Supermarket and convenience stores face greater challenges when it comes to operating successful foodservice operations. The challenges revolve primarily around the fact that these operators have so many areas that demand their attention.
They are also consistently being challenged with new government regulations and mandates. This combined with the fact that these industries are volume driven and produce razor-thin bottom line margins, makes it difficult to dedicate time to study the necessary foodservice best practices.
Driving Success in the Foodservice Industry
At PFSbrands, we focus primarily on providing top quality support to our retail partners. We help our retail partners drive more top-line sales, become more profitable, and we help them to become more successful overall.
Not unlike the supermarket and convenience store business, the foodservice business is tough. However, the overall gross margin capability within the foodservice segment is far greater than almost any other department or product that can be sold in these retail segments.
While supermarkets and convenience stores face many challenges, they also have a very unique opportunity to compete aggressively with the stand-alone QSRs and Fast Casuals. By spreading overhead across numerous departments and having numerous ways to draw and capture customers, supermarkets and convenience stores have a distinct advantage.
However, I know from experience that too many of these retailers either fail or do not maximize their success with foodservice. Why? Because the foodservice business is very different than merchandising groceries and candy. Like many industries, competition has mandated that supermarket and convenience store operators become better at what they do. Those that don’t will not survive.
10 Steps to Foodservice Success
Here are the 10 steps to developing and operating a successful foodservice operation within a supermarket or convenience store:
1. COMMIT – The most common mistake so many operators make is to implement a foodservice program without the necessary level of commitment. The owner and upper management must be committed, the store manager must be committed, and the entire foodservice staff must be committed. Without a commitment from all levels, the foodservice area will ultimately fail.
2. HIRE BETTER PEOPLE AND PAY THEM MORE MONEY – The deli or foodservice area should be one of your highest paying departments. The kitchen work is some of the hardest and most labor intensive work within any supermarket and convenience store. Unlike most other areas, this kitchen labor is preparing raw food for human consumption. Further, the person working the counter needs to be sales oriented, well groomed, and highly customer centric.
Your foodservice area has some of the greatest potential for growth and gross margins. Make this area where people strive to work. Make it a promotion to work in this area. You have to get the WHO right before you can move forward with a winning strategy. Watch the Jim Collins video as he talks about “First who, then what.”
3. OPEN BOOK MANAGEMENT – Why not provide your foodservice staff with an income statement so they can measure their success? If you are an owner, poll your workers one day to see what percentage of your revenue ends up on your bottom line.
You will be shocked at how high most people believe this bottom line number is. Why not teach these workers about how difficult the foodservice business is and what it takes to be successful? For more on open book management, see my prior post on this topic.
4. PROVIDE A STAKE IN THE OUTCOME – After the right people (WHO) know what to do, in other words they know the rules of the game and what is important to win, then you have to provide them an incentive to perform at the highest level.
Provide them the tools to do their jobs the best they can. Set a minimum amount of profit that the foodservice operation needs to be successful, teach them why you need to do this, then provide a profit sharing plan to EVERYONE in the foodservice operation that helps drive the success.
5. DEVELOP OR PARTNER WITH A SOLID BRAND – I believe branding your product and creating an appealing image around your food offering is far more important in foodservice than most any other product offering.
Your foodservice area must convey a professional image that consumers will have the confidence in purchasing. Many national and regional brands do a fantastic job with their in-store image. Many operators decide to take on the responsibility of creating their own brand and it can certainly be done. However, with a good partner that has the experience in creating brands you will likely create a better image and gain significant knowledge.
If you choose a branded concept, follow the advice and the procedures that are laid out for you. Too many operators want to ‘cheat’ or feel that they have a better way. The branded companies that are solid spend a significant amount of time on research and development. Feel free to offer suggestions for brand improvement, but always stay true to the ‘system’. If you can’t follow a system, don’t sign on with a brand.
6. CONSISTENCY – Choose products and brands that can deliver food quality consistency to the consumers. While I believe in sourcing high quality products, this may not always be the right choice for your store. One of my favorite foodservice comments is, “If you are going to serve a bad hot dog, make it the same bad hot dog every time.”
Regardless of what products you deliver, make it consistent.
7. ALWAYS FOCUS ON BUILDING MORE VOLUME – Too many operators install a foodservice operation and allow their volume to plateau quickly. After volume levels off, they stop thinking about growing sales and they start focusing on all the wrong things.
QSRs and Fast Casual concepts never cease in their effort to capture more market share. Along the same lines, PFSbrands doesn’t stop thinking about ways to help our partners grow their same-store sales. If you have a high quality product and you follow the steps shown in this article, there is no limit to your foodservice sales volume.
Like any business, volume cures a lot of ills. Continually focus on improving your top-line sales!
8. FOCUS ON KEY PERFORMANCE INDICATORS – Every foodservice operation should have some key performance indicators (KPIs) that are critical to overall success of their brand. In most every business, including foodservice, profit and cash flow are two of the KPIs that seem to always make sense. However, going back to my point in number 3 above (OPEN BOOK MANAGEMENT), too many operators do not educate their staff on the income statement. “Cash is King”!
Regardless of whether or not you open the books, be sure to provide some meaningful KPIs to your staff so they know what they are being measured on. Otherwise they are “playing without rules”.
9. MARKETING – Foodservice needs to be constantly marketed. Too many supermarket and convenience stores rely only on the people who are shopping their stores to purchase foodservice items. They do not work to develop foodservice marketing methods outside the 4 walls of their store.
At PFSbrands we provide marketing funds for all of our branded customers and we have a team of over 12 people (and growing) in our Marketing areas. Our Business Advisors, Business Developers, and our internal Customer Success team are all skilled and involved in the marketing process as well.
Supermarket and convenience store owners have a unique advantage when they market their foodservice offering to consumers who don’t already shop in their store. Once these foodservice consumers start coming into your store, they will most likely begin purchasing other products and they will ultimately change their shopping patterns. Your entire store will benefit.
10. CLEANLINESS & SERVICE – If you plan to be successful in the long-term with foodservice, you better be prepared to have a clean store.
This includes the foodservice area, the bathrooms, the entrance, and the entire store. Consumers want to purchase food in a clean environment where they know the food is cooked in the safest manner. If you are selling food that is visible, the display case must be spotless and the appearance of the food must always be kept full and fresh looking.
A Successful Foodservice Operation, Now It’s Your Move
Do you want to become successful with a new foodservice operation or improve the foodservice operation you currently have?
I know these 10 steps look daunting, but in reality, it’s not as complicated as it appears to be. Make a commitment, pick WHO, teach them, provide a reward system, pick a brand, build sales, execute, market the brand, and repeat the process day after day.
If you need help executing a foodservice brand within a supermarket or convenience store or looking for the best commercial kitchen equipment (like BKI equipment), look to PFSbrands or one of their fried chicken franchises for help. Our team thrives within these market segments. Here’s to you becoming more successful. Likewise, be sure to check out our series on Business Communication!
Copyright © 2018 Shawn Burcham. All Rights Reserved.