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The Future of C-Stores

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by Mike Cummings, Sr. Principal

April 2024

The future of C-Stores is bright, and there are opportunities to capitalize on demographic shifts and changes in customer preferences to provide a differentiated experience in the marketplace.

“What does the future hold for C-stores?”

First and foremost, diversity of food choices.  Providing a full range of choices – diverse snack and meal choices is key.  As mentioned in my previous blog on the evolution of C-Stores, millennial preferences trend Mexican, and Gen Z trend Asian.  Both grab-n-go and fresh options should be provided.  Careful consideration of the market and its customers, along with creating unique, freshly prepared options can create customer loyalty, and increased revenue per visit.  This approach, along with healthier choices, can make C-Stores an alternative to fast-casual restaurants. 

One interesting approach is the hybrid C-store, combining the best of convenience and groceries.  Most grocery stores include a market section in the offerings to allow consumers to shop for groceries and pick up a freshly prepared meal at the same time.  One development that lends support to the viability of a hybrid C-store opportunity is large grocery stores that include a convenience store in front of the main store.  They primarily offer fuel and traditional convenience store type merchandise, along with a few grocery items to provide quicker, easier pickup when only a few items are needed.  The hybrid C-Store can provide convenience, grocery, and meals on a 24/7 basis.

Finally, we come to the most impactful component of the future success of C-stores: the experience.  Brightness, cleanliness, and excellent customer service are essential but are not enough.  The customer experience, from easy access to ample parking and well-lit and clean exterior are only the start.  The interior should be warm and inviting, easy to navigate and find what you came for (and maybe a few more impulse items). 

Merchandising layout should be uncluttered with space allocated for everything, including special items that may be overstock, seasonal, or limited time merchandise.  Graphics must be planned and consistent, and not reliant on product branded placards or signage; the exception is convenience store branded merchandise.  The use of monitors instead of fixed graphics are easy to update and keep current, and allow cross-promotion, and community information to be incorporated. 

The customer check-out experience must be designed from the start.  Ample checkout stations, and queuing space around checkout are necessary.  Consider how you want your customers to line up while they wait for the next cashier.  Provide space for impulse items on the counter and along it in a way that does not impede customer flow or diminish customer experience. 

Consumers can get virtually anything they want delivered to their home or work, and we have to provide a high level of convenience, and a welcome experience to get them to stop in.  Consider drive through, self check-out, and/or express pick-up options to streamline the visit. 

That was part 3 of a 3 part series. To see previous parts, click the News tab, on our website!

Mike Cummings, Sr. Principal

FEC Conversion: Mechanical, Electrical, Plumbing

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by Trevor Ruhnke, Principal

January, 15th 2024

Welcome back! If you’ve been following along, you know we’ve been on a journey of transformation, exploring the prospect of turning a section of your traditional theatre into a dynamic entertainment facility. We have delved into the architectural and structural aspects, laying the ground work for a space that promises a multitude of revenue stream opportunities. As we continue our exploration, it’s time to shift our spotlight backstage — the Mechanical, Electrical, and Plumbing systems. In this next installment of our blog series we reflect on the intricate dance of these systems and how their modification plays a pivotal role in bringing our entertainment projects to life!

Mechanical

Auditorium HVAC systems are designed to serve large numbers of people at high density within the space. This design translates very well to an entertainment concept. Although the number of customers is reduced, there is an offsetting increase in the needed cooling load from games and other electrical equipment. Often, the existing equipment may be re-used to serve the new space’s layout.  However, evaluations of the equipment are warranted at this time. If the equipment is near the end of its useful life, replacement with newer, more efficient, equipment during the construction phase will be less impactful. Replacement equipment will also be tailored to the new layouts and required loads. Any new equipment may remain in the original location to help reduce cost and impact.

Although ductwork and distribution systems would often continue to function appropriately, the aesthetics may be poor. Many entertainment complexes utilize an open ceiling concept. Ductwork designed for above ceiling installation is typically rectangular with flexible ductwork extending to ceiling mounted diffusers. In an open ceiling situation large round ductwork painted to match the structure is normally seen. However, in some situations the ductwork may be painted a contrasting color matching the rest of the facility to provide another element of interest.

Facility changes often also include expanded food and beverage options. If the facility does not already have a kitchen or cooking options, this is the time to add them. If cooking is limited, expanding the cookline and menu is a good pair with the new entertainment options. This typically includes a true Kitchen exhaust system with grease hoods like you find in restaurants. While cooklines are traditionally located in the back of house areas they can also be in view of the customers adding a unique visual element.

Electrical

Many parts of the entertainment complex have high electrical demands whether that is from arcade games, bowling equipment, or general AV equipment. Luckily, auditoriums also have a high electrical demand. Although the requirements are different between the two space types often the original Theater electrical distribution is adequate for most conversions.

Often electrical panels serving auditoriums are located on the mezzanine near the projection equipment. If the mezzanine is to be retained during the renovation, it is possible they can be re-used. However, it may be more cost efficient to relocate or replace the panels and install them closer to the new equipment. If the mezzanine spaces are to be removed for the new space design new electrical distribution is generally needed. Replacement of a portion of the distribution can allow for better consolidation of circuits and a more efficient and cost-effective construction.

