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

Source: CSA

BY MARIANNE WILSON

April 11, 2018

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.