Sometimes it’s nice to step away from EMV and Blizzards and all things political to just smile. Perhaps have a Coke and a smile. This guy turned 11 yesterday and is in our circle of family operated business. He’s the smartest and kindest kid I know.
Last week we attended “The Really Big Expo” in Myrtle Beach, SC where there was much discussion about the growing and changing food service options in C-Stores. We attended NACS “Ideas 2 Go” program discussion which showcased emerging concepts that redefine convenience stores. Another huge topic of conversation is how the millennials are changing the way people eat and shop. Gone are the days of a dried hot dog spinning on a warmer as your only option. C-Stores are ‘destination spots’ – not just a place to fill your tank. Bigger selections and healthier options are becoming the norm.
If you’ve seen the 2013 NACS Ideas 2 Go program, then you’ll recognize many of the retailers the NY Times visited: Thai Pan, Flory’s and Seoul Food D.C. Each establishment was part of a segment on some of the best gourmet ethnic food found at a single-store operation, and the retailers behind these businesses that deliver exceptional food and innovative new ideas.
“Encouraged by the changing tastes of consumers and the potential for profit, a metamorphosis has taken place in at least 1,500 locations nationwide: at independent gas stations as well as those owned by oil giants like Shell and Exxon and convenience store chains like 7-Eleven,” writes the NY Times, adding that “fresh produce, elaborate sandwiches and even grilled tilapia and Korean bibimbap” are becoming more ubiquitous at the local convenience store.
These locations “are now cool to discover and tell others about,” Jeff Lenard, NACS vice president for strategic initiatives, told the news source. In fact, the industry has come a long way from food offers that merely served up punchlines for movies such as “National Lampoon’s Vacation,” where Chevy Chase laments, “I’m so hungry I could eat a sandwich from a gas station.”
“We definitely see, year after year, convenience stores presenting a competitive threat to quick-service outlets like McDonald’s,” Donna Hood Crecca, associate principal at Technomic, told the news source. Citing NACS State of the Industry data (newly released numbers will be presented next month at the State of the Industry Summit), in 2015, about 34% of in-store profits at convenience stores came from foodservice, up from 22% in 2010.
Larger convenience store chains, such as Sheetz, are adding drive-thrus and touchscreen ordering kiosks to accommodate their growing foodservice operations. The NY Times writes that there’s also “an increasing number of roving food trucks” at c-stores, such as Andrae’s Kitchen, in Walla Walla, Washington (hot dogs, hamburgers and sandwiches), and the Brew Pump, in Asheville, North Carolina (eight beers on tap, beer garden and sandwiches).
“Food industry analysts now consider convenience markets competition for some of the most powerful names in the restaurant industry,” writes the NY Times, adding that an estimated 10% of the 154,000-plus convenience stores across the country—a $575 billion industry—“could be described as food-forward.”
LEESBURG, Va. — Last summer, when two women were looking for a restaurant space in this Northern Virginia town of 48,000, one of the options held multiple enticements: It was affordable, it had a good location, the kitchen was fit for Asian cooking and it was in a gas station.
They signed on the dotted line and retained the name of the previous business, Thai Pan. Now, while the brick exterior is connected to a Liberty gas station and resembles a well-fortified bunker, the authentic Thai fare served in a charming dining room is drawing locals and adventuresome foodies from throughout the region.
“People come in here and say, ‘Wow, I never expected something like this,’” said Wilaivan Kammoongkun, one of the women behind the new Thai Pan.
The restaurant is part of a wave of gas stations and convenience stores capitalizing on a growing demand for fresh, healthful and convenient road food. Encouraged by the changing tastes of consumers and the potential for profit, a metamorphosis has taken place in at least 1,500 locations nationwide: at independent gas stations as well as those owned by oil giants like Shell and Exxon and convenience store chains like 7-Eleven.
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Wilaivan Kammoongkun helped open Thai Pan, which is attached to a Liberty gas station in Leesburg, Va., and serves authentic Thai fare. “People come in here and say, ‘Wow, I never expected something like this,’” she said.CreditAndrew Mangum for The New York Times
As a result, roller-grilled hot dogs and little packaged cakes of indefinite shelf life are, in many places, giving way to fresh produce, elaborate sandwiches and even grilled tilapia and Korean bibimbap. Popular food trucks and food carts are adding to the variety, many setting up shop just feet from gas pumps to take advantage of a steady stream of customers.
