Competing with QSRs
When Peter Rasmussen, director of operations for Neon Marketplace, passes a QSR with a long line of vehicles waiting in the drive-thru, his first thought is, “How can I get a piece of that business?”
Neon Marketplace was founded in Cranston, Rhode Island, just four years ago. Currently, the chain has two express stores and two stores with drive-thrus. A third drive-thru outlet opens this month. All of them aim to challenge the success of big, branded fast-feeders, and one way management will do that is by offering drive-thru service.
Retail outlets with drive-thrus have been around since the 1940s, but they gained a newfound respect during the pandemic when consumers hesitated to leave their vehicles to shop or dine. Since 2020, drive-thru windows combined with mobile ordering technologies have become game-changers for foodservice operators, and they’re poised to play a crucial role going forward. “But we’re still learning,” Rasmussen said.
If convenience stores want to be part of the future, we have to be a destination – a place someone wants to be.
ENHANCE THE IMAGE
When planning new stores, Neon Marketplace strives to create a “foodcentric” atmosphere for customers and works toward that goal with a design firm that usually serves the hospitality industry.
“When you walk in our stores, the first thing you see is a real brick pizza oven baking artisan-style pizzas,” Rasmussen said. “You see fire and feel the warmth. The kitchen is open and right in front of you. On the right, you see fresh bakery, bean-to-cup coffee and made-to-order espressos.”
The pizzas are made with fresh dough produced by a local bakery and delivered to the stores daily. Rasmussen admits that the pizzas could easily be prepared in a rapid-cook oven, but “you don’t have the warmth of the fire. You don’t have the atmosphere. Now, more than ever, that’s important to us. If convenience stores want to be part of the future, we have to be a destination—a place someone wants to be.”
The York, Pennsylvania-based Rutter’s chain communicates the image of quality food even before customers take the first bite. “All restaurant managers wear chef coats as a symbol that we are not a typical c-store food program or QSR,” said Chad White, manager of foodservice, Rutter’s. “We are a restaurant within a convenience store, and from the top down, our culture is to push ourselves to continue raising the bar,” White said.
FOCUS ON FOOD
Iowa-based Kum & Go distinguishes its foodservice offerings from those of other operations by using fresh ingredients and clean-label proteins, a move that’s paid off. Consumer research conducted by Kum & Go found that 70% of consumers surveyed ranked the store’s menu higher in quality and taste than that of competitors, including QSRs.
“Everything is made to order, and since we have a whole store to play with, we’ve added items like crushed Takis on our Mango Pork Bowl or Stacy’s Pita Chips on our Falafel Bowl,” said Tracy Ging, chief marketing officer, Kum & Go. “Selection—both from the variety of flavors on our made-to-order menu, as well as the sides, snacks and our huge beverage case—is part of what differentiates us from QSRs, so we really leaned into that.”
When plant-based meat first came on the scene, Neon Marketplace wanted to add it to the chain’s menu. “But we wanted to do it a little differently,” Rasmussen said.
Neon Marketplace partnered with Plant City Express in Providence, Rhode Island. The self-described “first plant-based vegan food hall and marketplace” provides Neon Marketplace with plant-based wraps, burgers and other entrees.
“The program is doing very well,” Rasmussen said. “And when you pull the sales data, the product mix is interesting. It’s not uncommon to find someone walking out of the store with a plant-based wrap, two energy drinks and a pack of Newports.”
According to a Gallup Poll, 5% of U.S. adults describe themselves as vegetarian. That percentage is even higher among younger consumers, with 8% of 18 to 34 year-olds saying they’re vegetarian.
The Market stores based in Charlottesville, Virginia, have something for everyone. In addition to crispy fried chicken, premade sandwiches and traditional wraps with meats and cheeses, the program includes offerings for the vegetarian palate.
“We offer vegetarian options on our sandwich menu, as well as five different types of freshly prepared salads that customers can pick up or order on our app,” said Pat Pitts, foodservice manager, The Market stores. “We also have prepacked items in our cold cases—fresh fruit salad, cut up pineapple and watermelon and grape cups. We offer a variety of menu items that give our customers more options.”
