Convenience Matters Intro:
[Music] You’re listening to Convenience Matters brought to you by NACS, whether it’s for food, fuel, drinks or snacks, about half of the U.S. population shops at a convenience store every day. We’ll talk about what we see at stores and what the future may hold for our industry.

Carolyn Schnare:
In the last half decade, sales of healthy and fresh products have continuously grown in convenience stores. Customers have grown to expect fresh fruit, frequently choosing lower calorie options on their visits and more retailers have increased their offer of fresh prepared foodservice items. Packaged, fresh, grab-and-go sandwiches, frozen-prepared items, and handhelds are more the norm than the outliers than they were a decade ago. Today, we’re going to talk about trends in customer buying habits for fresh foodservice. And also what the last 15 months have taught us that can become an opportunity for growth for retailers. Welcome to Convenience Matters, I’m Carolyn Schnare with NACS.

Jeff Lenard:
And I’m Jeff Lenard with NACS. And today we are talking about two of the bigger words we use here in our industry: fresh and foodservice. And today, we’re joined by Jac Moskalik, who is the corporate director of fresh and foodservice for Core-Mark. And Core-Mark for those who may not know, is a wholesaler who provides products to convenience stores in foodservice establishments. And also a couple of years ago joined NACS as one of the commitments to Partnership for Healthier America. So, both NACS and Core-Mark have demonstrated their commitment to fresh and to healthy and all those things that we’re seeing more with our customers. So welcome Jac.

Jac Moskalik:
Thanks guys. It’s great to be here.

Jeff Lenard:
So let’s start out, we know that the pandemic has been rough on business whether you’re a restaurant or whether you’re a convenience store with issues related to fresh and foodservice and some of the things initially what you could sell and what you couldn’t sell. But it’s also really changed…the pandemic has changed what people are looking for as we emerge fully from the pandemic with people out and about more. But we have seen some trends change over the last year and a half, and we know that smart businesses have gone about and reinvented the future as we navigate this pandemic. So what are some of the things that, that Core-Mark’s looking at to guide the future now that things feel a lot more normal related to equipment promotion processes and things like that related to fresh and foodservice?

Jac Moskalik:
During the height of COVID, I would say foodservice definitely experienced somewhat of a disruption. And so we saw reactions from both the retailer, honestly from the health department. And then obviously from a supplier standpoint, it’s how do you react to something like this? How do you a consumer feel more comfortable? How do you prevent that decline in sales? And so we saw all kinds of innovation stuff that we thought we would never see. There’s touchless dispensers for condiments, now, that Kraft came out with…they’re really cool, they started out in Europe, now they’re over here in the states. There’s individually wrapped products on roller grill I’ve never seen before. So that led to confidence from a retailer’s perspective, health department, that kind of thing. There’s reactive marketing display techniques. So for example, we created a conversion kit for roller grills so that the operator could actually have a foodservice offering at the height of the pandemic, as long as it was full service. We have packaging suggestions, signage on cleanliness or food stations. So we had all these different signs made up, whether it was floor graphics or signage that was on top of the actual counter so that a consumer could see that a retailer operator was actually cleaning their foodservice equipment properly and consistently, and that kind of thing, making them feel a little bit more comfortable, disposable, single-use gloves, disposable tongs, that kind of thing. All these things came to a height during COVID and I’m not necessarily sure that they’re going to go away anytime soon. but it’s it was really cool to see the suppliers innovate as fast as they did that usually takes six months to a year to come up with a new product. And they were quite fast to come up with solutions for retailers. So we’re pretty fortunate to have such a strong partner base.

Jeff Lenard:
Yeah. I noticed that went to a couple baseball games now that they have unlimited capacity. And so things are a little different first off you, when you order you use the app and you know, there’s less of a cash transaction, but also you were talking about the touchless mustard and mayonnaise and all that. And people were just standing around. It’s like, oh, that’s cool. So, you know, the innovation is surprising people, I think is a big deal when you hear the phrase like hygiene theater and it used to be foodservice theater. And just like, you want to have food on display and now it’s, you want to have food on display, but also how do they…how are you ensuring that the food feels safe to people as they look at safety as a big part. And we have seen, when we look at the NACS/CSX numbers – we already have April on the books – and it is enormous increase from April last year, which stands to reason because April last year was not a good time, but we are seeing massive increases in our industry year to year in terms of foodservice, something that we expect to continue. We also recently surveyed both retailers and suppliers, looking at some of the supply chain issues as we get through these bumps. And I would say about a third to close to half say, yeah, there’s, there’s different things that have been bumps along the way. But the one thing that came out is more so than ever, we are seeing that retailers are saying, suppliers are partners with us, and we are finding solutions together. And suppliers are saying the same thing. We are working more closely with retailers than we ever have. And you know, in some cases , this is about all channels and how Core-Mark works with all of them, but, you know, the convenience stores are really stepping up and working in making sure that it’s a two-way conversation that we’re looking out to each other. So, you know, I assume that you’re seeing that with your customers in terms of, “Hey, you know, we’re in this together, we ultimately serve the customer and this is how we’re doing it together.”

