Feb 27, 2017
10:28 am

Cost, Complexity & Competitive edge: The 3 C’s of Choosing a C-Store Food Model.


One of the seminar topics being offered at the 2017 CARWACS U Show in Toronto is ‘FOOD SERVICE EXCELLENCE: WHICH MODEL IS RIGHT FOR YOU?’ This is a subject CTM regularly discusses with clients. Here are some insights that we’ve learned that may inspire some conversation and questions at CARWACS.

In the increasingly competitive c-store business, owners are not content just to fill gas tanks. Money is to be made by filling bellies as well.

Chris Midbo works closely with independent c-store owners to provide options and advice around food service program. Midbo is a territory manager with Western Refrigeration, a food service equipment supplier that operates across Canada. Over the past six-years, he has observed a pronounced shift away from do-it-yourself (DIY) food offers in favour of a branded in-store quick service restaurant model.

“Unbranded programs provide higher profit margins, but do not have the drawing power of branded QSR offerings. Having a Tim Hortons or A&W logo on your building attracts new customers. Whereas a fried chicken or pizza program is more of a value-added offering for existing customers.”

That does not mean you should take the option of an unbranded food offering off the table.

If you have limited competition and are doing high sales volumes, a generic, in-store pizza or chicken program can boost sales through a complementary product offering – without the high entry costs and franchise fees.

So, which food model is right for you?  One way to look at it is to follow our 3 C’s: cost, complexity and competitive edge.

1. Sandwich and baked goods offering (prepared offsite)

Cost: $7,000 – $13,000 + electrical and plumbing

Complexity: Simple

Competitive Edge: Low

For a minimal investment, you can partner with offsite suppliers to provide a fresh food offering that can be sold at your c-store without a whole lot of effort or investment on your part. All you need is 4’ or 6’ open faced cooler. These coolers run on 208 V service, so you may require the services of an electrician. Coolers over six-feet long require a floor drain as well.

According to Western Refrigeration’s Chris Midbo, it is worth investing in an open-faced cooler versus a closed-door cooler.

“Having that glass barrier between the customer and your product will cut sales in half.”

2. Hot food program (prepared onsite)

Cost: $4,900 – $27,000 + electrical and plumbing

Complexity: Medium to Complex

Competitive Edge: Medium

 C-stores have a variety of options when it comes to a do-it-yourself hot food program. Hot dogs, corn dogs, taquitos, fried chicken, chicken wings, chicken strips, pizza by the slice and paninis are but a few examples.

Midbo says the equipment itself is not very complex, and is quite economical.

Roller racks range between $2,500 – $5,000. They run on standard 115 V service and do not require ventilation systems. Midbo says customers today expect more than just standard condiment packs. He recommends a fresh condiment station with built-in cooler storage (starting at $2,500).

Hot Air Ovens provide a fast, affordable solution for cooking pizza, wings, chicken fingers and baked goods (approximate cost is $9,000 – $10,000). For larger volume output, Combi Ovens are recommended (averaging $15,000 and $17,000). In both instances, you’ll require a hot case (running between $6,000 – $10,000).

Venting is not required for fire suppression, but do help in reducing steam, heat and odors. Electrical and plumbing upgrades may or may not be necessary. Any time you are handling food, health code will dictate you have a multi-compartment sink on premises. There may also be specific requirements around approved flooring and finishes.

“While the equipment itself is very easy to install or operate, running a hot food program can be somewhat complex. It will involve additional staffing and training. If the owner-operator does not have food service experience, it is a good idea to hire an experienced manager to oversee the program,” Midbo says.

Western Refrigeration works closely with customers to recommend the equipment and hot food offering that will work best for its customers and help them avoid common mistakes.

If you will be substantially renovating an existing store to accommodate a hot food program, it is a worth involving a professional design and engineering firm to develop blueprints for layout, wiring, plumbing, venting, storage and HVAC approval.

3.  In-store QSR franchise

Cost: $150,000 – $1.2 million (all in, excluding franchise fees)

Complexity: Medium to Complex

Competitive Edge: High

There is a reason national brands can command those high franchise fees. Quick service restaurant chains are familiar, proven entities that bring business into your store.

While franchises are shown to consistently attract more customers than an unbranded food offering, they also require a higher up-front investment – and those franchise fees come out of your bottom line.

We found the following information in an excellent article on Central.ca: Foodservice 101, by Kelly Gray.

According to Edward Khediguian, Senior Vice President Franchise, for Montreal-based GE Capital, the average spend to introduce a QSR franchise into a Canadian c-store ranges between $500,000 to $1.2 million.

These costs include design, construction and all equipment. An experienced professional engineering and design firm with QSR experience would be engaged to tailor the franchise’s National Design Standard to your building, municipal bylaws and applicable code requirements.

Drive-throughs are becoming the norm rather than the exception, which involve a physical alteration to the building structure and traffic planning approvals. Once a design is approved and all permits are in place, construction can begin.

Let your brain guide your decision. Not your stomach!

Choosing which food model is right for you must be considered in context of your overall business plan. Don’t make your decision without considering what the competition is currently doing (or may do in the future).

That is a lot of information to digest, but we hope you found it helpful.

The numbers provided are meant to provide a rough guideline. To learn more contact CTM or our partners at Western Refrigeration. If you get a chance, take in the ‘FOOD SERVICE EXCELLENCE: WHICH MODEL IS RIGHT FOR YOU? session at CARWACS  2017 in Toronto.