October 30, 2024
iStock.com/RiverNorthPhotography
Will Convenience Stores in America Take Over Fast Food?
Convenience stores, from giants like 7-Eleven to regional brands like QuikTrip, are evolving to compete with fast-food restaurants by enhancing their food offerings and creating inviting dining environments.
As traditional sales of cigarettes and soft drinks decline, convenience store operators are turning to international concepts like grab-and-go ideas, according to The Associated Press. Some locations have introduced sit-down seating, expanded coffee selections to compete with Starbucks, and made-to-order meals to attract busy consumers seeking affordable and appealing dining options.
Jeff Lenard, vice president of strategic industry initiatives for the National Association of Convenience Stores, stated, “It has been a decades-long journey to go from food that was perceived as desperation to destination.”
Chains like Wawa and Casey’s are expanding their menus to include dinner items, while 7-Eleven is launching nationwide delivery through its 7NOW app, bringing fresh international-inspired foods to U.S. locations. Despite recent closures and financial challenges, convenience stores are tapping into the popularity of unique regional offerings to build a loyal customer base.
“We really are approaching this like a restaurant as we always have, but more so now. Prices have gotten really high. So what’s happening is that convenience stores are becoming a real viable option for guests.”
Carrie Stojack, vice president of brand and strategic insights at Casey’s General Stores, via The Associated Press
Restaurant Finance Monitor explained in May how convenience stores are undergoing a significant transformation, moving away from their traditional roles as quick-stop locations primarily selling gas, snacks, and cigarettes. The pressure of diminishing fuel margins and a growing focus on health-conscious consumers has prompted these establishments to reposition themselves as food service destinations that cater to demands for speed, variety, and quality.
Notably, food service sales are outpacing overall revenue growth. These sales amounted to $51.7 billion in 2022, compared to $43.2 billion in 2021, representing a remarkable 19.7% increase and 18.8% of all C-store sales during the year, according to a Convenience Store News report from last year.
Additionally, data from a study completed last September by Acosta Group shows that approximately 52% of convenience store shoppers visit these locations at least once a week, with 30% saying they visit more often than they did a year ago. According to Acosta Group’s Kathy Risch, “For a vast majority of C-store shoppers — 92% — food and drink purchases are the primary purpose of the trip.” The report also noted that snacks, candy, baked goods, and refrigerated beverages were the most commonly bought items.
This has not been an overnight change. Back in January 2020, CNN reported that convenience stores had been becoming increasingly popular alternatives to fast-food chains, thanks in part to their enhanced food offerings. At the time, chains like Sheetz, Wawa, and Kwik Trip had already been featuring a range of prepared meals and snacks, significantly elevating their appeal for on-the-go dining.
To stay competitive, these stores were also hiring executives from the restaurant industry and broadening their selections of snacks and ready-to-eat meals prepared on-site. As Americans lean toward snacking and cook less at home, convenience stores cater to the demand for quick, quality options. According to CNN, analysts noted that millennials often prefer the efficiency of these stores, as customers typically spend an average of less than four minutes inside. With an emphasis on rapid service and appealing food choices, convenience stores are successfully carving out a niche in the competitive food landscape.
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Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Rachelle King
Retail Industry Thought Leader
Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
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Discussion Questions
How are convenience stores redefining their roles in the food service landscape, and what does this shift mean for consumer behavior and competition?
In what ways can convenience stores leverage their unique positioning to create a differentiated customer experience that competes with traditional fast food?
How can convenience stores balance the demand for quick, affordable options with the need for high-quality, nutritious food offerings in a health-conscious market?
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Some convenience stores are brilliant at food to take home or eat on the go. This includes chains like Casey’s and independents. However, many others are not so good. The quality is very variable. However, there is an opportunity for all convenience players to step up and grab more market share. Our data show that in 2023, convenience stores had around 1-2% of the overall foodservice market. By comparison quick service restaurants (fast food) had a 45.4% share. There are gains to play for here – so long as convenience stores align themselves with consumer demand. However, with the current gap, the idea convenience will overtake fast food is absurd.
