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The Brave New World of Convenience Stores

Michael Shapiro | May 7, 2024

Food | The Originate Initiative

From healthy meals to EV charging to high-speed internet, convenience stores are becoming go-to destinations.

For insight into how convenience stores are changing to meet consumer demand, Hormel Foods asked journalist Michael Shapiro to explore developments in the industry. References to specific stores or products do not indicate endorsement of them.

For decades the bar wasn’t high: stopping to fill their gas tanks, drivers would pour themselves coffee from a glass pot that had sometimes been sitting for hours. Today it’s a whole new coffee game. Stopping at a Circle K in late April, one driver was amazed by the options. “You have about five kinds of ground-by-the-cup coffee to choose from. And it’s darn good! Or another dozen options if you don’t need fresh-ground.”

That’s not the only trend at convenience stores, also known as C -stores, in recent years. C-stores have come a long way from the old Cokes-and-smokes model to offer fresh and healthy food, craft beers, energy drinks and electric vehicle charging. C-stores still sell sodas and cigarettes, but they also have fresh sandwiches, fresh fruit and hot food.

fresh fruit in baskets

“Food is not just the future of convenience stores, it’s the present,” said Jeff Lenard, a spokesperson for the National Association of Convenience Stores (NACS). “Convenience stores have evolved to become much more about on-the-go food,” he said, while dine-in is becoming a factor. C-stores that add dine-in seating are “telling people” that their food is “worthy of sitting down” and not just eating one-handed while on the road.

Consider the pitch of a store called Loop, founded in 2013 and now with more than 50 stores in California: “We’re serving up a menu of fresh ’n’ tasty food that you won’t find at any other convenience store,” says Loop’s website, including hot items such as build-your-own pizzas and fried chicken. “Need a car wash? We got that. Need a dog wash? We got that too. Need to gas up the grill for tomorrow’s bbq? We’ve got your propane.”

Loop also promises “blazing fast internet” for anyone who needs to get on an “emergency Zoom call.” Like other tech-savvy C-stores, Loop allows customers to use an app to order ahead.

Some C-stores offer delivery, so customers don’t have to leave home. Others seek to distinguish themselves with unique products. Circle K, a national chain with thousands of stores, has launched a network of high-speed EV charging stations and is the exclusive retailer for Mountain Dew’s Purple Thunder flavor, Lenard noted. C-stores can be a good way for companies to test a new product before a full-scale rollout.

From afterthought To Primary Food Source

For decades, the C-store was an afterthought: While pumping gas, people could pop into the attached market and grab cold drinks, chips or unwrapped sticks of beef jerky from a plastic tub. The covid pandemic changed that and so much else: C-stores became a primary food source for millions of people who wanted to get in and out as fast as possible.

As some groceries closed in underserved urban areas and remote rural regions, C-stores, especially those that widened their offerings to include fresh produce and other staples, became the best and sometimes the only nearby option.

The challenge is that fresh food doesn’t last as long as packaged goods. “There’s spoilage involved, so it takes a lot more discipline to add healthier options,” Lenard said. But stores usually are “successful if they stay with it, because there is a demand for those products.”

Total C-store sales in 2023
Total profits from fuel sales
across the convenience store industry in 2023
Enter the store
when buying gas at a station with a store attached

Total C-store sales hit a record $859.8 billion in 2023, including fuel sales, according to NACS. Fuel sales accounted for 67.3% of revenues, but only 38.6% of profits for the convenience store industry in 2023. Lenard noted that 58% of people who buy gas at a station with a store go inside.

In 2024 there are slightly more than 152,000 C-stores in the United States, up 1.5% over 2023, Lenard said. “If you add up all the grocery stores in the country, plus all the dollar stores, plus all the drugstores, plus all the Starbucks, plus all the McDonald’s, you’re at about that figure. Convenience stores are ubiquitous.”

Breaking the Mold

Gas price was once the primary motivator to get someone to stop, but today people are more motivated to go to stores they like where they can also fill the tank, Lenard said. When C-stores install a fast-food restaurant, customers know what they’ll get, but “proprietary food service allows more control … you can really differentiate yourself,” he said. A customer will say, “I’m going there because that’s my favorite sandwich.” One example is Aztec Grill, a Mexican restaurant located at several Chevron stations in Northern California that attracts people from miles around for their tasty tacos.

A regional chain that’s won the hearts and minds of shoppers is Buc-ee’s, which has broken the C-store mold by expanding many of their locations to the size of large supermarkets. Founded in 1982 with stores from Texas to Florida to Kentucky, Buc-ee’s stores have a cute, larger-than-life beaver mascot that roams the aisles. The buck-toothed creature is beloved by children, and Buc-ee’s proclaims it has “the cleanest restrooms” in America. Buc-ee’s serves barbeque brisket sandwiches that the Food Network calls “a tasty alternative to a lackluster drive-thru meal, and it’s just as convenient.”

A Buc ee's sign on the road

The goal is to get people into the store, an idea initiated by the renowned Wall Drug in South Dakota. That store, founded in 1931, could be considered one of the first convenience stores. It built its business, decades before cars had air conditioning, on the promise of free ice water.

Advantage Convenience

The world’s first convenience store was the Southland Ice Company, which sold ice in the days before refrigerators. People would stop by every day or two to get ice for their ice boxes, so in 1927 the Dallas store began selling milk, bread and eggs. Southland Ice Company eventually evolved into 7-Eleven, named for its original opening and closing hours.

A generation ago, people stopped at C-stores for film, maps, newspapers and magazines. Sales of those items have been “pretty much wiped out” due to the internet and smartphones, Lenard said, but ultimately what C-stores sell is right there in the name: convenience. Arguably, they have changed the interior design of cars which now have multiple cup holders. While some sectors have plummeted, new categories, such as energy drinks — which Lenard called “coffee for the younger generation” — have spiked.

Of purchased items
are consumed immediately
of purchased items
are consumed within the hour

Since being founded nearly a century ago, C-stores have satisfied customers’ immediate desires. About 66% of items purchased are consumed immediately, 80% within the hour, according to NACS data. While big-box stores in malls and traditional groceries have lost business to delivery services, C-stores remain resilient. “When somebody comes in, they want something now,” Lenard said. “That’s difficult to replace with delivery or online.”

C-stores’ New Horizon

Electric vehicles will accelerate the transformation of C-stores. Today, EVs account for about 7% of new car sales, but only about 1% of cars on the road are electric, most on the west and east coasts. EVs haven’t yet led to widespread changes, especially in the American heartland, but when they reach critical mass, C-stores will offer more EV-specific incentives, such as rewards for charging.

“The period a driver stays at a convenience store often increases to 20 minutes or more, …giving customers an opportunity to refresh themselves and do some shopping — and retailers an opportunity to cater to them,” notes a report from the consulting firm Oliver Wyman.

New cars are “essentially computers with wheels, and the opportunities for growing sales with EVs can be pretty dramatic because once you pull up and charge, the retailer has the ability to geofence, to provide offers,” such as discounts and incentives, Lenard said. “You’re able to have a much better conversation with a potential (EV) customer than with somebody holding a gas nozzle.”

You’re able to have a much better conversation with a potential (EV) customer than with somebody holding a gas nozzle.

Jeff Lenard, a spokesperson for the National Association of Convenience Stores (NACS)

Sometimes, even with C-stores, life imitates art. In Myrtle Beach, South Carolina, you can enter the world of The Simpsons in a real-life Kwik-E-Mart. The store sells Flaming Moe energy drinks, Lard Lad donuts, Buzz cola and Duff beer — not the healthier fare of many modern convenience stores, but certainly worth a trip down memory lane.