Jac Moskalik:
I would definitely say that fill rate was definitely disrupted during the height of COVID. And you’re absolutely right in how strong our partnerships were with our suppliers during this time. Communication was extremely transparent. It just became around solving for issues for the retailer, so that they were less impacted than they had to be. We tried to be much more proactive versus reactive. We continued to have conversations with our suppliers, with our retailers. We tried to be more as far as gearing up for summer and things like that, as far as projections, building inventories, having those conversations with retailers upfront so that we’re both set up for success for what they think is going to be a record breaking summer. So I would say that while COVID was definitely bumpy and painful, you’re absolutely right in saying that it strengthened all partnerships, whether it was with our retailers, because we were in it together, our supplier partners, because we were facing the same challenges. And what was kind of neat too is there was consistent messaging. So a supplier was just as transparent with Core-Mark as they were the retailer. And so then it just became as, as a team, like, how do we, how do we address these issues together? How do we come up with solutions and be better for it, for sure. So, yeah, it’s very fortunate.

Jeff Lenard:
And one more thing in our survey we asked what is the second half of the year promotion that is most going to impact your business? And Christmas was number two, the Christmas holidays, that holiday season. Number one was 4th of July, which is just upon us. So that tells me – tells us – that the work that you’ve done behind the scenes suppliers, working with retailers is really playing out because retailers are saying, “I’m confident about 4th of July as a big opportunity to really show that we’re back.”

Jac Moskalik:
I think if, just like Core-Mark, COVID gave us a little bit of time to kind of step back in foodservice and fresh in general. And it’s like, let’s look at our menu offering, are we offering our customers what they’re looking for? And then once the pandemic’s over, because we all knew it was going to end eventually, how do you get that consumer back in your store? And so I think this summer, we’re going to see all kinds of innovation at retail. We did at Core-Mark, we were able to take a step back and evaluate what we offer our retailers and so the retailers were able to do the same. And so I do think everybody’s planning for an awesome summer and it’s because they had time to reflect and make menu adaptations and innovate and, you know, create excitement in the store to try to attract and keep that new consumer that we all grabbed during the height of COVID. So yeah, 4th of July, like I said, I think that they’re predicting this is going to be a record breaking summer, so we’re really excited about that for sure.

Carolyn Schnare:
So Jac one of the things that I know back in the early days of COVID, I probably like most shoppers, we kind of turned inwards a little bit. We started cooking at home more reducing the number of grocery store trips. Like, so for my family, we would go, I would go once every two weeks. But there were stop offs in between – the top off trips, if you will – where I’d stop at a convenience store or some other quick in-and-out to grab something, because maybe I had a really cool new menu item that I wanted to make at home or try something else or maybe make more sour dough bread, right? But I didn’t do that for the record. I never made sourdough bread, but I made a lot of muffins as listeners have heard more than once on here. But there were certain things that people were cooking more at home and I have a feeling that people were going more to community stores and buying bulk items or not even bulk items, but things that they could take home and prepare or or even put in the freezer or the refrigerator for a couple more days down the road so that they could minimize those trips. And that might be something that stays and sticks beyond now. Maybe we all became smarter shoppers, who knows, but have you seen, did you see anything back in the earlier days or even now in the mid-days of COVID, and were you able to pivot what you were offering to convenience stores in terms of items to fit what retail consumers were looking for?

Jac Moskalik:
Yeah, so we call it like, we reference it like future consumption, kind of like, it’s not just a single-serve handheld type of product. But the bulk of my experience was actually supermarket and all data show that we were constantly losing the fill-in shopper, if you will, to the convenience channel and the dollar trade. And so when I came to Core-Mark, it’s like, we need a dairy set and we need a frozen grocery set because that shopper will buy it if we have it. And so we created those sets and then COVID hit and those categories spiraled, they were crazy. We had triple digit growth in certain areas, a fill rate – still experiencing – a fill rate disruption in frozen grocery. But yeah, those categories, they were all at double digits, at least in the refrigerated section. So I’m also over dairy and we call it deli wall or meat wall in another life. But yeah, those, those items continue to grow for us so much so that we actually have programs them now, just so that a retailer is more relevant and they’re considered proven basket builders. And during the height of COVID, we have effectively attracted that new shopper. The fill-in shopper now is more of a habitual shopper. They’ve identified convenience as definitely a secondary avenue for those types of products. And I am a firm believer if we continue to keep those products in the stores that shopper will keep coming into the store and building the basket for the retailer. So, yeah.

