Convenience Stores Evolve to Become True Food Destinations
Variety of offerings, private label brands and loyalty programs fuel in-store sales growth
DENVER (January 29, 2025)—Convenience stores are intensifying their focus on foodservice offerings to drive foot traffic, in-store sales growth and frequency of repeat visits. Strong consumer interest in prepared foods, commissary and beverage options has led convenience stores, often referred to as c-stores, to compete much more aggressively with quick service restaurants and fast-food chains.
The focus on offering a wider variety of prepared and ready-to-eat food items is clearly paying off, as c-stores registered record sales in 2023. Those gains are largely attributable to in-store sales, which grew 8% year-over-year in both 2022 and 2023 according to Circana, well ahead of overall inflation numbers for both food at and away from home. While sales appeared to soften in 2024, a Convenience Store News survey found two-thirds of c-store retailers predict total sales per store will grow in 2025.
According to a new report from CoBank’s Knowledge Exchange, the line between grocery stores, quick-service restaurants and c-stores will continue to blur, intensifying competition across the foodservice and retail grocery spectrum. C-store chains are increasingly viewing QSR and traditional fast-food chains as their chief competition and tailoring their food offerings to match if not exceed competitors’ menu options.
“Convenience stores have evolved from their gas-fueled beginnings to become true food and beverage destinations,” said Billy Roberts, food & beverage economist with CoBank. “Food service is the future for c-stores, and we expect they’ll continue to emulate their competitors with a greater variety of freshly prepared items, along with more attention to signature menu items and private label products.”
The emergence of c-stores as formidable destinations for prepared foods hasn’t gone unnoticed by major food manufacturers. Several leading food brands have taken the merger and acquisition route to enter the c-store channel. J.M. Smucker cites c-store distribution as an important reason behind its early 2024 acquisition of Hostess Brands.
Similarly, Hormel Foods dramatically expanded its c-store penetration with its 2021 purchase of Planters and Corn Nuts brands. Hormel has subsequently leveraged those newfound distribution relationships to bring more of its products to c-stores, including pizza toppings and bacon.
C-store kitchens are seeking quick and easily prepared products. Hormel is among the suppliers that has found c-stores to be something of a testing ground for new flavors and product concepts. For example, the key distinction of Hormel’s Bacon 1 isn’t necessarily flavor but ease for the operator. The fully cooked product heats quickly, enabling c-store operators to easily add bacon to a host of their menu options.
Customer loyalty programs are also playing a significant role in the success c-stores have had with food sales and repeat visits. Several c-stores have developed loyal followings on a near-nationwide scale. The 2024 Loyalty Trend Report from Paytronix finds at least 80% of c-stores’ loyalty program members in the top half of loyalty transaction visits per store every month.
“This enthusiasm for loyalty programs will be a tool that c-stores look to sharpen as they attempt to claim more traffic from restaurants, which have seen weak results of late,” said Roberts.
Read the report, C-stores Evolve from Gas-N-Grub to True Food Destinations.
About CoBank
CoBank is a cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 77,000 farmers, ranchers and other rural borrowers in 23 states around the country.
CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.
