With labor costs continuing to skyrocket and staffing an ongoing challenge, convenience retailers would be wise to keep commissary foodservice items in stock. While offerings that are freshly prepared in-store are increasingly winning over c-store guests, commissary products satisfy customers’ grab-and-go needs.
According to data presented at this year’s NACS State of the Industry Summit, average per store, per month sales of commissary foodservice items increased 6% in 2023 to $4,260. As a result, NACS Research Analyst Emma Tainter noted that commissary landed in the No. 10 spot among all in-store categories, while gross profit dollars increased 12%.
Andy Batt, director of merchandising, fresh foods and dairy, at Core-Mark, attributed the gain to moves by retailers to reign in rising labor costs. “Foodservice labor, including training and food safety, is challenging,” he said.
Expansion within the category is also contributing to its growth. With more c-stores offering quality commissary options, awareness is growing among consumers, remarked Jon Cox, vice president of retail foodservice at McLane Co. “The category has grown from just prepared sandwiches and cut fruit to snacks, salads, cut vegetables and fruit parfaits,” he said.
Commissary is comprised of four subcategories: ready-to-eat meals; sandwiches and wraps; thaw, heat, and eat items; and sides and salads. “In 2023, ready-to-eat meals made up 69% of category sales,” said Tainter. Sandwiches and wraps followed at 19%, while thaw, heat, and eat items accounted for 8% of category sales, and sides and salads for 4%.
The category has grown from just prepared sandwiches and cut fruit to snacks, salads, cut vegetables and fruit parfaits.”
Demand for the category and continued opportunity for growth is driving some c-stores to institute their own commissary programs. Michigan’s Beacon & Bridge Market launched its commissary operation from a central location one year ago, and according to Eric Patterson, chief merchandising and marketing officer, sales have exceeded expectations.
“Customers love the freshness, the quality, the size of the sandwiches and the price point,” he said of its B&B Fresh line of about 15 sandwiches, which are delivered to stores twice a week. “We use only premium ingredients, and don’t add any chemicals to the packaging,” resulting in a four-day shelf life, he noted. It’s been so successful that Beacon & Bridge has had to expand its initial production space. At press time, the chain of about two dozen stores was preparing to add a pizza bomb—dough stuffed with pizza sauce and sausage—to the line, with more products likely to follow.
Wisconsin-based Kwik Trip has long operated its own commissary business. “We believe in vertical integration,” explained Kevin Buttner, food research and development manager. Kwik Trip has its own distribution system with daily deliveries to its stores, and more than half of the food it sells is produced in-house. Because production takes place at Kwik Trip’s central 160,000-square-foot commissary, “We can administer our own safety checks,” Buttner added. “Safe food equates to quality food.”
‘Grab and Take Home’
Ready-to-eat meals lead the commissary category—likely due to a higher price point—and “have been gaining traction from stores capitalizing on the idea of providing multiserving meals that the consumer can grab and take home,” said Tainter. Kwik Trip offers a vast array of ready-to-eat options, with top sellers including beef stroganoff and noodles, fettuccini alfredo, meatloaf and potatoes and spaghetti and meatballs, Buttner reported.
Interestingly, entrees that include vegetables don’t fare as well as meals comprised of just a protein and a starch, he noted. The retailer introduced “ready-to-eat proteins,” such as already prepared chicken fajitas, barbeque pork and Korean chicken. “They take the hard work out of meal prep,” Buttner said.
Sandwiches and wraps, meanwhile, enjoyed the largest growth rate among all commissary subcategories at nearly 20%, Tainter reported. Gross profit grew by 5.4%.
Suppliers note that new sandwiches are being well received. “We introduced four new items at last year’s NACS Show, and they began shipping in February,” said Jeff Kjome, vice president, marketing, brand and innovation, at E.A. Sween, which produces the Deli Express, Market Sandwich and San Luis brands. Those entries include Market Sandwich subs in Italian, ham and turkey offerings, and a Deli Express roast beef sandwich. Ben Boyd, vice president, sales—convenience at Tyson Foods, meanwhile, reported that his company has also added four sandwiches, including two breakfast sandwiches under the Jimmy Dean banner.
