The Gray Cat Blog

A comprehensive collection of blogs designed to assist small business owners and multiunit operators.

The Many Steps to a Successful Foodservice Program

Jun 01, 2023

As more and more consumers are craving healthier, locally sourced, and convenient foodservice options, convenience stores are in a race against time to capture this demographic or run the risk of becoming obsolete.  Gone are the days of simply relying on standard convenience store products to optimize profitable.  The consumer is demanding more.  But retailers face many challenges as well as opportunities when they decide to offer foodservice. 

We are not talking about a case of frozen burritos and a microwave here.  The consumer expects more.  So, consider the many facets of launching a foodservice program from brand development, floorplan layouts, equipment, menu development, vendor management, technology, operations, and marketing.  The consumer has many options outside of the c-store industry – think Chipotle, Panera, etc. – that, like it or not, have raised the bar.   It is time for your locations to offer a comprehensive foodservice program.  

Based on the demographics and competitive viability of your location, operators have basically three paths they can take:

  • Become a landlord – rent space in your store to a branded, foodservice operator and collect a monthly rent check.
  • Become a franchisee – Learn foodservice from a proven brand and become a franchisee.
  • Develop your own proprietary brand – Name it, design it, create the menu and run it as your own.

The first two options are relatively self-explanatory, option three is a little more complex, so let’s take a closer look:

The Proprietary Foodservice Route:  First on the list is determining the menu and how it is going to be executed – either grab-n-go or made-to-order.  This is not a simple decision and if you have multiple locations, the execution may vary from location to location.  One goal here is to develop a menu that minimizes the amount of ingredients from an inventory management standpoint.  The more permutations you introduce with your menu, the greater the complexity in operational procedures from inventory to product assembly. 

Does it Make Financial Sense?  I am always amazed at how many operators skip this step in the foodservice process.    I am a big believer in creating a separate P&L for the foodservice operation so you can judge its success on its own merit.  Remember, you could have gone the landlord or franchisee route, so it is important to know whether you are optimizing the 200-300 square feet you may be dedicating to the proprietary foodservice operation.  Included in the financial proforma should not only be the operational data points for the P&L but all the capital expenses (CAPEX) as well.  That way, you can determine your expected return-on-investment (ROI).

Configuring the Foodservice Offering:  There can be many options involved in the physical offering itself.  Whether the foodservice offer is within the four walls of the store; bolted on to the side of the building; or even free standing on the same piece of dirt; all these options are on the table.  So, the first step is to determine the floor plan with all the category adjacencies.  As I mentioned before, you most likely will have multiple versions depending on operational components (i.e., grab-n-go vs. MTO) as well as due to various size space allocations of the location.  The second step involves configuring all the equipment for the kitchen, make line, display cases and sanitation.  Operational efficiency needs to be the driving force in both floor plan layout and equipment configuration.  Lastly, consider all the technology needs for the foodservice operation to possibly include customer ordering kiosks; back kitchen bump bars, monitors, label makers, etc.; POS and integration into the back office; digital menus; and consumer-facing apps.

Foodservice Execution:  Now the fun part – execution.  Included in this area would not only be all the operational components from product recipes to product assembly to rotational inventory to packaging to sanitation – the list goes on an on – but all the merchandising and marketing strategies surrounding foodservice.  Foodservice can be a different animal in that not only are you trying to sell the products, but you must make the products as well.  That is a LOT different than simply opening a case of Snickers and putting it on the shelf.

Launching a foodservice operation can be an exciting and profitable initiative if you consider all the moving parts in advance of the launch.  You may find that to reach the promise land, you must invest in the process and people as much as the buildout and equipment.  Said another way, if you attempt to manage your foodservice operation like you do your c-store, your results will only be a fraction of their potential.  

Want more ideas?  For more information on Foodservice Initiatives, visit the Gray Cat Learning Series:

John Matthews, President & CEO, Gray Cat Enterprises, Inc.

John Matthews is the Founder and President of Gray Cat Enterprises, Inc. a Raleigh, NC-based management consulting company. Gray Cat specializes in strategic project management and consulting for multi-unit operations; interim executive management; and strategic planning. Mr. Matthews has over 30 years of senior-level executive experience in the retail industry, involving three dynamic multi-unit companies. Mr. Matthews experience includes President of Jimmy John's Gourmet Sandwiches; Vice President of Marketing, Merchandising, Corporate Communications, Facilities and Real Estate for Clark Retail Enterprises/White Hen Pantry; and National Marketing Director at Little Caesar's Pizza! Pizza!