How convenience store retailers are managing foodservice

June 30, 2010

Copyright © 2010 Balvor LLC. All Rights Reserved.

117 South Cook Street #339

Barrington, Illinois 60010

phone: 847.722.2732

fax: 847.382.1801

[email protected]

Presented at:

Foodservice Webcast Series

Participant Summary

HOW CONVENIENCE RETAILERS ARE MANAGING FOODSERVICE TODAY


Composition of Retailer Respondents(Retailers completed online survey between 5/12/10 and 5/31/10)

1- 10 Stores,

69%

11 - 50 Stores,

14%

201 - 500 Stores, 6%

500+ Stores, 3%

Number of Stores Operated(Percent of Retailers)

Top-Line Characteristics

• # of retailers: 97

• # of store represented: 21,914

• 1-10 store operator share: 69%

• Foodservice sales (APSM): $20,037

• Foodservice sales growth forecast: +2.6%

2

Q: How many stores do you operate currently?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


PERFORMANCE METRICS


Foodservice Dollar Sales – By Quartile(Average per Store Month*)

$38,930

$25,163

$11,366

$7,552

Top Quartile 2nd Quartile 3rd Quartile Bottom Quartile

4

Q: What are your approximate foodservice sales on an average per store day basis? (Includes all dispensed beverage, food prepared on-site, and commissary/packaged sandwiches) *Projected up to monthly figure based on weighted average response.Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


2010 Dollar Sales Forecast(Percent Change vs. 2009)

3.0%2.9%

2.6%

2.1%

1.7%

Cold Dispensed Beverages

Hot Dispensed Beverages

Food Prepared On-Site Frozen Dispensed Beverages

Commissary/Packaged Sandwiches

5

Q: What is your company’s dollar sales’ forecast in 2010 versus last year for each foodservice category? Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.

Total Foodservice

Mean + 2.6%


2010 Dollar Sales Forecast(Top vs. Bottom Quartile)

6.1%

3.8% 3.5%

2.9%2.5%

-1.8%

0.5%

-1.0% -1.2% -1.2%

Food Prepared On-Site Hot Dispensed Beverages



Frozen Dispensed Beverages

Top Quartile Bottom Quartile

6

Q: What is your company’s dollar sales’ forecast in 2010 versus last year for each foodservice category? *Estimated projection.Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.

Total Foodservice*

Top Quartile + 5.0%

Bottom Quartile - 1.2%


SHOPPER PERSPECTIVES


Demographics – By Quartile(Percent of Retailers Perceiving Increases)

46%

29%

25%

17%

13%

29%31%

33%

23%

4%

20%

16%

12%

16%

12%

Teenagers* Females White Collar Males Moms with Kids** Kids**

Top Quartile Mid Quartiles Bottom Quartile

8

Q: How have your demographics been changing over the last 12 months relative to the following shopper segments? *13-19 years old **Under 13 years oldSource: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


Shopper Interest In Healthier Products – By Quartile(Percent of Retailers Indicating “Yes”)

73%

61%

37%


9

Q: Are your customers asking for your store(s) to sell healthier product offerings? Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


GENERAL STRATEGIES


Strategic Focus – By Quartile(Index)

105105

104 104

100

98

95 94

100

9899

97

10099

101

100

95

9798

102

101

104103

106

Lowering product supply costs

Investing more in off-site

communications

Improving in-store practices and

standards

Upgrading in-store fixtures &

equipment

Expanding the product range

offered

Evaluating supply-side alternatives

Using more limited-time-only

items

Offering more value-priced deals


11

Q: How important are the following strategies in achieving your objectives in 2010? Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


Core Foodservice Equipment – By Quartile(Percent of Retailers Indicating “Yes”)

73%

64% 64%59%

50%

69%

33%

69%67% 67%

79%

30%

39%

75%

65%

Hot Cases Fryers Convection Ovens Open Cooler Fixtures Roller Grills


12

Q: What kind of equipment is driving your foodservice operations these days? Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


PROMOTIONAL TACTICS


Off-Site Communication Usage – By Quartile(Percent of Retailers Indicating “More” or “About the Same”)

77%

64%

50%

41% 41%36%

27%

67%

45%48%

39%36%

42%

27%

60%

35%

20%25%

35%

10%

15%

Local event marketing

Website Radio spots Newspaper inserts

Social media Billboards Text messaging


14

Q: How are you using off-site communications compared to last year to promote your foodservice offering?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


Pump Signage Frequency – By Quartile(Percent of Retailers Indicating “Monthly”)

50%

27%

41%

23%

32%

39%

21%

42%

21%

30%

25%

15%

30%

20%

25%

Food Prepared On-Site Commissary/Packaged Sandwiches





15

Q: How frequently do you leverage signage at the fuel pump to promote special deals or products available in-store?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


New Product Introduction Tactics – By Quartile(Percent of Retailers Indicating “Always”)

73%

36%

27%

23%

58%

36%33%

6%

50% 50%

15%

0%

In-store signage Suggestive selling by store team

In-store special deal Coupon for discounted or free item via coupon


16

Q: How often do you promote a new foodservice product using the following tactics?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


Combo Deal Duration – By Quartile(Percent of Retailers)

50%45%

20%

23%

12%

30%


Quarterly

Monthly

17

Q: How frequently do you change foodservice-related combo deals in your store(s), e.g., buy a beverage and a food item and save $$?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


Club Programs – By Quartile(Percent of Retailers Offering)

