May 4, 2017

Noncommercial operators adopt elements of retail category management techniques.

Noncommercial foodservice operators may have untapped opportunities to better leverage data and insights in an effort to improve their snack merchandising.

While the foodservice industry will likely never adopt the full-blown discipline of category management that retailers employ to optimize their product assortments, some aspects of the discipline are being adopted by noncommercial operators to refine their snack offerings based on consumer insights.

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“I don’t see any operators right now who are driving a top-down strategic platform around category management — it’s more about applying the simple principles of improved merchandising. But it’s working,” says Doug Morrison, a partner in consulting firm The Partnering Group, Cincinnati, who authored a 2014 report on foodservice category management called “Full Plate.” “I think some of the solutions for the front of the house are well thought out, insight-driven and making a difference.”

Communication and insight

In order to benefit from some of the principles of category management that have helped retailers drive increased sales and profitability, noncommercial operators must communicate their needs clearly with suppliers, and suppliers need to share the consumer insights they have gathered.

“Operators should start to expect insight-oriented, go-to-market recommendations from the manufacturer, and then customized products and programs that will allow the operator to better reach their patrons,” says Morrison. “Years ago operators would have had to figure it out on their own.”

Five Star Food Service, a noncommercial operator based in Chattanooga, Tennessee, serving business, institutional and education accounts, applies some principles of category management and retail merchandising in both its micromarket locations and in its foodservice venues, says Gregory McCall, senior vice president of sales and marketing.

He says the company typically goes through an in-depth planogram review with its brokers and suppliers every six months to develop pricing strategies and optimize assortments. The company also adopts the retail strategy of segmentation based on customer demographics, deploying different planograms for its white-collar and blue-collar locations.

The company also uses cardboard shipper displays for promotional snack items in its micromarkets, which it often adopts for use in its cafeterias.

‘We are going to continue to do that a lot more in the future,” says McCall. “We’ll bring those items that we identify for micromarkets over to the dining side of our business.”

The company also employs retail merchandising strategies such as cross-merchandising bags of chips in the deli areas and adding impulse snack displays near the cash registers.

Operators can enjoy success with a varied assortment that includes on-trend items and a mix of both familiar and new snacking options that satisfy the needs of a broad array of customers. At successful snack food merchandisers such as Starbucks, impulse areas feature a variety of grab-and go options, from fresh baked goods to packaged items that range from healthy to indulgent. A typical grab-and-go offering at Starbucks might include granola bars, trail mix, jerky, cookies, madeleines and chocolate bars, with a steady influx of new items joining the mix.

Disrupt the flow

David Kincheloe, president of Denver-based National Restaurant Consultants, suggests that noncommercial operators should think about forcing customers to take notice of impulse snack displays.

“In a cafeteria setting you want to create an interruption in the flow so that someone has to step around the display,” he says. “It could be in line at the end of a station where you have merchandise professionally displayed, so customers can just grab something to go with their meal. The same things retailers are doing to encourage impulse buys apply in those types of settings.”

Cafeteria settings also present ample opportunities for cross-merchandising snacks with beverages, he notes, such as cookies displayed near coffee or milk stations.

At foodservice venues at ski resorts where Kincheloe has deployed these strategies to build check averages, sales have risen between 4 and 12 percent, he says.

Signage is also an important element of merchandising which can help to drive incremental snack sales, Kincheloe says.

“You need promotional merchandising that attracts your attention and gives you an incentive to buy,” he says. “If people don’t know about it, they are not going to buy. Make sure your guest knows about it.”

Clearly communicating product price — including any special combo pricing that may apply to snack items — is also critical, especially for time-hurried customers on the go, says Diane Chiasson, president of Toronto-based Chiasson Consultants.

“You have to have the proper information around your snacks,” says Chiasson. “This is not the time to hide the price, because I as a customer don’t have time.”

Jonathan Raduns, a consultant with Cherry Hill, New Jersey-based Merchandise Food, notes that branded, grab-and-go snacks with relatively low price points can be ideal impulse purchases at checkout.

“While people might not be open to buying a $3 or $4 mousse, or rice pudding, or piece of pie, they may be willing to pay $1 to $2.50 for a [branded snack],” he says. “It could be something to take with them to enjoy a sweet indulgence after a meal.

“It is a way to capture another small purchase where it otherwise would have been a lost opportunity.”