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Convenience stores sell much more than gasoline. Later in this email, find out how many hoagies one particular chain makes per year. Warning: The number might shock you. 

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🥪 Fresher, Better Food Options Are Saving Gas Stations

Clark has professed a fascination with and a love for convenience stores for years – especially those with outstanding food service such as Wawa and Buc-ee’s.

As it turns out, Clark’s personal taste is a great proxy for all Americans.

In an article titled “Gasoline is dead. Long live the hoagie.”, Sherwood Media described the old gas station model:

… merely a place to fill up, buy cigarettes, or shamefully lug around a bathroom key attached to a painted two-by-four.

But locations offering fresh food or dine-in options now account for 58% of U.S. convenience store spending (up from 48% in 2019).

Many of these chains are rooted in food. For example, Sheetz originated as a deli.

But now they’re ubiquitous. Wawa makes 183 million hoagies a year (1 million more hoagies than cups of coffee). Buc-ee’s new location in Texas is 75,000 square feet – about 10 times as large as the average Cheesecake Factory.

Casey’s, popular in the Midwest, grew gross profit on food, drinks and grocery items to $620 million in Q2, which is almost $200 million more than Domino’s. It also operates the fifth-largest pizza chain by store count. Revenue from food items grew 12% while revenue on gas items grew 1% in the quarter. Food margin (59%) was much better than gas margin (10%).

Better fuel economy and a higher share of the auto market going to EVs is expected to continue to slow gasoline market growth (and eventually throw it into reverse). But EV charging offers these locations more waiting customers willing to eat and buy merch.

7-Eleven, struggling enough to shutter nearly 500 stores, is considering an offer from Couche-Tard (Circle K’s owners). Hit by declining cigarette sales, a key part of the 7-Eleven turnaround plan would be to expand its U.S. food offerings.

The days of “gas stations” that just happen to sell cigarettes, alcohol, chips and candy bars are ending – and the days of mega-stores with built-in dining, huge merch lines and more are just getting started.

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