It's a question many C-Store owners struggle with: "Should I have a hot food offering? And if I do, should I choose a branded or non-branded product?"
To help shed light on the key points you need to consider, we solicited the insights of an independent consultant and C-Store specialist, Mark Walsh. Mark addresses both questions in this two-part interview.
Part I: The pros and cons of a hot food program.
Ask any hungry guest entering your store what they would prefer: a fresh grilled hamburger or a microwaved one? A hearty sandwich made on the spot and toasted... or a “modified” pre-packed sandwich with a seemingly eternal shelf-life thanks to the miracle of CO2?
The responses will overwhelmingly be in favour of a fresh, hot food offering. Yet, as an owner operator it all boils down to a business decision: risk vs. reward.
There are both Pros and Cons (although we prefer to use the term “considerations”), which we’ve listed at the end of this blog post. Before diving into these, let us look at the big picture.
According to independent C-Store Consultant, Mark Walsh, owners need to make the decision based on economics, demographics and the competitive landscape.
“To be successful in the C-Store business, you need to be Better, Faster and Different (BFD). Choosing the right hot food strategy can help you get there.”
Economics: “In determining if hot food is economically feasible, you need to weigh the cost of goods sold and delivery charges against your potential margins. This is what will ‘make it or break it’ for you,” Walsh points out. Naturally, construction and equipment costs also factor into the equation.
Demographics: Walsh advises you ask the following questions: “Who are my customers and what do they want? What is my potential customer base? Would a hot food offering appeal to them? What is happening in my market? What isn’t happening? Is there a need that isn’t being met?”
Competition: What other hot food options are being offered around you? And how can you set yourself apart?
Mark Walsh is a big advocate of partnering with branded products versus going it alone with a non-branded offering. Especially if you’re competing locally against established national franchises. (For more on this, see Part II of this blog post).
Now that you’ve analyzed the key factors around economics, demographics and competition, you can weigh the Pros and Cons.
Pros:
- Higher margins versus packaged food programs.
- Added drawing power (particularly with a branded food offering).
- A way to differentiate your business from your competitors.
- The chance to be a destination for breakfast, lunch and dinner.
- Enhances you ability to accommodate your guests’ everyday needs.
Cons(iderations):
- Infrastructure and equipment costs.
- More stringent requirements around health code.
- Workload: Can you manage this side of the business or will you need to hire a qualified 2IC (“second-in-command”) and empower him or her to make day-to-day operational decisions around your food offering.
- The need for additional staffing (cooks, servers etc.). Is there a ready labour pool in your market?
- Supply logistics are a make or break
- What is the frequency of deliveries?
- Is there an upcharge to deliver to your location (remote locations typically pay more)?
- Do you have adequate storage capacity to keep you going between deliveries?
Deciding whether hot food is right for you comes down to the business case for or against it. And since we’re talking about food, a strong “gut instinct” also goes a long way!
