Dive Brief:

• Circle K parent Alimentation Couche-Tard’s same-store merchandise revenues increased by 5.6% in the U.S. during its fiscal second quarter, driven by the success of its fresh food program, which has seen sales growth “up into the 20% range,” Brian Hannasch, company president and CEO, said during the retailer’s earnings call Wednesday.
• Hot to-go and frozen take-to-bake pizza — as well as fresh-baked cookies — were among Circle K’s foodservice standouts during the quarter, while the retailer’s new dispensed Mountain Dew Purple Thunder beverage also contributed, Hannasch said.
• Circle K piloted its new loyalty program in the U.S. — and a new tiered loyalty concept in Europe – during the period and is “preparing for an expansion in the upcoming quarters,” Hannasch said.

Dive Insight:

Circle K’s Sip and Save beverage subscription program continues to drive foodservice trips and enhance in-store baskets, Hannasch said. The program — which lets customers get one fountain beverage or coffee of any size each day for $5.99 a month — reached 24,000 subscribers during the quarter.

“We’re improving the online enrollment experience and seeing customers signing up [for Sip and Save] online,” he said.

Despite being “pleased” with where they’re at, Hannash said Circle K is still “in the very early innings” with its foodservice program, highlighting needed improvements with things such as building a food culture and managing daily spoilage.

“[Foodservice] is one of those things that if we get right, we can influence a consumer to turn left instead of right,” he said. “That’s the journey we’re on.”

Circle K reached 1,000 units of its Smart Checkout technology during the quarter and plans to reach 10,000 over the coming years, Hannasch said. This technology — which Circle K launched over the summer — lets customers place their selections on a platform that recognizes the items and rings them up in one transaction.

On the loyalty side, Hannasch said he’s “pleased with the early results” of the new program, which officially piloted at Circle K stores in Goldsboro, South Carolina and in Denmark in early September. In the U.S., the program has since piloted in other “small markets,” Hannasch said, although POS system delays have prevented it from being deployed more broadly.

By tiering the program, which has so far only been done in Europe, Circle K is focusing on its most frequent customers.

“We’ve got a strong group of consumers in our industry who drive a tremendous percentage of the volume,” Hannasch said. “We’re going to make sure the customers who can deliver the most value to us get the most value from us.”

Circle K saw “positive promotional activity” during the quarter from things like take-home soda packages and fuel discounts, he said. The retailer is using data to drive its promotional decision-making, and moving forward, will focus on quality over quantity with its promotions.

“You should see fewer promotions, but more effective promotions, which should result in higher margins and sales over time,” Hannasch said.