The Job Interview: How many convenience stores can one place support? A lot.
Workers position the sign on the convenience store under construction off Exit 17 at the corner of Hoit and Whitney roads on Friday, November 15, 2013. The site is scheduled to be open in December. It will have a 3,000 square foot store, a drive-thru Dunkin' Donuts and 12 gas pumps.
(ANDREA MORALES / Monitor staff)
Pieces of the sign for the new convenience store on Hoit and Whitney roads lay in the grass while work is finalized on Friday, November 15, 2013.
(ANDREA MORALES / Monitor staff)
Concord will get another combination convenience store and gas station – and its ninth Dunkin’ Donuts – next month when an Xtra Mart opens off Exit 17. That doesn’t surprise Jeff Lenard of the National Association of Convenience Stores.
Convenience stores, especially those that offer a mix of gasoline and food, are “recession resistant,” Lenard said. There are 149,000 of them in the country, one for every 2,100 people, and nearly 900 in New Hampshire, Lenard said.
A typical convenience store gets 1,100 customers a day: 800 of them inside the store and 300 just at the gas pumps. And while gas accounts for most of the sales at a convenience store (71 percent), it’s the food and other items that generate most of a store’s profits, Lenard said.
Above all, customers want one-stop shopping.
So, put gas, food and other daily needs under one roof in a convenient location – like right off a highway exit – and odds are it will do well, even in tough economic times, Lenard said.
“(Convenience stores) sell affordable luxuries,” he said. “As you cut back because of the economy, you may not be taking that vacation and you may not be doing other things, but you say, ‘I am going to have that candy bar because it doesn’t cost much.’ ”
We caught up with Lenard at his Virginia office by telephone last week to talk about what’s ahead for convenience stores and their customers. Think gourmet food and no need for cash – or credit cards.
Before we look ahead, can you take us back to the start of the convenience store?
The first one was built in 1927 in Dallas and it was an ice company. They sold blocks of ice that you stuck in your icebox to keep things cool. Then they said, “Why don’t we sell milk, bread and eggs the rest of the year?” Then they stayed open later hours when everything else closed at 5 p.m.
That store (changed names over the years) and is now the 7-Eleven, so you can guess what their extended hours were.
You estimate gasoline sales account for only about 35 percent of a store’s profit. I think that would surprise people.
The markup on a gallon of gas is about 17 cents. After (the store owner) pays credit card fees and other expenses, they make about 3 cents on a gallon of gas. If they sell 4,000 gallons of gas a day, they might make $120 off gas.
You need to run your business based on what you sell inside the store.
Like tobacco, snacks and drinks?
Tobacco accounts for more than a third of sales dollars inside the stores, in part because of the prices. But the profits are fairly slim as they are with gas.
And we are dealing with a decline in cigarette consumption, so when your two major draws are gas and cigarettes, you have to look at new profit (generators.)
I think the new profit areas stores are looking at is food, and not just packaged food but gourmet gas stations.
If you look at drug stores, dollar stores or Best Buy, Home Depot, PetSmart or Staples, they are looking more like convenience stores at their registers. They have snacks and drinks. Home Depot sells things for building and fixing homes, yet they are selling drinks and candy bars at the registers.
So convenience stores need to offer something different?
Yes. I think you will have more gas stations that have incredible food.
Much more in the way of fresh food. More in the way of healthy options. Grab-and-go salads and parfaits. Even simple packaged items like nuts.
A couple of things are leading to that.
We are seeing a changing demographic with more people from Central and South America, and the perception in their countries is that great food is oftentimes street food. And people’s perceptions have changed so that they no longer expect to have to sit down (at a restaurant) for a great meal.
Working with an existing quick service restaurant like Dunkin’s, Tim Hortons, or another known brand is one way to do it. The other way is to acquire skills in house and look to start your own sandwich program.
Thirty years ago, watching National Lampoon’s Vacation, one of the funny lines was . . . ‘I’m so hungry I could eat at a gas station.’ I’m not sure that’s as funny today. People expect food at a gas station convenience store. People expect good food at the convenience store.
Some convenience stores allow you to pay for your gas and other purchases with just your smart phone? Will we see more of that?
Yes, that’s another convenience. The idea is to give people their time back and be hassle free.
People will walk out of a store if there are six people in line in front of them. Convenience stores sell time. If (a store) can give people 10 more seconds or 20 more seconds by having a new payment method that doesn’t even use a credit card, they’ve made a friend.
You often see competing gas stations across the street from one another. And the new store coming to Concord will give the city its ninth Dunkin’ Donuts. How do they all survive?
Even though there may be stores that look identical across the street from each other, one might require a left-hand turn and a left-hand turn is considered inconvenient for someone depending on the size of the road.
It doesn’t take a very large population to support a convenience store, and a convenience store is not like a Walmart that (builds) a ways out of town to save on real estate.
You need to be in a convenient location for people. People won’t drive a quarter-mile down the road to something called a convenience store because that’s an inconvenient store.
(Annmarie Timmins can be reached at 369-3323 or email@example.com or on Twitter @annmarietimmins.)