Convenience Stores Aim to Remake Image Written by Jim Hirsch Written by Jim Hirsch CNN News CNN News Jessica Nopper

Gas Stations as Gourmet Destinations? want to shed the image of junk food pit stops and discourage the gas-up-and-go mentality want to shed the image of junk food pit stops and discourage the gas-up-and-go mentality Change into: upscale stores and restaurants that entice customers to linger and eat upscale stores and restaurants that entice customers to linger and eat

Upgraded Food Options Freshly Baked Bread and Pastries Freshly Baked Bread and Pastries Fresh Fish Fresh Fish Fancy Deli Options (sandwiches, soups) Fancy Deli Options (sandwiches, soups) High-end Meals High-end Meals Sushi Sushi Gelato Gelato Brick-oven Pizza Brick-oven Pizza Espresso Bars Espresso Bars Changing due to…………

New Competition for the Nation’s 138,000 convenience stores Previously relied on gasoline and cigarette sales (3/4 sales) Previously relied on gasoline and cigarette sales (3/4 sales) –Now those profit margins are shrinking  Alternative transportation avoiding rising gas prices  Fewer smokers compared to a few decades ago New Competitors New Competitors –Drug stores offering pharmaceuticals and food –Grocers adding fuel pumps ex. Costco, Safeway

New Customers Previous CustomerCurrent Customer Bubba = a blue collar man grab-and-go affluent people who smokeswho spend more time in their cars and demand better meals than slurpees and nachos who smokeswho spend more time in their cars and demand better meals than slurpees and nachos Now: requiring bigger, brighter, and more upscale shops than their predecessors than their predecessors

Marketing Theory People are more loyal to good food over gasoline brands –A good price on fuel might get people in the door once a week –Great food could pull them in daily Most retailers believe they can “make more money off a 12- ounce cup of coffee than a 12-gallon fill-up” Ex. Exxon Mobil’s On the Run convenience stores spent $10 million on a proprietary line of gourmet coffee called Bengal Traders and created new position in stores – Brew Master

They are SERIOUS about this coffee Believing good food has the power to bring-in and boost business

Convenience Stores’ Future Forming partnerships with existing restaurants Forming partnerships with existing restaurants Expanding stores Expanding stores –Avg. size 3,000 sq. ft. (25% larger) –Building kitchens for preparing food onsite – fresh –Additional parking spaces –Employing chefs to cook made-to-order –Adding dining rooms

Current Examples Sheetz Inc. Super Shops recently opened two 10,000 sq. ft. shops that offer: dining rooms, espresso bars, salads, pizzas made-to-order 7-Eleven team of chefs developing healthy sandwich wraps and other fresh foods

Conclusion The convenience dynamic is changing The convenience dynamic is changing –Focus on more upscale food options –Better branded foods to attract business –Dining experience more than quick in-and-out shopping –Build kitchens, hire chefs and make fresh, gourmet options –Keep customers longer to buy more than just gas Market the gourmet food over the gas brand Market the gourmet food over the gas brand There will be challenges to these changes, including many years of bad coffee and hot dogs under heat lamps, which have made customers hesitant to start replacing convenience stores for their current fast food restaurants but the future trends seem to be heading in that direction There will be challenges to these changes, including many years of bad coffee and hot dogs under heat lamps, which have made customers hesitant to start replacing convenience stores for their current fast food restaurants but the future trends seem to be heading in that direction

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