The locations “are now cool to discover and tell others about,” said Jeff Lenard, vice president for strategic initiatives at the National Association of Convenience Stores.
It certainly hasn’t always been this way. In fact, convenience store food regularly stood in as a joke. In the 1983 film “National Lampoon’s Vacation,” a hapless dad behind the wheel of a station wagon, played by Chevy Chase, laments, “I’m so hungry I could eat a sandwich from a gas station.”
Major oil companies still tend to shy away from the complicated and risky food business. But in the early 2000s, when a long-term decline in revenue from food, gas, cigarettes and other products approached troublesome levels, many gas station and convenience store owners started to rethink their business models.
Now, an estimated 10 percent of the 154,000 convenience stores across the country — a $31 billion industry — could be described as food-forward, the National Association of Convenience Stores says.
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Flory’s, a family-owned enterprise, has four locations. “We were apprehensive about doing this because we were not sure about customers wanting to eat in a convenience store,” said Jamy Flory, a co-owner and vice president of the business.CreditHiroko Masuike/The New York Times
The largest chain, 7-Eleven, with 10,900 stores in North America, has been polishing its game for more than a decade. Nearly all of its fresh food, heavy on fruits and vegetables, is prepared in regional commissaries.
The service station strategy appears to be working: In 2015, about 34 percent of in-store profits at convenience markets came from food and beverage service, up from 22 percent in 2010, according to the trade organization. Food industry analysts now consider convenience markets competition for some of the most powerful names in the restaurant industry.
“We definitely see, year after year, convenience stores presenting a competitive threat to quick-service outlets like McDonald’s,” said Donna Hood Crecca, associate principal at Technomic, a research company that follows the food industry.
Upgraded convenience stores are found across the country, especially on the East Coast and in the Midwest. Greater Dallas and the area around Harrisburg, Pa., are two hubs. The Tigris and Euphrates of the genre, though, might be the region in and around Washington. Here, one can feast on a variety of treats, including house-cured corned beef, Thai specialties, regional Mexican fare, homemade pizza, fried chicken and barbecue.
In 2012, Jon Rossler had the opportunity to permanently park a corned beef food truck at an Exxon station in Olney, Md., north of Washington.
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Thai Pan draws both local people and adventuresome foodies from throughout the region.CreditAndrew Mangum for The New York Times
The following year he moved inside, opening a spiffy 20-seat restaurant with faux brick walls, granite counters and large computer screen menus. Today, Corned Beef King goes through 150 pounds of corned beef and pastrami weekly, and 100 pounds of brisket. The business started with two employees; today there are 16.
“It’s wild,” Mr. Rossler said. “I think I may have gotten too big.”
Occupying part of an Exxon station in suburban Silver Spring, Md., is Seoul Food D.C., a cheerful, three-year-old art-festooned cafe serving gorgeous Korean dishes like bibimbap (sticky rice with vegetables, greens, a sunny-side-up egg and choice of protein) and the super bowl (rice, caramelized kimchi, spicy relish, two cheeses and Korean red sauce).
The experimentation also extends to the Hudson Valley town of Fishkill, N.Y., and the family enterprise Flory’s, which has four locations.
At first glance, especially at night, one of its stores — sleek and modern and large at 1,900 square feet — resembles a small casino with 14 gas pumps.
All food is made in-house: sandwiches, salads, soups and prepared meals. There is also a healthy fare section and make-your-own-milkshake machines. Two cooks toil in a small open kitchen preparing specialties like chili, lasagna, quesadillas, fried chicken and stuffed sole. Breakfast begins — with 16 types of coffee — at 4 a.m.
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Recent offerings at Flory’s included macaroni and cheese, vegetables, rice, chicken stew, fried chicken and French fries.CreditHiroko Masuike/The New York Times
Jamy Flory, a co-owner and vice president of the enterprise, said the concept had succeeded beyond his most sanguine expectations. When he first opened, he said, the meat and cheese purveyor Boar’s Head was reluctant to be associated with a gas station. Flory’s is now a regular customer.
“We were apprehensive about doing this because we were not sure about customers wanting to eat in a convenience store,” Mr. Flory said.
Taking cues from fast-food restaurants, many convenience stores are also providing drive-through windows and ordering kiosks. Sheetz, a chain of 541 gas stations based in Pennsylvania, has a store near Harrisburg that welcomes customers to relax outside at umbrella-shaded tables that afford the exhilarating view of automobiles being topped off.