Convenience stores are making meaningful gains in the food category. And the more success they have, the more they will invest. Convenience stores may only have a modest share of the overall fast food/QSR market, but every food dollar they get takes away from others like Starbucks, Chipotle, and everyone else.
The food service market and margins offer convenience stores an attractive growth opportunity leveraged within their existing store model. Wawa has successfully innovated in building loyalty through engaging employees, high-quality day-part meals, and the proper levels of technology.
Adding drive-thru, seating areas, and menu variety can help convenience stores to gain more food service share. The segment boundaries are blurring as speedy access to quality and desirable food and beverage options continues to expand beyond the traditional QSR channel.
Another day, another click-bait headline (sigh). Yes, food sales at C-stores will grow, both as a share of all such sales, and of C-store categories (the decline in tobacco, alcohol and, eventually – or is it only presumably? – gasoline, would make that true regardless). But I’m less sure how much competition they will offer to any but the most basic QSR’s..actually serving food takes a certain amount of effort, and infrastructure; store’s whose basic MO has been to pare staffing to the absolute minimum, might have to make major operating adjustments…who’s to say how many will ultimately do so?
Wawa and Nouria are both experimenting with drive-through and menu options that rival the QSRs!
I applaud your cynicism! The notion that these pose serious competition to large chain QSRs is have for me to embrace. Local QSRs that have a lower focus on high quality foods and value-oriented pricing … maybe (at best). I also go right to the economics – does the initial construction associated with carving out a seating space and the lost reoccuring revenue of reduced shelf space drive a better business outcome? Again, hard for me to come out in support of this as a scalable / industry innovation that is here to stay. Also,let’s say there is initial success … franchised QSRs are uber data focused and will set up locations close to these convenience stores and make the landscape even more difficult. Doesn’t seem like a defensible and sustainable pivot. I’d much rather they make sure the bathrooms are safe and clean!
Convenient stores aren’t in a position to replace fast food, at least not until they offer drive through, a more compact menu, an infrastructure, and the right type of set up inside.
Fast food is currently challenged with 23% inflation since January of 2021, salary demands that don’t fit their business models, and new environmental regulations.
Fast food might or might not survive in the long term, I think they will, with robotic operations.
Wawa and Nouria are both experimenting with drive-through and menu options that rival the QSRs!
The opportunity for c-stores from expanded prepared foods is real. The challenge is in execution. A successful prepared foods program engages a different level of expertise than found at the store level of most c-stores or perhaps in the c-store organization. Some get it. Like the c-store who ships pre-chilled beverages to their stores. The argument shared with me was, “A chillers job is to maintain temperature not achieve temperature.” That’s a unique way of thinking that delivers a superior customer experience through always chilled beverages and longer shelf life. Another c-store worked with a refrigerated equipment supplier on modifications to cooler airflow to make sure all the breakfast parfaits in an exposed cooler were at the same, safe temp. That’s new thinking for most c-stores.
The question in the title of this article implies that convenience stores will take over fast food. The short answer is it will not. Convenience with food offerings is another option for the consumer. It’s that simple. If you’ve been following what I write, you will recognize this next line: There’s a reason they call it a convenience store. (It’s convenient!) That’s what customers look for when they visit a convenience store. It’s fast and easy. If a convenience store wants to be competitive with other fast food options, be sure the quality meets the customer’s expectations.
C-stores with reputations for quality take-home food (like Wawa and KwikTrip) come to mind, and they certainly have an opportunity to grow that business. But few of these chains (outside of 7-Eleven, perhaps) have a national footprint anywhere close to a number of fast-food outlets, nor do they have the mobile and drive-thru capacity of these chains. Without that national presence, and the ability to drive nationwide marketing, it’s hard to see C-stores providing a serious threat no matter how fast they grow the category.
