Convenience Eclipses Fuel
By Greg Lindenberg on Aug. 22, 2017CHICAGO -- As the convenience-store industry evolves, the tired, old image of fuel-focused gas stations offering snacks, beverages and less-than-desirable food has begun to lose its hold on many consumers, replaced by a fresh, new image of convenience stores offering higher-quality food, beverages and snacks … and oh, yes, fuel.
Even while coming to dominate the retail gasoline market, more c-store chains have recognized the importance of foodservice and have upgraded their foodservice offer, transforming perceptions and helping to transform the industry’s reputation from stale and greasy to fresh and healthy.
The shift hopefully puts to rest the negative image conjured up by Chevy Chase’s too-often-quoted line from National Lampoon’s Vacation: “I’m so hungry I could eat a sandwich from a gas station.”
Here’s what has changed …
The major oil companies have been steadily squeezed out of the U.S. retail gasoline business, where refueling stomachs has become as important as topping off gas tanks, according to a Bloomberg report.
Motorists who once sought out Exxon’s tiger or Texaco’s star now search for Buc-ee’s beaver or Wawa’s goose, and millennials value the quality of food at a c-store just as much as the price at the pump, said the report. Now the two models are coming together, combining the strength of fuel brand recognition with new consumer preferences for a broader buying experience.
Buc-ee’s recently toppedCSP’s Fuels 50 ranking of fuel brands by market efficiency (market share divided by outlet share). And Wawa Inc. came in at No. 2.
But Lake Jackson, Texas-based Buc-ee’s is a destination c-store offering food, snacks such as Beaver nuggets (sweetened corn puffs) and jerky. It is also known for its clean restrooms. And Wawa, Pa.-based Wawa has a strong foodservice program famous for its hoagie sandwiches.
Selling cheap gasoline along America’s highways was never really Big Oil’s thing, the report said. Profits at the pump are limited to pennies on the gallon. As major energy companies whittled down their retail business through sales and franchises to focus on finding, refining, storing and transporting petroleum and petroleum products, c-stores and other retailers moved in.
The five largest oil companies owned 0.4% of U.S gasoline stations in 2014, down from 1.9% in 2008, according to Bloomberg, citing the latest data available from NACS. As a result, c-stores such as 7-Eleven Inc. and Sheetz Inc. pumped more than 80% of U.S. gasoline purchased in 2015, up from 59% in 1997, according to NACS.
Sheetz took the No. 4 spot on CSP’s Fuels 50.
Both Irving, Texas-based 7-Eleven and Altoona, Pa.-based Sheetz have strong foodservice programs—7-Eleven for its Big Bite lineup and Sheetz for its made-to-order (MTO) lineup. Sheetz has even positioned itself as a “convenience restaurant.”
“There’s a shift in people buying gas based on the quality of the sandwich as opposed to getting a sandwich based on the price of gas,” Jeff Lenard, vice president of strategic industry initiatives for NACS, told the news agency.
The percentage of people who say gasoline price determines where they refuel has fallen by 6 points since 2015 to 51%, according to a NACS consumer survey published in March. Millennials split equally at 45% on the gas price vs. food quality question, Lenard said.
QuikTrip Corp., which says it handles 2.5% of all U.S. gasoline sales, is looking for transactions inside its brick-and-mortar stores to make up a quarter of its revenue. “We wouldn’t be investing our money on in-store sales if we didn’t think that was the future,” spokesperson Mike Thornbrugh told Bloomberg.
QuikTrip came in at No. 3 on CSP’s Fuel 50. Tulsa, Okla.-based QuikTrip features a strong foodservice program through its QT Kitchens, which serve fresh, made-to-order food such as pizza, specialty drinks and frozen treats.
Ken Shriber, CEO of Chappaqua, N.Y.-based Petroleum Equity Group, said this trend is not unexpected.
“When major oils exited their large direct-served metro markets, it gave rise to this opportunity for other fuel and convenience-store chains to expand their footprint in a significant way,” he told CSP Daily News.
“Chains like 7-Eleven and Circle K, Wawa, QuikTrip and Sheetz have the knowledge, experience and logistics to deliver food programs to large numbers of outlets efficiently. This is a huge advantage that previously dominant major oil companies never had, nor could they cultivate, execute or compete with these chains that have a longstanding c-store heritage and brand,” he said. “One thing major oil did have however, was high-value real estate on busy corners offering real convenience to motorists, which is desirable to 7-Eleven and Circle K. Other regional players like Wawa build ground-up NTI [new-to-industry] sites, which are now finding their way into the metro areas.”
Circle K is No. 42 on CSP’s Fuels 50. Laval, Quebec-based Alimentation Couche-Tard Inc.’s Circle K is putting a renewed emphasis on made-to-order food in new or remodeled stores.