C-Stores Are Serious Food and Beverage Players

Foodservice at convenience stores directly competes with QSRs, and gas, groceries and more give the c-store channel an edge.

January 24, 2023

ALEXANDRIA, Va.—Convenience stores are changing the conversation on where to enjoy good food, giving customers a reason to stop beyond the gas pump and directly competing with QSRs, reports QSR Magazine.

According to Tom Cook, principal at King-Casey, a restaurant and foodservice business improvement firm, convenience stores are threatening quick-serve and fast-food restaurants in five ways.

  • Fifty percent of consumers agree that convenience stores are just as capable of offering fresh food and beverages as restaurants are.
  • Consumers’ perceived value of convenience stores is currently higher than that of restaurants.
  • Convenience store foodservice margins are generally higher than at QSRs, so they can offer more frequent deals and with greater discounts.
  • Convenience stores generally offer greater menu variety than QSRs, which is an opportunity to lure away customers.
  • Convenience store retail items provide an opportunity to attract consumers looking for the convenience of a one-stop shopping occasion.

Drive-thru, he says, which is currently not widespread at convenience stores, offers the opportunity to get on equal footing with quick-service brands in terms of speed and convenience.

“Channel blurring between quick-service restaurants and convenience stores has been occurring for some time now. That being said, the pace is picking up, so now is the time to keep these six convenience store threats top-of-mind as you develop and implement your 2023 business plan,” he advises restaurants.

QSR Magazine reports that Midwest convenience retailer Kwik Trip is prioritizing low prices but also readily available high-quality food. The convenience retailer offers food sampling often and promos such as “Dollar Wednesdays.”

“Our goal is to get the food in our customers’ mouths,” Paul Servais, retail foodservice director for the brand, told QSR. “We sample all the time. The expectation is that we're going to be sampling a minimum of eight hours a week per store.” (Read about Kwik Trip’s food-sampling program in “Elevate the In-Store Experience” in the April 2022 issue of NACS Magazine.)

Two years ago, Kum & Go, also based in the Midwest, made a concerted effort to improve its foodservice menu to put more emphasis on quick-service foods rather than the typical c-store menu, Jac Moskalik, Kum & Go’s vice president of food innovation, told QSR.

“All statistics show that once the consumers try our new menu they're hooked. Once they try it, they come back,” Moskalik said.

Kum & Go has a 68% customer retention rate, according to Natasha Ratzlaff, director of category management and food service at the company. “The lines of convenience are blurring,” she told QSR.

Kum & Go thrives during the morning daypart, as 54% of the retailer’s sales occur during the early window, but the company still plans to innovate its breakfast menu, as well as focus on the afternoon and evening dayparts as well.

“Next year all of our innovation is built around different occasions,” Moskalik told QSR.

Casey’s, based in Ankeny, Iowa, is enhancing its breakfast offering, as the company thrives in the afternoon and evening daypart, thanks to an established pizza business that brought in $1.2 billion in revenue last fiscal year.

Last year, Casey’s focused on broadening its morning daypart offerings, including new bean-to-cup coffee machines and updated breakfast burritos.

“We've continued to see unit and dollar growth in that product,” Tom Brennan, Casey’s chief merchandising officer, told QSR. “We've also taken a look at our breakfast sandwich lineup to make sure that we are delivering the same quality that we deliver in our pizza. We've seen guests really engage with us, and it's been very favorable.”All three of these retailers offer their customers a loyalty program that are tied to gas discounts. Kum & Go’s reward program is connected to its app and allows customers to unlock the gas pump and pay for their fuel all on the app. Customers can also tailor their rewards to what they want, such as fuel discounts or free food.

“You can actually fuel up while not having to leave your car with the exception of putting the pump inside of your vehicle,” Moskalik told QSR. “Then you can actually shop for items inside the store while you're fueling up and our fuel rewards are all linked in there.”

Casey’s rewards program launched in January 2020 and has nearly six million members. Customers can redeem their points earned for Casey’s cash, which can be used for fuel discounts, in-store items or donations to its Cash for Classrooms program. Brennan told QSR that 50% of its members are active in the app on a monthly basis.

Kwik Trip’s rewards program is used “religiously” by customers to get money off their gas purchases.

“The magic of rewards is cents-off gallons,” Servais told QSR. “That’s what drives loyalty in the c-store industry.”

Read more about how convenience retailers are enhancing loyalty programs in “Leveraging Loyalty” in the September 2022 issue of NACS Magazine.

Looking to up your foodservice game or just getting started? Check out the NACS Certified Convenience Foodservice Management Online Training Series powered by NACS eTraining partner Ready Training Online. Retail operators can now earn a Certified Convenience Foodservice Management (CCFM) designation by completing a 10-course online training series which tackles the key aspects of developing and growing a successful foodservice offer.