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Another record year for convenience stores as profits, sales edge higher

One of every 30.9 dollars spent in the U.S. in 2017 was spent at a convenience store.

That’s according to new data from the National Association of Convenience Stores, which reported that U.S. convenience stores experienced their 15th straight year of record in-store sales and fourth straight year of $10 billion-plus in pretax profits in 2017. Overall convenience stores sales surged 9.3% to $601.1 billion in 2017, led by a 14.9% increase in fuel sales. Profits were $10.4 billion, up 1.6% increase over 2016.

The sales increase at convenience stores last year was largely because of higher gas prices (up 12.8% to $2.38 in 2017) and a 1.9% increase in gallons sold.

Convenience stores sell an estimated 80% of the fuel purchased in the United States. But while fuel sales account for 61% of sales dollars, fuels margins are relatively slim and fuels only account for 38% of total profit dollars at convenience stores.

In-store sales at c-stores increased 1.7% to a record $237.0 billion.

Foodservice, a broad category that mostly includes prepared food but also commissary foods and hot, cold and frozen dispensed beverages, continues to be a key focus for growth in the convenience store channel.

Foodservice sales overall in 2017 were $53.3 billion, accounting for 22.5% of in-store sales in 2017 and 33.9% of gross profit dollars.

The category also was the biggest differentiator in terms of profits: Top-quartile performers had prepared food sales that were 3.6 times greater than bottom-quartile stores; coffee sales at top performers were 5.2 times greater that than those of the bottom quartile.

The overall merchandise sales groups as a percentage of overall merchandise sales were:

• Tobacco (cigarettes and OTP): 34.1% of in-store sales;• Tobacco (cigarettes and OTP): 34.1% of in-store sales;
• Foodservice (prepared and commissary food; hot, cold and dispensed beverages): 22.5%;
• Packaged beverages (carbonated soft drinks, energy drinks, sports drinks, water, juices and teas): 15.8%;
• Center of the store (salty, candy, packaged sweet snacks and alternative snacks): 9.9%;
• Beer: 8.5% (12.4% for stores selling beer); and
• Other: 9.2%.

Despite record in-store sales, direct store operating expenses — encompassing wages, payroll taxes, healthcare insurance, card fees, utilities, repairs/maintenance and supplies, as well as several other categories including franchise fees and property taxes—outpaced inside gross profit dollars for the second consecutive year. This trend continues to create challenges for convenience retailers as they look to grow their businesses, according to NACS.
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