Even as electric vehicles gradually gain traction, gas stations and convenience stores are expected to remain financially stable in 2026, bolstered by growth in food and in-store sales, Morningstar DBRS, a global credit rating agency, said in its report titled 2026 North American Fuel Retail and Convenience Store Outlook: Industry Resilience Fueled by Food.
Operators are expanding product assortments and emphasizing prepared foods to diversify revenue toward higher-margin, more-predictable categories, the report said. Branding and loyalty programs are also helping retailers retain customers and support fuel sales, even as overall fuel demand is projected to decline slowly.
The industry is expected to continue consolidating, with single-store operators and smaller chains facing ongoing earnings pressure, according to Morningstar DBRS. Over time, some smaller competitors might exit the market, while larger players leverage acquisitions, expand offerings and boost customer engagement to capture market share and maintain resilience.
Fuel sales are down slightly but still holding steady
Total fuel volumes in the U.S. declined by 0.5% for the first nine months of 2025 compared with the same period in 2024, according to the U.S. Energy Information Administration.
Fuel volumes will remain pressured and continue to experience modest declines through 2026 as headwinds persist. However, decline is expected to remain slow as a result of sluggish EV adoption, keeping the impact manageable for fuel retailers and convenience stores, the Morningstar DBRS report said.
The North American fuel retail industry faced significant challenges over the past five years, including pandemic-related stay-at-home orders, the gradual adoption of electric vehicles and improvements in fuel efficiency for traditional cars, the report said. Since 2020, however, fuel volumes have largely rebounded as workers returned to offices and modest population growth supported steady demand, leaving the industry relatively resilient despite these headwinds.
EV sales are growing slowly, not fast enough to hurt gas stations yet
While fuel volumes remain resilient, EV adoption is expected to cause a gradual decline in North American fuel sales in the long term, according to Morningstar DBRS.
However, to date the shift has been slower than anticipated as a result of inconsistent government policy, high up-front costs and insufficient charging infrastructure, which have deterred consumers from making the switch, it said.
In 2025, EVs accounted for only 7.8% of total vehicle sales in the U.S., down from 8.1% in 2024, according to Cox Automotive and outlined in the report. The U.S. was on track to set record levels of EV sales through the third quarter of 2025, until the U.S. government revoked sales incentives. The federal clean vehicle tax credit expired on Sept. 30, 2025—meaning vehicles acquired after that date no longer qualify for the incentive, according to the IRS.
Following the revocation, EV sales declined in the fourth quarter of 2025 by 46%, compared with the third quarter of 2025, and 36% year over year, the Morningstar DBRS report said.
However, a recent court ruling now allows states to access $5 billion in National Electric Vehicle Infrastructure (NEVI) funds for highway EV chargers, previously blocked by federal agencies. The program, backed by the 2021 Infrastructure Act, remains available until fully spent and supports convenience stores adding EV charging infrastructure.
C-Stores turn to prepared foods to drive revenue and loyalty
Foodservice sales have increased significantly in the U.S. over the past few years, to $66.2 billion in 2024 from $35.9 billion in 2020, according to Statista.
Fuel retailers and c-store operators continue to invest in non-fuel sales like foodservice to diversify revenue, drive foot traffic and improve margins, Morningstar DBRS said.
For example, in October, RaceTrac Inc. completed its acquisition of Potbelly Corp. The $566 million deal includes more than 445 company- and franchisee-owned Potbelly sandwich shops across the United States.
Fuel retailers and c-stores that successfully implement new foodservice offerings or increase existing offerings will be able to drive incremental foot traffic and benefit from cross-selling opportunities across fuel and grocery products, the report said. This is especially likely for c-stores with loyalty programs that reward consumers for increased transactions and are able to generate more targeted promotions.
Additionally, the report said that higher-margin foodservice sales can help operators boost overall profits and soften the impact of fluctuating fuel margins.
C-stores with strong, value-focused food offerings have an opportunity to capture market share from struggling quick-service restaurants (QSRs) in the near term, it said. Many QSRs have faced declining same-store sales due to inflation and weaker consumer spending.
Larger chains grow through acquisitions, leaving smaller stores vulnerable
Consolidation in the North American fuel retail and c-store industry was rampant in 2025, highlighted by Sunoco LP’s $9.1 billion acquisition of Parkland Corporation and Couche-Tard’s $1.6 billion purchase of GetGo Café + Markets, the convenience store banner of Giant Eagle. Anabi Oil, which owns Rebel convenience stores, also agreed to acquire Green Valley Grocery in October, while Casey’s General Stores completed several smaller acquisitions, including convenience stores, travel centers and liquor stores across Kentucky, South Dakota, Iowa and Minnesota, following its larger CEFCO transaction in 2024.
Morningstar DBRS expects larger operators to continue using acquisitions to expand their footprint, strengthen their brands and improve operating leverage, helping them capture market share and partly offset the long-term decline in fuel volumes.
By contrast, single-store operators and smaller chains are likely to face ongoing earnings pressure. These smaller stores generally have limited exposure to higher-margin nonfuel sales, such as groceries and prepared foods, leaving them more reliant on fuel margins, the report said. As a result, they can be vulnerable when larger competitors cut fuel prices to gain market share.
That said, smaller operators often have lower overhead and capital requirements, giving them some resilience to margin pressure. Over time, however, competitive pressures are expected to mount, prompting some smaller operators to consider exiting the industry, it said.
As of 2025, the fuel retail and convenience store sector remains highly fragmented, with roughly 60% of U.S. convenience stores operated as single-store locations, according to NACS. This leaves significant room for further consolidation, which is expected to continue in 2026 as larger operators pursue growth opportunities, according to Morningstar DBRS.
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