Now recognised as one of the fastest growing categories, foodservice saw a value growth of more than 21.4 per cent last year and has achieved double digit growth for six years running, according to data from the 2022 Australian Association of Convenience Stores (AACS) State of the Industry Report.
Theo Foukkare, CEO of AACS, says the growth of foodservice over the past two years alone has equalled $319 million in value or 36 per cent as convenience retailers continue to build momentum and provide everyday Australians with great quality food to keep them recharged and rehydrated.
“While the category margin was down slightly as retailers focused on stock availability and had higher waste which impacted margin, the dollar share of sales for foodservice has jumped from 6.9 per cent in 2018 to 11.9 per cent in 2022 and has more than doubled in value over that time,” said Foukkare.
“Take Home Food has had the exact same growth rate over the last two years, up more than 21.9 per cent, adding more than $94 million in value or 49 per cent over that time.
“Even though Bakery Snacks was the lowest growth category for the second straight year, it was still up significantly by more than 13.2 per cent versus 2021 which was only up by 0.7 per cent.”
Foukkare adds that retailers growing focus on foodservice is underpinned by the belief that convenience stores can become hubs for shoppers to eat, drink and spend time in, rather than simply a place to fill up on fuel and go.
“With electric vehicles on the rise, this is becoming more likely as shoppers can now be on site longer as they wait for their cars to charge,” says Foukkare.
“By becoming more of a ‘hangout’ where consumers can not only order food but spend time and even relax, convenience stores can gain more foodservice traction.”
Consistency is key
As an established food offering in the P&C channel, Bowser Bean’s foodservice has enjoyed continuous growth over the past six years, with take-away food up by 15 per cent compared to last year, says Managing Director Haydn Tierney.
“Over the summer period we saw increasing demand for our cold foodservice offer, which covers a traditionally healthier range, like salad rolls, salads and yoghurt and muesli,” explains Tierney.
“The demand was so noticeable that we found it a little hard to keep our displays full, which is always a great problem to have, so we started looking to increase the volume of these items in our stores.
“As we track into winter, we’re now starting to see traditional comfort foods like burgers, egg and bacon rolls, and muffins become very popular.”
Tierney says the company has adapted its foodservice offer by taking a network approach to the supply of products.
“We want to ensure we can offer the same high-quality product across our whole network,” he explains. “While that has meant reducing our lines in some cases, it means what we are offering is consistent, high-quality, and convenient fresh food.
“We continue to invest in training and upskilling our staff, but we’re aware of the limitations on our size, so our focus is offering products that can be replicated and resonate with the customer.”
Tierney adds that cost of goods and the ability to manufacture on site is essential when deciding which products to range.
“Everything on our menu is manufactured on site, so we need to make sure we can produce the food with minimal outlay and at a reasonable price for our customer.”
APCO Service Stations is taking a similar approach to ensuring its retailers are providing a consistent offer across the network says Karl Wilson, Senior Executive of Retail Operations at APCO.
“Over the last 18 months, we’ve adapted our food service offer to focus on consistency; making sure we have the processes and procedures in place that our retailers can execute,” says Wilson.
“We’ve been particularly focused on making sure that retailers are using the same recipes across the entire network. To support this, we’ve even expanded our food service team and our support office with more hospitality professionals who can provide hands on experience in that sector.
“Traditionally, the customer service base for P&C was around confectionery and cold beverages. Now, the opportunity lies in the high traffic flow of people who are very time poor, so we want to make sure that if we have an offer, that offer is consistent across our stores from Geelong to Mildura.”
While remaining true to APCO’s traditional foodservice offering, Wilson says the company is also expanding its range to include products to meet different dietary requirements of customers and providing retailers with the flexibility to tap into local markets.
“We are seeing more people basing their purchasing decisions on dietary requirements, so we’re providing products that are gluten free, vegetarian and vegan,” says Wilson.
“We’re also seeing different purchasing trends relating to geographics. While we have our core food range offering, we also provide our retailers with a level of flexibility so they can tap into the local market, so one site might find a pastry or pie is quite popular, whereas another might find a kebab style dish is more popular among customers.”
Café range contributes to growth
Maintaining high standards for its café and coffee range has influenced the growth of Jasbe Petroleum’s food offering according to Kerry Karavalakis, Retail Consultant at Jasbe.
“Our food service category has become a vital part of our store offering,” explains Karavalakis.
“We attribute this growth to our commitment in providing our customers with fresh on the go snacks and meals, including Daniels Donuts and pies which are baked fresh daily.
“We have also experienced a significant increase in our cafe beverages, such as hand scooped milkshakes, barista coffee and specialty Lindt chocolate beverages and double-digit growth in our barista coffee category.”
Jasbe has invested in new store fit outs that make the stores look and feel like a cafe or bakery, where customers can sit, relax, and recharge.
“While our food and beverage offer is a vital part of our business, it is not the only factor that influences customer satisfaction. We also care about creating a pleasant and comfortable store experience and delivering outstanding customer service,” says Karavalakis.
“We continue to maintain our high barista coffee standards and have formed strategic partnerships with Daniels Donuts, Laurent, and Lindt, to offer a variety of delicious treats.
APCO’s foodservice category growth has also been driven by its café range, according to Wilson.
“Our coffee sales are extremely strong, so we’ve invested quite heavily in training our barista staff and expanding our coffee offering, so we have more baristas on our sites so there is always someone on site prepared to make a coffee,” said Wilson.
A new approach to marketing
Bowser Bean has implemented a range of new marketing measures to broaden its reach, says Tierney.
“Bowser Bean has an incredibly loyal customer base, so our goal over the past 12 months was to increase our exposure to new customers,” he said.
“Along with our regular brand activations with our coffee vans and combis at events, we’re a lot more active on social media after recently partnering with a social media agency.
“Since we operate in regional communities in NSW and Victoria, we also invested in a regional television campaign that we believe will resonate with those audiences.”
APCO Service Stations’ has also adapted its marketing strategies to put foodservice at the forefront of its offering, says Wilson.
“Over the last few years, a lot of our marketing was traditionally around cold beverages and confectionery, but now foodservice is at the forefront of our offering,” he said.
“Following a recent burger promotion, we saw an increase of 40 per cent in burger sales – with 65 per cent of those sales not actually relating to the burger that was in the promotion. So, we’re calling out to our customers to let them know we have a wide foodservice offering.
“We’ve been in the market for quite a few years now, and have a large customer base, but we continue to adapt so we can target the next generation of customers coming through our doors.”
Tips for 2023
As retailers continue investing into better quality, freshly prepared food, foodservice is set to continue its stellar six years of growth in 2023.
“We understand the needs and expectations of our customers when it comes to fresh food,” says Karavalakis.
“Before committing to a product, we ask ourselves one simple question: would we eat it? Quality is our key driver. No one complains about price if the food and coffee is fresh and delicious.
“We understand the importance of getting our food and coffee right, as it builds customer loyalty and increases customer frequency. We will continue to expand our food for now and food for later offer over the next 12 months.”
Tierney says there is no silver bullet or magic product that’s going to help you win foodservice.
“Everyone is always looking for the next big thing, but the key is you have to be able to do something really well,” says Tierney. “It’s about finding a simple, delicious range and delivering it really well consistently.
“We’re in the game of convenience, so your food has to be available from open to close.”
This article was written by Lizzie Hunter for the August/September issue of Convenience and Impulse Retailing Magazine.