mIBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family businesses. The following blog article has been provided by Bryan Elliott of Stuart Range Consulting.

How Independent Convenience Stores and Mini-Markets Can Win in a High-Inflation Economy

Rising fuel costs and persistent inflationary pressures are having a negative impact on consumer confidence and spending. When consumers feel squeezed, discretionary purchases are the first to go, making convenience stores (c-stores) one of the first to feel the negative effect of a lower-spending public.

The challenge is compounded by relentless margin compression. For decades, c-stores relied on the high volume of cornerstone products like cigarettes and alcohol. However, rising vendor costs and increasing taxes have steadily driven the gross profit margin on these items toward their floor, reducing overall profitability. In the current economic climate, simply relying on tobacco, alcohol sales and fuel volume is a fast track to decline.

The Giant’s Blueprint: Lessons from Leading Chains

Despite these headwinds, several of the industry’s largest players are not only surviving but aggressively expanding their footprints, proving that a growth model exists even during challenging times.

Chains like 7-Eleven, Maverick, and RaceTrac are among those that actively added new locations in 2024 and 2025, with industry giants like Buc-ee’s also pushing into new markets. What these chains have in common is a fundamental commitment to being a food-forward destination. Their massive investments in high-quality, made-to-order (MTO) food offerings allow them to:

• Insulate Margins: They are less reliant on volatile fuel prices and low-margin tobacco.
• Increase Dwell Time: Customers stay longer, increasing the opportunity for purchases across multiple categories.
• Build Loyalty: Quality food transforms the store from a necessary pit stop into a preferred destination.

The single most important lesson independent owners can take from these giants is that their business is no longer just selling fuel and packaged goods; it is about selling food and experience. The core of the “food-forward” strategy is simple mathematics: high gross profit margin. Consider the typical margin structure within a convenience store:

By shifting focus to prepared food, owners fundamentally change the store’s product mix. Every dollar earned in fresh food is significantly more profitable than a dollar earned from a pack of cigarettes.

Furthermore, research confirms that adding food options is not a replacement for core products, but a supplementary driver for increasing the overall basket size of each purchase. A customer who stops for a breakfast burrito is not just buying a $4 food item; they are highly likely to also purchase high-margin items such as a coffee, energy drink, or fountain drink, driving the transaction value (basket size) up significantly. This co-purchase behavior is the engine of the modern c-store’s profitability.

A successful food program must be designed to maximize traffic throughout the entire day, a concept known as dayparting. Prepared food drives customer visits outside of the typical morning coffee and evening gas fill-up rush.

The Morning Rush (5:00 AM – 8:00 AM)

Commuters and early-shift workers dominate the morning. This daypart is anchored by the highest-margin product in your store: hot coffee.

• Offerings: Simple, high-demand items like Breakfast Burritos, Croissant Sandwiches, or Sausage Biscuits. These items are easy to prepare in advance and hold well in a warming case.
• The co-purchase: A customer grabbing a hot breakfast sandwich is almost guaranteed to pair it with a coffee or an energy drink from the vault, doubling the value of the stop.

Mid-Day and Lunchtime Traffic (11:00 AM – 2:00 PM)

This is the primary opportunity to compete directly with Quick Service Restaurants (QSRs).

• Offerings: Focus on satisfying lunch items that can be prepared quickly. This might include a single-slice pizza program, hot dogs/taquitos on a roller grill, or chicken tenders and wings.
• The co-purchase: The lunchtime basket is driven by fountain drinks, bottled teas, and chips/snacks. The fountain machine, with its high 60%+ per cup margin, is a critical partner to the lunch food offering.

Evening and Snack (3:00 PM – 7:00 PM)

The evening provides an opportunity to capture customers for dinner or a family snack.

• Offerings: Shift to Take-and-Bake Pizzas (for home preparation) or popular, larger format snacks like hot pretzels, nachos, and/or churros.
• The co-purchase: Capture evening traffic with options that serve the whole family, driving sales of bulk items, beer and wine (where permitted), and family-sized packaged snacks.

Actionable Roadmap: From Concept to Kitchen

To successfully transition into a food-forward model, independent owners should follow a phased approach focused on analysis, investment, and consistent execution.

Phase 1: Market Assessment and Opportunity

Before investing a dollar in equipment, analyze the opportunities within your immediate neighborhood. A successful food program is driven by local demand.

• Demographics: Is your store traffic primarily driven by commuters (need fast, grab-and-go options) or the local neighborhood (may prefer more variety or made-to-order)? Is there a hospital, school, or university nearby that provides a predictable lunch or late-night crowd?
• Competitive Gap Analysis: Identify all competing QSRs within a one-mile radius. What do they not offer? If every competitor sells burgers, your focus should be on filling the gap with something unique, such as gourmet coffee, grill items, or a superior pizza program. Finding that white space prevents you from entering an expensive price war.

Phase 2: Sourcing and Infrastructure Investment

Once you know what you want to sell, you must ensure you can execute it safely and efficiently.

• Identify Fresh Food Wholesalers: Partnering with a large, reputable food service distributor or wholesaler is essential for scale and consistency. While local vendors are excellent for niche fresh goods (like baked items), for core products, look to national partners who specialize in the convenience store channel:
  • CJ Schwan’s Food Service: Excellent for high-quality frozen and par-baked items like pizzas and handheld breakfast items that require minimal preparation.
  • US Foods/Sysco: Broadline food service distributors that offer a massive variety of fresh, refrigerated, frozen, and dry goods.
• Strategic Equipment Investment: You do not need a full kitchen, but you need reliable, fast equipment.
  • Turbo Ovens: These are essential for rapid cooking and consistent quality, allowing you to quickly prepare pizzas and sandwiches without the space requirements of a traditional oven.
  • Warming Cases and Roller Grills: Non-negotiable for holding food at safe temperatures and demonstrating continuous availability to the customer.

Phase 3: Marketing and Consistency

The biggest mistake an independent owner can make is investing in food and then hiding it.

• Visibility is Key: Invest in clear, bright signage that is visible from the road. Place menu boards and vibrant product displays near the checkout and front entrance. Use digital menu screens to highlight rotating specials.
• Build the Habit: It will take time, often six months to a year, to build the local reputation as a fresh food destination. Do not become discouraged if initial uptake is slow. You must consistently demonstrate availability and freshness. Keep the display case stocked, even during slow periods. Once customers trust that your food is always available and always fresh, they will break old habits and make your store their new fresh food destination.

By adopting a food-forward approach, store owners can effectively combat margin compression, increase average transaction size, and transform their business from a necessary pit stop into a high-margin, preferred destination for the community.

If you have questions relating to the content of this article or want more information on how to run a high performing convenience store, Bryan Elliott would welcome the opportunity to answer them.  Mr. Elliott can be reached at (509) 929-5060 and stuartrangeconsulting@gmail.com.

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