Bowling systems generally require additional electrical infrastructure. Additional panels are needed to separate the pin equipment and scoring equipment. There is a difference in electrical load requirements between traditional bowling equipment and newer string type systems. While electrical modifications do not typically drive the choice of options to include in an entertainment renovation, careful consideration can help minimize the cost impact.

Plumbing

Renovation from auditoriums to entertainment often leads to a reduction in the code required occupant count. This means the total number of required restrooms is reduced. Since the restrooms are often located near the promenade, they may need to be relocated to accommodate the open floor needed for the entertainment concept. New restroom locations must be coordinated with the slope of the underfloor piping system and that can dictate the final locations.

If the facility does not already have a kitchen, then a grease waste system and grease trap will be required. Traditionally adding the system requires a grease trap installed outside of the building. In some instances, with a smaller cooking operation an in-floor model may be acceptable. Whichever system is included, periodic grease removal and maintaining the trap is of utmost importance.

If a bar or kitchen is added during the renovation, this often requires significant removal of the floor in on grade buildings to facilitate installation of piping. This is needed for drainage, drink line conduits, and sometimes water piping. Coordination between Architectural and MEP design can help remove some of these requirements, helping to lower costs.

Conclusion

In conclusion, there is no doubt that converting auditoriums into Entertainment Centers is the next big thing in the Cinema industry. These transformations mean patrons are staying longer and spending mor money in your facilities. What’s not to like about that!!

Trevor , Principal

Preserve Your Cinema with an FEC Conversion

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by Jack Muffoletto, Sr. Principal

August, 4th 2023

What’s Happened

The last round of cinema transformations revolved around the experience. Many customers took the position that the in-home technology available allowed them to re-create cinema picture and sound in the convenience of their home with the familiarity off their comfy chair.

Exhibition responded:

  • Branded Premium Large Format auditoriums with giant screens unachievable at home
  • 3D immersive sound
  • Power reclining seats for comfort
  • Multiple choices to view movies:
  • PLF
  • Screen X
  • 4DX, D-Box, MX4D
  • VIP
  • Dine-in
  • Groups

Since Then

The pandemic caused the cinema industry to halt due to disrupted film production and the shutdown of exhibition.
Furthermore, known threats to the industry worsened. The options to stream film at home have become wider and easier. The theatrical ‘window’ discussion intensified to the point of eliminating it completely.

Over the years exhibitors have become accustomed to threats, so some self-examination was warranted. Questions to be answered:

  • How can we diversify revenue sources beyond Hollywood and become less dependent on them?
  • Are there too many screens for the content being released?
  • How can we generate higher revenue from under-utilized space?

What’s Next

The cinema business model as we know it could become obsolete. Cinema is not going away it is just evolving into something new. Entertainment Centers are quickly becoming the next big thing. Consider an FEC where cinema is a key attraction alongside bowling, arcade / redemption, axe throwing, laser tag, etc. Diverse revenue streams are established for year-round, all-day business.

  • Stay longer
  • Adult focus AND family focus
  • Gaming, competition focus
  • Competitive Socializing
  • Even more F&B! Many existing cinema properties already have the F&B infrastructure

Challenges / Opportunities you run into…

Existing cinema facilities come in all shapes and sizes and markets dictate attractions, ROI, construction cost, etc. However, there are some things you can always count on:

Advantages

  • Square footage and volume available
  • Toilet rooms in place
  • Potential for exterior yard space

Structural Considerations

  • Demising Walls
    • i. Many demising walls are non-load bearing metal stud and gypsum board walls with a few structural steel columns. In these cases, very large openings can be made or the entire wall can be removed.
    • ii. If a demising wall is structural, or made of concrete block for example, deliberate, small linteled openings for visibility can be made
  • Stadium Seating
    • i. Built up stadium seating is mostly non-load bearing metal studs, geofoam or steel stringers and can be removed completely
    • ii. Multiple floor elevations below grade can be leveled with geofoam and concrete
  • Projection booth mezzanine can remain or can be repurposed

Design and Construction Decisions

The facility is an Assembly Occupancy, and therefore we are dealing with the movement of large groups of people. The design solution will be based on your specific market, existing conditions and:

  • Customer Circulation
    • Safe exiting
    • Minimal crossover
    • Accessibility for customers with disabilities
  • Staff Circulation
    • Labor consolidation

  • Phased Construction
    • Stay open
    • Consider sarting with converting a small auditorium
      • You can visualize how closing an auditorium (or 2 or 3) will not be cause for business stoppage
    • Consider expanded F&B which is a high revenue generator
      • Bar
      • Kitchen
      • Seating
      • Adjacency to existing kitchen utilities
    • Consider arcade games and redemption which are a high revenue generator
    • Create gathering space

  • FFE for attractions
  • Equipment for kitchen and bar
    • Utility connections
  • Phased investment
    • New phase after ROI achieved

Movie going habits have changed and cinemas are changing in response. Streaming movies has been a failure and there is a full flow of wide releases this year. The writer’s and actor’s strikes could impact movie going down the road. Now is the time to consider converting your facility to preserve and increase your revenue, and to combat future threats to exhibition.