There is also an increasing number of roving food trucks at service stations, among them Andrae’s Kitchen, in Walla Walla, Wash., (hot dogs, hamburgers and sandwiches), and the Brew Pump, in Asheville, N.C. (eight beers on tap, beer garden and sandwiches).
“We want to be about good food but also about some fun,” said Mr. Flory, proudly showing a customer his arctic-themed “beer cave” with a giant simulated polar bear on top. (It’s where beer inventory is kept.) “People get a kick out of it, so why not?”
Criminals are migrating from brick-and-mortar retailers to online stores.
February 3, 2017
NEW YORK CITY – With more U.S. retailers adopting credit-card chip technology, thieves have begun to move from brick-and-mortar stores to online retailers, Bloomberg reports. Use of stolen card data to purchase goods via websites, mobile apps or call centers skyrocketed 40% in 2016, according to a new report from Javelin Strategy & Research.
“We are seeing more sophisticated types of fraud moving into the online environment,” said Erika Dietrich, global director of payments risk management at ACI Worldwide. A study released last summer found that one in three consumers worldwide has experienced card fraud.
By the end of 2016, nearly 1.81 million merchants in the United States could accept chip cards, a two-fold rise from 2015, according to Visa Inc. E-commerce retailers and financial firms will shell out $9.2 billion each year in fraud-reduction initiatives by 2020, a 30% jump from current levels, according to Juniper Research.
Worldwide, sales of merchandise purchased online is estimated to hit $27.7 trillion in 2020, up sharply from $22 trillion in 2016, according to eMarketer. This increased online shopping means thieves will have more opportunities to grab financial data or to place orders with stolen information. “Right now the environment is more challenging than it’s ever been,” said Al Pascual, research director and head of fraud and security at Javelin. “And things will get worse before they get better.”
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CIGARETTE SMOKING DECLINES BY 8.6 MILLION
A new CDC report shows the smoking rate among U.S. adults dropped 6% from 2005 to 2015.
November 14, 2016
ATLANTA – Smokers are lighting up less in the United States, NPR reports. A new report from the Centers for Disease Control and Prevention found that the smoking rate among the adult population dropped from 21% in 2005 to 15% in 2015. The rate declined 1.7 percentage points between 2014 and 2015—a huge decrease, according to the study in Morbidity and Mortality Weekly Report. Overall, 8.6 million fewer adults are smoking today than in 2005.
With California approving a $2 per pack cigarette tax last week, health advocates predict even more Americans will kick the habit. “Raising the tobacco tax is probably the single most effective way to reduce smoking, especially among kids,” said Vincent Willmore, vice president for communication at the Center for Tobacco Free Kids.
The new report finds that the West has the lowest smoking rates, even though taxes are higher in other parts of the country. Smoking rates are the highest in the Midwest. More men smoke than women too.
As cigarette smoking has decreased in the United States, vaping has become more popular. Some researchers are considering whether smokers have simply switched to electronic cigarettes rather than given up tobacco altogether. No data supports that claim, however.
Since the October 2015 liability shift, EMV remains frustrating for retailers and confusing for consumers—not a good proposition leading up to the next liability shift in October 2017.
October 3, 2016
ALEXANDRIA, Va. – One year after the October 2015 liability shift took effect for retailers to accept Europay MasterCard Visa (EMV) chip cards inside the store, thousands of chip readers have yet to be activated. To make matters more frustrating, the next liability shift—for fuels dispensers—is one year away.
Convenience retailer investments in EMV are not preventing fraud because chip cards in the U.S. are not enabled for PIN authentication, which is the most effective way to combat fraud, ensuring the customer using the card is the owner of that card. In the United States, the convenience store industry processes 160 million transactions each day and invests billions to reduce fraud at the point of sale. For example, many retailers pay to use customers’ ZIP codes to verify a transaction to protect their customers and their business. Retailers have real incentives to eliminate payment card fraud because they, according to the Kansas City Federal Reserve, absorb 80% to 90% of all fraud losses on credit and debit card transactions.
Convenience retailers will spend more than $7 billion on EMV—or just under 70% of industry pre-tax income for 2015—to upgrade and replace software and equipment to accept chip cards, but the card companies prevent retailers from requiring the use of PINs to verify the cardholder and protect against fraud. Without the protection of a PIN number on transactions, consumers and retailers are vulnerable to fraud.
