Category's profit potential is good news for stores and suppliers
By Kathleen Furore
“The sandwich reigns supreme on menus across restaurant sectors, and is a standard in deli and prepared foods at retail.”
That statement, from the Packaged Facts report Sandwiches: Culinary Trend Tracking Series, underscores how important sandwiches are to today’s on-the-go consumers. Supporting the researcher’s conclusions are facts like this: 79 percent of U.S. adults have eaten a sandwich in the past seven days. That consumer behavior further highlights the role sandwiches play in today’s consumer dining decisions.
Those and similar statistics are not lost on convenience store retailers, who are in what the National Association of Convenience Stores (NACS) calls “the ongoing food retailing war” – a war in which foodservice, including the sandwich category, is proving a powerful and profitable weapon.
“Foodservice – a category that includes prepared food, plus coffee, plus fountain – is the fasting growing and most profitable segment of in-store [convenience store] sales,” says Jeff Lenard, NACS’ vice president of strategic industry initiatives. “These sales topped $42 billion in 2014 and were 19 percent of sales.”
Just as impressive, the foodservice share of margin dollars increased from 31.8 percent to 33.0 percent in 2014, with sandwiches performing especially well. “Overall commissary and packaged sandwich sales rose by almost 10 percent in 2014 while profits grew at
13.2 percent, delivering strong double-digit growth unusual in today’s convenience retailing landscape,” NACS data shows.
“Foodservice – a category that includes prepared food, plus coffee, plus fountain – is the fasting growing and most profitable segment of in-store [convenience store] sales,”
—Jeff Lenard, NACS’ vice president of strategic industry initiatives
Trends to Watch
As those recent numbers reveal, sandwiches can drive sales and profits for c-stores and the vendors who supply them. Understanding what hungry sandwich shoppers want is an important step in making sure the right products are in prepared foods cases and behind made-to-order counters.
Information from NACS shows that “fresh, easy and single-serve sandwiches are important to all demographics and of particular importance to Millennials.”
Packaged Facts says the demands for “flavor adventure and authenticity” are two of the most important consumer drivers in the sandwich market today.
Lenard calls variety and speed of service “the two biggest trends related to sandwiches at convenience stores.”
And Holly Veale, foodservice product director for McLane Company, a supply chain services company, says quality is the overriding feature that plays into consumers’ perception of sandwiches in the convenience market.
“We’ve conducted extensive research in the category over the past several years to understand consumers in the c-store space and where sandwiches fit into the grab-and-go mix,” Archbold reports. “Sandwiches are easily portable making them a perfect meal solution within the c-store space. Consumers are asking for quick solutions that fill them up, that deliver on speed, and don’t compromise on flavor.”
More and more, that flavor impact comes courtesy of enticing new flavors, which Archbold says consumers are increasingly willing to try.
The company’s new Bold Flavors line of sandwiches featuring “extreme flavors, premium ingredients and tempting variety” on artisan-style breads is an example of how Deli Express is meeting consumer demand. The line – which includes Roast Beef & Horseradish made with horseradish mayonnaise and natural horseradish cheddar cheese, Spicy Chicken with hot pepperjack cheese and bacon, and Smokehouse Turkey Breast with chipotle turkey, smokey chipotle sauce and smoked gouda cheese – debuted at the NACS trade show in October.
“The development of the Bold line was a consumer-driven initiative that we tested with 1600 consumers nationwide,” Archbold says. “When we launched the line at NACS, it was very positively received. People said, ‘Wow this is exactly what our customers are looking for!’"
"As c-stores work to appeal to Millennials and attract additional female consumers, the perceived quality of the sandwich offering must be high,” Veale says. “Suppliers such as Deli Express® and Advance Pierre/Landshire have done an excellent job over the past few years, raising the bar on extended shelf life sandwiches for those operators who are just not ready to handle a truly fresh, three-day sandwich.”
Deli Express, in fact, has invested significant resources to study shoppers’ preferences, according Bridget Archbold, the marketing manager who oversees brands and consumer insights for E.A. Sween, the parent company of Deli Express – the #1 selling sandwich brand in convenience stores nationwide.
Pre-Made vs. Made-to-Order
Fresh. Flavorful. Convenient. Prepared and made-to-order products can, when done well, deliver those three attributes that are driving sandwich sales.
The high-end Bolla Market stores in the New York metropolitan area, for example, have an in-store deli that offers made to order sandwiches featuring Boar’s Head products.
Pennsylvania-headquartered Wawa, Inc., includes “Ready to Go” sandwiches on its menus, along with
hot and cold hoagies and other sandwiches that are Built-to-Order®, selected via touchscreen.
Likewise, Sheetz – another Pennsylvania-based c-store chain – offers customers the option of customizing sandwich orders via a touchscreen ordering system or grabbing pre-made sandwiches merchandised in the front of each store.
Similarly, Utah-based Maverik is known for its BonFire foodservice line that includes sandwiches made fresh and packaged daily in-store.
But, according to Veale, the majority of c-stores continue to rely on pre-made, pre-packaged product. “While the pinnacle of convenience has embraced made-to-order foodservice programs, in the sandwich segment most c-stores are still offering pre-made sandwiches,” Veale says.
Pre-made is the specialty at Deli Express.
“We produce all ready-to-eat sandwiches,” Archbold says. “The sandwiches are shipped frozen to stores, and the MAP packaging keeps products like the Bold line of sandwiches fresh for an extended period of time. (The MAP items offer a 90-day frozen and 30-day refrigerated shelf life, while the company’s Hot to Go sandwiches, wrapped in proprietary paper wrapping, have a 14-day refrigerated shelf life).
“Extended shelf-life packaging offers store operators more flexibility,” Archbold notes.
The kind of products they carry, and the way they merchandise them, will determine how profitable retailers will be with their sandwich offerings. The vendors who can provide the best products – those that offer high quality, fresh, flavorful sandwiches and ingredients – will be those who, along with their c-store clients, will benefit most from this expanding foodservice retail category.
As information from NACS says, “As the U.S. c-store industry grows in store count, so do foodservice sales dollars – nearly tripling from 2004 to 2014. Foodservice is increasingly becoming the convenience store industry’s most profitable category, a business model shift and mindset that became necessary amid years of falling revenues from motor fuels and cigarette sales.”
When Quality Counts, Slicing Matters!
As sandwiches continue their climb up the retail foodservice ladder, c-stores must consider the quality, consistency and appearance of the products they stock. As Deli Express has discovered, the way the meats and cheeses for those sandwiches are sliced plays a key role in delivering the kind of products today’s demanding consumers seek.
“Slicing equipment is pivotal to our business,” stresses Nick Staab, manufacturing engineering manager at E.A. Sween Company, the parent of Deli Express. “A significant percentage of our products contain sliced meats or cheeses. Our recipes specify number of slices and target weight per slice. Finding equipment that can meet those demands while producing a clean slice with minimal waste drives our business.”
Hence the company’s reliance on Weber slicers.
“We have three 402s and one 404,” Staab says.
“Weber slicers provide a quality cut with consistent performance, minimal waste and minimal downtime.”