As you noted it is along crusade embarked on by the C-store industry to gain share of wallet related to Quick Service Meals and Snacks. There is absolutely no doubt that C-stores will continue to gain market share in this space with multiple approaches. Not only have Chains like Caseys become the top of mind destination for Pizza. They have also become top of mind for frozen drinks and fresh ground and brewed coffee. Many like WaWa have invested heavily in Freshly prepared foods as well as kiosks and top of the line checkout technology to make the process as close to frictionless as possible. C-stores also have the advantage in many cases as their locations are easily accessible and already a destination in many cases for fuel. The challenge that some chains still struggle with is to keep the cleanliness, freshness, and presentation standards high with every franchise owner.
To date, most of CStore meals have been breakfast & lunch. Breakfast & lunch sandwiches, soup, hoagies & pizza have been successful in these two day parts. The challenge is the dinner day part. Providing nutritious, tasty non fast food alternatives, suggests greater use of chefs & instore meal preparation. These tend to be expensive & not as quick to prepare, negatively impacting the convenience perception. However, don’t count Cstores out. Creative commissaries & instore execution will make a difference.
Convenience stores in general get a bad wrap and many deserve it when it comes to cleanliness, the experience, food options, etc. However, there is a huge opportunity to steal share from fast food. For example, Sheetz, is a restaurant that has convenience store elements. If c-stores can think of themselves this way and focus on food quality, marketing, keep it price competitive, offer variety, they can win. The availability of drive-thru, digital ordering and in-store seating, if done well, can really help.
As for the health-conscious market, people still eat pretty poorly; sodas, candy, burgers, pizzas, fries, those really win the day. But the perception of choice can create a halo. They likely will have an uphill battle winning with the shopper that is ultra-health conscious.
My 14-year old and I are taking a road trip this weekend to his sporting event. We just discussed whether we should pack our lunch or not since it’s hard to find healthy food on the road. He said, dad, I’ll just get a big chicken salad at Sheetz, those are solid. And he’s pretty normal, rest assured he’ll want a burger, fries and a shake on our drive back. Tons of upside for C-stores. Like anything, they’ll have to define who they are and what their value prop is, where can they win and not alienate their current shopper base.
If I had to answer in a single word, I would say YES. However, there are a number of factors that will undoubtedly shape the future of food at convenience stores. Some (e.g., Casey’s, WaWa, Buc-ee’s, and Kwik-Trip), have established themselves as quality, reliable destinations for their food. While many others still have a single hotdog rolling on an outdated warmer and some day-old sandwiches. That means there is significant opportunity for some to up their games while others will leapfrog to the forefront.
Consumers have realized that value for money, convenience, and variety are hallmarks of certain c-store operators. And the success is building. If I was a fast food chain with one of these superstars in my neighborhood, I would have reason to fear.
Not mentioned here yet is the motivation that C-stores have to replace the revenue they are losing due to declining tobacco sales. Food service has higher expenses and complexity, but it can be used to convey a quality message and appeal to a wider audience beyond the smokes-and-brews crowd.
For years, standout operators Wawa and Sheetz have set the standard for this with their sandwich-making, while Casey’s has become one of the largest pizza sellers in America. Buc-ee’s is an other standout.
Some may also be influenced by the example set by operators in Japan, like Lawson’s and 7-Eleven, which update their extensive displays of grab-and-go meal items three times a day (breakfast, lunch, and dinner). I read recently that items like their very popular onigiri rice balls are finding their way into 7-Eleven menus here in the U.S.
As long as convenience stores continue to make improvements in the customer experience (WaWa is a leader) – better food options, warm restaurant style seating, clean floors, nice lighting, then expect more people will actually sit down, and enjoy eating on site. Stores in the past have tried create this by putting a bench and some chairs next to the beer cooler doors and the anti-freeze shelf, and under fluorescent lights. This won’t work anymore if you want customers to believe you sell decent food.
The good news is C-Stores have the biggest upside, with several or many more locations embedded in, around or near every community. It’s up to them to either do this right or not do it at all.