Leading up to the October 2015 deadline, the card networks were late providing the necessary software specifications to accept EMV transactions. Retailers then needed certification from each card network before they could activate EMV. There were bottlenecks for both, compounded by the fact that the card networks set a liability shift timeframe without regard to the ability of equipment manufacturers and software providers to actually meet the deadline—a problem that will undoubtedly turn out to be even worse at fuel dispensers.
Nearly a year ago, NACS Board member Jared Scheeler, managing director of The Hub Convenience Stores Inc., testified before Congress that his chain of four North Dakota convenience stores had spent roughly $134,500 to install POS and pump card readers that accept EMV chip transactions. At that time, NACS estimated that the average transition cost would be more than $26,000 per store, compared with an average profit of $47,000 per year.
Since the October 2015 EMV liability shift, many retailers have also been experiencing an outrageous increase in chargebacks, mostly erroneous. Counterfeit chargeback liability is unknown, and has not been divulged by Visa and MasterCard, despite industry efforts for clarification.
Last week the Merchant Advisory Group (MAG) sent a letter to Visa and MasterCard regarding ongoing challenges with the EMV transition for in-store deployments, and highlighted concerns regarding the feasibility of the payments industry being ready for the October 1, 2017, liability shift for fuel dispensers.
“Compounding the financial burden for small merchants is the liability shift already in place for in-store EMV transactions under which chargebacks have far exceeded expectations. And for larger retailers with many stores and multiple pumps at each location, the expense is staggering,” MAG wrote in the letter.
The NACS Show is just two weeks away, so if you want to learn everything you can about EMV, its hurdles and how to prepare for the next October 2017 liability shift, do not miss out on the education, guidance and discussions that will take place during the event.
Here’s how you can maximize your time at the NACS Show learning more about EMV:
Talk to NACS government relations staff and general counsel in the NACSPAC Lounge.
On Capitol Hill, most of the efforts have so far focused on the aftermath of a data breach and notification requirements. NACS is urging policymakers to consider not only what happens after a data breach occurs, but also how to prevent breaches and fraud from happening in the first place. Protecting against fraud should be a top priority for all forms of payment, including mobile payments, and the best way to authenticate transactions is through a PIN or more advanced means.
NACS is advocating that retailers should have the option to require PIN on credit and debit card transactions and those that occur on a mobile device—the same protection banks require at ATMs.
PIN is the most secure authentication technology currently available and can be implemented now. All EMV chip-card readers are PIN-enabled with encryption security. When PIN is required, whether a card number or the card itself is stolen, a PIN protects consumers against fraud.
The industry, known more for its fried foods and meat-heavy items, has started to embrace vegetables.
September 28, 2016
ST. LOUIS – What’s the hottest trend in fast food? As unlikely as it seems, it’s vegetables, Business Insider reports. “We’re going to see more vegetables, said Dan Kish, head chef at Panera. He pointed out that the fast-casual chain is trying to balance meaty menu items with more veggies.
“We’re going to see culinary treatments of those vegetables in ways that bring out their flavors without adding a lot of other things to it—so keeping things as natural as possible,” Kish said. “Upping the percentage of vegetables in your diet—[it] is part of our job to help you with that.”
With its emphasis on customization, Taco Bell allows nearly any dish to be made meatless. In 2015, the Mexican chain launched a vegetarian menu that lets customers swap meat for beans and rice. “Vegetarian has been really big for us recently,” mostly because of the push by millennials, said Missy Nelson, the fast-food chain’s dietitian and product developer.
Other chains are embracing vegetables too by branching out beyond tomatoes and iceberg lettuce. For example, Chick-fil-A and McDonald’s have started testing broccolini and kale in menu items. “They didn’t feel iceberg lettuce was a nutritious green, and they didn’t feel good about eating it in a salad,” said Jessica Foust, corporate chef for McDonald’s.
Consumer demand is driving these changes, as more Americans slash meat consumption. Plus, more veggies on the menu also appeals to the average consumer, who wants to eat more plants. In addition, vegetables cost less than meat, which is good for the restaurant’s bottom line.
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Bottled Water is the trend and big seller. Depend on backOffice™ Software for proper pricing and inventory. How about a mix and match promotion? Keep your shelves hydrated!
