Fresh food is one of the lowest margin products sold in convenience services. The short shelf life and spoilage when a product doesn’t sell by the best-by date result in waste and a higher cost at that location. It’s enough to convince some operators to eliminate this expensive segment in micro markets altogether. However, a number of operators swear by their fresh food programs, taking an entirely different approach. They invest in a higher quality of micro market food in order to set their companies apart and drive revenues, not just offer the customer a convenient onsite food option.
Long time operator Todd White, CEO of WeServ Inc., based in Chico, CA, has numerous micro markets, including many 365 Retail Markets. He works with a local baker to bring in fresh pastries daily. This is an added costs as any left unsold need to be counted as waste. Yet, micro market customers view these pastries as a special perk — drawing them into the space.
White also keeps a trendy menu in micro markets. He has a local caterer who specializes in incorporating the latest flavors and ingredients into entrees. He goes the extra mile which nets him additional sales.
The Diffendal brothers, Tom, Don and Rick, who run Laurel Foodsystems based in Pittsburgh, PA, stay current with micro market food thanks to an in-house commissary. It makes 7,000 to 9,000 sandwiches and meals a day to be served in Laurel locations, including its Avenue C micro markets. The benefit to the commissary is that it offers Laurel additional control. The prices can be adjusted based on ingredient costs and the markup on food bought from a third party is eliminated. The Diffendals can also control the quality of the food and react fast to local tastes. When quinoa was a popular ingredients, they started making dishes with that ingredient, easily staying on trend. Commissaries incur many costs and hard work, but the Diffendal brothers believe their in-house commissary gives them a competitive advantage.
Food drives other sales
Food is so important to micro market success that Ryan Harrington, Co-CEO of Royal Vending in Portland, OR, is willing to increase his waste in order to offer it in his 365 Retail Market micro markets. The reason is that because ultimately it increases his micro market revenues. He rarely sees a fresh food only purchase, recognizing that with an entree, his customers will also purchase at least one snack and a beverage. To encourage the food and ancillary purchases, Harrington keeps a low markup on fresh food items. Instead he balances the the margin with what he charges on other products.
According to the latest State of the Vending and Micro Market Industry Report, food represents 20.1 percent of micro market revenues for operators. That is substantially more than in vending, and supports the thought that food is an important segment. By investing in trendy products, and specialty items customers really appreciate, it can draw end users into the micro market making it a success all around.