This is an excellent opportunity for convenience stores to shift more focus to food. Between the steady rise in food prices and ongoing layoffs, consumers need a break somewhere. Why not turn to your local convenience store to make ends meet? The 20% growth in food sales is a strong indication that this is a move in the right direction to meet the c-store consumer needs.
The intuitive competition for growing c-store food sales may be fast food chains but we should dig deeper. More than half of c-store customers visit once a week. The only other chain with weekly foot traffic (generally) is grocery. I would suggest keeping an eye on local grocery store prepared meals. If c-stores can deliver decent quality at a better price with an elevated experience (made-to-order or dine-in) then it’s local grocery that may feel the squeeze most.
This is not going to happen. Sure, there have been inroads created at places like Sheetz. However most convenience stores are still simply aisles of packaged goods with merchandising courtesy of the packaged food industry-translation: this chains have no culture that matches the leadership skills needed to develop/change into a resort for take out food. Finally, as we (slowly) shift to healthier eating habits picking up a hot dog on the way to wherever is not going to cut it for many of us.
The fast food industry is experiences challenges also, but they know how to deliver a hamburger that many of us like to eat.
This match is over before it began.
Sounds like time to go on a road trip and visit a Wawa, Buc-ees, Nouria, and a few others! Let’s go!
One word example – Wawa! Sure, you have easy access to gas pumps with wide lanes, better-than-average restroom cleanliness, and access to all of the standard snack and convenience items. Then, you have high quality, made-to-order, cold and hot food (breakfast, lunch, dinner), that delivers a strong value proposition. Add to that a store team that is generally more engaged and customer friendly and you have a winning equation that will naturally take business and market share from the QSR regulars. Recommendation: Try their new pizza offering, it gives Dominos and Papa Johns a serious run for the money and you can get your favorite coffee or soda mix at the same time! I only wish they would build stores near me!
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Some convenience stores are brilliant at food to take home or eat on the go. This includes chains like Casey’s and independents. However, many others are not so good. The quality is very variable. However, there is an opportunity for all convenience players to step up and grab more market share. Our data show that in 2023, convenience stores had around 1-2% of the overall foodservice market. By comparison quick service restaurants (fast food) had a 45.4% share. There are gains to play for here – so long as convenience stores align themselves with consumer demand. However, with the current gap, the idea convenience will overtake fast food is absurd.
Convenience stores are making meaningful gains in the food category. And the more success they have, the more they will invest. Convenience stores may only have a modest share of the overall fast food/QSR market, but every food dollar they get takes away from others like Starbucks, Chipotle, and everyone else.
The food service market and margins offer convenience stores an attractive growth opportunity leveraged within their existing store model. Wawa has successfully innovated in building loyalty through engaging employees, high-quality day-part meals, and the proper levels of technology.
Adding drive-thru, seating areas, and menu variety can help convenience stores to gain more food service share. The segment boundaries are blurring as speedy access to quality and desirable food and beverage options continues to expand beyond the traditional QSR channel.
Another day, another click-bait headline (sigh). Yes, food sales at C-stores will grow, both as a share of all such sales, and of C-store categories (the decline in tobacco, alcohol and, eventually – or is it only presumably? – gasoline, would make that true regardless). But I’m less sure how much competition they will offer to any but the most basic QSR’s..actually serving food takes a certain amount of effort, and infrastructure; store’s whose basic MO has been to pare staffing to the absolute minimum, might have to make major operating adjustments…who’s to say how many will ultimately do so?
Wawa and Nouria are both experimenting with drive-through and menu options that rival the QSRs!
I applaud your cynicism! The notion that these pose serious competition to large chain QSRs is have for me to embrace. Local QSRs that have a lower focus on high quality foods and value-oriented pricing … maybe (at best). I also go right to the economics – does the initial construction associated with carving out a seating space and the lost reoccuring revenue of reduced shelf space drive a better business outcome? Again, hard for me to come out in support of this as a scalable / industry innovation that is here to stay. Also,let’s say there is initial success … franchised QSRs are uber data focused and will set up locations close to these convenience stores and make the landscape even more difficult. Doesn’t seem like a defensible and sustainable pivot. I’d much rather they make sure the bathrooms are safe and clean!
