A quick look at a comprehensive set of 2023 foodservice data shows promising growth: total industry foodservice sales represented 26.7% of in-store sales, an increase of 1.1 points from last year, according to the NACS State of the Industry Report® of 2023 Data released in June. Foodservice sales grew 9.0% year over year, from $54,835 to $59,752—and this wasn’t just due to inflation price increases.

Foodservice is as exciting to convenience operators as it is to consumers. Foodservice, which here is referred to as the five categories of prepared food, commissary, and hot, cold, and frozen dispensed beverages, are centers of innovation according to Deanna Hall, sr. product director of 7-Eleven. “Consumer needs are constantly evolving, and that’s what’s exciting,” said Hall.

Each of those foodservice categories has subcategories that make them unique, and retailers can capitalize on these attributes to create a foodservice program that keeps consumers satisfied all day. In this article, we’ll dig into the metrics of each subcategory to provide much-needed color for overall foodservice data.

Prepared food

Prepared food is any food that has been ordered by a customer to be prepared on-site by a foodservice employee.

Prepared food in convenience continues to be on the upswing. In 2023, the category once again contributed the most—71.7%—to overall foodservice sales. This is an increase of 2.3 points from the year before and was paired with a high margin of 55.65% that allowed operators to rake in an average of $50,991 per store, per month.

Prepared food often takes center stage on the convenience store menu and is ideal for introducing new flavors through limited-time offers (LTOs)—the amount of which convenience operators have doubled since 2019. LTOs allow retailers to cater to the taste of the consumer which can change with the seasons or even week-to-week.

Retailers have also used prepared food LTOs to encourage growth in the lagging morning daypart. Data shows that the morning commute is still down from pre-Covid rates, but there are still ways to boost morning sales. In 2023, 7-Eleven pushed LTOs to bring back the morning daypart and saw great success.

7-Eleven introduced “some of [their] biggest LTO successes” in the breakfast daypart, including their “new signature French Toast Breakfast Sandwich line of Ham & Egg & Cheese with bacon mayo and Sausage, Egg & Cheese with chipotle mayo,” shared Hall.

Commissary

Subcategories include: sandwiches and wraps, meals ready-to-eat, sides and salads, and thaw, heat and eat.

According to 2023 Convenience Voices data, 21.9% of respondents said they purchased commissary items within the last two weeks. Consumers on the run tend to reach for commissary items like fresh packaged sandwiches, cut fruit or frozen items they can heat up later in the day. Many retailers like Maryland’s Dash In prepare these offerings daily, and last year Dash In “saw an uptick in demand for fresh cold sandwiches, wraps and salads that we make daily as a fresh grab-and-go offering,” said Mark Samuels, executive vice president, convenience retailing, Dash In.

Sandwiches and wraps were the largest portion of the category in 2023 and accounted for 47.0% of commissary sales, which saw another year of overall sales growth—from $5,833 to $6,224. The sandwiches and wraps subcategory sales also increased by 7.7% year over year to $2,926 per store, per month.

The second largest contributor to commissary sales were ready-to-eat meals at 28.6% in 2023. The subcategory earned $1,781 per store, per month in 2023, an increase of 12.5% compared to 2022. Sides and salads sales, which represented 20.1% of commissary sales in 2023, saw slight decrease of 0.8% in 2023 to $1,251 per store, per month.

Thaw, heat-and-eat food was the smallest commissary subcategory at 4.3% of sales and was the only other subcategory that experienced a sales decrease. Sales declined by 2.0% to $267 per store, per month in 2023.

Consumer needs are constantly evolving, and that’s what’s exciting.”

Hot Dispensed Beverages

Subcategories include: coffee, cappuccino/specialty coffee, refills, hot chocolate, other hot dispensed beverages, coffee club mugs and hot tea.

The hot dispensed beverages category is primarily made up of coffee sales, which contributed almost three-fourths of sales (72.4%) in 2023. The category generated the second highest sales among foodservice categories. However, this success was hard won.

