The Combo Mambo!
"A single twig breaks,” Shawnee warrior Chief Tecumseh once said, “but the bundle of twigs is strong.”
For convenience retailing, what’s true for the twig is certainly true for the burrito, bag of potato chips and 32-ounce fizzy fountain drink.
That’s because hungry consumers love combo offers, meal deals and bundled bargains.
The problem is that, unlike QSRs and casual restaurants, too many convenience operators either don’t recognize the benefits of bundling or they poorly execute package deals. Others fear that without a substantial foodservice program, bundles are irrelevant.
How wrong they are.
Doing the Bundle
Jared Scheeler, managing director of The Hub Convenience Stores, which opened its first store last year in Dickinson, N.D., is a bundle backer.
“Today’s consumer is more time-strapped than ever before. Therefore, it’s beneficial for retailers to present an offer rather than wait for the sale,” says Scheeler, whose store serves up hot and fresh burgers, hot dogs, pizza and other foodservice favorites.
“The concept is no different than a value meal at a QSR. If we present a package that satisfies a want or need, or one that simply makes the consumer feel they received a great value, we’re likely to turn more inventory every day.”
Bundled offerings can boost sales during slower day-parts and days of the week, says Suzy Silliman, managing director of Management Science Associates (MSA), Pittsburgh. “Bundling at an attractive price could entice shoppers into the store and also increase register rings for shoppers who might have come in only to buy a drink or a food, but not both.”
Creativity in this space is important, however, as Donna Hood Crecca, senior director at Technomic Inc., Chicago, points out: “Bundled or combo offers are also readily available in QSRs. So there’s a lot of competition.”
Still, retailers can exploit the inherent, multi-category advantages that QSRs lack, says Bonnie Riggs, restaurant industry analyst for Port Washington, N.Y.-based research firm The NPD Group.
“Consider that visits to traditional fast-food restaurants are down, but QSR visits to c-stores are up by 454 million visitors over the past six years,” she says. “C-stores have experienced traffic growth at the morning meal, lunch, supper and with snacks, while breakfast has been the only growth day-part for fast-food restaurants since 2009.”
To continue this growth trend, “c-stores need to behave even more like fast-food restaurants by offering bundles,” Riggs says.
Deborah L. Holand, president of Dallas-based Foodservice911 Inc., says bundling bolsters three critical goals: driving PPA (per person average per check), enhancing consumers’ value perception and upselling edibles. If executed effectively, bundles can drive a 20% increase in sales of the items, she says.
“When upselling, you want to craftily engineer a make more money on that bundle than you do on anything else you sell in foodservice that day,” she says.
The key to effective bundling is to construct meals out of components that complement each other, Holand says. Then duplicate those components across as many day-parts as possible to avoid waste.
You probably know the top bundling items. Checking off MSA’s edible favorites as best foodservice companions are (in order):
- carbonated soft drinks
- potato chips
- hot dispensed beverages
- bottled water
- snack cakes/pastries/desserts
- iced tea
- alternative packaged beverages
- chocolate bars
That means factory-sealed snacks and prepackaged yummies—not just fresh/hot perishables—can be viable bundling candidates. And that’s a major differentiator vs. restaurants.
And while the trajectory of made-on-site foodservice remains high in the channel, it is not a bundling mandate, says Steve Montgomery, president of b2b Solutions LLC, Lake Forest, Ill.
“Some customers simply prefer bottled or canned drinks over fountain drinks. The same for the food portion of their meal,” Montgomery says. “Today, the industry is fortunate to have a number of suppliers of high-quality prepackaged foodservice items.”
That said, grouping perishables, especially fountain drinks or hot beverages, can yield greater profit than prepackaged goods such as candy bars, Holand says.