Convenient stores aren’t in a position to replace fast food, at least not until they offer drive through, a more compact menu, an infrastructure, and the right type of set up inside.
Fast food is currently challenged with 23% inflation since January of 2021, salary demands that don’t fit their business models, and new environmental regulations.
Fast food might or might not survive in the long term, I think they will, with robotic operations.
Wawa and Nouria are both experimenting with drive-through and menu options that rival the QSRs!
The opportunity for c-stores from expanded prepared foods is real. The challenge is in execution. A successful prepared foods program engages a different level of expertise than found at the store level of most c-stores or perhaps in the c-store organization. Some get it. Like the c-store who ships pre-chilled beverages to their stores. The argument shared with me was, “A chillers job is to maintain temperature not achieve temperature.” That’s a unique way of thinking that delivers a superior customer experience through always chilled beverages and longer shelf life. Another c-store worked with a refrigerated equipment supplier on modifications to cooler airflow to make sure all the breakfast parfaits in an exposed cooler were at the same, safe temp. That’s new thinking for most c-stores.
The question in the title of this article implies that convenience stores will take over fast food. The short answer is it will not. Convenience with food offerings is another option for the consumer. It’s that simple. If you’ve been following what I write, you will recognize this next line: There’s a reason they call it a convenience store. (It’s convenient!) That’s what customers look for when they visit a convenience store. It’s fast and easy. If a convenience store wants to be competitive with other fast food options, be sure the quality meets the customer’s expectations.
C-stores with reputations for quality take-home food (like Wawa and KwikTrip) come to mind, and they certainly have an opportunity to grow that business. But few of these chains (outside of 7-Eleven, perhaps) have a national footprint anywhere close to a number of fast-food outlets, nor do they have the mobile and drive-thru capacity of these chains. Without that national presence, and the ability to drive nationwide marketing, it’s hard to see C-stores providing a serious threat no matter how fast they grow the category.
As you noted it is along crusade embarked on by the C-store industry to gain share of wallet related to Quick Service Meals and Snacks. There is absolutely no doubt that C-stores will continue to gain market share in this space with multiple approaches. Not only have Chains like Caseys become the top of mind destination for Pizza. They have also become top of mind for frozen drinks and fresh ground and brewed coffee. Many like WaWa have invested heavily in Freshly prepared foods as well as kiosks and top of the line checkout technology to make the process as close to frictionless as possible. C-stores also have the advantage in many cases as their locations are easily accessible and already a destination in many cases for fuel. The challenge that some chains still struggle with is to keep the cleanliness, freshness, and presentation standards high with every franchise owner.
To date, most of CStore meals have been breakfast & lunch. Breakfast & lunch sandwiches, soup, hoagies & pizza have been successful in these two day parts. The challenge is the dinner day part. Providing nutritious, tasty non fast food alternatives, suggests greater use of chefs & instore meal preparation. These tend to be expensive & not as quick to prepare, negatively impacting the convenience perception. However, don’t count Cstores out. Creative commissaries & instore execution will make a difference.
Convenience stores in general get a bad wrap and many deserve it when it comes to cleanliness, the experience, food options, etc. However, there is a huge opportunity to steal share from fast food. For example, Sheetz, is a restaurant that has convenience store elements. If c-stores can think of themselves this way and focus on food quality, marketing, keep it price competitive, offer variety, they can win. The availability of drive-thru, digital ordering and in-store seating, if done well, can really help.
As for the health-conscious market, people still eat pretty poorly; sodas, candy, burgers, pizzas, fries, those really win the day. But the perception of choice can create a halo. They likely will have an uphill battle winning with the shopper that is ultra-health conscious.
