95% and frozen dispensed beverages at 65.23%.

Commissary had the lowest gross margin percentage at 35.97%.

Within the hot dispensed beverages category, sales of coffee at c-stores in the NACS SOI data set fell 4.5% in 2021 relative to 2020, while cappuccino rose 18.9%, and hot chocolate sales jumped 48.2%. Gross margin percentage is highest for cappuccino/ specialty coffee beverages at just over 73%, while coffee brings a 57% gross margin.

Benchmarking against 2019 data, though, most hot dispensed beverage sales are still down. Coffee sales on a per-store basis were 45% lower in 2021 compared with 2019, and cappuccino sales were 68% lower in 2021 compared with 2019.

Consider expanding breakfast into other dayparts.

Over on the soda fountain, carbonated cold dispensed beverage sales have remained relatively steady over the past two years, representing 63.8% of category sales, and seeing a 5.3% uptick in sales in 2021 compared with 2020 and a 4.2% increase over 2019 sales. Other cold dispensed beverage sales (which include iced coffee/cappuccino, cold brew, kombucha and others) climbed 61% in 2021 compared with 2020.

In the frozen dispensed category, non-carbonated and carbonated beverage sales both grew in 2021 by nearly 30% and carried strong margins of nearly 60%. Compared with 2019, however, frozen carbonated beverages sales are 43% lower, but non-carbonated sales are 34% higher than before the pandemic.

“We’ve seen a little bit of transitional movement between frozen carbonated (still the biggest part of the subcategory) and frozen non-carbonated (which is growing), creating some gross margin wins for us,” High said. 


Commissary makes up the smallest percentage of sales within foodservice, but the subcategory has become an engine for growth over the past two pandemic years. Commissary subcategory sales in 2021 climbed more than 47% on a year-over-year basis. The subcategory’s sales are split across ready-to-eat meals (roughly $900 in sales per store, per month), sandwiches/wraps (roughly $800 in sales per store, per month) and thaw/heat/eat meals at nearly $650 per store, per month. Of note: Sales of sandwiches/ wraps increased nearly 21% in 2021 vs. 2019.

“I suspect that you all have gotten into this business over the past couple years to provide meals for folks to take home,” High said. “And we’ve met that need. To me that’s a great opportunity, and that’s going to drive the commissary business for the next several years.”

The gross margin percentage for commissary subcategories remains lower than other foodservice categories at 36.2%, although sides and salads carry gross margins of more than 44%. Compared with 2019, all commissary subcategories were up sharply.


Prepared foods and commissary remain a terrific opportunity for growth for convenience retailers, High noted. “Convenience still has a substantial opportunity to keep shopper spend, especially that middle shopper spend,” he said. Data from the 2021 NACS Convenience Voices survey indicate that more than 1 in 10 c-store shoppers surveyed are looking for a meal for now (12.4%) or to take home (9%) when they visit a convenience store.

Convincing consumers to stay on site, though, is a challenge as 28.4% of c-store shoppers surveyed said they planned to buy a quick-serve or fast-food meal somewhere else in the next 30 minutes. “They are coming in, they are standing with us, we are looking at them eye to eye, and they leave and plan to go to McDonald’s, Chick fil-A or somewhere else,” High said. “They may even buy a soda from us. Why?”

We’ve seen a little bit of transitional movement between frozen carbonated and frozen non-carbonated, creating some gross margin wins for us.

It’s mainly due to a lack of variety or not having the specific food items that shoppers want. “Out of nine responses, six of them are telling us that we have an opportunity with our assortment,” High said. “I don’t know about you guys but 30% seems like a huge number to dive into.”

Besides competition from QSRs, other challenges that foodservice operators need to manage over the next year include supply chain snarls, labor issues, daypart growth and foodservice variety.

When it comes to the supply chain issues and out-of-stocks that have plagued all of retail, High advises category managers to identify opportunities for replacements and substitutions. “We should always be on the lookout for other products,” he said.

Pay attention to food waste. “You can’t afford to lose it now, especially when you’re paying more for it.” Think about using the same components across multiple offerings to reduce waste.

The current labor shortage has big implications for foodservice. Inflation is outstripping the benefits of higher wages, so get creative with incentives to keep your workforce. Things to consider: same-day pay models, flexible schedules for students or four-hour midday schedules for working parents, free or discounted nearby child care and even pet insurance.

What to do about dayparts and expanding foodservice offerings?

Dayparts are still tilting toward evening foodservice, but that doesn’t mean that those customers only want snacks or dinner items.

“Consider expanding breakfast into other dayparts. Look at how you can meet the customers’ needs where they are when they are there,” High said, sharing that Sheetz offers most of its traditional daypart-specific favorites all day.

Highlight promotional pricing like happy hour offers or everyday low prices to tout value. Offer fresh fruit as a signal that foodservice offerings are also fresh. Develop regional or locale-specific food items, plus restricted diet options to expand the menu appeal.

“We are still missing some pre-COVID shoppers,” particularly people who used to stop by regularly for coffee and dispensed beverages. “Reach out to those customers and tell them that you miss them,” High said. 

Kim Stewart

Kim Stewart

Kim Stewart is NACS editorial director and editor-in-chief of NACS Magazine. She can be reached at kstewart@

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