Convenience stores have competitors on nearly every corner. Adding foodservice can help c-stores stand out, but the stakes are high: Foodservice operations are complex, and hard-earned customers can leave you for established quick-service alternatives. Through our partnership with NACS, we at the Good Jobs Institute have seen that high employee turnover can make adding or elevating foodservice a risky proposition. The good news? Reducing turnover and strengthening execution can give convenience stores a competitive advantage that enables an adaptable and differentiated food experience.

The Risks of Adding Foodservice to a Weak System

Employee turnover sinks companies into a vicious cycle. When you have high turnover, your employees are less experienced and capable, driving execution problems like out-of-stocks, long lines and poor service, which hurt profit. Reduced profitability creates pressure to reduce staffing levels, which increases turnover, continuing the cycle. 

Adding complexity, like a foodservice offering, to this weak system can be risky. When c-stores operate in a vicious cycle, managers often spend their time fighting fires and are unable to hire the right people and train and develop their staff. Additionally, high turnover means that stores are hiring more people, so less time and resources can be allocated to each new hire. Stores in a vicious cycle also struggle to set high expectations for their employees—high turnover makes it harder to let go of poor performers, resulting in attendance problems. In these environments, even the most capable and motivated employees will struggle to perform at a high level. 

Without a system that enables a motivated and capable workforce, it is challenging to deliver quality food that is a good value with good service, let alone to innovate in ways that will generate customer loyalty and growth. 

Quality food and service: Foodservice requires training and time to execute, both of which can be limited in a high-turnover environment. Employees with less experience and limited training may be slower and make more mistakes, leading to longer wait times, refunds and lost customer loyalty. For one restaurant chain that we worked with, stores with higher turnover had more mistakes and were less profitable, with lower sales per square foot and lower same-store sales growth. 

Since high turnover goes hand in hand with attendance problems and understaffing, it is hard for employees to complete all tasks, which encourages cutting corners. The consequences for customers can range from a low-risk inconvenience to a high-risk public health crisis like a foodborne illness.

Spoilage and other costs: Researchers have found that retailers with lower pay and higher turnover have higher damages and theft. We observe this relationship in most of our company partnerships. For one convenience store chain, the stores with the highest turnover had nearly twice the shrink rate as their stores with the lowest turnover. 

Foodservice adds a similar factor, spoilage costs, which in a period of high inflation can drive high COGS that makes offerings unviable. As one convenience store operator with high employee turnover told us, “We had to kill fresh bakery and pizza. The costs were too high, and there was too much spoilage.” 

We’ve worked with convenience stores that have made significant investments to develop elevated food products only to end up in a holding pattern.

Beyond spoilage, and depending on the level and sophistication of the offers, foodservice programs come with a significant investment in equipment—ovens, refrigeration, freezers, ice machines, fryers, ventilation and the like. Often in high turnover environments, employees lack the time and training to properly clean and care for foodservice equipment, causing the equipment to break down and need to be serviced more often. 

In addition, just the direct costs (cost to hire, train and ramp up base productivity) of turnover can be substantial—anywhere from 2%-10% of revenue for some of the companies we’ve worked with. 

Innovation: In all retail environments, organizations need to be able to adapt and innovate to address their customers’ changing needs. We’ve worked with convenience stores that have made significant investments to develop elevated food products only to end up in a holding pattern because their workforce was too unstable. As one leader explained, “We were full steam ahead [with a new food offering] and had to drastically pull back. We didn’t recognize the impact of growth … and how that impact would be a domino effect across the board.” When high turnover becomes a bottleneck that prevents the launch of new menu offerings, c-stores risk falling behind the competition. To execute on more complex offerings, c-stores need a stable and experienced workforce.  

Building a Stronger System to Deliver Great Foodservice

The vicious cycle is not inevitable. As Zeynep Ton, co-founder of the Good Jobs Institute, details in her book “The Case for Good Jobs,” it is possible to reduce employee turnover and improve store execution and service by increasing investment in people and simplifying operations. Investing in wages and hours, training and career paths is essential to attracting and retaining great employees and creating a high-expectations environment. While these types of investments may seem prohibitively expensive on their own, operational changes that increase the productivity and contribution of employees can de-risk and pay for those investments. 

We’ve seen companies reduce non-value-adding work by adding better equipment to reduce manual tasks like grinding coffee, eliminating time-consuming offerings like money orders, working with suppliers to make deliveries consistent and reducing administrative work for store managers. The combination of simplifying work and investing in frontline roles enables c-stores to reduce turnover and drive operational excellence. 

Ultimately, making these types of changes can have a meaningful impact on a retailer’s ability to adapt to an increasingly dynamic environment. C-stores that operate with lower turnover and look to maximize the contribution of their employees are better equipped to deliver quality, service and value through an innovative foodservice offering.