Convenience Store

America Has A New Favorite Style of Restaurant, And You May Be Surprised

When planning where to go for dinner many of us would think of a nice restaurant or maybe a takeaway restaurant but there is another option that is becoming more popular with Americans.

Thanks to the variety of meal kits, keto snacks, salads and coffees offered by many gas stations and convenience stores, it appears that our favourite restaurants are now Kwik Trip, Wawa and Sheetz.

The improvement in these areas has seen an unexpected rise for sales at convenience stores, especially when we are currently in a situation where many stores have to close due to shoppers opting to buy their products online. And with many Americans working late or inconvenient shifts, it is easier for them to eat on the go, especially when filling the car.

Nielsen’s senior vice president of retail services Jeff Williams said, “it has absolutely been a hidden gem. They are demanding that consumers view them as a destination for food.”

With the way Americans eat continuing to change – many prefer to snack rather than have a sit-down meal – convenience stores have had to adjust their businesses in an attempt to cash in. And it seems to have worked.

Many chains have started employing restaurant executives, prepare the food on site and have increased the choice of food on offer. Customers are no longer prepared to visit a fast food restaurant or spend time searching for food at the grocery store according to analysts. With time an issue – especially for millennials – many prefer to head to the convenience store where the average visit is under four minutes.

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Leadership development specialist for Kwik Trip, Carl Rick, agrees. “People simply don’t have the time to sit down a whole meal at night like they used to. The more places where people can duck in, be out in three minutes with milk, eggs, maybe a sandwich, something to drink – those places are doing very well.”

The growth of the convenience store has grown over the last twenty years with The National Association of Convenience Stores confirming there were now 28% more stores in America. Sales have also improved with an increase of 30% over the last ten years.

The convenience store first came into existence in Dallas when the Southland Ice Company opened their first store. Now known as 7-Eleven, they noticed a gap in the market for customers wanting to buy staple supplies when the conventional grocery stores were closed in the evenings and on Sundays.

By 1965 there were around 5,000 convenience stores across the country and today we now have nearly 153,000, which is more than America’s dollar stores, drug stores and grocery stores combined.

And with 93% of Americans able to access a convenience store within 10 minutes of their home and nearly 80% of those have a gas station attached it is easy to see why sales have grown.

In the past, convenience stores used a business model popularly known as “Cokes, smokes and gas” which saw many of them profiting from the sales of soft drinks, tobacco and fuel. However, today’s Americans are healthier which has forced the industry to take a different approach in order to stay in business.

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The sales of food steadily increased, becoming the biggest seller between 2009 and 2018, and with 2010 seeing the spending on food outside of the home higher than food inside the home, it was clear a shift had started. Something Kwik Trip’s Rick agrees with.

“Fewer people are making those big grocery trips and more and more people are buying individual meals. We’re looking to capitalize on that.”

A 2017 USDA study also discovered that millennials “exhibit a higher preference for convenience” who tend to eat out more often than the previous generation.

Sheetz’s chief operating officer Travis Sheetz confirmed that they are moving their sales goals, stating their “bullseye is kind of that younger age group – the late teens to the early thirties for food and beverage…..They tend to be much more accepting of eating at a gas station”.

Sheetz have admitted that McDonald’s is their biggest competitor and have been offering more choice in their food, including their breakfasts that you can buy at night, something McDonald’s has only recently started to offer.

However other areas of retail have noticed this trend and have started to introduce “copycat” convenience store type deals with many restaurants improving their snack and breakfast offerings. The move could have a drastic effect on the convenience store with Steve Holtz of CSP Magazine worried that “other retail channels also are trying to steal our thunder.”

Some stores are even creating smaller versions – such as Dollar General (DG) who have opened DGX, while Kroger (KR) has joined forces with Walgreens (WBA) to install Kroger Express sections in some of the locations.

A recent research report from real estate firm CBRE confirmed it is believed that “major grocery players will employ more small-format, convenience-oriented concepts.”