Australian Convenience Store News | Sandwiches & Subs Sophisticated convenience

Australian sandwich customers have only recently discovered that they can get a healthy sandwich from a convenience store, and now that theyíve made the discovery, theyíre looking for more variety. Until recently, the basic sandwich from the corner shop has met the standards of most Australians, but the convenience store sandwich market is a fast growing one.

The pre-prepared fresh food at Australiaís service stations and convenience stores has until recently fallen short of the range and sophistication offered in the US, but this is now changing for the better. Two companies, Australian Convenience Foods (ACF) and Subway Development are offering their customers fresh and healthy alternatives to the traditional white-bread sandwich.

As Australian consumers become more ëtime-poorí, they are looking towards more convenient solutions. Convenience store customers were historically young males, 18-35, who exclusively bought hotdogs and hamburgers. Now convenience store sites are attracting a far broader range and age group, such as women office workers.

"No-one likes waiting in line for 10 minutes in their 30-minute lunch break to have a sandwich made to order," says Ian Kerr, National Operations Manager, ACF. Convenience stores provide a quick and easy alternative to this. "Convenience store sandwich products can be eaten quickly and without mess in your car, which is an important factor in the marketís success."

In recent times, there has been a move away from standard sandwiches by Australian consumers and a gravitation towards more healthy offerings. According to Mr Kerr, "People are now looking for greater variety of breads and more healthy fillings."

ACF has responded to the changing taste of Australian consumers by introducing two branded sandwiches. Daily Express is a more traditional sandwich brand, including old favourites like ham, cheese and tomato on white bread. Connoisseur is an up-market range of sandwiches and fresh rolls including bagels, focaccias and pita breads, which are increasingly in demand.

Both Daily Express and Connoisseur sandwiches come in sturdy PVC envelopes that are sealed for freshness. The shelf life of both products can be 3 to 4 days if correctly made and suppliers take stock on a sale or return basis. All ACF products arrive in a chilled state via refrigerated vehicles that adhere to the Australian Cold Chain Code of Practice. "Australian consumers know that pre-packaged sandwiches have been made in a commercial kitchen," says Mr Kerr, "and are probably safer from a health perspective than buying from the corner deli".

ACF is proud to be the only national supplier of branded sandwich products and to have an Australia-wide distribution network that even covers remote areas. There are still, however, plenty of pocket sandwich manufacturers in Australia who service their immediate area. "Australian consumers are now realising that sandwiches can be eaten right throughout the course of the day," says Mr Kerr, "and as such they have a much broader appeal."

This is a view shared by Nicholas Dimas, Director of Franchise Development, Subway NSW/ACT, who believes that Subway has to some extent been responsible for the re-education of the Australian consumer. "The perception was that you didnít eat sandwiches at night," says Mr Dimas. "That has changed in the last few years and Subway is now a late night destination spot."

Subway Development is committed to providing a quality, healthy product to its convenience store customers. Subway specialises in branded submarine sandwiches, either six or twelve inches long, and made fresh in front of the customer. Convenience store customers trust Subway sandwiches because of the strong branding. "The integrity of the product will be maintained for a long time," says Mr Dimas. "Our customers can buy a sub on the way to work and itíll still be fresh by lunchtime."

According to Mr Dimas, simplicity and freshness are the secrets to a well regarded sandwich brand. "Subway keeps it really simple. Essentially we serve subs and salads made to order, cookies and drinks, and breakfast is an optional program. But the thing that really sets Subway apart from other traditional and pre-made sandwiches is that we bake our own bread, every four hours. There is always fresh bread on the premises."

All other ingredients like meat, cheese, and salads (including capsicum and olives for the gourmet) are delivered refrigerated and ready to use. Subway also caters to the vegetarian palate with a patty made from chick peas and carrots served hot which is very popular.

"Australians are definitely becoming more health conscious," says Mr Dimas, and Subway has responded quickly to the push towards healthy sandwiches and rolls. In January 2000, Subway launched its low fat campaign, "6 with 6", which is 6 subs all with 6 grams of fat or less. Subway expect this launch to be a big success in Australia if the US launch two years ago is any indication.

Recognisable Brands
Australian consumers associate very strongly with brands and many of Subwayís competitors have failed simply because they neglected to brand their sandwich product.

"People are looking for our product because weíre a strong brand," says Mr Dimas. "History shows that the most effective stores are ones which display prominent signage and have prominent position in the convenience store."

In service stations, Subway signs appear on the main pylon beneath the oil company logo, so the customer sees the two brands together. Subway signs have proven to be a drawcard because itís easy for the customer to pull in and get petrol and meal items at the one location.

In Australia, Subway has 30 franchises in convenience stores with another 20 in the development stage. Of its 14,000 outlets worldwide, 2,500 are in convenience stores and truck stops which translates to 15-20% of all Subway stores. In the US, where Subway isnít competing with corner sandwich shops, it has retained an 87% market share.

There are 240 Subway outlets in Australia at present and there will be 250 by the end of 1999. "Subway is the fastest growing franchise ever, let alone in the food industry," says Mr Dimas. "This is because our development is regionalised."

Becoming A Franchisee
Subway deliberately franchises to convenience stores in order to gain market share, to build brand awareness, and to make it convenient for their customers. Subway wonít sign an exclusive deal with an oil company or distributor because that limits them to locations which particular oil companies or distributors distribute to. Instead, Subway deals with oil companies or distributors by having the oil company or distributor be the franchisee or by leasing space from the oil company or distributor and putting in their own franchisee.

There is a low start-up cost in becoming a Subway franchisee, $80,000 to $130,000, and royalties on sales amount to 8%. It is also low maintenance in an operational sense. "We donít cook, which makes it easier to operate and clean," says Mr Dimas, and a Subway franchise will only take up 30 to 50 metres within the store.

Convenience stores have an easy transition if they become a Subway franchisee because there is no crossover of staff between the service station and the Subway store. Subway has additional staff working longer hours and its stores are well lit and open late, which is good for added convenience store and service station security.

The Subway business complements the service station business in that Subway is busiest at lunch times when the service station is at a quiet period. There is also the dinner trade, optional breakfast trade, which feeds off service station business and also late at night. So, depending on the location, convenience store trade can be strong right throughout the day.

Subway franchisees are put through a two-week training course in Brisbane where they receive training in all aspects of design, construction, operation, systems support and employee training. This is good preparation for the time when all Australian food service operations will be formally Hazard Analysis Critical Control Points (HACCP) approved. These are uniform rules concerning staff training, storage, cooking and cooling, personal hygiene, food preparation, and cleanliness of premises.

In terms of promoting healthy food service operations, the Australian service station and convenience store industry is being educated all the time. Mediums like the National Association of Convenience Stores (NACS) Convention in the US let operators see first-hand an operationís success. The convention runs seminars and workshops where service station operators have the chance to speak to oil companies and distributors.

There is no denying the huge fresh sandwich market in Australia, and thereís also no denying that Australian tastes are becoming more and more adventurous. Even so, the development of the convenience store sandwich market will take time and effort if it is to adapt to Australian eating habits and tastes. Unlike the US, distributors of pre-packaged sandwiches in Australia are competing with corner sandwich shops, and Australians seem reluctant to give this up. For these reasons, the Australian sandwich market as compared to the US market may prove a slightly tougher nut to crack.