Jack Muffoletto, Sr. Principal

The Evolution of C-Stores

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by Mike Cummings, Sr. Principal

May, 16 2023

The Covid pandemic had a significant impact on the industry.  The overall number of stores and revenue declined, and it also changed purchasing patterns.  The pandemic highlighted how gaps in the global supply chain added a sense of urgency to keep pace with high-demand products in non-traditional C-store categories. Many customers relied on the channel for daily essentials, including grocery items, as well as treats to boost spirits.

The C-Store Landscape covered the most prevalent functions/types of C-Stores including travel centers, fueling C-Stores, Grocery C-Stores, and Urban C-Stores. 

There are still many opportunities for new locations within all types of C-Stores. But what is currently happening in the marketplace and what is next? 

The most interesting current trend is the diversity of food choices.  From personal experience driving to jobsites, I would decide where to stop based on demonstrated ability to provide a good cup of coffee.  That is basic and can provide an alternative to the coffee shop. Not only are food choices the most interesting trend, but it can also have a large impact on revenue. Foodservice sales in convenience stores increased 20.5% in 2021 after falling 10% in 2020, according to the 2022 Convenience Store News Industry Report. Some of the increase was driven by changes in consumer behavior during the pandemic, but it is also driven by demographics. Data from Cargill show millennials are the top indexing convenience store customers. “Better-for-you” foodservice offerings are key to capturing the demographic, as are Mexican-inspired flavors, said Jessica McMillan, strategic account lead for convenience stores at Cargill. “When we look across the consumer base, millennials are actually the first generation to prefer Mexican flavors over Italian flavors,” she said. “If you look at Gen Z, Asian flavors are their top choice.”

By incorporating more diverse flavors like Mexican and Asian, along with healthier choices, can C-stores become an alternative to fast-casual restaurants and/or the market section of a grocery store? I believe they can.

Have you noticed that grocery stores have added market sections to their offerings or included branded C-stores on their sites?  That empirical evidence alone demonstrates the opportunity For C-stores. Some restaurants pivoted and sold basic grocery items during the pandemic.  The C-store can provide both groceries and meals on a 24/7 basis.  

I expect this duality of grocery and fresh meals represents the current evolution opportunity in the C-Store market.  Providing diversity of offerings in grocery, meals, snack, and beverage categories can increase revenue per visit as well as deliver new, regular customers. 

Full realization of the concept will require a focus on convenience including loyalty apps, self-checkout, drive-throughs, and express options.

That is what is happening today in the marketplace, but what about tomorrow?  Stay tuned.

This is part 2 of a 3 part series. To see previous parts, see our news tab, on our website!

Mike Cummings, Sr. Principal

The C-Store Landscape

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by Mike Cummings, Sr. Principal

March, 21 2023

Convenience stores serve a variety of needs and continue to evolve.   Full disclosure – I am a fan of C- stores, both in my daily life and when I am on the road going to jobsites.  There are more than 150,000 C-stores in the US, and it is a half-trillion-dollar annual industry.  They may or may not sell fuel.  C-stores are evolving from the traditional “cokes and smokes” to becoming a destination and not just a place for gas and a cup of coffee.  C-stores come in all kinds of sizes from small walk-up non-fueling locations to the biggest in the world like Buc-ee’s. 

Most convenience stores fulfill a variety of needs so they can be difficult to categorize.  Among the primary needs that C-stores can fulfill:

Travel centers are generally large facilities with convenient auto and diesel fueling, large restrooms and lots of drinks and snacks.  Many have a restaurant incorporated.  Travel centers offer a welcome stop on road trips to stretch your legs and refuel. Other amenities that you might find at a travel center include:

  • dedicated truck and RV parking areas
  • Pet relief area (I had no idea so many truckers travel with a pet)
  • Expanded food choices.

Fueling convenience stores

The primary function of some C-stores is to sell fuel, with an assortment of snacks and beverages.  Many times, these may be the only fueling option in town or within miles. 

Grocery convenience stores

The primary function of some C-stores is to be the local grocery store; these may be the only grocery option within miles. These stores will also have an assortment of snacks and beverages, and other convenience items, and may also sell fuel.  Grocery is now the third most common category purchased at convenience stores, falling just below snacks and candy, according to data from NRS.

Urban convenience stores

These small, non-fuel locations are normally seen on an active, pedestrian street and cater to people living or working nearby.  I was quite surprised to encounter these types of C-stores while traveling internationally. One in Beijing on the ground floor of a high-rise office building features a steam table serving lunch to workers in the office building.

As I said, most convenience stores fulfill a variety of needs and fit within multiple categories.  The good news is that there are still many opportunities for new locations within all types of C-Stores. And for new types of stores.  Will the “lessons learned” during the Covid pandemic lead to evolution of C-stores or even new types of C-Stores? 

Stay tuned.

Mike Cummings, Sr. Principal