Barry Skown
June 8, 2016
How Convenient!
How Convenient!

My generation, along with subsequent generations, has grown up with convenience stores in our lives. First, it was 7-Eleven that popped onto the scene.  They sold anything from packaged candy and snack food to “emergency” milk, eggs and bread for Mom when it was Thanksgiving or Christmas Day, and all the grocery stores were closed. All the while charging you a premium for the “convenience” of being open 24/7.  The office building equivalent to 7-Eleven at that time was coin-operated vending machines that dispensed packaged snacks and beverages.  Some companies offered their evening shift employees pre-made sandwiches, fruit, soup, and salads vending.  But the age of any of those food items was guarded like a NSA secret for many years.  No more!  As the old commercial slogan once said:  “You’ve come a long way, Baby!”

A Revolution

In the past 15 years, we have seen vending machines offering more variety and less “junk” food. Dollar bills are accepted instead of only coins.  And finally for the ultimate convenience, credit/debit cards or your employee badge for payroll deduction can be used as payment.

Pre-made food items also improved. Foodservice operators implemented small commissary teams within their operations to not only produce fresh-made sandwiches and salads for food merchandising machines, but also to date each item on the packaging and change them out every two days maximum to ensure freshness!  A Revolution indeed!  Almost overnight, all the jokes about how “that sandwich had been in the machine since Abe Lincoln was President” were gone.  People could purchase pre-made food items without the worry of getting sick or of discovering a science experiment in the package after paying for it.

Advanced Technology

But the vending revolution has not stopped there! In the past 5 years, companies, colleges, and even healthcare facilities, who are building new dining facilities and who also want to offer 24/7 convenience to their resident populations, are increasingly moving away from offering a bank of even the most advanced vending machine types.  Why? What are they offering in their place?  The answer is today’s new Convenience Store, otherwise known as the new “C-Store” or “Micro Market.”

New payment technology, along with innovations in casework design and store layout have resulted in a new brand of C-Stores that now offer employees, students, and customers the food options they desire after the manual foodservice has ended for the day. But this 24/7 access does not cost the operator (or client) any extra labor cost.  Why?  Because advances in payment technology now allow for each C-Store to have its own self-checkout kiosk and system that is similar in many ways to the self-checkout machines now used in grocery stores.  Each item—whether a pre-packaged snack or sundry item, or a fresh-made food item—comes with a bar code on the outer packaging which is easily scanned at the payment kiosk when the customer is finished selecting the items they want.  The kiosks have also been designed to accept either credit/debit cards or paper money, and in some cases, swiping your employee badge/student I.D. for either payroll deduction (employees) or debit account deduction (students).

Updated store design, casework, millwork, and display layouts have improved not only the merchandising factor for food and non-food items offered at the new C-Stores, but also allowed Operators to increase the range of items offered at each store. In fact, C-Stores are very similar to a retail 7-Eleven unit that offers not only freshly-made food items (much fresher than any 7-Eleven), but also sundry, toiletry, and small novelty/gift items to help the employee who may have a raging headache, the student who left their toothbrush at home during a visit, or the hospital visitor who forgot a Get Well card and wants to purchase one before going to see their friend.

Refrigerated and frozen items are no longer locked inside a vending machine either. These items are now stored in easy reach-in refrigerators (or air-screen refrigerators) so the customer only needs to pull open the glass door and select the item they want from each refrigerator or freezer.  This system includes beverages as well as pre-made sandwiches, wraps, salads, soup, prepared salads, specialty food items (e.g., hummus and carrots), and frozen novelties.

Loss Prevention

Basically, today’s C-Stores and Micro-Markets are designed and laid out to look and feel just like a “grab-n-go” section at your favorite high-end grocery store…only with no attendant to check you out for payment. So if there is no attendant to process payment, what prevents customers from just “grabbing-n-running” with items from the C-Store?

Well the answer is…the honor system, plain and simple. All of the major contract foodservice operators offer their own in-house brand of C-Store, complete with self-checkout systems.  However, none of them report theft, or loss, of more than 1-2% of total revenues.  In some store designs, there is a security camera strategically mounted in the store that looms like a big seeing eye in the sky…although no one is ever certain whether or not the camera is actually hooked up and functioning.  But why take the chance?  If you’re an employee, do you really want to risk your job over a $2 soda, a $4 sandwich, or a $1 bag of chips?  If you’re a student, do you really want to get a call from your parents one night saying the Dean of your school called them about a security matter involving their child?  For the vast majority of us, that kind of risk just doesn’t make sense.  Thus, 98-99% of customers pay for the items they select in the C-Store.  And with the margins operators make on C-Store items, they are more than willing to take that risk to save the labor and offer the convenience to the resident population.

What’s Next?

There is no doubt that C-Stores will continue to evolve and improve into the future. Today’s 24/7 society demands 24/7 access to basic food and sundry items in most urban and even rural locations. What the next innovations in store design and/or payment technology will be is anyone’s guess.  But I’m sure there is a collective sigh of relief across office buildings, colleges, and healthcare facilities that Abe Lincoln’s sandwich will never be featured as part of C-Store offerings!

By:  Barry Skown

Senior Associate – Management Advisory Services | Portland

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