NACS Magazine March 2022 by NACS Magazine

Advancing Convenience & Fuel Retailing

MARCH 2022 THE TOP 100

Convenience retailers by store count HIRING VETERANS

An overlooked staffing opportunity

convenience.org

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ONTENTS NACS / MARCH 2022 FEATURES

24 Self-Checkout Strategies

Practical advice on why, how and who’s doing what with cashierless options.

The Top 100 Leading convenience retail chains in the U.S. are ranked by number of locations as of December 2021.

34 M&A Boom

Spice It Up Make sales sizzle with peppery products and fiery foodservice offerings.

Regional family-owned companies opt to exit—not just because of attractive valuations but also tepid interest from the next generation.

On the cover: MVelishchuk/Shutterstock. This page: Phive2015/Getty Images

42 Military Ready Are veterans an overlooked hiring opportunity for c-stores?

52 Thanks for the LIFT

A lighting, image and facilities transformation revs up sales at one Wisconsin c-store.

STAY CONNECTED WITH NACS @nacsonline facebook.com/nacsonline instragram.com/nacs_online

Subscribe to NACS Daily—an indispensable “quick read” of industry headlines and legislative and regulatory news, along with knowledge and resources from NACS, delivered to your inbox every weekday. Subscribe at www.convenience.org/NACSdaily.

linkedin.com/company/nacs NACS MARCH 2022 1

ONTENTS NACS / MARCH 2022

DEPARTMENTS 06 From the Editor 08 T he Big Question 10 NACS News 16 Convenience Cares 18 Inside Washington

At least 20 Democrats and six Republicans say they will retire from the House of Representatives.

22 I deas 2 Go

At Dave’s Grill & Grocery, customers come from miles around for its freshcut steak, chicken, pork and roasts.

56 C ool New Products 60 G as Station Gourmet

Everest Momo Plus sells up to 2,000 Nepalese-style handmade dumplings each day.

62 C ategory Close-Up

IT’S A FACT

$44,348

Liquor sales moderate, but longterm prospects remain strong; also, rethinking strategies to get coffee fans back in stores.

72 B y the Numbers

CATEGORY CLOSE-UP PAGE 62

PLEASE RECYCLE THIS MAGAZINE 2 MARCH 2022 convenience.org

The presence of an article in our magazine should not be permitted to constitute an expression of the association’s view.

Alenkadr/Getty Images

Average sales per store of liquor in 2020

THE RIIHT STRATEEY RIIHT SUPPORT

RIIHT PEOPLE

ATMS l AIR/VAC l PROCESSINN l ACCESSORIES WWW.CDLATM.COM l 800-776-8834

/ MARCH 2022 EDITORIAL

NACS BOARD OF DIRECTORS

Kim Stewart Editor-in-Chief (703) 518-4279 kstewart@convenience.org

CHAIR: Jared Scheeler, The Hub Convenience Stores Inc.

Lisa King Managing Editor (703) 518-4281 lking@convenience.org Lauren Brooks Digital Content Manager (703) 518-4283 lbrooks@convenience.org

What’s top of mind in convenience? We’ll tell you. Get the inside scoop on all things convenience by downloading our weekly podcast! Convenience Matters® is the only podcast in the convenience industry that brings together thought leaders and retailer superstars each week to discuss matters of convenience. Download the podcast today, and gain access to industry knowledge and trends — all in 24 minutes or less!

CONTRIBUTING WRITERS Terri Allan, Sarah Hamaker, Al Hebert, Pat Pape, Renee Pas, Jerry Soverinsky DESIGN Imagination www.imaginepub.com

ADVERTISING Stacey Dodge Advertising Director/ Southeast (703) 518-4211 sdodge@convenience.org Jennifer Nichols Leidich National Advertising Manager/Northeast (703) 518-4276 jleidich@convenience.org Ted Asprooth National Sales Manager/ Midwest, West (703) 518-4277 tasprooth@convenience.org

PUBLISHING Erin Pressley Publisher and Vice President, Education & Media (703) 518-4208 epressley@convenience.org Rose Johnson Audience Development and Production Manager (703) 518-4218 rjohnson@convenience.org

OFFICERS: Lisa Dell’Alba, Square One Markets Inc.; Varish Goyal, Loop Neighborhood Markets; Brian Hannasch, Alimentation Couche-Tard Inc.; Chuck Maggelet, Maverik Inc.; Ken Parent, Pilot Flying J LLC; Victor Paterno, Philippine Seven Corp. dba 7-Eleven Convenience Store; Don Rhoads, The Convenience Group LLC PAST CHAIRMEN: Julie Jackowski, formerly Casey’s General Stores Inc.; Kevin Smartt, TXB MEMBERS: Chris Bambury, Bambury Inc.; Frederick Chaveyriat, MAPCO Express Inc.; Andrew Clyde, Murphy USA; Chris Coborn, Coborn’s Inc. Little Dukes; George Fournier, EG America LLC;

Terry Gallagher, Gasamat Oil/Smoker Friendly; Anne Gauthier, St. Romain Oil Company LLC; Douglas S. Haugh, Parkland Fuel Corp.; Raymond M. Huff, HJB Convenience Corp. dba Russell’s Convenience; Ina (Missy) Matthews, Childers Oil Co.; Charles McIlvaine, Coen Markets Inc.; Lonnie McQuirter, 36 Lyn Refuel Station; Jigar Patel, Hari 1 LLC, dba Fish River Food Mart; Glenn M. Plumby, 7-Eleven Inc.; Robert Razowsky, Rmarts LLC; Richard Wood III, Wawa Inc. SUPPLIER BOARD REPRESENTATIVES: Brent Cotten, The Hershey Company; Kevin Farley, GSP STAFF LIAISON: Henry Armour, NACS GENERAL COUNSEL: Doug Kantor, NACS

NACS SUPPLIER BOARD CHAIRMAN: Brent Cotten, The Hershey Company CHAIRMAN-ELECT: Kevin Farley, GSP VICE CHAIRMEN: David Charles, Cash Depot; George Ubing, E&J Gallo Winery PAST CHAIRMEN: Rick Brindle, Mondele-z International; Drew Mize, PDI MEMBERS: Tony Battaglia, Juul Labs; Alicia Cleary, AnheuserBusch InBev; Matt Domingo, Reynolds; Mike Gilroy, Mars Wrigley; Josh Halpern, FIFCO USA; Danielle Holloway, Altria Group Distribution Company; Jim Hughes, Molson Coors

Beverage Company; David Jeffco, Krispy Krunchy Foods LLC; Kevin M. LeMoyne, Coca-Cola Company; TJ Lynch, Hospeco Brands Group; Bryan Morrow, PepsiCo Inc.; Lesley D. Saitta, Impact 21; John Thomas, iSEE Store Innovations LLC; Sarah Vilim, Keurig Dr Pepper; Dean Zurliene, Monster Energy Company RETAIL BOARD REPRESENTATIVES: Steve Loehr, Kwik Trip Inc.; Chuck Maggelet, Maverik Inc. STAFF LIAISON: Bob Hughes, NACS SUPPLIER BOARD NOMINATING CHAIRMAN: Brad McGuinness, PDI

NACS Magazine (ISSN 1939-4780) is published monthly by the National Association of Convenience Stores (NACS), Alexandria, Virginia, USA.

Available on:

Subscriptions are included in the dues paid by NACS member companies. Subscriptions are also available to qualified recipients. The publisher reserves the right to limit the number of free subscriptions and to set related qualifications criteria. Subscription requests: nacsmagazine@convenience.org POSTMASTER: Send address changes to NACS Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA. Contents © 2022 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices.

Tune in at conveniencematters.com

1600 Duke Street, Alexandria, VA, 22314-2792

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UP FRONT FROM THE EDITOR Cameras and shelf sensors spot what items Hudson Nonstop customers grab to eliminate checkout friction.

Checkout, Please!

arly self-checkout systems frustrated me. I’d be the woman muttering, “Yes, the items are in the bagging area”—standing by while a cashier came to my rescue. When my kids were young and asked to help, we’d invariably end up scanning the same box of cereal five times. My now-grown-up son works part time as a grocery store cashier, and let’s just say, he has heard some colorful language in the self-checkout area. Fortunately, self-checkout technology has improved in recent years, along with my skill in using it. I’m not sure I’m ready just yet for the next step: autonomous retail. Switching planes at Chicago Midway International Airport last summer, I peeked into a Hudson Nonstop market equipped with Amazon’s Just Walk Out technology. Visually, the store’s lighting and signage are appealing, but for someone who grew up on science fiction novels, I found the camera-festooned ceiling unsettling. I’m sure future iterations will solve for this. Our cover story delves into the frictionless strategies convenience retailers like Circle K, Mach 1 and Parker’s are using in their stores, offering some practical advice for implementation. One hurdle is winning employee acceptance. This month we are delighted to introduce the 2022 NACS/NielsenIQ list of the Top 100 Convenience Retailers as ranked by store count. What’s unique about this list is our ranking of C-, D- and E-size chains not only by store count but also by NACS region. The main trend line is industry consolidation. As “M&A Boom” explores, the biggest chains are expanding their 6 MARCH 2022 convenience.org

reach by acquiring smaller chains with a track record of growth and strong fuel and convenience assets. Interviews with investment banking firms, leading retailers and consolidators indicate that M&A activity is still red hot. Speaking of heat, in “Spice It Up,” we take a closer look at the hot and spicy trend in food and beverages which has real staying power. “Military Ready” shares how convenience retailers QuikTrip and CEFCO, among others, are known for hiring former military personnel, and how other retailers can boost their ranks, too. I hope to see many of you in Chicago April 12-14 for the first live, in-person NACS State of the Industry Summit since I took the helm of this magazine in 2019! Wheels up, my friends!

Kim Stewart, Editor-In-Chief

Self-checkouts by NCR have replaced express lanes in many Whole Foods Market locations.

Self-checkout technology has improved in recent years, along with my skill in using it.”

T H E

A R T

O F

M E R C H A N D I S I N G

T M

UP FRONT THE BIG QUESTION

How do you build a customer-centric culture at your store?

At 36 Lyn Refuel Station, we pride ourselves on knowing our customer and trying to be a place where people feel comfortable from all different walks of life. Literally anyone can be walking through our doors at any given point in the day, and we want to be the place where people feel comfortable voicing their opinions on different matters and where they feel comfortable shopping at any time of the day. Another thing that we pride ourselves on is making sure our

 Lonnie McQuirter, director of operations, 36 Lyn Refuel Station, a single-store operator in Minneapolis, Minnesota. McQuirter is also a member of the NACS Board of Directors.

8 MARCH 2022 convenience.org

staff feels dignified in the work they do, and they feel respected, wanted and welcome. Part of our onboarding process is explaining to [employees] that my job is to advocate for and understand the customer. Everything that I’m going to teach [an employee] while [they] work for me is directly related to some type of customer interaction and how to make sure that they have a great experience. If we are really servicing our customers, and we’re doing it in a way that resonates well with the customer, it can make all the difference in the world to someone depending on what they’ve gone through that day. I get great satisfaction in knowing that we’re serving our customers well, and I really want that and desire that from our staff. In order to do that, we have to train and spend time talking about the products and engaging with customers. The lasting value that [operators] have is to not just embrace technology around us but also tap into our human resources that we are honored to still have right now and to help them grow as well, especially with the current labor shortage. It’s about how can you make the best of the situation you have right now. That’s a challenge, and it’s an honorable one.