Customers are gravitating to more premium commissary sandwich options at c-stores, noted retailers. Kwik Trip’s new honey ham and Havarti on a pretzel roll and pastrami and Swiss on rye, for example, have received a strong response, according to Buttner. “We’re seeing customers trade up from value sandwiches to premium sandwiches,” the retailer remarked. A popular item within Core-Mark’s Fresh Take line, introduced about two years ago, is the peanut butter crunch sandwich. Comprised of peanut butter, jelly and granola, “it’s an adult PB&J,” said Batt. “It’s more upscale.”
New products are also emerging in the thaw, heat, and eat subcategory. Earlier this year, Performance Food Group (PFG), Core-Mark’s parent company, partnered with GPM Investments on a 12-inch frozen take-and-bake pizza that’s available at more than 1,000 of the company’s c-store locations. Priced at $4.99 for loyalty members, the pizza is available in hearty cheese and pepperoni options.
Commissary will continue to be a growth opportunity.”
In the sides and salads subcategory, Cox noted that sales of bowl salads including chef, Caesar and cobb, and cut fruit—all marketed as part of the McLane Fresh program—have been strong. “We’re seeing some really good results with our better-for-you items,” he explained.
Buttner reported that sales of yogurt parfaits at Kwik Trip were up 10% through early April, and the chain plans to launch an LTO parfait for the fall. And for c-store guests with a sweet tooth, Rich Products recently expanded its Our Specialty Treat Shop parfait line with the grab-and-go turtle cheesecake mousse parfait in 5.75-ounce cups. The parfaits “answer a c-store’s need for delicious desserts that are individually packaged, portable and labor free,” said Elizabeth Sommer, customer marketing manager at Rich’s.
Labor Savings
Suppliers and retailers alike point to the labor savings that commissary foodservice products offer stores. At Kwik Trip, it’s more cost effective “to make sandwiches for 800 stores with 10 people in one facility than to make sandwiches in 800 stores with 800 people,” Buttner said.
Commissary can also help retailers control other costs, said Cox, noting that in addition to labor and ingredients, in-house foodservice production requires investment in materials like wraps and labeling. “A commissary program can actually be a cost benefit for a c-store,” the McLane executive remarked.
We’re seeing some really good results with our better-for-you items.”
“One of the most important benefits of commissary is the food safety aspect,” said Batt. Due to required food safety certifications, “There’s a level of compliance at the sites that may or may not happen at the store level.”
The Core-Mark executive also noted product consistency and assortment as some of the advantages commissary programs provide. Shelf life can be another benefit. E.A. Sween’s Kjome noted that many of the company’s products stay fresh for up to 30 days through the use of modified atmosphere packaging (MAP) technology, helping to reduce waste.
But for commissary products like cut fruit and vegetables that can’t rely on MAP, spoilage challenges can arise, particularly for stores that receive deliveries only once a week. Beacon & Bridge’s Patterson said that minimum order requirements on perishable items like salads and cut fruit can often be too high for some stores, so they opt out. As a result, both Core-Mark and McLane recently made moves to sell some of their merchandise to c-stores by the unit, rather than in larger quantities.
Foodservice labor, including training and food safety, is challenging.”
Prominent Placement
Just as with other categories in the store, commissary items must be effectively merchandised to drive higher sales. “Placement in the store is key,” remarked Cox. “You don’t want to hide it in the back of the store.” He recommends commissary products be merchandised as close as possible to the kitchen or another high-profile space, such as adjacent to the cold vault. Kjome added that “creating relevant reminders is really important, whether it’s a compelling offer to drive fuel customers into the store or a bundling opportunity with a beverage.” Stocking limited-time-only commissary items is another way to create excitement for the category, suppliers noted.
The commissary category is expected to remain a steady contributor to c-stores’ foodservice programs, whether they produce freshly prepared items or not. Tyson’s Boyd said that with snacking occasions on the rise among consumers, items like prepared sandwiches are perfect for on-the-go customers.
“With food safety a front-and-center concern for c-stores and the unlikeliness that the labor market will improve anytime soon, commissary will continue to be a growth opportunity,” said Batt.