59%

41%

32%

23%

14%

58%

30%

24%

18%

6%

45%

25%

0%

15%

0%



Food Prepared On-Site Frozen Dispensed Beverages



18

Q: Do you offer a club program in any of the following categories, e.g., buy 5 and get your 6th free?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


ASSORTMENT TACTICS


Commissary / Packaged Sandwiches – By Quartile(Percent of Retailers Offering Products in Store)

95%91%

77%82%

97%

82%85%

91%

84%

47%

74% 74%

Sandwiches Salads & Sides Thaw, Heat & Eat Ready to Eat


20

Q: In Commissary/Packaged Sandwiches, what is the dominant branding strategy associated with your core offering in each sub-category?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


Commissary / Packaged Sandwiches – By Quartile(Branding Strategies Based on Percent of Retailers Offering in Store)

48% 48%

5%

38%

53%

9%

25%

63%

13%

Proprietary/Self Branded

National/Manufacturer Brand

Wholesaler/Control Branded

Sandwiches


55%

30%

15%

63%

37%

0%

44%

33%

22%




Salads & Sides


21



Commissary / Packaged Sandwiches – By Quartile(Branding Strategies Based on Percent of Retailers Offering in Store)

18%

82%

0%

29%

61%

11%14%

71%

14%




Thaw, Heat & Eat


56%

44%

0%

43%47%

10%14%

71%

14%




Ready to Eat


22



Food Prepared On-Site – By Quartile(Percent of Retailers Offering Products in Store)

77%

64%

100%

86%

79%

85%

97%

82%

47%

84%

95%

63%

Pizza Hot Dogs/Roller Grill Sandwiches/Wraps Bakery


23

Q: In Food Prepared On-Site, what is the dominant branding strategy associated with your core offering in each sub-category?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


Food Prepared On-Site – By Quartile(Branding Strategies Based on Percent of Retailers Offering in Store)

36%

57%

7%

39%

50%

11%

25%

56%

19%




Hot Dogs/Roller Grill


59%

36%

5%

47%

41%

13%

39%

50%

11%




Sandwiches/Wraps


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Food Prepared On-Site – By Quartile(Branding Strategies Based on Percent of Retailers Offering in Store)

35%

65%

0%

46% 46%

8%

22%

33%

44%




Pizza


42%47%

11%

41%44%

15%

25%

58%

17%




Bakery


25



Frequency of Limited-Time-Only Items – By Quartile(Percent of Retailer Indicating “Quarterly” or “Monthly”)

55%

45%

36%

32%

27%

52%

42%

52%

27%30%

16% 16%

32%

21%

16%

Food Prepared On-Site Commissary/Packaged Sandwiches





26

Q: How frequently do you introduce limited-time-only items onto the menu in the following categories?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


Introduction of New, Value-Driven Products(Percent of Retailers Indicating “Yes”)

50%

45%

41%

45%

33%

55%

37%

26%

42%

Food Prepared On-Site Hot Dispensed Beverages Commissary/Packaged Sandwiches


27

Q: Have you introduced any new products in the past 12 months that enable your store(s) to offer lower retail prices?Source: CSD/Balvor Foodservice Survey, Balvor LLC, May 2010.


Putting it all into context(What does this all mean?)

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• Work continually on improving core products and practices

• Expand ways value is delivered to the consumer

• Focus on reaching a broader set of your target consumer

• Increase visibility of food-related promotions at the fuel pump

• Motivate store visits and product trial via special deals

• Leverage new products to maintain interests in offering

• Drive demand for new products by removing barriers to trial

• Remember it takes time, commitment, and resources to become a top performer

Copyright © 2010 Balvor LLC. All Rights Reserved. 29

Notable Public Accomplishments

White Papers

• Are Retailers Doing Enough? Preventing Underage Access to Tobacco

at Retail, Center for Responsible Tobacco Retailing, Inc., 2009.

• Accelerating Cigar Profits Through an Increased Strategic Focus, John

Middleton Inc., 2008.

• How to Succeed in Convenience Retaill:A Practical Guide for Product

Suppliers, NACS, 2007.

Industry Research

• SKU Rationalization Survey, NACS/Balvor, March 2010.

• Motor Fuels Retailer Survey, Balvor/NACS, January 2010.

• State of Foodservice, Convenience Store Decisions, 2008-2010.

• Private Label Trends in Convenience, NACS, 2008.

Current Industry Affiliations

• Convention and Events Committee, NACS, 2007 - present

• Supplier Advisory Board, Convenience Store Decisions, 2006 - present

• NACSPAC Member, 2008 - present

Biography

David is the managing partner of Balvor LLC, which is a sales and

marketing firm that provides consulting, sales support, research, and

analytic services to retailers, product suppliers, financial analyst and

other organizations.

Balvor’s services support various food channels, covering both

foodservice and retail classes of trade.

David has helped many leading retailers evaluate new retail concepts,

enhance annual category planning processes, and develop new

business support methods related to assortment rationalization, space

allocations, or branding strategies.

David leverages his experience to help product suppliers improve their

competitive positioning, trade programs, and category management

capabilities by better understanding what retailers’ value while also

benchmarking versus peer companies.

He’s also has broad experience with activity-based costing, channel

sales strategy, merchandising assessments, trade communication, and

custom analytical support for both consumer packaged goods and

foodservice industries.

Prior to founding Balvor in 2008, David spent 12 years at Willard Bishop

in various positions, including most recently as partner. David began his

career with The Levy Restaurants in operations for new store concepts

where he focused on beverage and financial programs.

David Bishop Managing Partner, Balvor LLC

P: [email protected]

mailto:[email protected]

How convenience store retailers are managing foodservice

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