SATISFACTION FOR EVERYONE,

RETAILERS INCLUDED ZYN

OVER

MORE CANS SOLD

on!

ZYN is the #1 brand in retail sales.*

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UP FRONT NACS NEWS

Chris Boling

Joseph Hobson

Kristin Jarabek

10 MARCH 2022 convenience.org

NACS established the Master of Convenience designation in 2019 to acknowledge the hard work and investment that NACS members have made in their personal leadership development. The designation is awarded to convenience retailers who have attended three or more of the five NACS Executive Education programs. For 2022, NACS recognizes three retailers as Masters of Convenience: • Chris Boling, senior vice president of store operations, Casey’s General Stores Inc. • Joseph Hobson, vice president of marketing, Maverik Inc. • Kristin Jarabek, vice president of category management, Kum & Go L.C. With the support of their organizations, recipients of the NACS Master of Convenience designation have prioritized self-improvement, which in turn contributes to the growth and excellence of their company and the convenience industry as a whole. To celebrate and recognize their achievement, each year, NACS Master of Convenience recipients are invited to attend the NACS Leadership Forum. At this invitation-only event, attendees learn alongside nearly 200 c-suite leaders and network at receptions and dinners. NACS also recognizes recipients on the Leadership Forum stage and presents them with a special certificate and pin. To learn more about the five NACS Executive Education programs, visit www.convenience.org/leadership or contact Brandi Mauro, NACS education program manager, at bmauro@convenience.org.

Liubov Khutter-Kukkonin/Getty Images

Congratulations to the 2022 Masters of Convenience

Kass Joins the Fuels Institute Marjorie Kass has joined the Fuels Institute as director of marketing and communications. Kass Marjorie Kass comes to the Fuels Institute with a background in communications, marketing and brand management, with significant experience in the energy sector, including stints with ExxonMobil, NATSO and Constellation Energy, as well as the Smithsonian Networks and Showtime Networks. Her work has been recognized with numerous Telly, CTAM and BDA awards. She also was a finalist for a Clio Award for a spot that is in the permanent collection at MoMA.

Undefined/Getty Images

NACS Taps Jordan for Marketing Post NACS welcomes Matt Jordan to the staff as digital marketing specialist. Jordan will support all aspects of our Matt Jordan digital marketing strategies across multichannel campaigns. A recent transplant from Belfast, Ireland, Matt holds a bachelor’s degree in public relations and applied communications from Northumbria University.

Fuels Institute Report Shows Differences in Carbon Emissions In low carbon electricity markets, BEVs emit Life Cycle A new report by the Fu71% fewer tons of Analysis els Institute evaluates the greenhouse gases Comparison life-cycle carbon emissions of than ICEVs; in battery electric (BEV), internal extremely high combustion (ICEV) and hybrid carbon electricity electric vehicles (HEV). markets, BEVs The report, “Life Cycle Analemit 16% more ysis Comparison – Electric and than ICEVs and Internal Combustion Engine 59% more than Vehicles,” compares the energy HEVs. sources that power these three vehicle Seventy-two percent of greenhouse types, the effect of external variables gases emitted by BEVs are associated on life-cycle carbon emissions and the with electricity generation. Over a 10corresponding total cost of ownership year period, on average, BEVs and HEVs that affects consumers. represent an 8% lower total cost to own “The Fuels Institute was not seekcompared with an ICEV, driven primaring to publish a definitive answer to ily by lower fuel expenditures. the debate concerning which vehicles As explained in the report, “Decarare cleaner, but rather we wanted to bonization of electricity appears to provide an objective evaluation to help be the biggest driver in reducing the guide discussions focused on how we life-cycle emissions from the vehicle, might improve emissions throughout followed by technological advancethe transportation market,” said Fuels ments in vehicle systems. Larger scale Institute Executive Director John adoption propels the technology growth Eichberger. faster due to economies of scale.” The report found that based upon The report also compares the total the U.S. average electricity sector, BEVs cost of owning a BEV, HEV and ICE emit 41% fewer tons of greenhouse gasvehicle. Overall, a BEV saves the owner es than comparable ICEVs. HEVs emit about $10,000 over the ICE vehicle. 29% fewer tons of greenhouse gases Download the report at https://bit. than ICEVs and 21% more than BEVs. ly/33PbqS4. J A N U A RY 2 022

ELECTRIC AND INTERNAL COMBUSTION ENGINE VEHICLES EXECUTIVE SUMMARY

NACS MARCH 2022 11

UP FRONT NACS NEWS

New Members NACS welcomes the following companies that joined the association in December 2021. NACS membership is company-wide, so we encourage employees of member companies to create a username by visiting www.convenience.org/ Create-Login. All members receive access to the NACS Online Membership directory, latest industry news, information and resources. For more information about NACS membership, call (703) 684-3600.

NEW RETAIL MEMBERS Digital Concept LLC Ulaanbaatar, Ulaanbaatar, Mongolia KARS Petro Distributors Rockledge, Florida Seminole Nation Division of Commerce Seminole, Oklahoma NEW HUNTER CLUB MEMBERS CHS Inc. (CENEX) Inver Grove Heights, Minnesota www.chsinc.com Stewart’s Enterprises Inc. Lincroft, New Jersey

Calendar of Events MARCH NACS Day on the Hill March 08-09 | Virtual NACS HR Forum March 21-23 | Orlando, FL APRIL NACS State of the Industry Summit April 12-14 | Rosemont (Chicago), IL

Ready Training Inc. dba (RTO) Ready Training Online Elizabethtown, Pennsylvania www.readytrainingonline.com

Harvest Roasting LLC dba Scooter’s Coffee Omaha, Nebraska www.harvestroasting.com

NEW SUPPLIER MEMBERS Capital City Fruit Norwalk, Iowa www.capitalcityfruit.com

NewBold Corporation Greenville, South Carolina www.newboldcorp.com

Catalina Snacks Inc. Indianapolis, Indiana https://us.catalinacrunch.com Gratify dba Osem USA Englewood Cliffs, New Jersey Hanwha Techwin Teaneck, New Jersey

MAY NACS Leadership for Success May 15-20 | Glen Allen (Richmond), VA NACS Convenience Summit Europe May 31-June 02 | Berlin, Germany JULY NACS Financial Leadership Program at Wharton July 17-22 | The Wharton School, University of Pennsylvania Philadelphia, PA

Onnit Austin, Texas www.onnit.com Rubicon Global Atlanta, Georgia Wonderful Pistachios Los Angeles, California www.wonderfulpistachios.com

NACS Marketing Leadership Program at Kellogg July 24-29 | Kellogg School of Management, Northwestern University Evanston, IL

NOVEMBER NACS Innovation Leadership Program at MIT November 06-11 | MIT Sloan School of Management Cambridge, MA

NACS Executive Leadership Program at Cornell July 31-August 04 | Dyson School, Cornell University Ithaca, NY

NACS Women’s Leadership Program at Yale November 13-18 | Yale School of Management New Haven, CT

OCTOBER NACS Show October 01-04 | Las Vegas, NV

For a full listing of events and information visit www.convenience.org/events.

12 MARCH 2022 convenience.org

We started out with a simple vision, to be your trusted bargain brand. Fast forward 12 years and Pyramid has sold over 2 billion packs. All we can say is THANK YOU! Here’s to another 12 years and 2 billion more packs of success.

ORDER THE BRAND YOU CAN COUNT ON. Call 1-877-415-4100 to order or contact your LVB rep today.

Liggett Vector Brands is the exclusive sales, marketing and distribution agent for Liggett Group and Vector Tobacco. © 2022 Liggett Group MSA PARTICIPANT. 2 billion packs of Pyramid based on company sales 2009 through August 2019.

UP FRONT NACS NEWS

Member News RETAILERS 7-Eleven Inc. announced Ken Wakabayashi’s new role as coCEO of 7-Eleven International LLC (“7IN”). Previously Ken 7-Eleven Inc.’s seWakabayahsi nior vice president, head of international, Wakabayashi will now lead the 7-Eleven brand’s global growth strategy alongside co-CEO Shinji Abe of Seven-Eleven Japan. As co-CEOs of 7IN, Wakabayashi and Abe will be responsible for all operations outside North America and Japan, as well as overseeing the 7–Eleven trademark globally. SUPPLIERS Brian Baker has been promoted to president and CEO of J.D. Streett & Company Inc. Baker is the fourth generation of the Brian Baker Baker family to lead J.D. Streett. He has worked in many capacities during his 15 years of service, learning the business from the ground level up. Baker is looking forward to the challenge of leading and growing the company in the ever-changing economy of the petroleum industry. Swisher has hired Jacinta Carter as executive vice president, human resources, people and culture. Carter will lead all asJacinta Carter pects of Swisher’s HR operations, with a priority focus on organizational alignment, building strong 14 MARCH 2022 convenience.org

pipelines for future hiring needs, promoting inclusion and opportunity in the workplace, and designing and evaluating career paths to meet the company’s business growth goals. Most recently, Carter served as senior vice president, human resources for Atrium Hospitality. Mitch Langston has joined Scooter’s Coffee as vice president of marketing. Langston will execute best-in-class Mitch Langston marketing initiatives to differentiate the brand, increase customer engagement and advance the Scooter’s Coffee brand promise of delivering an amazing customer experience. Prior to joining Scooter’s Coffee, he held positions at Church’s Chicken, Chili’s Grill and Bar, Applebee’s International, Long John Silver’s, Popeyes Louisiana Kitchen and others. Alto-Shaam, has promoted Ben Leingang to associate director of national accounts. In this newly created role, Leingang Ben Leingang will assist with the strategic development and tactical execution of targeted national chain and multi-unit account growth within the supermarket, c-store and other foodservice markets. Serving more than 30 years in the culinary industry, Leingang brings a unique first-hand operator perspective to the role. ASSOCIATION The New York Association of Convenience Stores has selected Kent Sopris as its next chief executive

officer. Sopris joined the staff in mid-February as vice president and will work side-byside with longtime President Jim Kent Sopris Calvin until Calvin retires July 1. Sopris will become the fourth president in NYACS’ 35-year history. Most recently, Sopris was director of the Public Transportation Bureau of the New York State Department of Transportation. KUDOS Lone Star Food Stores is a multiple winner of the “Best of Texoma” contest held by the Herald Democrat of Sherman, Texas. Lone Star Foods won in the following categories: Best Gas Station, Best Restrooms and Best locally owned business: Denison, Sherman, and Van Alstyne.” “Best of Texoma” is a local contest. The voting period lasts for two weeks, followed by several weeks of tallying up the votes. The National Confectioners Association and Candy & Snack announced that Todd Gean, category manager – candy, Hy-Vee Todd Gean Inc., is a 2022 Confectionery Leadership Award recipient. Gean was recognized for blending his industry knowledge and sense of creativity, and for delivering unique solutions in the confectionery category over the past five years. Hy-Vee piloted industry-leading National Candy Month merchandising and launched a new series of Candy Shoppes, a store-within-a-store concept.