Given that selection is one of our differentiators, we’re focused on how fast it is for customers to come in and place their orders.
UPDATE TECH AND INCREASE SPEED
There is no room for Luddites in the c-store business, and retailers must keep up to remain competitive. Current technology provides stores with valuable data while communicating with customers and speeding up service.
Inside Neon Marketplace, printed POS materials have been replaced by video messaging that promotes freshly made foods. Outside at the stores’ gas pumps, digital screens play videos of pizza production, tempting drivers to step inside, where they can order food from a digital touch screen.
“We’re in a world that’s digital,” Rasmussen said. “Motion pictures sell more than words. The millennials and Gen Zs are attracted to video content.”
In addition, Neon Marketplace will soon launch its rewards app so customers can order and pay in advance. Recent research from the Restaurant Friction Index, a PYMNTS and Paytronix collaboration, found that 41% of an average restaurant’s revenue is generated online. This revenue comes through digital channels, such as mobile apps, aggregators and websites, and exceeds the 32% in average restaurant revenue generated on site and the 26% of revenue generated over the phone.
Consumers expect to get their food fast and easily. The National Restaurant Association reports that 54% of adults say purchasing takeout meals or having food delivered to them is essential to their lifestyle. That includes 72% of millennial and 66% of Gen Z shoppers.
Like many c-stores, Kum & Go offers mobile ordering and curbside pickup to let customers order any place at any time without stopping to make a phone call. “Given that selection is one of our differentiators, we’re focused on how fast it is for customers to come in and place their orders,” said Ging. “By the time a customer is finished grabbing a drink from the cold vault and snacks for the day, their food is ready.”
The Market stores’ ordering app gives customers added convenience in placing orders and picking up their food. “The ordering app has been a significant addition, enabling more flexibility for our customers,” said Pitts. “It offers our full menu, as well as our catering platform.”
The Market Rewards loyalty program rewards repeat visits. “By signing up for the rewards card, customers get points to use for free food, gasoline discounts, free Market beverages and other incentives that are added monthly,” she said.
54% of adults say purchasing takeout meals or having food delivered to them is essential to their lifestyle.
PLEASE BE SEATED
In the past, c-stores nixed seating in favor of more shelves, freezers and products. But that’s changing.
Every Rutter’s store provides customers with a place to nosh, and some locations offer as many as 30 seats. “While the large majority of our customers are grab-and-go consumers, we believe that seating is important and allows us to ensure everyone has an enjoyable experience at our stores,” said White.
At TXB Stores, based in Spicewood, Texas, existing seating varies by store, but as the chain expands, new locations will have inviting seating, according to Ben Hoffmeyer, vice president of marketing and merchandising, TXB. “Already, some stores have a seating capacity for up to 40 people,” he said.
Some hungry shoppers at Kum & Go “really appreciate the chance for a respite from the car,” said Ging. “One insight we’ve uncovered is that no matter how portable or well-packaged the food, eating in the car is messy, and that’s part of what makes consumers feel bad about fast food. By design, we’re a fast option and by offering seating, we can be fast and a comfortable place to eat.”
According to a recent National Restaurant Association report, diners like outdoor seating. In a survey of consumers, nearly 40% said the option of outdoor dining would make them more likely to choose one eatery over another.
BACK TO BASICS
One of the most important things a retailer can do to compete with QSRs is to be consistent, said Rasmussen. “A lot of QSRs are successful because of consistency,” he said. “I can go to a McDonald’s, Chick-fil-A or Starbucks anywhere in the world, and I know what I’m getting.”
In addition to upping their foodservice game, retailers should ensure that each customer has a positive in-store experience.
“Our focus is to provide our customers with not only a place to stop for food but a place that truly provides a top-notch overall experience,” said White. “We’ve done this in many ways, from providing a restaurant-level foodservice program to enhancing our beer offering and even adding gaming rooms at 17 locations,” he said.
“The c-store industry has the ability to compete with and beat QSRs by focusing on our strengths,” said White. “We’re already a vital stop for drinks, lottery, fuel and more. Offering high-quality foodservice allows time-starved customers to make fewer stops during their day, which they greatly appreciate.”