EMA Journal • Fall 2024 • Foodservice Profitability

Convenience store businesses can’t ignore the impressive profits foodservice can bring to their stores. With the category’s success continuously growing in the industry, many retailers are implementing robust programs of their own. According to a study from Technomic earlier this year, foodservice sales growth was “projected to outpace that of quick-service restaurants and foodservice overall in 2024.”

While foodservice sales can help c-stores, many aspects must be considered for overall success. Between recipe accuracy, cost control and overall inventory management, foodservice can be a juggling act. Fortunately, modern software solutions can help. Whether it’s controlling margins or increasing efficiency, modern software can act as a watchdog over your foodservice category and help ensure success.

Delivering a consistent food product is important for several reasons. For one, customers expect to receive the same product every time they order it, and inconsistency can lead to dissatisfaction. Recipe management is also crucial for making sure money isn’t being wasted. C-stores need to determine ingredients and portion sizes that make each item profitable but still offer customers a good value.

“Establishing your recipes and the portions [becomes] invaluable,” said Jeff Taylor, director of stores at Last Minit Mart, which operates six stores across Pennsylvania. “I’m able to look at our ham and cheese sandwich and see the results of the sales and the profitability of that sandwich.”

Once ingredients and portion sizes are determined, they need to be adhered to every time. If a pizza is sold and a foodservice worker uses an excess portion of cheese, margins will be off. This problem only grows when workers consistently use too much of an ingredient every time, but software will help point this out. In this case, mozzarella cheese will show a consistent shrink, and the software will alert management of a potential portion issue. “Once you know you have your recipes down and you’re confident that the portions are correct, you know you can focus on that human error,” shared Taylor.

Successful foodservice needs constant attention. “It’s not going to just run itself and solve all your problems,” said Taylor. “It still takes human interaction — that’s looking at the results, analyzing those results and figuring out why you got the results that you got.”

Despite the required attention, Taylor understands how valuable foodservice is for his convenience stores. “You’re looking at an item you’re making a 60 percent margin on; it’s the best margin in your store,” Taylor said. “When you do those analyses, you can see the dramatic positive impact foodservice has on your operation.”

Making sure you’re not overspending and having control of your inventory are keys to foodservice profitability. As mentioned in the previous section, it’s important for those preparing the food to adhere to set portion sizes. It’s also important to minimize waste as much as possible. It’s best to record waste through write-offs; this gives you visibility into waste and the reasoning behind it so that you can make changes to minimize it. Modern software helps by alerting you to any write-offs that fall outside acceptable parameters, allowing you to address issues quickly.

“We had excessive waste at some locations,” said a representative from Molo Companies, which operates 17 Big 10 Mart stores in eastern Iowa and western Illinois. “We reacted by adjusting our food preparation. We prepared more of the items that were selling and cut back or removed items that weren’t selling.”

Successfully tracking inventory to know which foodservice items are thriving and which ones aren’t selling is a huge advantage. If management sees that they are constantly running out of hamburgers in their sales velocity reporting, they can adjust inventory to match customer demand. Alternatively, if chicken is constantly being wasted, you can be notified, helping you make the proper production adjustments to maintain store profits.

With modern software, Rahn’s Oil and Propane, which operates 11 stores throughout central Minnesota, was able to focus on saving money. They took the guesswork out of their foodservice profits and were able to home in on the proper inventory that would make them the most profitable.

“We serve a lot of bakery items such as doughnuts,” shared Nicole Veldkamp, pricebook specialist at Rahn’s. “We discount doughnuts after they have been sitting out all day since they are not as fresh. Our reporting indicated that one store had many more discounts than the others. When reviewing the quantities being purchased versus the sales, we were able to adjust the purchasing at that location.”

Veldkamp continued, “We can also see cost discrepancies on invoices, so when the vendor cost does not match our pricebook, we know right away what we need to look into.” The software pointed out these opportunities, which had a direct impact on their bottom line.

Using your software’s available audits, reports and alerts is essential for maintaining your margins and understanding the true success of your foodservice category. Having software that allows you to analyze POS sales can inform your foodservice strategy greatly. “Managing your foodservice requires review, tweaks, more review and more tweaks,” Chris Kiernan, director of operations of retail/wholesale at ADD Systems, said. “That management is best done with a system that can help you report on all activity.” With POS sales analysis, you can understand the what and when of your foodservice items; you know what items are selling and when they are selling to help you maximize profit. POS sales and foodservice reports with data visualization can help you quickly see what times and items are optimal. These reports can also help you set your staff optimally with clear visibility into high and low store traffic hours.

Foodservice is a promising category that not only has a high margin but also the potential to differentiate your store and build a loyal customer base. But it isn’t a simple category. To manage it well, you need the proper accounting and tracking. This includes proper recipe setup, portion controls, attention to waste and focus on inventory management. Software is an invaluable partner in the endeavor with alerts and analytics that can protect margins and proactively keep your foodservice operation healthy and successful.

As convenience stores look at all the types of products they have to offer, whether it be foodservice, tobacco, fuel or any category, it’s important to realize that increased profits are only one part of the equation. Ultimately, serving customers the best you can is the most important part, and doing so can increase convenience store success. Software helps you achieve this. Whether it’s accurate recipe management that keeps your regular customers coming back, inventory control that keeps your store well-stocked, or efficient staffing to give the best customer service possible, software is an indispensable tool that improves the experience of everyone who enters the store.

by Levi Jiorle, Marketing Specialist, ADD Systems, EMA Platinum Corporate Partner