CONVENIENCE CARES

Volunteers distribute fresh produce at the Northeast Oklahoma City Community Resource Center.

Fighting Hunger A

A Food Bank of Iowa volunteer sorts potatoes that will go to needy families.

16 MARCH 2022 convenience.org

cross its 16-state footprint, Casey’s is rallying its team members and its customers to help fight food insecurity. As part of the Ankeny, Iowa-based convenience retailer’s long-standing partnership with Feeding America, Casey’s set a goal of donating 17 million meals to children and families facing hunger across the heartland in 2022. A round-up campaign began in February in partnership with Monster Energy. “Hunger and food insecurity are increasingly prevalent challenges for many Americans, especially those living in rural areas where the pandemic has intensified food insecurity,” said Ena Williams, COO of Casey’s. “Through Casey’s partnership with Feeding America and the generosity of our guests, we can financially support the fundamental need for food in our local communities. These donations can make a lasting, positive impact on those most in need during this critical time.”

According to the U.S. Department of Agriculture, more than 38 million people, including 12 million children, in the United States are food insecure. Feeding America’s network of 200 food banks across the country serves over 40 million Americans every year. Since their partnership launched in 2020, Casey’s and Feeding America have donated over 15 million meals alone because of their collaboration and Casey’s guests’ donations to combat hunger. MAVERIK GIVES BACK Maverik answered the call to fight hunger by contributing more than $580,000 to help neighbors in need in the communities it operates in across 11 Western states through a series of donations to Feeding America, the largest domestic hunger relief organization in the United States. Since launching its food waste program in April 2021, Salt Lake City-based Maverik donated 30,508 pounds of

SOCIAL SHARES NACS encourages retailers to share their giving-back news on social media using #ConvenienceCares.

In The Community Every year, the convenience and fuel retailing industry dedicates billions of dollars to advancing the futures of individuals and families in our communities. The NACS Foundation unifies and builds on NACS members’ charitable efforts to amplify their work in communities across America and to share these powerful stories. Learn more at www.conveniencecares.org.

Feeding South Dakota provides children with milk and other staples.

surplus food, helping to provide access to an additional 25,423 meals, the “Adventure’s First Stop” convenience retailer shared in its 2021 Community Impact Report. The food donation also keeps food out of landfills, which equals the removal of the CO2 from nine passenger vehicles from being driven for one year. The company also recognizes how the pandemic has caused significant educational learning and development disruptions for millions of students. In response, Maverik in 2021 amplified charitable giving to assist youth educational adventures by donating more than $950,000 to academic-based nonprofits that help underserved students, including United Way of Salt Lake, Girls on the Run, Boys & Girls Club of Greater Salt Lake and YMCA. Maverik and its parent company, FJ Management, also support continuing education in its home state of Utah, donating more than $600,000 in educational scholarships to assist students. As Adventure’s First Stop, Maverik wants to make sure people can experience the benefits of healthy outdoor recreation. In 2021, the company donated more than $45,000 to support the Utah Clean Air Partnership as it develops a pathway for individuals, businesses and communities to make small changes that improve the state’s air quality.

NOMINATE A RISING STAR The NACS Foundation’s Future Fund Scholarship recognizes rising convenience retail industry leaders within their companies. This year’s application deadline is June 6. Each year, the NACS Foundation distributes up to 11 scholarships toward undergraduate career education at a community college or university. Since its inception, the program has awarded more than $500,000 in scholarships to NACS retail member company employees. Selected scholarship applicants are awarded $3,000 each toward tuition, as well as a stipend to attend the 2022 NACS Show. Recipients will be recognized during a special evening ceremony at the Show and given the firsthand opportunity to learn more about the exciting career paths in the convenience industry. Visit conveniencecares.org/ Future-Fund to download an application, or email Stephanie Sikorski at ssikorski@convenience.org.

PILOT HAS HEART Pilot Company kicked off its annual American Heart Month Campaign in February with new ways for customers to get involved at the more than 670 participating Pilot travel centers across North America. This is the sixth year Pilot has teamed up with the American Heart Association for its Life is Why™ campaign, which inspires customers of the Knoxville, Tennesseebased company celebrate their reasons to live healthier, longer lives. “Over the past five years, we’ve been able to raise more than $5 million to help support the life-saving work of the American Heart Association,” said Brian Ferguson, chief merchant of Pilot Company. Pilot Company’s fundraising initiatives include: • Paper Heart Icons: $1, $3 and $5 red hearts for purchase from February 22-28 to benefit Heart & Stroke. • Pin-Pad Round Up or Donation: During February, guests could round up their purchase to the nearest whole dollar or elect to donate other amounts to the American Heart Association on the pin-pad during checkout at participating U.S. travel centers. • eGift Cards: For every heart themed Pilot Flying J eGift card sold in February, the company donated 10% of the proceeds to the American Heart Association, up to $10,000. • Donate Online: A donation link on the Pilot Flying J campaign website throughout February provided another convenient way to donate to the American Heart Association.

NACS MARCH 2022 17

INSIDE WASHINGTON

Mid-Term Move Out

At least 20 Democrats and six Republicans say they will retire from the House of Representatives. BY JON TAETS

S KEY FIGURES

House members have announced retirement plans

Senators intend to retire, the largest number since 2014

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ince at least 1976, an average of 23 U.S. House members choose to retire from all public office every two-year election cycle, according to the Cook Political Report. As of this writing, there have already been 26 such announcements by incumbents. This is in addition to 15 other incumbents who are vacating their House seats to seek another elected office. According to Ballotpedia.org, the rate of announcements is outpacing the last election cycle, though it currently trails the 2018 cycle when Democrats last took control of the House majority. As is often seen in elections that are expected to be “wave” years for one party or the other, particularly when they are expected to lead to a change in the majority party—as most analysts believe the 2022 mid-terms will be—there has been a significantly higher number of House members in the majority party who have announced they will not seek re-election than members in the minority party. Recent polls asking likely voters if they would like a generic Republican or Democrat to be their representative show Republicans with a narrow lead early this election year. Using the 2020 election cycle as a reference, in late January 2020, Democrats enjoyed a roughly five-point advantage

Vermont Statehouse

in that question. It was Republicans who would add 14 seats that November, however. Such a significant swing is just one data point indicating why many Democrats are choosing retirement. Of the 41 House members who have thus far announced their retirements, 28 are Democrats, 20 of whom are simply retiring from public office rather than seeking another seat. That compares with 13 Republicans heading for the exits, with seven of those seeking other offices. The seniority level of many of these Democratic retirements is notable. The current chairs of four House committees have announced their retirements. John Yarmuth (DKY) chairs the Budget Committee, Eddie Bernice Johnson (D-TX) chairs the Science Committee, and Peter DeFazio (D-OR) chairs the Transportation and Infrastructure Committee. DeFazio, 6th in House seniority, and Bernice Johnson, 20th in seniority, join Bob-

Gnagel/Getty Images

Sen. Leahy’s retirement in Vermont has opened the door for Rep. Peter Welch (D-VT), an important friend of our industry, to seek that Senate seat.

by Rush (D-IL), 23rd in seniority, and Mike Doyle (D-PA), 29th in seniority, as examples of senior Democrat members who have decided to end their long, elected careers. The move by senior and powerful representatives to leave the House is not entirely unique to Democrats, as the top Republican on the powerful House Ways and Means Committee, Kevin Brady (R-TX), who is also 34th in House seniority, has decided to retire as well. On the GOP side of the aisle, however, he seems to be the outlier thus far. Of the Republicans who have announced their retirements, four— Mo Brooks (R-AL), Ted Budd (R-NC), Vicky Hartzler (R-MO) and Billy Long (R-MO)—are all seeking U.S. Senate seats. Of the six not seeking other office, Adam Kinzinger (R-IL) and John Katko (R-NY) are facing dual challenges of having their districts targeted for elimination in redistricting processes

and facing long odds in their primaries due to supporting the impeachment of former President Donald Trump. In addition, Rep. Tom Reed (R-NY) announced his retirement in 2021 after facing sexual misconduct allegations. There are far fewer Republican members simply calling it a career than there are Democrats thus far. SENATE DEPARTURES The story in the U.S. Senate is nearly the opposite in terms of partisanship. While most prognosticators give the GOP a good chance of retaking the majority in that chamber, that likelihood is much less assured than in the House, partially because the Republicans must defend 20 seats to the Democrats’ 14. Thus far, six senators have announced their retirements, the largest number since 2014. Of those, five are Republicans. The sole Senate Democrat to announce retirement is the Senate’s most

senior member, Patrick Leahy (D-VT), who also chairs the Senate Appropriations Committee. On the GOP side, the 4th and 20th most senior members of the Senate will be moving on—Richard Shelby (R-AL) and Richard Burr (R-NC), respectively. Joining them in retirement will be senators Pat Toomey (R-PA), Rob Portman (R-OH) and Roy Blunt (R-MO). Toomey’s retirement, in particular, is seen as a conversion opportunity for Democrats. INDUSTRY IMPACT For the convenience industry, a number of the announced retirements raise concerns, while one in particular represents a significant opportunity for our industry to gain a key ally in the U.S. Senate. Sen. Leahy’s retirement in Vermont has opened the door for Rep. Peter Welch (D-VT), an important friend of our industry, to seek that Senate seat. Rep. Welch is currently favored to win that seat. The flip side to that is that we will lose a key House ally, and Welch is not the only friendly face our industry will be losing in that chamber. From payments and data security issues to menu labeling and fuels issues, Welch has worked closely with NACS and retailers in his district. In addition, he was one of the first members of Congress to participate in a NACS In Store event and was part of the 100th In Store celebratory event and video. At least two other business-friendly Democrats are departing at the end of this Congress, as well. Reps. G.K. Butterfield (D-NC) and Stephanie Murphy (D-FL) have, at times, been key moderating voices in the Democrat caucus. Reps. Kinzinger, Katko and Reed have played similar roles on the Republican side as has Trey Hollingsworth (R-IN), who is also leaving and not seeking other office and has been a friend to the industry. On the Senate side, Sens. Burr and Blunt have been friends of our industry. Burr has long been a champion on tobacco issues, ensuring that the NACS MARCH 2022 19

