The gas station/convenience store market has become increasingly competitive over the past few years. At least a thousand of these businesses are added every year across the US, raking in more money than supermarkets and possibly even restaurants.
According to The Florida Times-Union, 70% of the average convenience store’s revenue comes from gas but the pumps account for just 40% of the store’s profit. The rest comes from the items sold inside the store, which are the main focus of business owners looking to rapidly evolve. Several big chains are planning on opening dozens more locations in certain states and featuring a significantly larger selection of food and beverages.
In Minnesota, fourteen BP gas stations were recently converted into SuperAmericas, a franchise offering a bakery and deli. The latest Daily’s stores to be set up in Florida boast made-to-order sandwiches and a grab-and-go case with everything from yogurt to string cheese to hard-boiled eggs. Circle K based its new strategy on the discovery that half of all gas station/convenience store customers enter the store for beverages. As of earlier this year, you can get a fountain drink of any size at Circle K for just 79 cents.
The main takeaway here is that these businesses are now selling more than just the basics, and for three reasons.
DEMAND IS ON THE RISE
Before expanding their selections, gas station/convenience store operators were frequently visited by travelers looking for the nearest source of sufficient sustenance, like a deli or 7-Eleven. The customers had unexpectedly found themselves in a “food desert,” or a major highway or neighborhood void of noticeable supermarkets and restaurants. Wisconsin-based Kwik Trip has added 35-40 stores per year over the last decade, most of which are located along the same, central US roadways, such as Highway 10 or Interstate 94.
The second reason stems from the fact that gas station/convenience stores aren’t just competing with each other. They are also competing with CVS, Walgreens, Best Buy, Home Depot and any store that sells candy and drinks at the cash register. Supermarket customers may have noticed that more and more convenience-related items are now being sold up front.
YOUR BEST CUSTOMERS, VERSION 2.0
Approximately ten years ago, America began experiencing a dramatic drop in the sale of gas and tobacco, two of the highest-selling items at gas station/convenience stores. But alongside these declines came the emergence of the most reliable of customers, one who places a much higher value on convenience stores than previous generations.
Jeff Lenard, spokesman for the National Association of Convenience Stores, confirmed to the Florida Times-Union last March that “Millennials are the convenience stores’ best customers and [are] transforming how everyone serves them.” About 70 years ago, 55% of households consisted of married couples with children. “By the 2000s, “ Lenard continued, “married households were down to 28 percent and singles were up to 20 percent. When you’re single, there’s less tendency to rush home and cook dinner by yourself.”
IT’S NOW OR NEVER
Each of these three observations poses a different reason to contact an alternative lender about a small business loan. The first suggests that, much like the restaurant industry, the quickest way for owners of gas station/convenience stores is to add more stores throughout any area that is deprived of traditional sources of food. If there is a new ramp being built for a major highway near you, it’s up to you to capitalize on this opportunity before someone else does.
Lucky for you, alternative business financing companies like United Capital Source are able to approve small business loans in 24-48 hours. This allows you to quickly secure that new location with a down payment while covering monthly expenses for your existing location. And instead of wasting time gathering and worrying about money, you can conduct research on the area, scout for new hires, and simply dedicate 100% of your focus towards perfecting this investment.
It’s already been established that the adoption of extensive food options is vital for survival, but you need to step up your game even further if your store is located within a close proximity of one of the aforementioned, non-convenience competitors and/or a massive millennial population. In these two scenarios, your store can never have enough items or “convenience.” For example, the “Grab-and-Go” cooler at Daily’s has seen immense success simply because it doesn’t have a door. Others are experimenting with tables for eating, a wider variety of ready-to-eat food, and of course, free Wi-Fi.
A PROGRAM TAILORED FOR THIS EXACT SITUATION
Expanding or installing a selection food and beverages takes time. You’ve got to buy a grill, refrigerators, ventilation, cooking utensils, and hire more staff to run the area. Traditional funding programs require you to make monthly payments immediately after funding is distributed but clients of United Capital Source can avoid this stress by receiving a Merchant Cash Advance. This program provides a lump sum in exchange for a percentage of future credit card sales, and since most gas station transactions are conducted via credit card, your debt will be erased by the middle of the busy season.
Demand has undoubtedly increased for food items in gas station/convenience stores, and business owners are realizing that there is always something more they could offer customers. The current mentality is to expand your reach as far as possible, so it’d be wise to jump on the bandwagon now before someone else steals your potential traffic. Besides, at this point, if you choose not to expand, you will literally be known as “the only store without ____.”