Convenience-Store Foodservice Outlook

Examining the demographic distribution of frequent foodservice purchasers reveals convenience stores are earning increased sales from key consumer cohorts (Exhibit 2).

The respective shares of female, Gen Z and Hispanic/Latino consumers purchasing prepared food and beverages at convenience stores rose 2 points from 2022 to 2023. That may not sound like much, but in a sample that approaches 13,000 consumers, this shift is indeed notable!

Convenience has long struggled to engage female consumers, but efforts to create a more welcoming environment and ensure a relevant mix of prepared food and beverage offerings appear to be paying dividends.

Gen Z is coming into its own with unprecedented foodservice options literally at its fingertips. It’s growing involvement with c-store foodservice offerings bodes well for continued category growth in the channel.

As the largest contributor to population growth in the U.S., Hispanic/Latino consumers are vital to driving future growth.

Increased engagement with prepared food and beverages by these three cohorts points to continued foodservice growth for convenience stores.

Unique Differentiator

Satisfying their hunger and quenching their thirst aren’t the only reasons consumers visit c-stores for foodservice while on the go. As consumers’ days are once again busy with work, school and activities, the ability to check other tasks off their todo list, such as fueling or charging their vehicle and picking up fill-in grocery items or an Amazon package, is also top of mind. In fact, 75% of c-store foodservice patrons prioritize the ability to multitask at the location.**

On the Menu

Convenience-store operators’ investment in their foodservice offerings to enhance freshness, elevate quality, expand selection and ramp up innovation for both food and beverage items is moving the needle on consumer perceptions of the channel as a credible foodservice provider.

When asked to rate foodservice segments visited on key attributes, a larger share of consumers rated convenience-store foodservice offerings as good or very good than said the same for price, freshness, cleanliness, quality and availability of unique items at quick-service restaurants (Exhibit 4). In fact, menu variety was the only attribute where more consumers rated quick-service restaurants as good/very good than said the same for c-stores.

That may soon change. Upwards of 25% of c-store operators report plans to increase menu offerings across their varied prepared food and beverage formats in 2024, with menu updates focused on global flavors, dietary needs, and seasonal flavors and ingredients.****

That variety of food and beverage formats is another competitive advantage for c-store operators in the battle for foodservice occasions. Today’s foodservice-forward c-store may feature foodservice formats that include cold merchandisers displaying sandwiches, salads and fresh snack items, as well as warmers/hot cases offering breakfast sandwiches, pot pies, burgers, burritos and chicken items. A plethora of customizable food and beverage menu items are available at made-to-order stations. And the roller grill, which is truly unique to the channel, can provide a quick snack or a meal at a value price. Extensive hot, cold and frozen beverages are typically offered to accompany food items or satisfy for a snacking occasion.

With continued focus on quality, freshness variety and value, convenience stores are well-positioned to compete for and win foodservice occasions in 2024 and beyond.

Outlook and Opportunities

The growth outlook for foodservice in the convenience channel is positive. That said, evolving dynamics in the foodservice industry and the broader marketplace will require convenience operators and suppliers to sharpen their offerings, operations and strategies to compete effectively and maximize the growth opportunity. Some key considerations include:

Commitment to menu innovation will be key. Visitation is frequent in c-stores, so consumers seek their favorites but are open to and welcome the unexpected across prepared food and beverages

LTOs present opportunity to engage consumers with new flavors, ingredients and items that will create excitement and drive traffic, as well as serving as a way to test new items for potential inclusion on the core menu

Low-labor preparation and enhancements, as well as items and ingredients with applications across the offering, will enhance operational efficiency and margin

Adoption of a restaurant-like approach to foodservice financials is crucial in ensuring the category is profitable. Retail financial metrics and norms do not apply

Leveraging the ability to multitask in marketing the foodservice offering will be key. Most consumers no longer object to purchasing prepared food and beverages where they purchase fuel

Showcase the availability of varied and unique foodservice formats to further differentiate the menu, as well as and convey variety and the ability to satisfy varied need states

Highlight comparatively lower prices, but also convey value through quality, freshness, portion, brand and other key attributes

Finally, all stakeholders in the convenience channel must prepare for competition to intensify as electric vehicle (EV) adoption evolves and grows. The convenience channel currently owns the vehicle fueling occasion, but EV charging is increasingly available across various channels, including quick-service restaurants. Investment in foodservice now will position convenience stores to compete effectively for EV-charging occasions by providing a relevant and quality offering to charging consumers.