Cautiously optimistic, convenience store operators are banking on long-term investments in prepared food and dispensed beveraGes
Playing the Long Game
From a distance, the current state of the foodservice category is rosy, and convenience store operators are doing everything right. Sales and profits are up, with most retailers predicting continued increases throughout 2024, and companies are investing in new technology, equipment and menu innovation to ensure success in the years to come. However, taking a closer look reveals obstacles that even the best-designed food program can’t ignore. Economic difficulties and concerns about the future are prompting consumers to tighten their purse strings, rising costs have slowed profit growth, and employee recruitment and retention remain a struggle, according to the findings of the 2024 Convenience Store News Foodservice Study. Here, we examine the current state of convenience foodservice and consider what’s ahead for this important in-store category.
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Breakfast sandwiches are the most commonly available prepared food item at c-stores
(offered by 80% of retailers) despite dropping 10 points from last year.
Prepared Foods Offered
Breakfast and lunch continue to be key dayparts for convenience stores with foodservice, as surveyed retailers estimate that 26% of their category sales come between 6 a.m. and 8:59 a.m. and 30% come between 11 a.m. and 1:59 p.m.
Foodservice Sales by Daypart
— A surveyed retailer
Hot, cold and frozen dispensed beverages are offered in varying degrees,
but available at the majority of stores. Cold dispensed generates 25%
of total foodservice revenue while hot dispensed stands at
22% and frozen dispensed at 12%.
Eighty-one percent of respondents report that their foodservice sales overall increased in 2023,
up from 72% who said the same in last year’s study. Just 13% say their 2023 sales decreased.
Foodservice Financial Trends
2023 vs. 2022
Costs, though, were also on the rise, with 91% reporting their costs increased in 2023.
This marks the third year in a row that more than 90% of surveyed operators
reported rising costs.
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Playing the Long Game
Operators report that the breakfast daypart saw the biggest sales growth in 2023.
However, they predict lunch will see the most growth this year.
In response to rising costs, the vast majority of c-store
operators have instituted price increases.
Have You Raised Foodservice Prices in the Past Year?
Looking ahead, operators expect recent financial trends to continue. Nearly eight in 10 expect their foodservice sales
to increase in 2024, and 72% expect their foodservice profits to rise.
Anticipated 2024 Foodservice Sales & Profits
New limited-time offers and promotions,
and improved internal culture and employee buy-in were cited as reasons retailers have positive expectations for the year ahead.
Convenience store operators aren’t wavering
in their commitment to foodservice as a
tentpole of their operation. For the past three years, the average square footage devoted to the category has
stayed consistent at around a quarter of total store size.
Hot entrées experienced the most growth in menu presence over the last year, increasing 8 points compared to 2023. Hot dogs and salads saw the largest declines in presence, both falling 18 points, but are still offered by more than half of surveyed retailers.
On the dispensed beverage side of foodservice, hot coffee, carbonated fountain drinks and hot chocolate lead in availability,
offered by at least eight out of 10 retailers.
Dispensed Beverages Offered
Iced coffee saw
a big jump from last year, increasing 12 points and now offered by approximately
two-thirds of study participants. Other
cold coffee types saw double-digit growth
as well, including cold brew and iced specialty coffees, signaling that consumers are exploring new ways to get
their daily java.
Large operators are significantly more likely than small operators to have hot cappuccino/latte/espresso items among their dispensed beverage offerings.
It’s no surprise then that rising costs ate into foodservice profits last year: 58% of operators say their profits increased, down 8 points from a year ago when 66% reported higher profits.
Their approach varies, however. Just more than half of study participants (55%) report that they’ve raised prices across the board, while 39% raised prices on only some items.
When asked what could thwart their optimism, 73% of study participants pointed to hiring and retaining employees as the biggest obstacle to foodservice success. Although this figure dropped seven points year over year, it is still the most cited challenge by far.
Biggest Obstacles to Foodservice Success
Additionally, more than half of retailers point to supplier price increases (55%) and consumers having less disposable income
(52%) as other top obstacles to foodservice success.
In a positive sign, the percentage of surveyed retailers citing the supply chain as a major obstacle dropped significantly, falling from 56% in last year’s study to 21% in this year’s study. Difficulty
in finding the right products/programs also fell
10 points to just 18%.
SALES
PROFITS
