Convenience Stores: “Gas, Smokes and Cokes” – No More

One of many great memories is my family, packing up the car, and hitting the road for vacation. Dad would try to keep us from stopping but eventually we needed gas and we got a little hungry. Of course, we stopped at the gas station and/or the convenience store off the highway. Other than gas, you didn’t expect much: a soda, some chips, maybe an almost uneatable hot dog. You know the time-honored description of a convenience store’s key value “Gas, cokes and smokes.” Anyone who has a car is stopping by one of these establishments at least a couple times each month. The decision where to go is mainly based on gas prices, convenience and habit. Well, the convenience store world is changing and if you are in the business and want to survive and thrive you need to understand what is happening in the industry.


“Convenience Stores are now a location for quality food and anything else you need for the evening meal”

The size of the industry in the US is massive:

  • The convenience store business has been a growth industry for many decades
  • Over 150,000 stores in the USA at over $400 billion in annual inside sales (excluding gas)
  • Over 100 different operators

The changing convenience store world – Leading edge operators are now a destination for fresh food and other product offerings needed to meet a family’s basic needs. Convenience stores are transforming to cafés, quality fast food, prepared meals and a place to meet.  This path makes so much sense as there is a constant flow of customers out at the pumps who are looking to just make one stop for their basic needs, especially related to food. The trick is how to get them in the store and keep them coming back.


So what are the leading operators doing to meet this need?

  1. Building kitchen “made to order” capabilities and offering other fresh food choices
    • From hot “made to order” meals, to quality prepared meals, to a wide variety of baked goods, high quality and wide offerings of fountain drinks and coffee
  2. Smart about the fundamentals. They first understand that they have to be effective operators
    • Effective workforce and labor management. Store Leaders who think and act like business owners vs. task managers
    • Inventory and sourcing of product. Better quality at higher margins
    • Training and hiring that’s fluid to the changing business and market needs
    • Strong operational standards, from cleanliness to in-stock conditions to levels of fresh product
    • Effective marketing and customer service capabilities. Treating the customer the way they expect and demand
  3. Leading edge technology
    • Levels of automation throughout the store
    • Workforce and labor management systems
    • Production and order management systems
    • Digital customer engagement: mobile ordering, scan and pay, delivery, self-check out, etc.


Why? What’s the Impact?

Here is an example of one operator who has been transforming their business to this model:

  • Fresh and made to order items offer a margin 15% higher than traditional center store offerings
  • 60% increase in fresh and made to order food sales
  • 10% to 20% increase in total inside sales
  • 100 to 150 basis points decrease in labor costs
  • 100 to 200 basis points in shrink reduction


Where is your organization and where does it need to be? Don’t be left behind