Circle K Aims to Grow Its Fresh Food Business in North America

The convenience retailer looks to its smaller European division for inspiration.

September 26, 2022

ALEXANDRIA, Va.—Circle K is focusing on increasing its fresh food business, Brian Hannasch, president and CEO of Alimentation Couche-Tard, told Bloomberg. Fresh food at Circle K’s 9,000 North American stores represents 11% of sales, while about half of gross profit comes from fuel.

Bloomberg reports that Couche-Tarde is expanding a marketing push, including food trucks and other types of advertisement, in thousands of Circle K outlets to entice its customers to try its hot sandwiches, pizza, chicken and other meals.

“As COVID has backed off in most of our geographies, you will see a lot more sampling and marketing around food,” Hannasch told Bloomberg. “We have a lot more options than what Couche-Tard and Circle K of the past had for customers.”

Hannasch has a plan to have universal production facilities in stores that can provide food based on regional tastes. The concept comes from Holiday Stationstores, a Minnesota-based chain that Couche-Tard bought in 2017, Stifel GMP analyst Martin Landry told Bloomberg. Fresh food at Holiday stores generates $500 a day in revenue, which is more than double what Couche-Tard sees in its other North American stores, Bloomberg reports.

Couch-Tarde Chief Financial Officer Claude Tessier told Bloomberg that the company wants to increase its fresh and prepared food to 20-25% of North American sales, similar to what the company does in its much-smaller European division.

“The quality of the food in stores that I visited in Europe was a little bit more complex and sophisticated than what I could see here in North America,” Landry told Bloomberg. The company has been looking for ways to improve its food offering in North America for a long time, he added.

Alimentation Couche-Tard is launching 10,000 smart checkouts in 7,000 Circle K and Couche-Tard locations to free up employees for foodservice tasks.

"Through this agreement, I am convinced that we will scale a great tool that makes it easy for our customers and team members, saving time and putting our customers and people first in our global operations,” said Alex Miller, executive vice president operations, North America, and global commercial optimization for Couche-Tard.

Also, Circle K was one of a few big-name investors in Kitchen United, a ghost kitchen and restaurant hub technology company.

"We see many commercial opportunities in partnering with Kitchen United as it prepares for considerable scale. We believe this business stands apart from other industry players with its centralized locations, multi-format offerings, experienced management team and mature technology stack—all of which align with Circle K's mission to make our customers' lives a little easier every day as we work together to shape the future of convenience," said Kevin Lewis, chief marketing officer, Alimentation Couche-Tard.

Hannasch told Bloomberg that the company could eventually use Kitchen United as a distribution point for food and grocery items. “We can provide snacks, chips, drinks, our food sandwich out in that same ecosystem or in conjunction with a Chick-Fil-A order or others,” he said.

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