Why Convenience Stores Will Win The Fast Food Battle

When I was little, my grandmother taught me how to make a quality cup of coffee. She’d put the percolator on the stove, and I’d hear the familiar bubbling sound that meant she and my grandfather would have coffee soon. I loved the ritualistic aspect of sitting at the table with our cups and saucers (though mine was only filled with tea). I couldn’t wait until I was old enough to drink this apparent off-limits beverage. My grandmother’s influence on me—that quality cup—sparked an idea decades later. 

Growing up in the family business and working with my Dad gave me a unique perspective. Throughout the 1950s, Dad ran a Cities Service Station (later Citgo) and then went on to become a commissioned agent with Continental Oil Company (later Conoco). Conoco hired him to oversee their four service stations and wholesale bulk distribution warehouse. Back in the day, we called this business TBA: tires, batteries, and accessories. Dad had me working the full-service gas pumps, stocking the warehouse, and delivering TBA products to the service stations. I didn’t realize it then, but I gained priceless knowledge relating to every aspect of our industry. I attribute that absolutely to my father’s influence and guidance all those years ago. Even though I went into investment banking post graduation, I always enjoyed the industry. And I especially loved working with my Dad. 

He began to segue from the service station era in the late 70s. Throughout the 80s and 90s,  the convenience store industry expanded, but it offered customers nothing but burnt coffee sitting on burners and equally disappointing food: poorly prepared and held in warmers far too long. When I turned 30, I shared with Mom and Dad that I wanted to leave my investment banking firm and reestablish our sleepy yet successful wholesale oil company. Both were apprehensive. However, they eventually supported my efforts and later threw themselves in behind me full force. When we surveyed the industry, the lack of quality food and beverage drove me to pivot our oil company into a retail gas and convenience company. I thought back to the care with which my grandmother made morning coffee for my grandfather. She wouldn’t touch the c-store coffee with a ten-foot pole.

Starting our family c-store operation in 1990, I wanted to offer something more. My partner, Geron Vail, alongside Mom and Dad, supported this effort. Geron began to develop a program with best-in-class franchises and suppliers. By 1993, Geron’s team had made substantial progress toward fulfilling my vision for a quality food and beverage offering. I lobbied for whole bean, top-notch coffee with refined production procedures using the best equipment. To develop our food expertise, we purchased a KFC / Taco Bell franchise using its management to hone our skills. Given the cost of such an enhanced program, many in our company opposed these efforts. They believed conventional wisdom was clear: c-store customers only cared about price and convenience, not quality.

But I remained determined to deliver superior products that differentiated us from competitors. My unconventional approach focused on quality first, then determined pricing once we understood our costs. It was risky, but I believed consumers would follow quality rather than price. 

Customers quickly recognized how much better our coffee and food were compared to competitors. We gradually adjusted pricing to achieve respectable margins. Volume surged, confirming we discovered something significant.

Our model didn’t compare to the conventional c-stores at that time. It represented an entirely different paradigm, one that the industry soon followed.

Transforming Customer Behavior

We discovered something profound: people who never considered eating in a convenience store began doing so regularly. Previously, customers used c-stores only for fuel and restroom facilities. The paradigm shift changed this fundamentally. 

We weren’t attracting new customers; rather, existing customers who came for fuel and restrooms began making additional purchases in categories they previously ignored. Food and beverage became foundational to the industry.

Today, as co-founder & partner of Downstream Energy Group, I advise convenience store owners and energy companies on strategic positioning, mergers, acquisitions, and succession planning. My work has given me a front-row seat to the transformation of this industry.

Future-Proofing Against Declining Fuel Sales

As electric vehicles gain popularity, convenience stores face a potential threat to their traditional business model. Forward-thinking operators are already adapting by installing charging facilities. But the key insight remains: customers will patronize stores that offer quality food and beverage programs alongside clean restroom facilities, regardless of how they power their vehicles.

The longer wait times associated with EV charging create additional opportunities. While traditional fueling takes minutes, charging requires more time, allowing stores to offer expanded food and beverage options as customers have more time to dine and shop.

The Imperative For Survival

Looking at today’s competitive landscape, convenience store operators must actively develop and improve their food and beverage programs to compete directly with fast food and coffee chains. At Downstream Energy Group, I’ve guided numerous store owners through this strategic transition. Those that fail to adapt face a stark choice: sell their locations or eventually wither away.

The future belongs to specialty hot and cold beverage programs paired with fresh food platforms. European convenience retailers have figured this out. Many U.S. operators lag behind. My team is working with an Irish innovator to accelerate this transformation in the American market.

What began as a personal appreciation for quality coffee has evolved into a vision for industry transformation. The convenience stores that embrace this paradigm shift won’t just survive the challenges of declining fuel sales and fast food competition: they’ll thrive by offering something customers truly value: quality food and beverages in the most convenient locations possible.

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