Scope of the Industry

Fuel sales have increased significantly since the first purpose-built, drive-up gas station opened in 1913—growth that has continued into the 21^st Century.

Nearly 90,000 convenience stores sold fuel in 2000, but strong growth continued through 2015 when more than 127,000 stores sold fuel. The decline in the number of locations selling fuel since then is reflective of retailers evolving their business models to focus more on the in-store foodservice offer, as well as retailers embracing new store formats and establishing their brands in more urban, walk-up locations.

Over the past five years, gross margins on fuel have averaged 22 cents per gallon. But the profit margin of a gallon of gas can vary widely depending on where the store is located, competition from nearby businesses and fuel retailers, and the brand of fuel being sold. After expenses, which include credit card fees, transportation and utilities, the average profit margin of a gallon of gas generally ranges from 5 to 10 cents per gallon.

Gas price is the top reason for a customer to select a certain station to refuel. Most consumers (58%) say price is the most important factor, but that percentage has dropped from 71% in 2015. Lower gas prices (the national average gas price has been below $3 since October 2014) and more consumers embracing the quality food programs at convenience stores are two factors driving this trend. An increasing percentage of consumers now say the in-store offer determines where they purchase gas: 5% of all drivers cite the in-store offer as the primary reason they select a place to fuel up, and 10% of younger consumers (ages 18 to 34) choose where to fill up based on what they plan to purchase inside the store. (Find more fuels-related resources in the Fuels Resource Center.)

The quality of the in-store offer also is driving consumer preferences for certain stores or brands: Nearly two in three drivers (62%) say they prefer a certain c-store or chain, which is double the amount from eight years ago. Read more insights in the March 2020 NACS Magazine cover story, "The 2020 NACS Consumer Fuels Survey."

Convenience stores sell immediate consumption items: 83% of in-store merchandise is consumed within one hour of purchase, and 65% is immediately consumed, per the NACS Convenience Voices program. In fact, a beverage or snack are the two most popular items purchased by customers who also buy gas.

More than anything, consumers are coming to stores for drinks and food. Over half (53%) of all gas customers who also go inside the store say that they went inside the store primarily to buy a drink (53%), compared to 20% who wanted to purchase a snack or meal and 27% who went in for another reason (to buy a different product or use the ATM or restroom).

Foodservice, a broad category that includes food prepared onsite along with commissary-made items (accounting for nearly 70% of the category’s sales) and frozen, cold and hot dispensed beverages (roughly 32% of the category’s sales), is an important category. Growth in foodservice suggests that customers rely on their local c-store for snacks and meals. 

In addition, consumers are recognizing the continued growth in sales of healthier, better-for-you foods. A NACS consumer survey found that 28% of consumers say they regularly buy healthy items at c-stores. And more than half of all consumers (59%) say they are satisfied with the healthy choices at c-stores.

To continue the move towards healthier choices on store shelves, the industry has partnered with health- and nutrition-focused organizations, such as the Partnership for a Healthier America (PHA), to help redefine how more fresh food options are commonly available in convenience stores.

In 2014, La Crosse, Wisconsin-based Kwik Trip Inc. made a three-year commitment with PHA to expand its fresh fruit and vegetable offerings; to expand its whole grain rich offerings to at least six products; and to implement a healthy concessions program in local schools. In 2016, PHA and Honorary Chair First Lady Michelle Obama recognized Kwik Trip as the first convenience store to complete its commitment to expand healthier options across its stores.

NACS signed a commitment with PHA in 2017, becoming the first retail-focused association to join the organization. Ten convenience retailers and six convenience distributors have signed commitments with the organization, cumulatively representing more than half of the convenience stores in the country. Recognizing the industry’s progress, PHA named NACS its “Partner of the Year” in 2019.