Hot dispensed beverages was one of the hardest hit foodservice categories during and after the pandemic. The morning daypart—usually the most popular time to purchase hot dispensed beverages—experienced a sluggish recovery as workers slowly trickled back into the office or not at all.

Further, consumers’ tastes are changing. In the third quarter of 2023, Starbucks recorded that its cold beverage business made up 75% of sales, a clear indication that more consumers are opting for a cold coffee over a hot one.

Retailers are getting more innovative with their coffee offerings, in addition to adding breakfast themed LTOs, to reinvigorate the morning daypart. Dash In, for example, “made investments in 2023 that included transitioning stores to B2C [bean to cup] equipment for Hot Beverage,” said Samuels.

These types of investments helped coffee realize a 4.9% increase in per store, per month, from $4,323 to $4,554, and a per store, per month gross profit increase from $2,871 to $2,996. The second largest subcategory, cappuccino and specialty coffee, also saw success, and increased both sales (from $1,075 to $1,141) and gross profit (from $618 to $648).

The smaller subcategories of refills and hot chocolate fared similarly. Each claimed 3.9% of category sales. Refills contributed $246 in sales and $166 in monthly per store profits, and hot chocolate recorded $243 in sales and $125 in gross profits per store, per month in 2023.

Cold Dispensed Beverages

Subcategories include: carbonated, other cold dispensed beverages, non-carbonated, refills, fountain club mugs and sports drinks.

Of Convenience Voices respondents who chose a site due to its product offering, the third most popular reason (43.5%) was the quality of fountain or frozen beverages offered by the store.

Cold dispensed beverages category sales have been historically dominated by carbonated dispensed beverages. In 2023, they contributed 52.3% to category sales, a year-over-year decrease of 5.7 points. Sales were recorded as $2,772 per store, per month, a slight year-over-year decline of 1.1%. Gross profit dollars also fell by 7.3%, from $1,546 to $1,433 per store, per month.

The “other cold dispensed” category, which includes iced coffee, cold brew and more, increased its share of the category by 5.5 points to 37.1%, and saw per store, per month sales increase from $1,468 to $1,898 per month. Margins were slightly less profitable than the previous year (falling from 59.78% to 54.57%), but sales volume was enough to boost gross profits from $878 to $1,036.

The remaining 10.6% of sales came from the subcategories of non-carbonated, refills, fountain club mugs and sports drinks, and all except refills saw year-over-year sales increases. The largest of these subcategories, noncarbonated cold dispensed beverages, saw the highest gross margin percentage of all cold dispensed beverages (56.01%).

While Dash In experienced “a continued decline in traditional CSD fountain drink units,” the retailer pushed a new “proprietary fresh cold dispensed bubbler program for the cold dispensed category,” showing that “new innovation[s are] driving unit sales.”

Frozen Dispensed Beverages

Subcategories include: frozen non-carbonated, frozen carbonated and other frozen dispensed beverages.

Frozen dispensed is typically the smallest contributor to foodservice sales (2023 contribution was 5.8%), but usually boasts the highest margin. Last year, frozen dispensed beverages margins were 65.31%, and beat the second highest category, hot dispensed beverages, by 2.09 points.

Frozen dispensed beverages can be an important trip driver—and consumers look for a quality frozen dispensed program. Last year, Dash In “invested in an automated frozen beverage technology that replaced a previous offer and led to significant growth.

Overall category sales increased by 18.1%, from $3,501 to $4,134, and gross profits increased by 21.7%, from $2,218 to $2,700. The majority of frozen dispensed beverages sales came from frozen non-carbonated beverages, which accounted for 74.4% of sales, a slight 0.1-point decrease from the prior year. Its sales increased 17.9% year over year, and averaged $3,076 per store, per month in 2023.

Frozen carbonated and other frozen dispensed beverages were the smallest contributors at 17.3% and 8.3%, respectively. Frozen carbonated beverages sales and gross profits both increased by double digits and saw the highest sales increase of 22.7%— from $583 to $716—but its margins were the lowest of the subcategories at 35.36%. “Other frozen dispensed,” the smallest subcategory, grew year-over-year sales by 10.6% in 2023 to $342 per store, per month.