INSIDE WASHINGTON ONE VOICE This month, NACS talks to

Joe Zietlow, convenience and fuel retailing industry continues to be allowed to sell legal tobacco and nicotine products, and Blunt was our champion on efforts to amend the challenging menu-labeling rules that came out of the Affordable Care Act. The loss of key allies and friends underscores the importance of political engagement and continuing to build strong grassroots connections not just with current members of Congress but also state and local office holders. Many of the 41 currently open seats will be filled by state legislators or local elected officials. Convenience retailers and the industry as a whole benefit greatly if those new members are already familiar with you and your business when they come to Washington. NACS will seek to meet with all the new members and introduce them to the industry once they take office. If retailers have already built strong relationships with these members, either while they served in local office or while they were candidates, it gives the convenience and fuel retailing industry a head start on that process here in Washington, D.C. Engagement with these officeholders isn’t just about financial support for their campaigns. It can also be about ensuring that they know convenience retailers can be a resource to them when issues which could impact the industry come before their offices. As always, NACS encourages you to reach out to your elected officials, set up a meeting to introduce yourself and your business, invite them to your stores and make yourself a friendly face and a resource for them. You will likely see a significant return on your investment of time and effort even if those officials never seek federal office. Jon Taets is NACS director of government relations. He can be reached at jtaets@ convenience.org. 20 MARCH 2022 convenience.org

industry and trade association manager Kwik Trip Inc., La Crosse, Wisconsin What role do you think convenience stores should play in the community? Our industry stepped up and demonstrated the important and essential role we played when the COVID-19 pandemic began in March of 2020. Our front-line workers at all of our c-stores kept our country moving forward, by providing gasoline for essential workers to get to work, diesel fuel, food and a place to rest for truckers so they could deliver medical supplies to hospitals, and food and supplies to people in their homes due to the stay-at-home orders around the country. We Your voice can save “Truly Made a Difference” in every community your business. our businesses call home! Scan the QR code to tell us what’s This has also provided a huge opportunity keeping you up at for convenience retailers. We have and will night and where continue to be where community members can you’re willing to lend your voice to NACS’ find essential food all day, such as a hot meal. advocacy efforts. Our stores fill the food desert void as convenient places for many of our less fortunate customers who depend on SNAP to shop for food for their families. Convenience stores take pride in supporting our communities every way we can. What does NACS political engagement mean to you, and what benefits have you experienced from being politically engaged? As a member of the NACS Political Engagement Committee, I have made a commitment to being engaged and involved in all the issues that affect our industry. By building relationships with every representative and senator we have and by educating them on our business and industry, we have become a respected and trusted resource in the states we operate in. Through our grassroots efforts, we also provide education to our colleagues on the issues that affect our company and industry. Additionally, we encourage those colleagues to contact their elected officials, thus making a difference for our company, industry and state we live in. What federal legislation or regulatory issues keep you up at night? Currently, the government chooses winners and losers in the future of transportation fuels and energy. Government is essentially trying to eliminate fossil fuels and ICE engines, while favoring incentives for EVs and EV infrastructure. We need to keep building our congressional relationships in order to educate them on our industry and advocate for a level playing field to let the consumers and market determine what the future of transportation looks like—not a government agency or policy mandate! What c-store product could you not live without? No question, it would be our Karuba Columbian Coffee with cream. Great start to my day!

NACSPAC DONORS NACSPAC was created in 1979 by NACS as the entity through which the association can legally contribute funds to political candidates supportive of our industry’s issues. For more information about NACSPAC and how political action committees (PACs) work, go to www.convenience.org/nacspac. NACSPAC donors who made contributions are:

DECEMBER 1-31, 2021

JANUARY 1-31, 2022

Arch Aplin Buc-ee’s Ltd.

Barry Eveland Rocket Oil Company

Charles McIlvaine Coen Markets Inc.

Money Samra Samra & Sons

Paige Anderson NACS

Leroy Kelsey NACS

Brian Ashburn Yesway

Dan Fleckenstein RPF Oil Company

Scott McPherson Core-Mark & Eby-Brown

Tony Savoie Richard Oil and Fuel Inc.

Arch Aplin Buc-ee’s Ltd.

Brian Kimmel NACS

Chris Bambury Bambury Inc.

Derek Gaskins Yesway

Lonnie McQuirter 36 Lyn Refuel Station

Stephen G. Sheetz Sheetz Inc.

Henry Armour NACS

Alicia Landrum NACS

Dan Bambury Bambury Inc.

Anne Gauthier St. Romain Oil Company LLC

William C. Milam

Travis Sheetz Sheetz Inc.

Laura Beck NACS

Jennifer N. Leidich NACS

Joseph Bona Bona Design Lab Inc.

Christopher Gheysens Wawa Inc.

Kevin Smartt TXB Stores

Lyle Beckwith NACS

Greg Levitan NACS

Ned Bowman Florida Petroleum Marketers Association

Erin Graziosi Robinson Oil Company

Theron Soderlund TMS Enterprises Inc.

Jeff Blalock Oberto Snacks Inc.

Brandi Mauro NACS

Andrew Sokolski Whirley Industries

Chrissy Blasinsky NACS

Jeff McQuilkin NACS

Stephen C. Spinks The Spinx Company Inc.

Anna R. Blom NACS

Nancy Pappas NACS

Nicholas St. Romain St. Romain Oil Company LLC

Katie Bohny NACS

Erin Pressley NACS

Darlene Stanley Johnson Junction Inc.

Britt Brewer NACS

Chris Rapanick NACS

Arthur Stawski Ragin’ Cajun Food and Fuel

Jenna Collard NACS

Jay Ricker Ricker Holdings

William Stein Core-Mark & Eby-Brown

Michael Davis NACS

Ashley Short NACS

Marc Strauch Cameron Park Petroleum

Allison Dean NACS

Stephanie Sikorski NACS

Chad Taylor Sagac Public Affairs LLC

Kirk Dickerson Dickerson Petroleum Inc.

Martin Smith Elmer Smith Oil Co.

John Tippery Sheetz Inc.

Stacey Dodge NACS

Douglas Spencer NACS

De Lone Wilson Cubby’s Inc.

John Eichberger Fuels Institute

Lori B. Stillman NACS

Richard Wood Wawa Inc.

Suzanne George NACS

Jon Taets NACS

Doug Yawberry Weigel’s Stores Inc.

Jayme Gough NACS

TJ Velasco NACS

Dean Zurliene Monster Energy Company

Margaret Hardin NACS

Leo M. Vercollone Energy North Group

Keith Harlow NACS

Nicole Walbe NACS

Jessica Hayman NACS

Leigh Walls NACS

Kevin Hodges Skupos

Don Wasek Buc-ee’s Ltd.

Bob Hughes NACS

David Woodley Sheetz Inc.

Stephen Brady Techniche Americas LLC Kelly A. Bucher Casey’s General Stores Inc.

Johnny Milazzo Lard Oil Company Inc. Jeffrey G. Miller Miller Oil Co. Inc.

Thomas G. Gresham Gresham Petroleum

Greg Mitchell Toot’n Totum Food Stores LLP

Ieva Grimm J.M. Davis Industries Inc.

Madalena M. Morgan Bobby & Steve’s Auto World

Rahim Budhwani 6040 LLC

Brian Hannasch Alimentation Couche-Tard Inc.

Robert A. Buhler Open Pantry Food Marts of Wisconsin Inc.

Shultz Hartgrove Naughty Chile Taqueria

Matt Nelson Excel Tire Gauge LLC

Doug Haugh Parkland USA

Bill Newcomb Newcomb Oil Co.

Nancy Caldarola Concept Associates Inc.

Tom L. Heinz Coffee Cup Fuel Stops and Convenience Stores Inc.

Brian Newcomb Newcomb Oil Co.

Brad Call J&T Management

Christopher K. Hobson Core-Mark & Eby-Brown

Nishant Chudasama Cadnicks Inc.

Sonja Y. Hubbard Yates Group Inc.

John Clark Howard & Howard Inc.

David Hutchinson Hutchinson Oil Co. Inc.

Andrew Clyde Murphy USA

Julie Jackowski

Ken Parent Pilot Travel Centers LLC

Cory Jackson Jacksons Food Stores Inc.

Bhavin Patel Pantry Quik Inc.

Aj Jha Tustin Arco

Sanjiv Patel National Petroleum

Kevin Kelly Travel Centers of America

Glenn M. Plumby 7-Eleven Inc.

Jonathan Ketchum Energy North Group

Darrin Pohar Sheetz Inc.

Jack Kimberly Royal Cup Coffee and Tea

John W. Richardson Sagac Public Affairs LLC

Roland Leyh J.R.’s Country Stores Inc.

Lesley D. Saitta Impact 21

Crystal Maggelet Maverik Inc.

Taha Saleh T.A. Saleh Enterprises

Chet Cadieux QuickTrip Corporation

Chris Davies Blue Goose Investments LLC Joseph M. DePinto 7-Eleven Inc. Rick DeRose TSN-A Bunzl Company Bhagdeep S. Dhaliwal Dhaliwal & Associates Inc. Colin Dornish Coen Markets Inc. Matt Durand Cumberland Farms Inc. Justin Erickson Harbor Wholesale Foods

Jay Nelson Excel Tire Gauge LLC

Duy Nguyen Bambury Inc. Shaun O’Brien Perfetti Access Strategies Darcy Paluch Moyle Petroleum Company

Doug Kantor NACS NACS MARCH 2022 21

IDEAS 2 GO

Our Hot Dog Chili has become our No. 1 seller since we added it to the menu.”

A Cut Above

Name of company: Dave’s Grill & Grocery Date founded: 1957

At Dave’s Grill & Grocery, customers come from miles around for its freshcut steak, chicken, pork and roasts.

Website: www.facebook.com/ DavesGrillandGrocery/

22 MARCH 2022 convenience.org

Like many convenience stores, Dave’s Grill & Grocery in Aiken, South Carolina, serves homecooked meals of barbecue, hot dogs, burgers and chili. But customers can also get something a little more unusual in a c-store—fresh-cut meats. “What attracted me to buy the store last year was its meat market,” said owner Andrew Siders, who purchased the store from Dave Golding, its previous owner of 38 years and the Dave of the store name. “Dave had a background as a grocery store meat manager and had brought in an extensive meat counter to the store that the locals loved.”

Liudmyla Chuhunova/Getty Images

BY SARAH HAMAKER # of stores: 1

INDUSTRY ATTRACTION For Siders, the fresh meat section was just one of the many compelling reasons to trade his insurance agency for a convenience store. “I’ve always liked the convenience store model, especially those in a more rural market like Dave’s,” he said. “This is the perfect next step for me when I was ready to sell my insurance agency.” Prior to insurance, Siders worked in retail. “I liked the buying and selling and the community aspect of retail,” he said. “For me, Dave’s was a great opportunity to get in on the ground floor of a retail situation.” Siders has been taking a fresh look at every aspect of the business category by category. “I knew from the beginning I would keep the meat market with a meat cutter,” he said. “You wouldn’t believe how much meat we sell because Dave’s has a reputation of being a great place for fresh cuts of steaks, whole ribeyes, roasts, pork chops, chicken, bacon, ham and ground beef.” The store also makes its own sausage. The location between two towns in a largely rural community of horse farms means customers stop by Dave’s for fill-in groceries and impulse shopping. In January, Siders received his beer and wine license, and he is in the process of building a high-quality selection of alcohol. On the fresh foodservice side, Siders added his uncle’s chili recipe, which had been very popular at an area restaurant in the 1960s and ’70s. “Our Hot Dog Chili has become our No. 1 seller since we added it to the menu shortly after I took over the place,” he said. He’s also brought in new items to meet the diverse customer base. “For example, there’s a large Hispanic population in the area, and I brought in Bimbo salsas and hot chips, which has been a popular addition to the store,” Siders said. In addition, he kept the store’s long history alive by leaving some of the old

advertisements on the walls. “The store had an old Winston cigarette display case that needed some elbow grease to bring it back to its former state,” Siders said. “I cleaned off years of gunk to showcase the original Winston script, and everyone loves it.” COMMUNITY CONNECTIONS Dave’s has a large social media following that Siders has built on as the new owner. “It’s very easy to get the word out about our specials or new products,” he said. “I’ve had posts gain 35,000 views on Facebook or Instagram.” With Siders’ background as a businessman in the community, he’s had some high-profile customers stop by the store. For example, South Carolina Gov. Henry McMaster, South Carolina Lt. Gov. Pamela Sue Evette and a state representative stopped by the store on the same day last fall. “Since I know the governor, he came by and had a fried bologna sandwich,” Siders said. The bottom line for Siders is making every customer feel like family when they visit. “We pride ourselves with being very friendly and always speaking to customers,” he said. “I really harp on customer service and the friendliness aspect of our store. I don’t want any customer to say Dave’s is an unfriendly store.” Siders already has his eye on the future. “One town has been after me to bring Dave’s to their community, so I’m in the planning stages to do that within the next year,” he said. “Eventually, I’d like to have 10 to 12 Dave’s locations in other rural communities because I see this concept as filling a need in those areas.”

