Extreme Makeover?

Published in CSP Daily News

Consumers noticing the remaking of c-store cuisine

CHARLOTTESVILLE, Va. -- Gas stations as gourmet destinations? The industry's certainly been trying to change its image, and a recent Associated Press story noted that consumers are starting to notice.

Slim Jims are making way for sushi as convenience stores transform themselves with upscale eats and shed their image as junk food pit stops, according to the AP report. It's an attempt by the industry to discourage the gas-up-and-go mentality and bolster the bottom line with artisan cheeses, freshly baked breads and high-end meals that entice consumers [image-nocss] to linger and eatand to do it often.

We're trying to make these stores destinations rather than convenience stops, said Stuart Lowry, marketing director for The Markets of Tiger Fuel, a Charlottesville, Va.-based convenience chain that offers fresh seafood, a fancy deli and professional chefs. If you choose to just get in and get gas, you can. But if you want to sit down and have a gourmet meal, you can do that, too.

The change comes at a crucial time for the nation's 138,000 convenience stores, most of which historically have relied on gasoline and cigarettes for more than three-quarters of their sales. At the same time as profit margins on those products are shrinking, the $395 billion industry is facing tough new competition from grocers adding fuel pumps and drug stores that offer more food than pharmaceuticals.

Until recently, the industry has focused mostly on one type of customer, what many call Bubba, a blue-collar man who smokes. Reaching beyond Bubba has meant a new generation of c-stores, said National Association of Convenience Stores (NACS) spokesperson Jeff Lenardbigger, brighter and more upscale than their predecessorsthat compete less with service stations and more with grocers and restaurants.

Bubba is being replaced by the grab-and-go affluent, people who spend considerable time in their vehicles and demand portable meals, but want more than Slurpees and shrink-wrapped sandwiches, Lenard said.

The economics of the transformation make sense. A good price on fuel might get people in the door once or twice a week. Great coffee, brick-oven pizza and gelato could pull them in daily. Most retailers will tell you they can make more money off a 12-oz. cup of coffee than a 12-gallon fillup, he said.

That's the plan at ExxonMobil Corp.'s 659 On the Run c-stores, where the company recently spent $10 million developing a proprietary line of gourmet coffee called Bengal Traders. Since many customers are more loyal to good coffee than to gasoline brands, that is money well spent, said Russ Ritenour, the company's hot beverages manager. ExxonMobil even has added a new position at its storesbrew master. (For further details about the Bengal Traders program, see page 73 of the May issue of CSP magazine.)

Many companies are taking a broader approach, outfitting their shops with kitchens or forming partnerships with existing restaurants, such as Subway and Dunkin' Donuts. Many shops will even bring their food to you with catering services.

Today, 80% of c-stores offer food prepared onsite, making it one of the fastest growing segments of the foodservice industry, according to the National Restaurant Association (NRA). All that food prep takes space, and newer shops have it. Today's c-stores average about 3,000 square feet, nearly 25% larger than those built just a decade ago, according to NACS.

Bill Knight upped that ante when he opened his 12,500-sq.-ft. flagship NexStore MarketPlace in Boca Raton, Fla., in December. Nearly two-thirds of the space is kitchen. Outside there are nearly 300 parking spaces. He needs the room. Knight employs 41 chefs who prepare 120 different baked items, including cakes, pies and pastries, 12 soups, 16 varieties of sushi and more than 150 different deli items. There's also a meat-carving station.

Oh yeah, and he sells gasoline, too. At 20 pumps. Knight's shop may sound excessive, but it is no anomaly.

Altoona, Pa.-based Sheetz Inc., with hundreds of c-stores along the Mid-Atlantic, recently opened two 10,000-sq.-ft. shops that offer dining rooms, espresso bars and salads and pizzas made to order. The whole convenience dynamic is changing and changing in a big way, said Bill Reilly, vice president of sales and marketing for Sheetz, which plans to open dozens more super-shops this year.

The changes are not without challenges. Fancy foods will not play in every neighborhood. And years of bad coffee and hot dogs under heat lamps have made many consumers reluctant to take c-store food seriously.

Having them see 7-Eleven as a good alternative to a McDonald's or a Burger King is a challenge, conceded Jim Keyes, president of 7-Eleven, Dallas, which has a team of chefs developing healthy sandwich wraps and other fresh foods for 5,000 of its North American shops. But Keyes said parents increasingly see his shops as a healthier choice than traditional fast food.

Karen Moran is one such parent. Convenience stores induce less guilt than they used to, she said recently while browsing dozens of sandwiches, baskets of fruit and more than a dozen gourmet coffees at an On the Run store in Manchester, N.H. I like convenience stores more than I used to, the Danville, Vt., mother of two said as she stocked up on snacks. There's more to choose from. You can have lunch now and not feel too bad about it.