Food Sales Make Up For High Gas Prices In Today’s C-Store Market

“Food is the future of (the c-store) industry,” says Jeff Lenard, NACS vice president to The Gazette, an Eastern Iowa newspaper.

Food sales accounted for 16.9% of a record $195 billion of in-store sales at convenience stores in 2011, according to the National Association of Convenience Stores (NACS), which means many c-store chains have been expanding on their prepared food and beverage menus to make up for losses on other products.

Kum & Go, Casey’s General Stores and Kwik Trip all have plans to expand their foodservice and beverage menus in the near future.

The c-store industry posted sales of $681.9 billion with motor fuel sales accounting for the largest sale at $486.9 billion. Jeff Lenard, NACS vice president, said “food is the future” for convenience store sales.

“Our stores will become food stores that happen to sell gas rather than gas stations that happen to sell food, as they are perceived today,” Lenard said. 

Lenard said it will be a “slow evolution,” and is expected to happen because people want fresh food on-the-go and they want food for a valuable price. He said customers are also more likely to buy grab-and-go breakfast and lunch than they were 10 years ago.

“Attracting the consumer who is eating their breakfast or lunch in their car before they arrive at their destination is an important growth area for our industry,” Lenard said.

Technomic, a Chicago-based market research firm, found that a significant number of quick-service restaurant (QSR) customers perceive c-stores as the same category as fast-food eateries. Eighty-two percent of the more than 3,700 people surveyed said they buy prepared foods or beverages from c-stores once a month; 52% reported they do so once a week.

Kum & Go’s newest stores are designed to emphasize foodservice as a major component in its goals for increasing sales and market share. One way they are doing this is through the expansion of their beverage programs.

“We have some competitive advantages over the QSRs,” said Roman Stone, Kum & Go vice president of foodservice, to The Gazette news. “You get the breadth of food at QSRs, but you don’t get the breadth of beverages.”

Casey’s has been expanding foodservice by securing a spot among some of the top pizza retailers in the nation. Its doughnut sales have also played a major role in expanding the company’s foodservice program for decades. Just a few years ago, Casey’s began offering pizza delivery at a single store, and the program has entered 125 of its stores.

“We have another 50 slated to begin delivery in October and 50 more will be converted over to delivery before the end of our fiscal year,” said Bill Walljasper, senior vice president and chief financial officer to The Gazette. “We’re really moving that forward.”

Walljasper said Casey’s has a goal of increasing same-store prepared food and fountain sales by 11% in fiscal 2013 with an average margin of 61%.

Kwik Trip has also placed a stronger focus on its food and beverage sales. The store has proven successful in these categories because of its sale of fresh coffee and produce.

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