Sarah Hamaker is a freelance writer and NACS Magazine contributor based in Fairfax, Virginia. Visit her online at sarahhamakerfiction.com.

South Carolina Gov. Henry McMaster enjoys a fried bologna sandwich at Dave’s Grill & Grocery.

BRIGHT IDEAS “If you don’t have something special about your store, people won’t come back,” said Andrew Siders, owner of Dave’s Grill & Grocery in Aiken, South Carolina. “I want to give people a reason to stop at my store.” For example, given the store’s location on the way to Charleston, South Carolina, he’s talking to Tesla about adding a charging station. Siders also keeps on top of trending products, often being the first store in the area to have the current hot item. “I was the first to sell Black Rifle Coffee, Death Wish Coffee and Liquid Death Mountain Water when those products started trending,” he said. When he gets in a hot item, he broadcasts the word out through the store’s social media. For the products themselves, he usually orders them from Amazon Business, which “does a really good job of keeping up with popular products,” he said.

Ideas 2 Go showcases how retailers today are operating the convenience store of tomorrow. To see videos of the c-stores we profiled in 2021 and earlier, go to www.convenience.org/Ideas2Go. NACS MARCH 2022 23

Self-Checkout

Yagi Studio/GettyImages

Strat

24 MARCH 2022 convenience.org

egies Practical advice on why, how and who’s doing what with cashierless options.

BY RENEE PAS

s consumer comfort levels with cashierless technology increase, self-checkout in c-stores is set to broaden in line with other retail segments. Many retailers have “embraced them anew in recent years as they contend with a tight labor market and lost revenue from shoppers moving online, and as shoppers become more accustomed to interacting with technology instead of humans,” a Wall Street Journal article noted in 2020. Last year, both Kroger and Walmart pushed self-checkout even further and introduced 100% self-checkout test stores. The chains opted to forego traditional manned checkouts altogether: Customers scan their own items, and employees remain on the sidelines and assist as needed.

C-stores have also been getting into the game. Wawa started rolling out self-checkout last year to 60-plus stores and stated that all new stores will include self-checkout as an option. Royal Farms expanded its self-checkout solution to all stores in 2021 after first introducing it at select stores in 2019. And the Spinx Company started piloting self-checkout last summer and plans to introduce the option in all of its 80-plus South Carolina stores this year. Expect even more c-store activity related to frictionless checkout this year as 41% of convenience retailers report they will offer frictionless/cashierless checkout in 2022, according to data from the recent NACS Building Convenience Retail Success Through Technology survey of retail members. Additionally, 30% say they will offer app-based ordering/payment. NACS MARCH 2022 25

Hudson Nonstop store featuring Amazon Just Walk Out technology

Grabandgo app mobile checkout (Circle K & GetGo Café & Market c-stores) 7-Eleven Mobile Checkout

NCR (Mach 1 c-stores)

DRAWING INTEREST: AUTONOMOUS CHECKOUT Yet to be widely adopted in any retail segment, autonomous checkouts continue to draw attention and tests as retailers look to get ahead of the curve. Amazon set the bar for cashierless shopping with its Amazon Go stores and proprietary Just Walk Out technology, which uses computer vision and sensor technology to track shoppers’ purchases. Amazon now operates 30 such stores since the first one opened to the public in 2018. Since that time several startup companies have launched similar technology, and other retailers have entered the autonomous checkout arena. Standard AI garnered attention last fall when it helped Circle K retrofit a test store in Tempe, Arizona, with the tech company’s artificial-intelligence platform. Using computer vision, the frictionless checkout system 26 MARCH 2022 convenience.org

allows customers to “enter the store and shop, tap and go—meaning shop as they normally would, quickly tap their smartphone at a tablet-based checkout station and exit the store without waiting in line or having to scan products,” said Michael Suswal, co-founder of Standard AI. AI recognizes when customers remove or return items on the shelf, tallies the items and electronically delivers a receipt. The system uses no shelf sensors and instead relies on cameras and the AI component to know what the consumer is taking for purchase. “It’s not just about getting people in and out faster,” said Suswal. “It’s about the customer having a better experience because they are not spending time in line. It’s a new paradigm in shopping.” Suswal likens it to the transition from taxis to Ubers. That platform shift created a different experience, he noted. “With a taxi,

it meant explaining where I wanted to go to the driver, and in the end passing them money for payment,” he said. “Uber changed all that: They already knew where I was going, and the money was already established.” While autonomous formats are not yet part of the mainstream shopping culture today—in any retail outlet—it is something that c-stores are becoming more aware of as a potential opportunity. For those already tapping frictionless in the more traditional format of kiosk-based self-checkout stations, autonomous could be the next generation. Alan Meyer, CEO of Meyer Oil Company, is certainly open to learning more. The Illinois-based downstream petroleum company operates NCR self-checkout units at six of the company’s 23 Mach 1 convenience stores to date, with plans to roll it out to another eight locations. “I’m always curious about different approaches that can benefit our stores,” said Meyer. “I talk to a lot of my peers about frictionless and self-checkout. Everyone is somewhere on the spectrum of implementing or learning more.” That said, he added that kiosk-based self-checkout stations seem to have the edge at the moment in terms of gaining greater acceptance among c-stores (see “Practical Advice” sidebar). “Self-checkout is probably the norm in the c-store industry today,” he said when it comes to frictionless solutions. CLOSING IN ON ACCEPTANCE: SELF-CHECKOUT Another convenience store chain on its way to mastering self-checkout is Parker’s, which is now fully committed to self-checkout. All new stores will include a self-checkout option, said Scott Smith, senior director of IT at Parker’s, who oversees self-checkout operations for the 70-store chain based in Savannah, Georgia. The retailer is also actively retrofitting legacy stores with the NCR self-checkout system, he said. Parker’s actually prefers the term “assisted checkout” instead of self-checkout, which reflects a soft-sell strategy of guiding hesitant customers through the process. Another key term the Parker’s team uses: “concierge in attendance,” which Smith said reinforces the fact that the store still has someone there interacting with customers to provide a positive

Self-checkout allows managers to redeploy staff to other areas, like foodservice and cleaning. experience. “That person—the concierge—can see if someone’s having an issue,” he said, “and help scan items. There is a lot of interaction with the employee and the customer. It also helps transition customers to using assisted checkout through those interactions and makes the process less intimidating.” Parker’s started installing self-checkout systems at stores in 2020 and continues to add them where it makes sense space-wise, Smith said. The retrofit for self-checkouts takes a store from three manned cash registers to one manned checkout plus three self-checkouts. The maximum is five self-checkouts, which sit in line with the manned checkout at the front of the store. The store-level breakdown looks like this: At a busy store, Parker’s has three self-checkout options. One functions as a credit/debit-only machine, and two other self-checkout machines offer the choice of using a card or cash. Additionally, two traditional cashier-manned registers sit on each end of the self-checkout lineup. “One of those manned checkouts always has a cashier present. The other can serve as more of an overflow station and may not always be manned, but at the same time, it creates an extra spot for when the store is busy,” Smith said. The decision to put in a machine that allows cash payment is based on the past year’s worth of data at that store, Smith explained. If the store has greater utilization of cash, Parker’s installs a cash option, otherwise the chain opts for the card-only approach. On average, Parker’s stores are 60% credit usage today on the machines. “It really depends on the area, but holistically, we are starting to see stores going more toward credit,” Smith said. “Rural areas tend to be high on cash usage, with customers frequenting downtown locations higher on credit.” The advantage of a credit-only system is fewer moving parts, he noted, and no need for the chain to incorporate cabinet work in the retrofit with credit-only machines. Based on internal metrics, Smith said, “It’s definitely doing what we thought.” Overall, 68% of transactions now happen via self-checkout at Parker’s stores, he said, with

Tap into additional insights on self-checkout via the NACS SelfCheckout Innovations in Convenience Retailing webinar, now available on demand at https://bit.ly/3Izcpot. Alan Meyer, CEO of Meyer Oil Company, was a featured speaker.

NACS MARCH 2022 27

Practical Advice on Self-Checkout Alan Meyer, CEO of Meyer Oil Company, itemizes five self-checkout to-dos based on his learning from the company’s continued investment in self-checkout at its Mach 1 convenience stores. The average Mach 1 self-checkout setup includes three self-checkout units and one manned checkout. Customers scan barcodes on items. If an item does not have a barcode, for example a doughnut, the customer touches the screen to look up the code for that item. 1. Understand the business case. Take a step back and know what you want to get out of self-checkout from a corporate perspective. “It can be the line buster to speed up the process,” said Meyer. He added that c-stores must also seek to strategically take advantage of self-checkout when they opt to move forward with the approach. For Meyer that means front-and-center placement of self-checkout units and establishing store-level programs to drive participation. 2. Consider shrink within the margin of error. Originally theft was a major concern for Meyer, but he has not seen a significant difference with shrink. In his opinion, “Customers that go to self-checkout want to pay properly.” The one caveat: Associates may linger longer elsewhere, such as on a break, when there is less of an urgency to get back to the register. 3. Metrics and labor. Meyer studies transaction counts in relation to labor hours to understand the ROI on self-checkout. His metrics show 40 in-store transactions equal one labor hour. So, when a store reaches 50 transactions per hour, that is an indicator to add more labor. The variable comes in with rush periods, where that extra person may only be warranted for a short time and not an entire shift, said Meyer. “We have rush times and as a retailer have to decide how to staff the store to cover those peak customer counts, but then we are probably overpaying for staff during the lull. That’s where self-checkout makes sense,” he said. Currently he assesses this labor model on a store-by-store basis. It helps understand when the chain hits the ROI on the units, which he said is about 10 months at Mach 1 stores. 4. Be transparent with staff. The sentiment of concern and reluctance among some staffers makes showing them the benefits all the more important, said Meyer. At Mach 1, store managers have the chance to talk about self-checkout with stores that have already implemented it. The peer-to-peer approach works, he said. Get to the forefront of concerns about the technology costing jobs, he said, adding that managers explain to employees the goal to change the dynamic of what they are doing. “They are the drivers of the bus,” he said. 5. Incentivize. One contest at Mach 1 stores encouraged employee buy-in through incentive pay. When the store hit a specific threshold of transactions through self-checkout, employees earned an extra 25 cents per hour. It’s about changing both cashiers’ habits and customers’ habits, Meyer said. “I’m a big believer in getting buy-in from employees,” he added. The most successful Mach 1 self-checkout store now runs 75% of transactions through self-checkout, he said.

