The Fresh Foods Goal
I think everyone would agree that SEI’s goal of building fresh foods sales to 20 percent of overall store sales is a great strategy. It will help us make up for shrinking margins in other critical categories that we’ve depended on in the past, and it will help give us an edge over the competition. While we have the desire to accomplish this goal, it’s going to require a huge team effort from both sides to get the job done. We will also need large investments in infrastructure and some changes in the operational culture at the store level, as well as at the corporate level.
A good place to start would be to educate franchisees on how they benefit from growing fresh foods sales. Storeowners need to have tools that show how increasing another 20 hot food items or selling five more pizzas or selling six more sandwiches impacts their bottom lines. We need the tools to keep an eye on true gross profit after writeoffs, how to make choices between different available SKUs, and how to optimize our fresh food assortment. We also need a step-by-step plan with the right product mix and a road map of how to achieve the 20 percent goal.
In terms of infrastructure, more needs to be done to prepare our stores to be food-friendly destinations. It’s been said many times, but it can’t be said enough—SEI needs to invest in our stores. When you go to the competition, their stores are up to date; they look like foodservice destinations. When you come to our stores, many of them look dated. That’s a big mind block for our customers. Our guests look at us as hot dog and beer destinations rather than some place they can go to enjoy a quick lunch of sandwiches, salads, or pizza. As much as SEI is investing in opening new locations and buying existing chains, the company should not ignore the existing stores and hope that the customer won’t notice. Fresh food is a high margin business, and we are required to make our guests feel comfortable with the appearance and cleanliness of our physical plant.
SEI’s plan for uniform offerings should be reconsidered. In downtown San Francisco, for instance, you could sell a bunch of sandwiches, but in another area chicken wings may be a big seller. It’s tough to have a uniform fresh foods policy for the whole country. SEI should allow franchisees to customize their fresh food offerings to fit what their customers want.
We should also have different fresh food offerings for each part of the day. If we are to make fresh foods 20 percent of our sales, we can’t just rely on lunch sales. Selling chicken wings and some sandwiches at the lunch rush won’t get us there. We need to have attractive offerings in the morning and mid-day as well as some evening offerings. We need to get more creative to cover the entire day. Field consultants can help us by providing us the tools and assistance we need to analyze how the fresh foods business is growing. We could then tweak it and make some individual decisions at the store level. This way we could focus on what products are working and stop wasting resources on items that aren’t.
Clearly some stores will do phenomenal food volumes and some can’t. In those that can’t, to keep pushing the franchisee to concentrate on fresh foods is punitive and counterproductive. Let’s turn those stores into beer stores, grocery stores or tobacco stores, whatever caters to their customers. The emphasis should be on determining which stores can do well with fresh foods, and in the stores that can’t, customize each store to cater to the exisiting customer base.
There should be no question in anyone’s mind that we should be in the fresh foods business—our survival depends on it. But we need a cultural change. Cleanliness scores have gone up, and we are getting some training on food handling, but SEI needs to give franchisees a little more flexibility in how to present their products and more flexibility to decide what products to carry for their particular area. SEI needs to trust the franchisee to do the right thing.
In 2012 we did not see volumes of change in 7-Eleven’s fresh food business. We trust SEI’s fresh foods team, with Kelly Buckley as vice president of Fresh Foods Innovation, and we feel they have great ideas, but SEI also needs to provide the proper remodeling support we need to move forward with fresh foods. Franchisees in general have a wait and see attitude about what is going to happen, but we are really waiting for some big-time resources and a huge refreshment of our store base.
Convenience is our ultimate advantage, and we can fill the demand for freshness and healthier choices—healthier than QSRs are currently serving—but let’s speed up the plans!