Carolyn Schnare:
Definitely. I think there’s a lot of COVID in all of its negative forms, certainly built a lot of loyalty or allowed retailers to become trusted partners. Like we said before, just like you’re partnering helping the retailers succeed, the retailers…or the customers look to the retailers and then up the chain. And I think also they’ve become very wise, they being consumers, about what the supply chain is. And I think, you know, we’re still, like you said, still hearing it on the news, you know, whether there’s not necessarily sometimes a shortage of this, but then an abundance of this – I certainly can find hand sanitizer just about anywhere you go these days – but, you know, there’s certain other things that you can’t always find. But, but that said, I think it sounds like you had some innovations that really could keep in a multiple-day setting, which is, which is good, like the fresh items that are, that are packaged. So like a sandwich, for instance, that, you know, in the past might have been on wrapped and ready to go, could have been, you know, kept for a day or two, both for the retailer side. And, you know, you get the safety aspect of it too, because you don’t know who touched that.

Jac Moskalik:
Absolutely. Absolutely. Yeah. We I would say refrigerated snacking, our new commissary program, we launched at the most perfect time. So perceived safety of fresh products, it was pretty much one of the only food offerings that a retailer could have, whether it was frozen or refrigerated, if it was packaged, it was completely acceptable to offer that food offering. So a lot of retailers depended heavily within those categories to grow their food sales while foodservice was either shut down by the state or the city in which they operated in or just COVID in general, there was concerns with food safety. So packaged products from a fresh perspective, as well as frozen, were an awesome opportunity to at least convert those cells to a food purchase. Absolutely.

Jeff Lenard:
I want to go back to something that you both touched upon earlier, the grocery and the fill-in items, and then touch upon another trend, but in terms of the grocery and fill-in, I think it presents more opportunities for convenience stores because generally convenience stores, 83% of the items they sell are for immediate consumption, which means within the hour, last year, that dropped to 80%. And that, that is a result of two things. There were fewer people commuting. So there were fewer people, you know, going in and about grabbing things, but we also saw more people grabbing to-go items for the pantry, whether it’s to heat and eat at home, or whether it’s to in the pantry for a day or so. So now immediate consumption is down to about 80%. It’ll probably bounce back, but I think that that leads to an opportunity. And also the other big opportunity is the return to healthy. Over the last year plus, we’ve talked to analysts and there’s been some weight gain in this country. It’s been roughly 10 to 15 pounds per person on average throughout the country, as people just are closer to food, if they’re working at home I heard somebody joking the other day saying it’s a couple more pounds – and everybody’s heard about the Freshmen-15 – this is going to be the COVID-19 pounds. And that’s kind of the joke to the serious issue that health is emerging as, as important, if not more important, and health comes in all kinds of different forms. It can be fresh, it can also be packaged, but I think the next six months and next year, there’s going to be a huge refocus on healthy. And how do you shed some of those pounds you inadvertently gained over the last few months and are you looking at things there to either subtly or directly address that?

Jac Moskalik:
Absolutely. So that in the fresh category in particular there’s definitely been a shift toward healthier products. More and more people are labeled readers. It’s the new consumer. I think their reference is the contemporary fresh consumer, but they’re willing to purchase products more regularly. I think there was a statistic 68% of Americans will go into their local convenience store more often if they have a fresh variety of what they perceive as premium healthy products, whether that’s salad sandwiches, wraps, snacking, just anything that they feel it’s not a fried product. It’s a better for you option. It’s a meal option and it’s convenient. So and they’re willing to purchase that in multiple {locations} – they’re omni-channel shoppers, they embrace Omni-channel. So they, they will purchase those products in a grocery store. They’ll purchase them in a convenience store and they’re, they’re not price sensitive. So, you know, I definitely think that those products are absolutely important to the convenience space, especially now, and future state. People are starting to innovate even in beverage again, which is great to see. So whether it’s cold pressed juices or the refrigerated shots, we brought those in the height of COVID. They always did well in the West. They did okay on the East {Coast} and then kind of in the middle. But during the middle of COVID, or in the midst of the pandemic, those shots did really, really well. So it was great timing to partner with our newest brand. And so those are the types of products that we see actually contributing to the growth in the fresh category. And then on frozen while the fill rate challenges were a pain point, for sure, we had healthier brands that like, kind of debuted because of that. And so like, Amy’s, for example, that was not probably the most stable, if you will, in the frozen food category. It didn’t rank super high and now it does. And so they had product in the midst of COVID, they made their way into convenience and they’re staying, I mean that consumer is looking for healthier options, whether it’s, you know, fresh or frozen or even in foodservice. So yeah, I definitely see that as sticking. I don’t think it’s going anywhere at all.

Jeff Lenard:
Yeah. Frozen fruit frozen will continue to grow as we get more at that dinner day part.

