Quebec-based Couche-Tard has made a takeover bid for 7-Eleven’s parent company. The Canadian company already owns convenience store brands Circle K and Holiday. Purchasing 7-Eleven would give the company even more control over a market that totaled nearly $860 billion in 2023, according to a trade group.
According to Abbey Lewis, vice president of content strategy at Informa Connect, the convenience store business model of a few decades ago could be summed up in just a few words: “Cigarettes and Coke.”
“You know, people went out and got their fuel, their drinks, their cigarettes, and that was it,” she said.
But these days, not nearly as many people smoke and gasoline demand can fluctuate, so convenience stores have significantly expanded their grocery offerings, which used to be a joke, said Jeff Lenard of the National Association of Convenience Stores.
“Forty years ago, there was a funny line in the movie ‘The Four Horsemen’ where Clark Griswold said, ‘I’m so hungry, I could eat that gas station sandwich,'” he said.
Now?
“You can increasingly see a shift in the industry from a gas station that, oh, by the way, offers food to a restaurant where, oh, by the way, you can also fill up or pay money,” Lenard said.
Buying a sandwich or a cup of coffee at a convenience store may be cheaper than at a fast-food restaurant, says Bobby Stephens, a principal at Deloitte. Plus, the stores are conveniently located.
“Even if you could perhaps afford to spend a little more on fresh food or higher-priced items, you don’t have the time to do so,” he said.
Convenience stores offer comparatively shorter waiting times and lower prices. And this has helped the sector to achieve relatively good success in recent years.
Stephens said sales were flat or up slightly, while other retail categories declined.
But convenience stores have also seen increased costs for labor, gasoline, and all the ingredients needed to make sandwiches. Stephens says this is contributing to industry consolidation.
“To accommodate the purchasing power of larger organizations, give them the ability to operate multiple businesses and weather regional trends on a global level,” he said.
In other words, economies of scale allow stores to offer more than just a sweaty hot dog spinning on wheels for who knows how long.
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