28 MARCH 2022 convenience.org

the highest location coming in at 86% and the lowest at 49.8%. “It reduces friction points. It’s a line buster to get people in and out,” he added. The smaller overall basket size is one reason Smith feels customers more willingly accept self-checkout options in the c-store segment versus, say, grocery stores. “With the basket size in c-stores generally being fewer than four items, it’s easy to scan and leave. And we have barcodes on everything, even bananas, so customers don’t have to weigh or look up anything. We’ve made it easier for customers to tap and pay.” For other chains looking to add self-checkout stations, Smith suggests first working with operations personnel and store leadership to gain acceptance. “When you get operational buy-in and show store teams that this can help them, everyone buys in, and that’s huge,” he said. “We sit down with store leadership and show them metrics from other stores and send them to a self-checkout store to see it in action. Then they understand the holistic advantage and how much faster transactions can occur. They like it when they see how it’s successful at other stores.” The Parker’s team continues to reiterate that stores are still hiring, he said, emphasizing that self-checkout allows managers to redeploy staff to other areas, like foodservice and cleaning. Toby Awalt, director of product marketing at Mashgin Inc., agrees that adding frictionless checkout can reduce workloads and allow a chain to shift some staff to do other, possibly more meaningful, tasks. Based on his recent conversations with retailers, he adds that most c-store operators also believe they will be dealing with a labor shortage for a while longer. “Many retailers continue to struggle to fill jobs,” Awalt said, adding that he finds a correlation between understaffed stores and a greater use of frictionless checkout. “And long-term employees like the system because it greatly reduces a task that tends not to be the favorite,” he said. “Frictionless” is the preferred term for the Mashgin model, which Awalt describes as an enriched self-checkout approach. The system varies from a traditional self-checkout system because customers are not required to scan items. Instead, customers place their items on a tray and the system identifies them using computer vision and artificial intelligence

Parker’s self-checkout

Overall, 68% of transactions now happen via self-checkout at Parker’s stores. programs. There is a stopping point at a unit, but essentially the technology powering the Mashgin model matches what supports autonomous checkouts. Once installed, staff at the store level add any SKUs not already in the system by building a visual profile of the object through photos that then funnels into the Mashgin network for any store using that company’s system. “Technologies like this will see significant market share from the top players over the next three years,” Awalt said. “The combination of the pandemic and the labor shortage is acting as a catalyst for the industry as a whole. More c-store companies today have full innovation teams—they are ready for this.” Downstream energy company Delek US Holdings started rolling out the Mashgin system last summer at its retail operations in Texas. Additionally, Mashgin’s Touchless Self-Checkout was named the top Cool New Product at the 2021 NACS Show. CATCHING ON: MOBILE PAYMENTS App-based mobile checkouts offer another option for frictionless payment, especially as consumers have grown accustomed to using mobile payment apps such as Venmo. Apple Pay is the market share leader in this space, according to data from Statista. Five out of 10 U.S. respondents said they used Apple Pay in a store or restaurant between August 2020 and August 2021, according to one Statista survey. While consumer adoption of mobile payments has not skyrocketed, many forecasts point to usage figures increasing faster in the years ahead. The global mobile payment market is expected to expand at a compound annual growth rate of 31.8% from 2021 to 2028, according to a report by Grand View Research Inc. “The retail and e-commerce segment is expected to emerge as the fastest-growing segment over the forecast 30 MARCH 2022 convenience.org

Mashgin (Delek DK convenience store)

period owing to the increasing partnerships between mobile payment providers and retailers,” the report stated. BP plans to start checkout-free shopping by summer 2022 using Grabango’s technology platform, which serves as a bit of a combination of an app solution that works with retailers’ loyalty programs and is powered by computer vision technology. Customers do not scan individual items. “The Grabango system knows what’s in the store and where everything is,” said Will Glaser, CEO and founder, Grabango. “Shoppers can pick items up and put them back and are only charged for what they walk out with. Once they are done shopping, they just skip the line, scan their Grabango app once at the kiosk and walk out.” The company is starting with a retrofit of 10 stores—seven ampm stations in California and three Amoco locations in Pennsylvania. Circle K is already using Grabango’s technology at six stores in Tucson, Arizona. The Grabango system integrates with retailers’ loyalty programs. While currently limited to inside store sales, Glaser said “capabilities for paying at the pump are coming in the future.” Additionally, 7-Eleven plans to have its Mobile Checkout deployed to all U.S. stores by the end of 2022 after expanding its app-based contactless payment last summer to 3,000 stores. Using the 7-Eleven app, customers in store scan product barcodes themselves and pay via the app. Purchases are confirmed with a QR code before exiting a store. “Today, self-checkout has the clear lead in deployed stores,” Glaser admitted, “but checkout-free is growing much faster on a percentage basis.” With myriad technology solutions now available, convenience stores have more choices than ever when it comes to frictionless payment solutions at a time when consumers are more comfortable with the idea as well. Renee Pas’ writing draws from both her c-store background and her more than 20 years writing about various retail channels. She can be reached at reneepas4@gmail.com.

THE

Top Leading convenience retail chains in the U.S. are ranked

-Eleven Inc. tops the inaugural 2022 NACS/NielsenIQ list of the Top 100 Convenience Retailers as ranked by store count. The Irving, Texas, convenience retailer has 12,763 locations in the United States as of yearend 2021. In February, 7-Eleven, founded in Texas in 1927, celebrated a milestone 77,711 stores open in more than 18 countries. The convenience giant has locations across the U.S., with the largest presence in the Northeast, where it has 3,603 stores, and the smallest footprint in the Central region, where it has 709 stores. 32 MARCH 2022 convenience.org

Alimentation Couche-Tard Inc., which owns the Circle K and Couche-Tard brands, is the second-largest chain by store count, with 5,739 stores in the U.S. The parent company is based in Laval, Quebec, with U.S. headquarters in Arizona. Couche-Tard operates convenience stores in 26 countries and territories, with more than 14,200 stores, of which roughly 10,800 offer road transportation fuel. Circle K’s largest U.S. footprint is in the Southeast, where it has 1,911 stores. Casey’s, EG America and GPM Investments LLC round out the top five by size, with 2,394, 1,744 and 1,383 stores, respectively. Casey’s, based in Ankeny, Iowa, dominates the Central region, where it has 1,481 stores.

by number of locations as of December 2021.

The NACS State of the Industry enterprise breaks down the size of convenience retail chains as A (1-10 stores), B (11-50), C (51-200), D (201-500) and E (500+). In the 2022 Top 100 Convenience Retailers list, no A- or B-size stores rank among the top 100, yet there are 13 E-size firms atop the list, followed by 20 D-size firms and 69 C-size chains. (Note: The top 100 includes several ties in the rankings when chains had the same number of stores.) Industrywide, 148,026 convenience stores operate in the United States—a 1.5% decrease in the number of stores from a year earlier, according to the 2022 NACS/NielsenIQ Convenience Industry Store Count. Of these, 116,641 convenience stores sell motor

fuels (78.8% of all convenience stores). The main trend line in the NACS/NielsenIQ store-count data is industry consolidation. The biggest chains continue to expand their reach by acquiring smaller chains with a track record of growth and strong fuel and convenience assets. (Combined, the top 5 retailers make up just over 16% of the industry.) 7-Eleven’s 2021 blockbuster $21 billion acquisition of Speedway and its roughly 3,800 convenience and fuel stores in 36 states is a case in point. At the same time, the number of single-store operators continues to shrink—down by 3.1% at the end of 2021 vs. 2020. Single stores account for 60.4% of all U.S. convenience stores, or about 90,000 sites. NACS MARCH 2022 33

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M&A

Boom Regional family-owned companies opt to exit—not just because of attractive valuations but also tepid interest from the next generation. BY RENEE PAS

The perspectives are slightly different in terms of whether a person identifies as a seller or a buyer in today’s market, but the underlying story remains the same: Convenience store businesses continue to change hands at an astonishing pace. It’s an old-school M&A story of the big getting bigger. The new twist, industry observers note, is that longtime, dominant regional players seem to be moving toward the exit door. To note, while the colloquial “mergers and acquisitions” is the much-repeated turn of phrase, most of these transactions wind up in the acquisition ledger. “There is a strong 34 MARCH 2022 convenience.org

appetite for acquisitions and expansion,” said Roger Woodman, managing director at Raymond James, an investment banking firm that provides M&A advisory services. “We don’t see it showing any signs of slowing down. There will be a continued demand for growth from acquirers.” The future may bring some increased scrutiny from the Federal Trade Commission on larger acquisitions, he said, which could translate to the larger consolidators making acquisitions in markets where they have less of a footprint. Some of the deals are surprising because these are established regional players opting out, such as Titletown Oil (dba Grand Central Station) in Green Bay, Wisconsin. Founder

NACS REGIONS

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and President Dan Pamperin sold the company’s 19 retail stores, three unattended fueling locations and its wholesale fuel operation to Ohio-based True North Energy LLC in November 2021. He kept one store out of that sale, the first site he opened. That sale certainly made Robert Buhler look twice. “That was big news in Wisconsin,” he said. Buhler’s perspective comes by way of investment banker turned second-generation owner of Open Pantry turned businessman more heavily vested in real estate today via E&K Land, his commercial real estate company. He maintains his role as president and CEO of Open Pantry, now a seven-store chain based in Pleasant Prairie, Wisconsin, after the majority of his stores changed hands to 7-Eleven back in 2012. “We made a lease deal on 18 sites,” he said, “which is not very common anymore.” The locations that continue as Open Pantry sites are largely because of conflicts for 7-Eleven, such as a location being co-branded with McDonald’s. The current Open Pantry management team, led by Jim Schutz, now gives those stores “a lot of love,” said Buhler. “Honestly, I sold because I couldn’t buy reasonably at the time,” Buhler said. “Prices were too high.” The answer for someone considering getting out today, he said, is “Yes, you can get out. And at a great multiple. But then what are you going to do … just stare at your Merrill Lynch account all day?” The flip side, he said, is knowing the vulnerability that comes with continuing in the industry. “Every year, sites get eroded by a highway or competitor; you have to build or acquire more—and not every chain has that kind of energy in their company.” Noting the increased interest in the convenience store segment from private equity firms, Buhler believes that will follow a historical private equity model. “Most of these guys will repackage it and move it,” he said.

7 Eleven Inc.

12,763

3,603

1,735

2,073

1,785

709

2,858

Alimentation Couche-Tard Inc.

5,739

243

1,911

921

1,625

578

461

Casey’s General Stores Inc.

2,394

734

104

1,481

EG America

1,744

839

192

224

376

111

GPM Investments LLC

1,383

250

340

427

249

Wawa Inc.

956

719

237

QuikTrip Corp.

915

244

429

235

Kwik Trip Inc.

771

462

309

Pilot Company

697

180

149

133

Sheetz Inc.

636

475

111

Love’s Country Stores Inc.

570

194

RaceTrac Petroleum Inc.

556

378

174

Murphy USA Inc.

