Food Service at the Service Station Channel in Europe CM00083-005/Published 07/2012

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SERVICE STATION RETAIL INSIGHT SERIES

Food Service at the Service Station Channel in EuropeConsumer trends, competitive landscape, and strategies for success

Reference Code: CM00083-005

Publication Date: July 2012

OVERVIEW

Summary

With changing lifestyles, average time spent on meals is reducing while consumers' propensity for consumption on-the-

move is growing. Although consumers still perceive service stations primarily as refueling destinations, they are

increasingly demanding food service at forecourt outlets to appease their growing appetite for food-to-go. This trend

coupled with declining fuel margins is stimulating fuel retailers to develop better food service, either under their own private

label brands or through partnerships.

Fuel retailers are focusing on improving the quality and freshness attributes of their food service propositions and are

developing meal-oriented offers. Specialist food service retailers are also developing smaller retail formats suitable for

travel retail destinations and are looking for opportunities to establish their presence at service stations.

Food Service at the Service Station Channel in Europe examines the development of food service across Europe’s service

station networks in the context of the changing consumer trends and dynamics of the fuel retailing industry. It analyzes the

food service propositions and strategies of major fuel retailers in Europe and also profiles food service specialists for

potential partnerships.

Consumer Trends and Market Context

Food Service at the Service Station Channel in Europe CM00083-005/Published 07/2012

© Datamonitor. This report is a licensed product and is not to be photocopied Page 15

Figure 2: The proportion of meal occasions conducted out-of-home and on-the-move in Europe will

increase by the end of 2014

29.7%30.6%

11.9%

12.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

France Germany Italy Netherlands Spain Sweden UK Europe

Pro

porti

on o

f mea

l occ

asio

ns c

ondu

cted

out

-of-h

ome

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Pro

porti

on o

f out

-of-h

ome

mea

l occ

asio

ns c

ondu

cted

whi

le o

n-th

e-m

ove

Proportion of meal occasions conducted out-of-home (2011)Proportion of meal occasions conducted out-of-home (2014e)Proportion of out-of-home meal occasions conducted while on-the-move (2011)Proportion of out-of-home meal occasions conducted while on-the-move (2014e)

Source: Datamonitor Consumer Survey, Datamonitor analysis VERDICT RESEARCH

Breakfast is the most commonly eaten meal on-the-move

Typically, most people find themselves on the road in the morning and evening on their way to and from work. There has

been an increase in the average commute time as growing urbanization means that people are settling in the suburbs on

the periphery of the main cities and are traveling a greater distance each day for work. This coupled with rising traffic

implies that people are spending more time on the roads than before, and are often forced to leave home earlier than

normal, thereby missing the opportunity to have breakfast at home.

Moreover, the likelihood of feeling reasonably satisfied upon grabbing a quick breakfast-to-go such as a coffee and

croissant is much higher in comparison to having dinner on the go. People usually like to have a reasonably substantial

meal for dinner in order to feel satiated. Thus, consumers have the highest propensity to eat breakfast when they are on-

the-move, followed by lunch and dinner. Breakfast accounts for over 60% of all meals consumed on-the-move.

Consumer Trends and Market Context

Food Service at the Service Station Channel in Europe CM00083-005/Published 07/2012

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Figure 8: The proportion of motorists who would like more variety for various products at service station

shops in the Euro 8 region

0.0% 10.0% 20.0% 30.0%

News and magazines

Hot, ready-to-drink coffee and tea

Hot food

Mobile top up

Lubricants and car products

Bakery products

Over-the-counter medicine

Chilled snacks

Soft drinks

Tobacco

Confectionery

Ambient snacks

Fresh produce

Hot drinks (tea bags and packaged coffee)

Dairy products

Alcoholic drinks

Personal care products

Outdoor goods

Grocery

Household goods

Frozen food

Source: Datamonitor Motorist Survey VERDICT RESEARCH

By providing what consumers want most, fuel retailers will not only be able to leverage the growing opportunity in food-to-

go but will also be able to improve the overall consumer perception about forecourt shops. This can further help to win over

more skeptical consumers and grow shop profitability.

The need for food service at service stations varies across different consumer groups

Professionals on-the-move drive greatest demand for food service at service stations

Professionals who travel to and from work by car every day have a pronounced need for food service at service stations.

Mounting pressures at work and an increase in the average travel time mean that people often leave home early and have

less time to spare for a sit-down meal. Grab and go food options either for a particular mealtime (breakfast, lunch, or

dinner) or for an ad hoc snacking occasion are becoming increasingly attractive to professionals who strive to optimally

utilize every minute of their working day.

Aside from professionals who on average make one return journey per day, those people who by virtue of their work have

to make multiple short trips or high mileage trips during a working day tend to depend on food service available at easily

accessible service stations. For example, sales executives, consultants, and technicians are part of this group of intensive

motorists. Sometimes when traveling their expenses are borne by their employers, and thus they are less price sensitive.

