Keeping pace with the demands of the modern customers is a challenge for all franchise businesses, particularly those in the food, retailing and services sectors.

Some of the most dominant consumer trends across these markets are the intensifying need for convenience of all product and service offerings, the demand for mobile technology ordering, and a growing desire for healthy eating options.

Meeting such needs is not easy, but co-location presents an opportunity for franchises to strategically position their business in shared hubs to satisfy the on-the-go, technologically-savvy and health-conscious demands of customers.

Co-location is not a new concept. In its most basic form, it is the driver behind the design and layout of many food courts, small strip shopping precincts and petrol service stations, where several franchises are conveniently located next to other.

However, co-location is a rapidly evolving concept and the subject of much innovation and experimentation. Instead of just being located next to each other, we are now seeing franchises physically integrate their brand into that of another business. Examples of this ‘store within a store’ are increasingly found in the service station setting, where major food brands are physically positioned within the stores of petrol retailers.

There are now signs that the co-location trend is set to be taken to a whole new level.

Fuel retail franchise Caltex Australia is at the forefront of innovation in this area, having recently launched ‘The Foodary’ pilot store in Sydney’s inner-west. This new trial concept store, transformed from a former Caltex Star Mart, provides a fully-integrated food and services convenience hub well beyond what we have come to expect from a service station.

There are breakfast, lunch and dinner options to go, prepared meal kits, artisan bakery products and barista-made coffee, while services available at the store include a daily laundry service and parcel pick-up point for internet transactions.

Caltex’s ‘The Foodary’ concept is supported by a dedicated App where customers can refill and pay for fuel on-the-go, without going instore, and the option to pre-order food before re-fuelling, so they can easily collect food at the counter and have parcels ready for collection.

In launching the trial store it hopes to roll-out nationally, Caltex Australia’s Executive General Manager Commercial Bruce Rosengarten, said ‘The Foodary’ doesn’t look or feel like a traditional petrol station and aims to “excite and surprise”. Customers can come in and have the choice to eat healthier while they’re on-the-go, grab something for dinner on their way home, or simply pick up their washing or a parcel.

“The Australian convenience industry is rapidly evolving and our goal is to meet the changing needs of consumers, wherever they are. We will continue to trial and test new products and services to ensure what we’re offering is what customers want,” he said.

Caltex has already struck partnerships with franchise chains Sumo Salad, Boost Juice and Guzman y Gomez for its expansion of ‘The Foodary’ concept, with the potential for more to come.

It is an interesting innovation that blurs the lines between co-location and co-branding, where two or more brands share resources while operating within the one physical space.

The potential synergy and cross-selling benefits are clear in positioning franchises to meet the very growing demands for convenience from customers. However, there are also integration and brand risks for all parties involved in such arrangements, particularly in terms of staffing and quality control.

The management of this risk appeared to be addressed by Guzman y Gomez (GYG) in announcing its co-location plans with Caltex, which will see GYG open its own pilot stores within Caltex’s ‘The Foodary’ roll-out.

GYG Managing Director Steven Marks said customers don’t have to compromise on quality for the sake of convenience. “We pride ourselves on giving our guests the best experience possible, so we’re putting our own crew into each Caltex store to ensure our food and customer service is of the same high standard you’ve come to expect from GYG,” he said.

Petrol stations are emerging as the hotly contested battleground for co-location convenience retailing and services, and it is likely there will be plenty more innovation to come in this area with flow-on ramifications to a variety of franchises also seeking to remain relevant in this space.