Food sales growing at convenience stores
Fast food establishments are feeling the heat of competition.
Neighborhood convenience stores are taking a larger share of the food market with biscuits and breakfast burritos in the morning and fried chicken, hot dogs and barbecue at lunch and in the evening.
Saying “convenience store food” may make people think of spinning hot dogs and sausages by the counter, but many of the national chain convenience stores like Circle K are expanding their hot food offerings in hopes of drawing customers away from fast-food chains.
The push by convenience stores into hot, fast, affordable foods is just one of the pressures facing chains like Burger King, Wendy’s and Taco Bell. The traditional fastfood chains are also fighting for customers with smaller restaurant chains, and with supermarkets that offer prepared foods for busy shoppers.
Low prices and speed are big factors for readyto-eat foods at convenience stores. McDonald’s partly blames its declining number of customer visits in the U.S. on its failure to hold onto the deal-seekers at the cheaper end of its menu after eliminating the Dollar Menu.
“Convenience” is the key word according to customers at a number of stores in the area.
“It’s easier to run into a convenience store and come out than waiting 15 or 20 minutes in a line,” said Timothy Clackum, Adairsville, inside the Adairsville Market on U.S. 41. “The food is just as good and it’s quick and easy.”
Anthony Alexander is a school bus driver. He stops in at the Adairsville Market before he revs up his bus in the morning.
“I usually get a Coke and a bologna biscuit, and it’s just more convenient for me before I start my bus route,” Alexander said.
Khushbu Patel, a clerk in the Adairsville Market, said the breakfast
biscuits are big sellers, generally a much higher percentage of daily sales than the lunch offerings. “Lunch does well, too, but not as good as in the morning,” Patel said.
“If you go to convenience store conventions, all they talk about is the decline of gas and tobacco, so they have to become more like (fast food),” Dunkin’ Donuts CEO Nigel Travis said, noting the effect of convenience stores on his business.
Convenience store price points can also be a draw for people who may have less money to
spend. About 60 percent of convenience store food customers have household incomes of less than $40,000, the National Association of Convenience Stores said in a recent report.
Prepared foods and drinks like pizzas, burgers and coffee accounted for 22 percent of convenience store sales last year, an industry report said last month, a figure that has risen from 13 percent in 2010. The industry says many people in rural areas who may not be near supermarkets often get their groceries from convenience
stores, but the push into hot and prepared foods in recent years is driven by another factor. Cigarettes remain the No. 1 seller at convenience stores, but are generally on the decline. So convenience stores are expected to keep trying to sell more food as smoking rates fall.
Terre Ely, manager at the Walker Mountain Store in Floyd County, said the store has had a deli operation for close to 20 years.
“Everybody comes from all over to get our barbecue,” Ely said. “They come in for breakfast, lunch or dinner for their gas, their cigarettes, their energy drink or beer. It’s a one stop; you don’t have to go to four places to get it.”
Latrisha Brock has been working in the deli at Walker Mountain for about five months. “People are able to get in and out real quick,” Brock said. “Almost all of our customers are regulars. They come in and we socialize with them if they’ve got the time.”
Location has a lot to do with the success of fresh food operations for convenience stores. Jimmy Corno, a clerk in the Second Avenue Market, said the store offered a variety of biscuits in the morning and barbecue sandwiches from a small food counter behind the checkout station up until about eight months ago.
“Most of what we sold was to construction people working around here,” Corno said.
He said the Salvation Army shelter less than a block away also contributed to his customer base.
As some of the construction projects ended, sales slowed and the management of the independently owned store decided to pull the plug on the fresh food. “The key to the decision to stop fresh food sales was product loss, coupled with the resulting profit losses,” Corno said.
Because the convenience store industry has so many smaller chains and independents, those stores might not have the resources to develop competitive preparedfood offerings, says Chris Mandeville, a Jefferies analyst who tracks the industry.
That may lead some convenience stores to team up with fast-food chains like Subway rather than compete with them, and open up outposts within their locations.
That’s specifically the case at a number of the former Kangaroo, now Circle K markets, in Rome and Floyd County. Subway shops are open in the store on Calhoun Road at the bypass, at the shop on Burlington Drive in Shannon, at Six Mile and several others.
And for stores cooking up their own food offerings, the image of convenience-store food is a challenge. “Older folks tend to think of the roller dogs that have been sitting on the grill for hours,” Mandeville said.
And while those spinning hot dogs may be a punch line for some, they’re an easy way for smaller convenience store owners to get into the hot food business, says Jeff Lenard, a spokesman for the convenience store association.
He says Burger King’s decision to add hot dogs to its menu last year reflects their popularity.
For now, Lenard notes a bigger potential problem: the conveniencestore industry’s reputation for unpleasant restrooms.
“If you have a bad experience in the bathroom,” he said, “you are not going to buy the food.”