Jac Moskalik:
Oh yeah, absolutely. At supermarket, which I’m sure is not going to shock anybody, but you know, we would hold people hostage in the store to build the basket which was like the opposite of convenience. So if convenience can figure out how to build that basket and cater that shopper, those categories are just going to continue to grow.

Carolyn Schnare:
So there’s also plenty of us who say we want to eat healthy and may or may not do so {laughter} when we get the chance, but then there’s also people who just like what they like, and there’s nothing at all wrong with that. I mean, there’s a perfect time and a place for everything. So what about some of the staple items, if you will, you had mentioned that there were roller grill innovations and you know, pre-wrapped…like, so help me picture this…So they were wrapped on the roller grill?. Cause I didn’t see those, but that’s really cool sounding. But then you have other things where you’ve continuously kept them in stores or provided them for retailers. Are some of those things, do you expect to come back even stronger, whether it’s like the traditional roller grill or you know, fried chicken tenders or whatever…which now I’m so hungry every time I do these shows I’m so hungry, sorry! While my stomach growls, I’ll let you answer that question.

Jac Moskalik:
So there was there’s pre-wrapped products, like Padrino {Foods} like tamales and those come pre-wrapped in a shrink wrap and they rolled it, keeping the moisture of the tamale in and that kind of thing. But like I was saying, I think we, earlier in the conversation, is a lot of people took COVID as a time to step back, reflect on their current menu offering. And how do you innovate on roller grill? Because roller grill is probably the staple, if you will, of a foodservice type program in a convenience store. And so people are coming out with new flavors, LTO, that kind of thing. I think condiments are coming back full force. But how do you innovate on those? And then outside of roller grill, I think the pandemic has brought to light for convenience. Like you can’t just rely on roller grill anymore. We have to start innovating in foodservice outside of roller grill. And so you see programs like countertop warmers coming in, or there’s a theater aspect. So with the consumer who is the contemporary fresh shopper that wants to pay for premium, they also want to pay for theater. And so how do you build that basket further? So whether it’s, you know, build your own sandwich or maybe they want to see pizzas or chicken, just something that’s a little bit different, a barbecue being made on the floor. Like it just depends on what area that your store is in, but they definitely want to be entertained and they want to see the product being mad because to them that’s the freshest possible in a convenience store.

Carolyn Schnare:
I want to see a hibachi chefs. And tell me what store to go to and I’m going to go watch as they start throwing the shrimp at you.

Jac Moskalik:
I will totally check into that for you.{Laughter}.

Carolyn Schnare:
Thank you. {Laughter}

Jac Moskalik:
You’re welcome!

Carolyn Schnare:
So I guess with all of this it sounds like there’s a lot of innovation out there and I know I’m, you know, we’re all slowly getting started and I’m still getting started and I have a road trip planned for later next month. And I’m excited because that means convenience stores are always going to be a place that you can stop and get something awesome. And it’s something that, you know, like I said in the beginning, 10 years ago, you didn’t really think about it. You’d be like…what’s the line, Jeff, that you say from from National Lampoon’s all the time?

Jeff Lenard:
Chevy Chase’s character, Clark Griswold said, “I’m so hungry, I could eat the sandwich from the gas station.” And in 1980, that was funny. For those of us that have watched that, it’s still funny, but you talk to a 20 year old and that joke just falls flat because they’ve always seen that convenience stores can offer awesome food. So when they remade the movie…that was vacation, not Caddyshack, right?

Carolyn Schnare:
Yeah, yeah!

Jeff Lenard:
When they remade the movie that that line didn’t make the cut because it doesn’t stand up to today’s consumer. That’s good.

Carolyn Schnare:
That’s true. And, you know what, in 20 years from now they’ll be like “hibachi in a convenience store? Of course there is…everywhere!” {Laughter} So, Jac tell us, tell our listeners, a little bit more where they can find more about all the offerings that Core-Mark has, how maybe to get in touch with you because you have some really great ideas. I know you guys have a lot of analytics behind what you do where are some places…and we’ll also put them in show notes too on the episode page…but if you wouldn’t mind telling us a little bit about where we can find more, where we can learn more?

Jac Moskalik:
You can access any information that you’re looking for at Core-Mark through our website, which is www.Core-Mark.com and so there’s different tabs. There’s a fresh tab, there’s a Food Service tab. We also have a ton of other programs, whether it’s Smart Stock or Promo Power, all that kind of thing. So it’s everything that you would need to learn about Core-Mark is actually on the website. And then obviously that leads to a form and we can contact whoever reaches out and offer whatever additional information that they’re looking for.

Jeff Lenard:
And of course Core-Mark is spelled traditionally not like how we like to misspell things in our industry. It’s not spelled with a Q or anything crazy like that. It’s C-O-R-E-M-A-R-K. So thank you very much for joining us today, Jac. And thank you all for listening to convenience matters.

Convenience Matters Outro:
[Music]. Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.