553

167

172

119

Kum & Go LC

415

317

Yesway

401

336

Maverik Inc.

379

283

United Pacific

362

308

Stewart’s Shops Corp.

355

Copec Inc.

332

217

103

Jacksons Food Stores Inc.

320

308

ExtraMile Convenience Stores LLC

302

Global Partners/ Alliance Energy

297

296

CAPL Retail LLC

274

190

Anabi Oil Co.

263

129

Delek US Holdings Inc.

253

252

Two Farms Inc.

252

TravelCenters of America Inc.

246

Texas Petroleum Group

232

United Refining Company of Pennsylvania

228

219

Giant Eagle Inc.

226

141

Thorntons LLC

211

183

Cals Convenience Inc.

208

Fikes Wholesale Inc. dba CEFCO Convenience Stores

207

170

Meijer Inc.

183

United Dairy Farmers

177

Refuel Co.

170

138

Croton Holding Co.

166

116

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G & M Oil Co Inc.

166

Hy-Vee Food Stores Inc.

164

148

True North Energy LLC

161

Tri Star Energy LLC

160

139

Bolla Management Corp.

159

Terrible Herbst Inc.

150

141

Nouria Energy

144

Blarney Castle Oil Co.

142

Vintners Distributors/ AU Energy dba Loop Neighborhood Markets

130

Go Mart Inc.

123

112

Martin & Bayley Inc.

123

106

Englefield Oil Co.

119

118

Enmarket Inc.

118

CF Altitude LLC dba Alta Convenience

111

107

Little General Stores Inc.

109

107

Sampson Bladen Oil Company Inc.

108

Mirabito Energy Products

107

Victory Marketing LLC

107

Plaid Pantries Inc.

107

Panjwani Energy LLC

107

Town Pump Inc.

105

H & S Energy Products LLC

105

Petrogas Group SC LLC

102

Stinker Station

102

M M Fowler Inc.

102

Parkland USA

Gas Express

Mountain Express Oil Inc.

Newcomb Oil Co.

The Spinx Company Inc.

Flash Oil Co.

Reid Stores Inc.

36 MARCH 2022 convenience.org

The most dominant consolidators come to the table with significant existing capital, Woodman said, including 7-Eleven and Alimentation Couche-Tard, plus other companies that have quickly achieved scale in recent years, including EG Group and ARKO Corp. “We’re seeing a broader set of well-capitalized companies in the universe than we have ever seen before,” he said. “And they will likely continue to grow.” POV: A PROMINENT CONSOLIDATOR With a focus on rural, secondary markets, ARKO Corp. seems primed for continued growth. The publicly traded entity has no intentions of lessening its appetite for acquisitions, according to Arie Kotler, founder, chairman and CEO. “We can continue to grow,” he said. “This is still a fragmented market.” In terms of how big and how fast, “everything’s possible,” Kotler said. “We are driven by return on capital.” ARKO has realized a nearly tenfold increase in 10 years. Its nearly 3,000-store portfolio includes 1,572 dealer sites and 1,406 company-operated stores. As ARKO continues to acquire, one noticeable difference from the super-consolidators is its robust portfolio of convenience store brands (which fall under its wholly owned subsidiary GPM Investments), with Fas Mart, E-Z Mart and Village Pantry among a total of 19 brands. Retaining the brands it picks up will remain part of ARKO’s strategy, Kotler said. “The way we look at it, the regional brands will stay in place. They carry a huge legacy. Why would I take a strong brand and convert it?” Economies of scale happen through centralized purchasing, loyalty programs and private-label items, he added. Kotler also believes that maintaining regional brands adds appeal for sellers, which have largely been family chains without a succession plan. “That was the case with E-Z Mart,” he said, referring to the Texarkana,

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POV: A LESSER-KNOWN CONSOLIDATOR “I’m not aware of another market as fragmented and large as this one,” said Mark Jordan, president and CEO of Refuel, a convenience retailer and wholesale fuel distributor based in Charleston, South Carolina. “I think we could be acquiring for another 20

Texas, chain founded by Jim and FaEllen Yates that second-generation CEO Sonja Yates Hubbard sold to GPM Investments in 2017. “They wanted to sell to the right group that would keep the legacy and brand intact. That is really our model with acquisitions,” he said. For the most part, he added, management teams stay in place. “At the end of the day, we may not be doing the crazy multiples that everyone wants to read about, but we are keeping employees and are unique in how we structure deals,” Kotler said. “We do a lot of due diligence up front to get the number right.” Some organic growth will also be part of the mix, Kotler said, such as the 5,600-square-foot truck stop raze-andrebuild Scotchman store that opened in South Carolina in December 2021. “We will do both,” he said, “but our M.O. is really growing through acquisitions.”

t To

“Every year, sites get eroded by a highway or competitor; you have to build or acquire more— and not every chain has that kind of energy.”

Toot’n Totum Food Stores Inc.

CCO LLC dba Sam’s Food Stores

Family Express Corp.

FKG Oil Company

CHR Corp. dba Rutter’s

Sunoco Inc.

Krist Oil Co.

Johnson Oil Co.

Atlantis Management Group

First Coast Energy LLP

Campbell Oil Company

Quick Track Inc.

C N Brown Co.

E&C Mid Atlantic Ventures

The Kent Companies dba Kent Kwik Convenience Stores

Southwest Georgia Oil Co. dba SunStop Stores

MFA Oil Co. dba Break Time

Gate Petroleum Co.

BFS Foods Inc.

Weigel’s Stores Inc.

Clarks Pump-N-Shop Inc.

Midjit Market Inc.

The Parker Companies

CFM of Missouri Inc. dba Convenient Food Mart

OnCue Marketing LLC

Dandy Mini Marts Inc.

Par Pacific Holdings Inc.

Holiday Oil Co.

7 Eleven Hawaii Inc.

Kenk Inc.

Walters-Dimmick Petroleum Inc.

Good 2 Go Stores LLC

Fuel Maxx Inc.

NACS MARCH 2022 37

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years. It could be decades before the landscape truly changes.” Part of private equity firm First Reserve since 2019, Jordan credits the decision to align with private equity as one that provided him the financial power to make more acquisitions—and faster. “We now have enough power to double our size or more,” he said. “We accomplished what I thought would take five years in 11 months.” Notably, Jordan owned a different convenience store entity prior to launching Refuel in 2008. He sold his former company because it felt like the right financial time, he said. “It seemed like such a good idea, but I didn’t really have an Act 2 in mind,” he said. “When the financial crisis hit, I realized I had been in a business that was stable

that I loved.” He now intends to remain in the convenience store industry for a long time. “I never want to stop doing what I’m doing,” he added. What Jordan has been doing is taking Refuel from a small, five-store operation to a 175-store chain. Acquisitions have included regional players such as Action Fuels, a Texas jobber with eight stores; Turtle Market, a three-store chain in Myrtle Beach, South Carolina; and DoubleQuick, a Mississippi-based 48-store chain known for its proprietary fried chicken. Except for the DoubleQuick stores, all others will be rebranded Refuel. “DoubleQuick is such a big brand in their market, we decided to leave that intact,” Jordan said. Refuel will build roughly 10 new stores per year, he said, as part of its “buy and build model.”

TOP 5 CONVENIENCE RETAILERS BY REGION Region 1: Northeast Company 7-Eleven Inc. EG America

Region 4: South Central Store Count 3,603 839

Company

Store Count

7-Eleven Inc.

1,785

Alimentation Couche-Tard Inc.

1,625

Wawa Inc.

719

QuikTrip Corp.

429

Sheetz Inc.

475

Yesway

336

Stewart’s Shops Corp.

355

Delek US Holdings Inc.

252

Region 2: Southeast Company Alimentation Couche-Tard Inc. 7-Eleven Inc.

Region 5: Central Store Count 1,911 1,735

Company Casey’s General Stores Inc.

Store Count 1,481

7-Eleven Inc.

709

RaceTrac Petroleum

378

Alimentation Couche-Tard Inc.

578

GPM Investments LLC

340

EG America

376

QuickTrip Corp.

244

Kum & Go LC

317

Region 3: Midwest Company 7-Eleven Inc. Alimentation Couche-Tard Inc.

Region 6: West Store Count 2,073

Company 7-Eleven Inc.

Store Count 2,858

921

Alimentation Couche-Tard Inc.

461

Casey’s General Stores Inc.

734

United Pacific

308

Kwik Trip Inc.

462

Jacksons Food Stores Inc.

308

GPM Investments LLC

427

ExtraMile Convenience Stores LLC

302

38 MARCH 2022 convenience.org

Jordan finds sellers are exiting the market for the same reasons Kotler stated. “Owners are ready to retire and don’t have a clear way of passing the business on,” he said. “Refuel can offer a good home to those stores and hopefully will continue to be seen as the right buyer. As new teams come on board, we’ve been able to offer them more opportunities.” POV: A MID-TIER CONSOLIDATOR Acquisitions are also fueling growth for Parkland USA, an approach that company President Doug Haugh said he will lean into versus new builds. “I don’t see us moving to a model where most of the growth is through new builds. We will build some, but to meet our objectives for growth, we will continue to buy,” he said.

“We could be acquiring for another 20 years. Even the largest chains don’t represent that much of a share. It could be decades before the landscape truly changes.” The Charleston, South Carolina-based consolidator has made 20 transactions in the past 36 months, bringing the store count to 650 locations in the U.S., 214 of which are company-operated stores. Half of the acquisitions, Haugh noted, were the result of owners/operators reaching out to Parkland, something he believes is both a sign of some companies being ready

NACS MARCH 2022 39

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“A lot of us in my age group, where their families don’t want to take over the business, are going to be primed to sell.” to exit the business and also an indicator that multigenerational companies recognize the “kindler, gentler” approach that Parkland takes to acquisitions. “Among the many things driving the changing of ownership of companies is that handoff from generation to generation where there is not always the next generation interested in ownership,” Haugh said. “We want to keep that kind of business intact,” Haugh explained. In terms of Parkland’s acquisition history that means both retail and wholesale elements, which could include fleet services, lubricants and the like. On the commercial fuels side, Parkland’s model is to continue to develop regional brands. That includes Farstad in Parkland’s Northern Tier; Rhinehart in the Rockies; Conrad & Bischoff in the Pacific Northwest; and Tropic Oil in the Southeast. Other brands will consolidate under those four over time, Haugh said. On the retail side, Parkland will continue to unify all stores under the On the Run banner, which the company gained rights to in the U.S. in 2020. Parkland made a slew of acquisitions in late 2021, including the November acquisition of Miami-based Urbieta Oil, which included Urbieta’s fuel distribution business and 94 gas stations; Lynch Oil, an Idaho-based operator with seven large-format stores and a commercial and wholesale fuels business; and Parker’s Energy, the wholesale fuel side of Geor-

