C-Stores Evolve With Guests

What’s old is new again.  Conveniences store, the oft-forgotten stepchild of the grocery, restaurant, foodservice continuum are stepping into a new age.  Over the past few years, we’ve seen the restaurant industry eclipse grocery sales in America, which was a huge first.  Now, restaurant revenues have finally started to slow–not slip!–and some spending to return to other formats.

And C-stores want a piece of the action.  At Choice Market in Denver, guests can get artisan sandwiches and staples like quinoa or kombucha on tap.  Housed in 2,700 square feet–about the size of an average Chipotle, places like Choice Market and Green Zebra, in Portland, are finding a new niche between QSR’s and grocery stores, but well above the traditional Doritos-and-candy convenience store.

Traditional players, like Wawa, have long known the value of the their real estate and already provide an up-scaled convenient experience.  And now Amazon is getting in on the action with Amazon Go–a cashless, cashier-less store that tracks you and bills your Amazon account.

We’re seeing a confluence of trends merge on similar themes again and again: grocery stores relying on prepared foods for sales, restaurants capitalizing on the fast casual trend, and automation in point of sale.

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Shake Shack Returns to its Roots

Karl Marx will have to wait; the machines will not yet replace us.  The fully-automated ordering system Shake Shack put in place at it’s newish Astor Place location is being terminated to bring back people and cash.

On the most recent earnings call, CEO Randy Garutti discussed the feedback that the chain has received about this unit in particular.  Voices came in clearly via Twitter, Yelp, and direct feedback: guests want the option to pay in cash and want to place their orders with a person.

When Shake Shack opened the Astor Place location in 2017, it was touted as the company’s first foray into self-service kiosks and cashless operations.  The benefits of both are obvious–less labor, lower risk of theft, less waste, and more-accurate ordering.

However, the backlash came in hard and fast from guests who didn’t want to wait on the kiosks and who were inconvenienced by the credit-only policy.  Shake Shack is reinstating a cashier for all open hours and will begin accepting cash with said cashier.  The kiosks will be rolling out to other locations–but not in replacement of the cashiers.

Shake Shack has consistently be posting huge growth.  In 2016, average unit volumes were 3.5x the burger-segment median, at $4.5m.  However, net income was only 6.2%–a far cry from industry elder McDonald’s 20%.

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