Concerns about health and lead contamination in drinking water are likely fueling the trend.
August 3, 2016
WASHINGTON, D.C. – Bottled water will outshine soda for the first time in U.S. history in 2016, spurred by its convenience and fears over tap water, Bloomberg reports. A previous report found that bottled water consumption grew 120% between 2000 and 2015.
The nation’s largest bottled-water producers (Coca-Cola Co., Dr Pepper Snapple Group, Nestle Waters and PepsiCo Inc.) point to Americans desiring portable, calorie-free beverages, but predict the trend will continue because of concerns over contaminated drinking water.
Communities in Flint, Mich., Newark, N.J., and Washington, D.C. are struggling to replace corroded pipes that have leached lead into tap water. “Concerns in places like Flint do bring bottled water to people’s attention as a safe and sealed source of drinking water,” said Jane Lazgin, a spokeswoman for Nestle Waters North America. The U.S. Environmental Protection Agency forecasts a whopping $384 billion is needed to maintain or replace essential components of the nation’s water infrastructure over the next decade or so.
Euromonitor expects Americans to down 27.4 gallons of bottled water in 2016, 1.2 gallons more than carbonated soft drinks. That switch hasn’t impacted the bottom line of soft drink manufacturers because many of them have expanded into bottled water.
For more on packaged beverages (including bottled water), read “The Workhorse” in the August 2016 issue of NACS Magazine.
Visa Global Payment System Risk is aware of increasing incidents involving suspects placing skimming devices on point-of–sale (POS) terminals for the purpose of collecting payment card information, including PIN numbers. Perpetrators use this information to create counterfeit cards re-encoded with the stolen card information and make unauthorized ATM withdrawals. The primary targets for these recent skimming events are self-checkout terminals in supermarkets. However, any POS terminal may be at risk, including those that are often unattended, such as terminals near deli counters, coffee stands, etc. The perpetrators are mobile and will target multiple stores within a geographic area for a period of time before moving on to a new location. Most entities targeted are using payment devices that have not yet been upgraded to accept EMV cards.
Placement of Skimming Devices
Skimming devices can be placed at any time of the day but placement usually occurs during slower times of business when the perpetrators can go undetected by employees or other customers. The perpetrators will usually work in teams of two or more with one person being a lookout, one person placing the skimming device on the POS terminal and another creating a barrier so that no one can observe the skimming device being placed. Perpetrators have been known to use large items such as packs of paper towels to block the view of POS terminals. In some instances, it was reported that the suspects created a distraction in the store by faking a medical incident or causing commotion that distracted the attention of store personnel away from the POS terminals. The skimming devices will mimic the look of the front of the POS terminal.
Recommended Inspection & Response Actions
1. Prevention Through Device Inventory Management
In accordance with PCI DSS Requirement 9.9, ensure implementation of security controls to protect POS devices from tampering and substitution. Examples include:
⇒ Maintain a list of devices including the device serial number or other method of unique identification.
⇒ Keep a list of device location either by store or physical location within the store itself (i.e., self-checkout, deli counter, manned checkout).
⇒ Train personnel to be aware of suspicious behavior and to report tampering or substitution of devices.
⇒ Verify the identity of any third-party persons claiming to be repair or maintenance personnel, prior to granting them access to modify or troubleshoot devices.
2. Physical Inspection of POS Devices
Implement security procedures to inspect POS devices at least twice each day and at random times.
Physically examine the device. Skimming devices are typically attached with minimal adhesive allowing them to be place and removed with ease, so devices may be detected by giving the front of the POS/PED a good grab-and-pull. Weighing the devices may also identify tampering.
Please note some skimming devices are Bluetooth enabled and data can be captured without the device needing to be recovered.
When inspecting devices, use backup security personnel to monitor from a distance as suspects may watch compromised terminals and suspects are trained in counter surveillance to avoid detection/arrest.
3. Device Recovery Response
If a skimming device is discovered on a POS terminal, do not handle it, as evidence may be damaged.
Notify local law enforcement and the FBI or USSS office so they can recover the skimming device.
Protect any video surveillance that may be used to identify any perpetrators and confirm timing of when the device was placed on the POS terminal.
Initiate incident response procedures and notify your Acquirer so that Visa can assist with the investigation.
Information from VISA April 2016
For other questions, please contact Cyber Intelligence & Investigations via email at USFraudControl@visa.com