Convenience Stores Convenience Stores Aim to Remake Aim to Remake

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Written by Jim HirschWritten by Jim Hirsch

CNN News CNN News

Jessica Nopper

Gas Stations as Gourmet Gas Stations as Gourmet Destinations?Destinations?

want to shed the image of junk food pit want to shed the image of junk food pit stops and discourage the gas-up-and-go stops and discourage the gas-up-and-go mentalitymentality

Change into:Change into: upscale stores and restaurants that upscale stores and restaurants that

entice customers to linger and eat entice customers to linger and eat

Upgraded Food OptionsUpgraded Food Options

Freshly Baked Bread and PastriesFreshly Baked Bread and Pastries Fresh Fish Fresh Fish Fancy Deli Options (sandwiches, Fancy Deli Options (sandwiches,

soups) soups) High-end MealsHigh-end Meals SushiSushi GelatoGelato Brick-oven PizzaBrick-oven Pizza Espresso BarsEspresso Bars

Changing due to…………

New CompetitionNew Competitionfor the Nation’s 138,000 convenience for the Nation’s 138,000 convenience

storesstores

Previously relied on gasoline and cigarette Previously relied on gasoline and cigarette sales (3/4 sales) sales (3/4 sales) – Now those profit margins are shrinkingNow those profit margins are shrinking

Alternative transportation avoiding rising gas pricesAlternative transportation avoiding rising gas prices Fewer smokers compared to a few decades agoFewer smokers compared to a few decades ago

New Competitors New Competitors – Drug stores offering pharmaceuticals and foodDrug stores offering pharmaceuticals and food– Grocers adding fuel pumps Grocers adding fuel pumps ex. Costco, Safewayex. Costco, Safeway

New CustomersNew Customers

Previous CustomerPrevious Customer Current CustomerCurrent Customer

Bubba = a blue collar man Bubba = a blue collar man grab-and-go affluent peoplegrab-and-go affluent people

who smokeswho smokes who spend more time in their who spend more time in their cars and demand better cars and demand better meals than slurpees and meals than slurpees and nachosnachos

Now: requiring bigger, brighter, and more upscale shops Now: requiring bigger, brighter, and more upscale shops

than their predecessorsthan their predecessors

Marketing TheoryMarketing TheoryPeople are more loyal to good food over gasoline People are more loyal to good food over gasoline

brandsbrands– A good price on fuel might get people in the door once a A good price on fuel might get people in the door once a

weekweek– Great food could pull them in dailyGreat food could pull them in daily

Most retailers believe they can “make more money off a Most retailers believe they can “make more money off a 12-ounce cup of coffee than a 12-gallon fill-up”12-ounce cup of coffee than a 12-gallon fill-up”

Ex. Exxon Mobil’s On the Run Ex. Exxon Mobil’s On the Run convenience stores spent $10 convenience stores spent $10 million on a proprietary line of million on a proprietary line of gourmet coffee called Bengal gourmet coffee called Bengal Traders and created new Traders and created new position in stores – Brew Masterposition in stores – Brew Master

They are SERIOUS about this They are SERIOUS about this coffeecoffee

Believing good food has the power to bring-in and boost business

Convenience Stores’ FutureConvenience Stores’ Future

Forming partnerships with existing Forming partnerships with existing restaurantsrestaurants

Expanding storesExpanding stores– Avg. size 3,000 sq. ft. (25% larger)Avg. size 3,000 sq. ft. (25% larger)– Building kitchens for preparing food onsite – Building kitchens for preparing food onsite –

freshfresh– Additional parking spacesAdditional parking spaces– Employing chefs to cook made-to-orderEmploying chefs to cook made-to-order– Adding dining rooms Adding dining rooms

Current ExamplesCurrent Examples

Sheetz Inc. Super ShopsSheetz Inc. Super Shopsrecently opened two recently opened two

10,000 sq. ft. shops 10,000 sq. ft. shops

that offer: dining rooms, that offer: dining rooms,

espresso bars, salads, espresso bars, salads,

pizzas made-to-orderpizzas made-to-order

7-Eleven7-Eleventeam of chefs developingteam of chefs developing

healthy sandwich wraps andhealthy sandwich wraps and

other fresh foodsother fresh foods

ConclusionConclusion The convenience dynamic is changingThe convenience dynamic is changing

– Focus on more upscale food optionsFocus on more upscale food options– Better branded foods to attract business Better branded foods to attract business – Dining experience more than quick in-and-out shoppingDining experience more than quick in-and-out shopping– Build kitchens, hire chefs and make fresh, gourmet Build kitchens, hire chefs and make fresh, gourmet

optionsoptions– Keep customers longer to buy more than just gasKeep customers longer to buy more than just gas

Market the gourmet food over the gas brandMarket the gourmet food over the gas brand

There will be challenges to these changes, There will be challenges to these changes, including many years of bad coffee and hot dogs including many years of bad coffee and hot dogs under heat lamps, which have made customers under heat lamps, which have made customers hesitant to start replacing convenience stores for hesitant to start replacing convenience stores for their current fast food restaurants but the future their current fast food restaurants but the future trends seem to be heading in that directiontrends seem to be heading in that direction

SourcesSources

www.cnn.netscape.cnn.comwww.cnn.netscape.cnn.com

www.ampm.comwww.ampm.com

www.exxonmobil.comwww.exxonmobil.com

www.post-gazette.com/pg/www.post-gazette.com/pg/105072/470125.stm105072/470125.stm

www.tigerfuel.comwww.tigerfuel.com