My 14-year old and I are taking a road trip this weekend to his sporting event. We just discussed whether we should pack our lunch or not since it’s hard to find healthy food on the road. He said, dad, I’ll just get a big chicken salad at Sheetz, those are solid. And he’s pretty normal, rest assured he’ll want a burger, fries and a shake on our drive back. Tons of upside for C-stores. Like anything, they’ll have to define who they are and what their value prop is, where can they win and not alienate their current shopper base.
If I had to answer in a single word, I would say YES. However, there are a number of factors that will undoubtedly shape the future of food at convenience stores. Some (e.g., Casey’s, WaWa, Buc-ee’s, and Kwik-Trip), have established themselves as quality, reliable destinations for their food. While many others still have a single hotdog rolling on an outdated warmer and some day-old sandwiches. That means there is significant opportunity for some to up their games while others will leapfrog to the forefront.
Consumers have realized that value for money, convenience, and variety are hallmarks of certain c-store operators. And the success is building. If I was a fast food chain with one of these superstars in my neighborhood, I would have reason to fear.
Not mentioned here yet is the motivation that C-stores have to replace the revenue they are losing due to declining tobacco sales. Food service has higher expenses and complexity, but it can be used to convey a quality message and appeal to a wider audience beyond the smokes-and-brews crowd.
For years, standout operators Wawa and Sheetz have set the standard for this with their sandwich-making, while Casey’s has become one of the largest pizza sellers in America. Buc-ee’s is an other standout.
Some may also be influenced by the example set by operators in Japan, like Lawson’s and 7-Eleven, which update their extensive displays of grab-and-go meal items three times a day (breakfast, lunch, and dinner). I read recently that items like their very popular onigiri rice balls are finding their way into 7-Eleven menus here in the U.S.
As long as convenience stores continue to make improvements in the customer experience (WaWa is a leader) – better food options, warm restaurant style seating, clean floors, nice lighting, then expect more people will actually sit down, and enjoy eating on site. Stores in the past have tried create this by putting a bench and some chairs next to the beer cooler doors and the anti-freeze shelf, and under fluorescent lights. This won’t work anymore if you want customers to believe you sell decent food.
The good news is C-Stores have the biggest upside, with several or many more locations embedded in, around or near every community. It’s up to them to either do this right or not do it at all.
This is an excellent opportunity for convenience stores to shift more focus to food. Between the steady rise in food prices and ongoing layoffs, consumers need a break somewhere. Why not turn to your local convenience store to make ends meet? The 20% growth in food sales is a strong indication that this is a move in the right direction to meet the c-store consumer needs.
The intuitive competition for growing c-store food sales may be fast food chains but we should dig deeper. More than half of c-store customers visit once a week. The only other chain with weekly foot traffic (generally) is grocery. I would suggest keeping an eye on local grocery store prepared meals. If c-stores can deliver decent quality at a better price with an elevated experience (made-to-order or dine-in) then it’s local grocery that may feel the squeeze most.
This is not going to happen. Sure, there have been inroads created at places like Sheetz. However most convenience stores are still simply aisles of packaged goods with merchandising courtesy of the packaged food industry-translation: this chains have no culture that matches the leadership skills needed to develop/change into a resort for take out food. Finally, as we (slowly) shift to healthier eating habits picking up a hot dog on the way to wherever is not going to cut it for many of us.
The fast food industry is experiences challenges also, but they know how to deliver a hamburger that many of us like to eat.
This match is over before it began.
Sounds like time to go on a road trip and visit a Wawa, Buc-ees, Nouria, and a few others! Let’s go!
One word example – Wawa! Sure, you have easy access to gas pumps with wide lanes, better-than-average restroom cleanliness, and access to all of the standard snack and convenience items. Then, you have high quality, made-to-order, cold and hot food (breakfast, lunch, dinner), that delivers a strong value proposition. Add to that a store team that is generally more engaged and customer friendly and you have a winning equation that will naturally take business and market share from the QSR regulars. Recommendation: Try their new pizza offering, it gives Dominos and Papa Johns a serious run for the money and you can get your favorite coffee or soda mix at the same time! I only wish they would build stores near me!