The humble filling station is not historically known for top bakery cuisine. Not too many years ago, picking up a soggy pasty was about the best the average driver could hope for. But the UK’s fuel retailing industry has been through some pretty major changes recently, and this has resulted in consumers increasingly starting to seek out petrol stations as a destination stop for food including bakery products as either food-to-go or for take-home.

One reason for the change is declining profits at the pumps. As fuel sales margins have been squeezed, retailers have been forced to become more inventive with their shop offer. According to IGD’s Convenience Retailing report (May 2010), bakery’s contribution to average sales at UK forecourt stores was 2.9% in 2009, up ever so slightly from 2.8% in 2008. Yet retailers and oil companies alike say the category has plenty of potential.

Steady growth

Robert Jenkins, food services and chilled category manager at Total UK, says the oil company’s forecourt shops have been seeing steady growth in baked goods. "The growth is coming from hot, savoury food items, and anything related to breakfast meal deals," he says. "Breakfast baps (bacon etc) have seen an increase in sales of 35-40% in the past 52 weeks. Customers are being tempted by deals more than ever before. In spite of the economic climate, consumers are as hungry as ever, and have no intention of cutting back."

And with major bakery retail names like Greggs expanding into forecourts, the future certainly looks positive. But industry experts warn that the main challenge for suppliers is understanding how the fuel retailing sector works.

Firstly, it’s not always obvious who owns which petrol station. Only about a quarter of forecourts today are owned by oil companies. According to figures from Experian Catalist, just over 60% are owned by independents and 14% by hypermarkets. Some retailers own one site, while others own hundreds. Still others are part of a symbol group, such as Spar or Budgens. It can seem a bit complicated, but it’s not impossible to crack.

Shell still owns some of its own forecourts and uses its category partners at Foodservice Centre (FSC Group) to look after its bakery lines. Jeremy Simpson, commercial director at FSC Group and also responsible for buying bakery products for Shell’s company-owned sites, says suppliers must research the forecourt sector thoroughly and understand how it operates. It’s also important to learn about the business of each retailer before approaching them sites have differing consumer needs depending on location and customer demographic.

Simpson explains: "In the dealer channel, the oil companies have little to do with the shops. With fuel margins being low, more retailers are working with symbol groups, such as Spar and Mace, to enhance their shop offer, so there is an opportunity for bakery suppliers to get their products into the symbol group shops by teaming up with wholesalers. It’s a good way to get into that channel."

He advises suppliers to approach wholesalers directly with products, adding: "If the wholesaler likes them, they might list and promote them and the supplier invoices through the wholesaler. The wholesaler might expect a discount on the product, but because the supplier invoices through the wholesaler, it removes the need for a large credit control department.

"That’s a far better route than going out and pitching to individual retailers, which can be time-consuming. Teaming up with a wholesaler can seem expensive, but the wholesaler will really push your products if they like them through their annual trade shows etc. It’s quite a popular route with suppliers, and is becoming increasingly popular."

Direct approach

As far as the sites owned by the oil companies are concerned, Simpson says it’s better to approach the company directly through head office and arrange a meeting with a buyer. About 60% of Shell’s estate is franchise-operated. FSC Group either stocks a brand or uses its own brand, Deli2go. Simpson adds that, at transient sites, such as those owned by Shell, customers often have a different mind-set to those visiting their local petrol station for a loaf of bread. His advice is: "Don’t expect to take your existing product and sell it to the forecourt market. It’s a very different market to the high street and the consumer has a different mind-set. They are often feeling negative in a petrol station usually over the price of the fuel they’ve just bought! and often just want to get home. They’re usually also short of time.

"Understanding case size and packaging is also very important. It’s pointless to approach a site that only sells five pasties a day with a case of 50 fresh pasties. And when designing packaging, remember that the consumer will probably need to eat the product in their car.

"Give thought to the operation, supply and consumer need-state," he adds. "If you’ve thought that through, not only will you sell more product, but you’ll impress the buyer with your presentation. That’s what will help clinch the deal."

Sausage rolls are the biggest seller by a long way, he says, followed by savoury slices and pasties. Danish pastries are quite popular, but products like muffins and donuts don’t do so well at Shell’s bigger, high-volume outlets.

The company has four suppliers for its savoury pastry range, including Crantock Bakery in Cornwall for pasties and Pieminister for sausage rolls. Simpson adds: "In the main, it’s still mostly impulse buys at busy main route forecourts."

Over at Total, it’s a slightly different story. Jenkins says freshly baked bread is very popular and the more variety the better.

