Australian Convenience Store News

In the days before McDonalds and KFC and their kind, convenience food was the only 'fast' food, and that meant pies, sausage rolls and sandwiches. With the advent of the new breed, the old favourites disappeared into the background, but now convenience is back. ASS&CSN turns the spotlight on the new-age sandwich

Take two slices of bread, add some filling and you have a meal. It used to be that easy but like everything in life, it isn't any more.

When it comes down to a good business proposition, the simple sandwich isn't. While there's no doubting the demand is still there, issues such as labour costs and the complex minefield of food preparation regulations (including HACCP) force a new look at the sandwich as part of a food offering.

As such, it would appear that the old-style 'made-on-the-spot' sandwich is disappearing, at least as far as the C-store is concerned - but there are plenty of new options. Franchise specialists such as Subway are becoming more popular, as are fresh-made, daily-delivered products of various types but first there comes a choice of another sort.

"The food service offer is important and sandwiches are part of that mix," says Jeff Rogut, national marketing manager for 7-Eleven Stores, "but you have to decide if a food service offer is important to you.

"Traditionally the C-store has not had a particularly good image when it comes to serving food. Changing that image requires commitment and hard work - the product has to look fresh, healthy and desirable and must be presented that way.

"But how do your customers see your store? Do they see you as a convenience store or a petrol station? When they drive up, does the site present as clean and attractive or are bags of cow manure and firewood the first things they see. If they do, then you will be struggling for credibility as a food outlet."

Sandwiches and subs are very much part of a full food offering and according to Ian Kerr of Australian Convenience Foods, there's no doubt the industry is starting to realise the importance of this familiar staple as a potential cash flow item. ACF's core business is in C-stores, as a national supplier of sandwiches and other products.

Fresh & Convenient
"Our business is in C-stores and there's been 30 per cent growth over the last year. There are more open-fronted, chilled display units being sold because route has begun recognising the potential in this market - there's more space and equipment being allocated to what can be a very profitable part of the retail mix."

One of the biggest challenges facing the industry is changing the customer's perception from 'convenience' food - a desperation food choice because you're the only thing that's open - to a 'convenient' food, meaning the C-store is seen as a viable food outlet, a food destination, an alternative to the 'fast' food chains. It's not only the operator who is facing the challenge.

"Fresh food has to be fresh to be credible. The sandwich that is fresh today won't be tomorrow, won't look it and shouldn't be on display. That creates real difficulties for the supply chain," says 7-Eleven's Mr Rogut.

"Wastage is a big factor," says ACF's Ian Kerr. "Our products are out there on a sale or return basis because it's the best way to grow the market, but a lot of new suppliers will do sale only so the operator carries the wastage.

Fresh Means Frequent Delivery
"Sites want to display a range of products and consumers want the choice, but someone has to carry the wastage with a product that has to be seen to be fresh, and that is part of the cost.

"You have to have fresh products on display. Long shelf life is not part of the deal with these products, so distribution also adds to the cost. Fresh means frequent in delivery terms."

One option that can take all the hard work away from the operator is a Subway franchise. Subway is generally acknowledged as a world leader in the sandwich and subs market, with around 15,000 locations in 76 countries (300-plus in Australia) - including 3000 C-stores. There are two alternatives - either Subway will lease the space, run the operation and pay rent or C-store operators can invest and operate their own Subway outlet.

"C-stores represent 25 per cent of our business and we're certainly looking to increase that," says Jim Dimas, development agent (Southern NSW and ACT) for Subway Systems Australia.

Fresh & Wholesome Appeal
"The appeal for the consumer is a fresh, healthy alternative to more traditional fast food offerings - and we also have a low-fat range that we're promoting quite strongly. The product is made fresh for the customer, with fresh wholesome ingredients, and it is that guaranteed freshness that makes the outlet work for the operator too."

Aside from the sheer weight of experience that Subway brings to the market ("Subway is to sandwiches what McDonald's is to hamburgers"), it also has all the appropriate food handling requirements in place. That removes a major headache.

Subway is not the only alternative overseas. Some of the larger C-store chains are doing a custom-made offer - people 'build their own' sandwiches by ordering from a variety of menu options. The sandwich is put together under controlled conditions while they wait.

While it's true that one should never say never, our experts suggest our market simply isn't big enough to support that variation. The alternative is the pre-packaged product and there are a wide variety of suppliers around Australia. A pre-packaged product is more economical than 'made-to-measure' and also allows for maintenance of hygiene standards. It's an easy solution - but there are problems.

"The challenge for us as suppliers and the operator as vendor, is offering a greater variety of products, because consumers want choice as well as fresh," says ACF's Ian Kerr.

"There is a good margin in sandwiches if they're well managed but in this case 'management' covers a whole range of issues - it's a full investment in your 'food-to-go' area with lighting, equipment and hygiene as well as a variety of products.

Not Just a Lunch Offering
"It's also important to realise that sandwiches are more than just a lunch offering. You can have sales happening throughout the day - but that means a commitment to managing the product throughout the day and maintaining the presentation and the offering to a high standard."

Mr Rogut agrees, suggesting that in this case the term 'sandwiches' can also include muffins and pastries. Sandwiches, he says, are just part of a range of products that have all-day appeal.

"If we're interested in food as an offering, then we need to aspire to food service and that means insisting on cleanliness and attractive presentation throughout the store as well as the freshness and frequency of the products.

"We also have to remember that we have huge competition in this area, such as McDonalds and the rest. If our customers don't perceive us as a food outlet, if they're not happy grabbing a quick sandwich from us, they may be reluctant to buy other food items too.

"The challenge is to develop and deliver a quality product that gives the customers confidence that you're doing it right - and that goes for sandwiches and everything else you plan to sell."

Getting the Basics Right
The experts agree that whichever way you decide to tackle the sandwich bar - prepackaged, custom-made, or franchise group offering - it's important to get the basics right.

Do your research. Is food part of your existing offer? Do you want it to be? If so, have a look at your customers? Who's in your demographic - how old are they? Where are they from? What do they do? When are the peak times for food sales in your outlet?

If breakfast is your specialty and there's no demand for the rest of the day, there's no shame in having clear shelves later - as long as the entire food service area is sparkling clean with a sign saying there'll be more fresh items the next day.

The very worst thing for your credibility is less-than-pristine shelves holding the tray of tired donuts that's sat there all day, alongside a sandwich or two that have seen better times. Your best business will be return customers - but they won't be back if they keep seeing the same old products on display. If you've chosen food service as part of your mix, you have to get it right the first time, all the time.