The convenience-store industry in February got a bit buzzed on the news that millennials are favoring convenience stores for food and beverage stops over fast-casual restaurants. Reported in USA Today and citing research from NPD Group, the declaration that c-stores are twice as important to millennials’ out-of-home eating habits was seen as a big coup over much-extolled Goliaths such as Chipotle and Panera.
According to the report, c-stores accounted for 11.1% of millennial food and beverage stops in 2014, compared to 7.7% in 2006. Fast casual accounted for 6.1% in 2014 vs. 3.1% in 2006.
Sounds like a victory, right? Well, Bonnie Riggs, restaurant industry analyst for NPD Group, stresses caution when contemplating the data. It’s really not a victory, but rather a call to keep up the momentum in the ongoing fast-food fight.
The numbers show that c-stores haven’t actually expanded the gap between themselves and fast casual since 2006. This is a take-share environment, with consumers increasingly enticed by the convenience and comfort of new ways to cook at home. So a win for c-store foodservice will come only through a loss for quick service or fast casual. Fast casual is doing just as well as c-stores are. (Our condolences to quick service.)
“It’s really a fast-food battle, because if you take c-stores and fast casual out of the equation, [the segment isn’t] growing,” says Riggs.
What Riggs does see is an increase in the number of c-store chains that appear on consumer lists of where they go to eat. Among retailers such as Dunkin’ Donuts and Five Guys are c-stores such as 7-Eleven, Chevron and ampm. For its part, NPD is working to identify “food-forward” c-store chains that focus on quality, variety and freshness.
So what’s driving millennials toward c-stores?
“Millennials are cheap—they’re no different from anyone else,” Harry Balzer, chief food industry analyst for NPD Group, told USA Today. “What we mostly do in our lives is get food as fuel; we don’t usually go out for exciting eating adventures.”
Americans’ overarching frugality is certainly tied to financial insecurity. But the industry can’t wait around for the economy to improve and, as Riggs points out, it’s not just about price. “It really is all about the freshness of the food, the quality of the food and the price. It has to be fresh, quality, good-tasting, reasonable and affordable,” she says. “If it doesn’t taste good, it’s not worth $1.”
NPD research has found that after price, younger millennials (those ages 18 to 24) place the greatest importance on quality of food followed by the quantity of food, indicating a preference for shareable or large-sized entrees. Older millennials, meanwhile, identify quality of food and good service as the most important attributes after price.
Millennials’ appreciation for c-store foodservice also reflects what they don’t like about fast casual. The segment’s strengths—quality, customization, made-to-order freshness—can also be its weaknesses. How often do you go to Jason’s Deli or even Chipotle, wait in line for a decent time span, and then get overwhelmed at the options and offerings? Throw in a few additional orders from co-workers and you’re two pants away from a panic attack. For some consumers, the lack of convenience a deal breaker.
“They are looking for a quick in and out. … The thing of it is, even fast food [has] gotten fairly complicated with their menu, and there’s been some different challenges,” says Riggs.
A big questions remains: Will c-stores keep their hold on millennials as they mature? Is the fact that a 21-year-old is happy to eat lunch at a c-store, while her 50-year-old dad isn’t, a reflection of age or specific generational traits? Riggs believes it’s the latter:
“I think they will carry that behavior forward so long as [retailers] offer those products [they desire].”
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