He adds: "Price seems to be less of an issue for consumers, with bread baked on-premise commanding a higher price than well-known plant bread. Large French baguettes are our biggest-selling line; these have grown by 12-15% over the past 52 weeks.

"Breakfast goods, such as crumpets, muffins and teacakes are still a relatively small part of our business, but have huge potential for development. We are restricted on our ability to grow this category due to short shelf-life, and most products falling into 48-hour lines. Breakfast goods must be ordered in advance, since warehouse availability cannot be guaranteed. This kind of forecasting is a risky business, which requires relatively high store turnover."

He advises bakers to look at supplying locally-sourced products, explaining: "We are currently selling baked products from a well-known village bakery across two of our service stations. Early results are very encouraging: customers want to support their local bakers. Results from the two-site trial suggest that fresh cream cakes and muffins are favourites among customers."

Brian Madderson, chairman of RMI Petrol, which represents 6,000 independent forecourts in the UK, agrees there’s a market for locally baked products. And while it’s usually best for bigger suppliers to go through wholesalers, smaller bakery suppliers should approach retailers directly.

Madderson explains: "For smaller bakers, there’s a big and growing demand for local speciality breads and bakery products. Some independents, even though they may have a symbol brand store, still like to sell local produce. These are usually homemade items, or maybe speciality loaves something different, not just your average sliced white loaf. Snacks that can be eaten on the go, such as Danish pastries, are also very popular.

"The local baker also needs to make sure that the presentation of their products is right, or at least that the local retailer is prepared to present their products in a manner that is attractive for example in bread baskets." Madderson advises smaller bakers to look for retailers who already sell other local produce, such as fruit and veg or meat, and approach them directly.

Big in bake-off

Meanwhile, bake-off is big in many forecourts, with companies like Country Choice and Cuisine de France the main suppliers. Sunil Tandon runs Croydon-based Park Garage Group, one of the biggest independent fuel retailer groups in the UK with 96 sites. He says about 60% of sites have a bake-off facility, all with Country Choice.

"Country Choice has a huge range, but it’s the traditional products that are still the most popular sausage rolls, steak and kidney pies etc," he says. "If you get bake-off wrong, it can cost a lot in labour, plus there’s also wastage to consider. But the margins are quite good if you get it right."

FSC Group has been working with Shell to put bake-off in 50 stores under its existing Deli2go brand. Simpson says: "There are opportunities; just make a call to head office and explain what product you’ve got. We have agreements in place, but we’re always interested in having discussions with potential new suppliers."

Simon Lawrence runs independent group Lawrences Garages (London), and sources speciality breads for one of its five sites from a local bakery in Norwich. He explains: "The bakery supplies us with artisan breads ciabatta, stone-baked but this is very much for a forecourt with local, regular customers. There’s not a huge demand for these types of products, but there’s enough. We also stock the well-known bread brands. We rely on Country Choice for pretty much all our other bakery products. We get our freeze-and-bake products from them sausage rolls are still the best seller."

Pack sizes are very important. Anis Patel is director of Bolton-based Aleef Garages, another of the UK’s biggest independent retailers. He says smaller pack sizes tend to sell better for example, a pack of six rather than 12 snacking items, such as muffins. The company tends to use wholesalers rather than dealing with bakery suppliers directly. Its biggest gripe concerns being able to get enough product without being penalised for minimum orders along with the ability to return unsold bakery goods. Patel adds: "Bread is very low-margin but it is a must-have item. The opportunity is there for small local suppliers, but branded goods do sell. We use a company called Bobby’s Foods for all our snacking lines, such as muffins, cakes and teacakes."

Over at BP, spokesman Mark Salt says snacking trends are moving towards "indulgent American-style confectionery", such as muffins, donuts, cookies and whoopie pies. The oil company, which has about 250 company-owned sites and sells bakery products via its Wild Bean Café brand, advises bakery manufacturers and brands to "modify and tailor solutions relevant to format and customer type", but adds that it offers no opportunities for small suppliers.

According to James Hall, controller of Bestway symbol group Best-one, suppliers need to research the market and find a point of difference. He advises: "It’s best to make an appointment and take in a range of goods that you can easily produce. Have a look at what type of customer uses the forecourt builders, people on the way to work and put together an appropriate selection of the actual goods and let the person try them. Make the range interesting and a bit special."

Country Choice’s top 10 bakery products in UK forecourts

l Extra Large White Baguette
l Small White Baguette
l White Organic Loaf
l Small Harvest Grain Baguette
l Batched White Crusty Rolls
l All Butter Croissant (Curved)
l Pain Au Chocolat
l Maple Pecan Plait
l Decorated Ring Doughnuts
l Yum Yums
Source: Country Choice marketing controller Stephen Clifford