Service Station Retailers' Food Service Propositions

Food Service at the Service Station Channel in Europe CM00083-005/Published 07/2012

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Figure 23: Wild Bean Café meal deals in the Netherlands

Source: BP VERDICT RESEARCH

Despite operating a strong food service concept, BP faces stiff competition from the Dutch market leader Shell, which has

the largest network of 530 service stations and a strong food service offer. Shell is expanding its food service concept

Deli2Go in the Netherlands, which will further improve its market position. Other players such as TOTAL and Texaco also

have well-developed own-brand food service concepts. Given the tough competition, it is important for BP to expand the

food service proposition to more service stations and strengthen its market position.

BP is expanding the Wild Bean Café concept in Poland

In Poland, BP features the Wild Bean Café food service concept at over 200 service stations – half of its entire network of

402 sites in the country. In May 2011, BP introduced the concept at a dealer-owned service station for the first time.

Wild Bean Café offers a wide range of food and drinks in Poland including baguettes, sandwiches, rolls, sausages, hot

dogs, tortilla wraps, and chicken wings. Chicken-based snacks were introduced in April 2011 in direct competition with fast-

food chains such as KFC and McDonald's, and illustrated BP's focus to establish a complete fast-food offer to cater to the

growing demand for food-to-go in Poland.

In terms of promotional offers, Wild Bean Café offers meal deals for breakfast and lunch that include a sandwich and a

drink, similar to the offers in the UK. It also provides one loyalty stamp upon the purchase of a coffee, and customers can

get a free coffee after accumulating nine stamps. BP has also introduced a Wild Bean Café-branded thermal mug, upon the

purchase of which customers can use to receive a discount every time they purchase coffee at BP stations.

In addition, BP has a deal with multi-partner loyalty program Payback in Poland. Payback card holders can earn 50 loyalty

points upon a purchase worth €2.39 (PLN10) from a Wild Bean Café. The accumulated points can be redeemed against

various rewards available on BP's online catalogue including car washes at BP sites. This is an efficient way of promoting

another important forecourt service along with food-to-go products.

Research shows that in Poland over 28% motorists place a high level of importance on food service when choosing a

service station. The Polish forecourt food service market is under development, with several fuel retailers entering the

market and actively developing their food service propositions. PKN Orlen, the Polish market leader, has developed its

Stop Café and Stop Bistro food service concepts and is fast expanding them across its network of 1,714 sites. Statoil is

also offering its Made to Go private label food range in Poland.

Service Station Retailers' Food Service Propositions

Food Service at the Service Station Channel in Europe CM00083-005/Published 07/2012

© Datamonitor. This report is a licensed product and is not to be photocopied Page 56

By offering something as diverse as sushi, Statoil is also competing directly with quick service restaurants and food service

specialists that keep innovating with new and international cuisines in order to keep their menus novel and unique. No

doubt Statoil is challenging the commonly held notion that drivers do not expect to find and buy healthy food options when

stopping at a service station for a quick bite. While this may hold true for the majority of high mileage drivers, especially in

the commercial traffic space, fuel retailers cannot afford to overlook the overall consumer trend toward health and wellness,

which is affecting consumers’ choices independent of where they eat.

In February 2012, Statoil launched wholemeal bread at 180 service station shops in Denmark. Statoil has also launched a

new range of cinnamon-flavored pastries in Denmark, which are baked on-site and carry their own quality and taste stamp.

Statoil guarantees money back if customers do not like the pastries.

In Sweden, Statoil launched new baguettes in 2012, developed in association with the Swedish Association of Chefs. The

new products include baguettes with fillings of grilled vegetables and feta cheese and smoked sausage with herbs. During

2012, Statoil will be launching eight new products in Sweden.

In Norway, Statoil launched a new range of sandwiches under the Wasa brand and offered a free sandwich upon the

purchase of a VG newspaper during the first six weeks of 2012. In Poland, Statoil introduced two new flavors of muffins at

200 of its retail outlets.

In Scandinavia, Statoil's major push has been on coffee promotions

Figure 30: Statoil’s coffee mug promotion targets men and women with black and pink mugs

Source: Statoil VERDICT RESEARCH

In terms of promotions, coffee is one of the key focus areas for the fuel retailer. In Norway, Statoil has been promoting its

coffee through an unlimited offer over the last few years. Customers are entitled to unlimited coffee and other hot drinks for

free for one year upon the purchase of the Statoil-branded coffee mug worth €26.60 (NOK199). Upon the end of one year

from the date of purchase, customers can benefit from the offer for another year by purchasing the mug cover and lid worth

€19.92 (NOK149). Through this offer, Statoil has developed strong customer loyalty, which it leverages to drive custom for

other shop products. The "unlimited" component of the offer makes it very attractive to customers, as it clearly

communicates the value proposition. In 2012, Statoil launched another coffee mug worth €6.55 (NOK49) for those who do

not use the mug frequently, requiring users to pay a discounted price (€1.33 [NOK10]) every time they buy coffee. In 2011,

Statoil launched a limited edition range targeting men and women separately with black and pink mugs.