40 MARCH 2022 convenience.org

gia-based Parker’s convenience store chain. When the calendar flipped to 2022, Parkland acquired M&M Food Market, a high-end frozen-food retailer in Canada with more than 300 standalone locations along with an expanded freezer presence at retail partners. While outside the norm for traditional U.S. c-store retailers, Parkland plans to align M&M’s fresh-from-frozen meals with On the Run stores both in Canada and the U.S. POV: A SELLER Echoing previous sentiments, Bob Bolduc sold his Massachusetts-based Pride convenience-store chain, a business his grandfather started, because there was not a generation behind him wanting to come into the family business. And that was fine with him. “That wasn’t surprising to me,” he said. “A lot of my colleagues, where their families don’t want to take over the business, are going to be primed to sell.” Looking ahead, Bolduc intends to put his energy into charitable giving through two foundations his family created: the Bolduc Schuster Family Foundation and the newly launched Hope Foundation for Youth and Families. Pride sold to Boston-based private equity firm ArcLight Capital Partners in December 2021. The sale included 31 convenience stores and travel centers, eight parcels for future development, 15 Subway franchises and 15 Chester’s Chicken franchises. The new owners intend to keep both the Pride name and the management team in place, Bolduc said. Boston-based investment banking firm Capstone Partners served in an advisory capacity on the deal. Pride is a “great example of a strong regional player—a leader,” said Ken Wasik, managing director, head of consumer investment banking at Capstone Partners. “Bob did not have to sell, and he was not fearful of consolidators because geographically he was a leader. If you are a leader, it gives you both the ability to compete or be attractive as a seller. You get to choose your own destiny.” From a banker’s perspective, Wasik said both consumer dynamics and appealing

Digital extra!

real estate are fueling acquisition interest. “C-store chains are good investments because they are important to the consumer,” he said. “And the financial model works well. There are cost savings that come with consolidation, efficiencies of scale. The consolidators have already proven this works. The regionals have to compete with the consolidators, so they are motivated as well.” Private equity is also realizing they can come into the segment and find success, said Jesse Betzner, director, business services and consumer for Capstone Partners. “Private equity was cautious in the past, somewhat because of the vertical power of Big Oil and concerns over fossil fuels. Now, private equity sees the future of alternative fuels and the value of c-store locations.”

Visit www.NACSmagazine.com to read how small retailers contend with growth amid a fast-paced M&A market. Also, NACS Vice President of Research Lori Stillman shares her perspective on the small retailer advantage.

Like many other industry observers, Betzner noted that it is still a fragmented industry. “We believe Pride is an early indicator of what’s going to keep happening over the next couple of years,” he said. “There is still a lot of room for continued consolidation.”

Renee Pas’ writing draws from both her c-store background and her more than 20 years writing about various retail channels. She can be reached at reneepas4@gmail.com.

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hen it comes to hiring veterans, other business segments may be more actively tapping this talent pool than convenience retailers. In November 2021, DoorDash announced a new employee resource group for veterans at its company, deepening its commitment to veteran hiring and retention. And it was hard to miss Amazon’s July 2021 announcement committing to hire 100,000 U.S. veterans and military spouses by 2024. That would more than double the number the company currently employs: 40,000. The hiring pledge included a $15 per hour paycheck and benefits. How do convenience retailers compare in the veteran hiring effort? The French phrase “comme ci, comme ça” seems applicable here.

42 MARCH 2022 convenience.org

There are recognized leaders in the c-store realm earning acclaim for their approach to employing veterans, perhaps most notably of late is QuikTrip. The Tulsa, Oklahoma-based chain of more than 900 stores earned the No. 37 spot on Forbes’ annual list of America’s Best Employers for Veterans 2021. Forbes compiled its ranking from more than 5,000 surveys of respondents (all veterans) who work either part time or full time at companies with a minimum of 1,000 employees. The veterans were asked about working conditions, the company’s approach to diversity and inclusion and whether their work environment is veteran friendly. While QuikTrip is thrilled to make the Forbes list, the retailer does not have a formal program in place to recruit veterans. “What

Are veterans an overlooked hiring opportunity for c-stores?

Straight 8 Photography/Shutterstock

BY RENEE PAS

NACS MARCH 2022 43

44 MARCH 2022 convenience.org

MILITARY CONNECTIONS The traits Raisbeck notes align with the key reasons many companies make the effort to invest time into hiring veterans, said Lori Buss Stillman, vice president of research for NACS. “Military personnel are used to an environment of teamwork, collaboration and problem solving. That is fundamentally part of the day-to-day role in the military and translates well to our industry. Veterans make great team members; they have the ‘one team/one fight’ mindset that builds culture.” One additional area where veterans may be an asset, said Stillman, is with the supply-chain challenges convenience stores face today. “Think about how broken the supply chain is right now. I cannot think of a

better group of people to help with that. The logistics and planning skills honed in military operations can be invaluable to solving current supply-chain challenges.” Mark Baird, founder of HirePatriots, based in Carlsbad, California, agrees that those with experience in the military are good candidates for jobs that require logistical skills. “They can run a warehouse really well,” he said. “They have lots of skills that line up really nicely with convenience stores and big box companies.” The military teaches leadership skills, organizational skills and strong logistical skills, he noted. HirePatriots helps connect veterans with jobs and helps companies set up veteran-focused hiring programs. When looking to hire veterans, consider the amount of structure that exists in your company’s operational practice, said Baird. “The more structure a company can build into operations, the better fit for a veteran,” he said. “Veterans function well in an atmosphere with a lot of structure and rules.” Once hired, veterans tend to be extremely loyal to organizations, according to the Veterans’ Employment and Training Service Guide from the U.S. Department of Labor (DOL). “What is good for your veteran population is also good for any employee,” the guide notes, adding that “if the environment does not meet veterans’ needs, they tend to leave an organization faster than non-veterans.” Elements that are important to many veterans, according to the DOL guide, include a challenging/engaging opportunity, clearly stated expectations of the position, a known pathway for advancement, a mentor on arrival and an onboarding program specific to veterans, clear and open verbal and written communication, and a known impact to the organization. “Veterans are used to hearing from their leadership, usually in person,” the guide notes, and they “want to know what they are doing has meaning.” Companies across the board are investing in recruiting veterans to meet workforce needs. The SHRM Foundation, an extension of the Society for Human Resource Management, a professional HR association, reports that recruiting veterans ranks in the top three

FeelPic/Shutterstock

“Veterans come with the competency sets we are looking for, which include integrity, teamwork and performance under pressure.”

it really comes down to is those individuals were the best qualified for the jobs,” said Aisha Jefferson-Smith, corporate communications manager at QuikTrip. “Our hiring process is very detailed. We have many veterans who work for us; they were the best qualified. Our founder, Chester Cadieux, was a vet—he served in the Air Force—and it’s amazing to know that connection carries on today.” A similar approach exists at Fikes Wholesale Inc., parent company of CEFCO Convenience Stores, which deems the process of hiring veterans as having always been a part of the hiring culture. The company’s main corporate office sits within 20 minutes of Fort Hood, a large U.S. Army base, making the military connection even more relevant. Hiring former military personnel, and their spouses, is an inherent part of the culture at Fikes, said Michael Raisbeck, chief people officer at CEFCO Convenience Stores, who is a disabled vet himself. “We do this on a day-to-day basis and are humble about it. We are happy to help transition these folks. “Veterans come with the competency sets we are looking for, which include integrity, teamwork, performance under pressure, etc.,” added Raisbeck.

Mega Pixel/Shuttersock; Straight 8 Photography/Shutterstock

priorities for HR professionals. The foundation’s research shows that 68% of employers report veterans perform “better than” or “much better than” their civilian peers. Additionally, 57% of veterans stay at their jobs longer, according to SHRM, with a median tenure of 2.5 years. Vets can raise a company’s workforce to the next level in areas such as leadership and decision-making, SHRM research has found. Specifically, those in the military are required to react quickly and precisely to high-pressure situations, and the military creates individuals who understand how to bring people together. While large operators with robust recruiting arms may have already taken the lead on military hiring, any size organization can be intentional about hiring more veterans, said Stillman. There is a difference between tapping into veterans as potential employees and having a formal program and/or established goals on veteran hiring that are being measured and managed against, she explained. “The awareness of veteran programs may be higher on the radar screen where it’s more visible in the fabric of the community or the organization,” she said. Examples are organizations with leaders who are familiar with the military, such as Joe DePinto, president and CEO of 7-Eleven and a U.S. Army veteran. 7-Eleven in 2009 introduced the Veterans Franchise program, which reduces franchise fees for qualified veterans for their first store. However, even companies without vast military knowledge can still opt to move resources toward veteran hiring. “As with anything, it starts with a good foundation,” said Stillman. Setting hiring metrics to measure progress is a good place to start, she added. “Any time a metric is set—you say you are going to do ‘X’—it forces the organization to take action. You cannot manage what you don’t measure. Setting a goal makes it important to start achieving it.”

4 BEST PRACTICES TO RECRUIT VETERANS Veterans are in high demand as employees, according to the U.S. Department of Labor, which updated its Veterans’ Employment and Training Service Guide in May 2021. The guide notes that it “requires dedicated efforts by employers to find and hire veterans.” Here are four recommended best practices for crafting a plan to hire veterans: 1. Ensure everyone is on board. Gain buy-in from both the leadership team and HR managers at all levels so that everyone understands the goals, especially first-level screeners. 2. Create an employee resource group. Open the group to all employees regardless of whether they are a veteran. The only requirement should be interest to participate. These kinds of groups create a place for veterans to collaborate and serve as a retention tool.

3. Establish a veteran mentorship program. This is a successful tool for companies that don’t want to create a formal resource group but want to establish a support system for veteran employees. This is especially valuable for new hires learning the company culture. 4.Empower employees to recruit for you. The veteran community is a tight-knit group. Do you know how many veterans you currently employ? Share their success stories. They can be your best asset when it comes to recruiting more veterans as employees.

Renee Pas’ writing draws from both her c-store background and her more than 20 years writing about various retail channels. She can be reached at reneepas4@gmail.com.

NACS MARCH 2022 45

46 MARCH 2022 convenience.org

Make sales sizzle with peppery products and fiery foodservice offerings. BY PAT PAPE

Phive2015/Getty Images

The hot and spicy

flavor trend has been around for years. But instead of slowing down, it is growing and filling store shelves with more diverse and hotter products. Last year, CPG companies, beverage manufacturers and restaurants rolled out product options enhanced with chili peppers, tabasco, wasabi, ginger, harissa and jalapeños, and Americans keep clamoring for more. According to the Technomic Flavor Report 2019, demographic groups that love spicy flavors the most are men, Hispanics, millennials and Gen Z consumers. Custom research by McCormick & Company, manufacturer of spices and other products, describes spice lovers as “adventurous,” especially millennials, who look for something new, take roads not traveled and enjoy the thrill of trying new flavors. “Spicy lovers appreciate the spicy tingling sensation but prioritize flavor over heat,” the research noted. “They want something tasty more so than just something hot.” NACS MARCH 2022 47

of consumers have tried spicy flavors.”

“

HOT PRODUCTS Today’s spice lovers can find a pungent version of almost every product from nuts and snacks to pastries, such as last year’s Spicy Ghost Pepper Donut from Dunkin’, which featured strawberry icing plus ghost pepper and cayenne. In June 2021, Blue Diamond Growers introduced three versions of Blue Diamond XTREMES almonds: Cayenne Pepper (hot), Ghost Pepper (hotter) and Carolina Reaper (super hot). “Through our research, we uncovered that there is a growing demand to really bring the heat to the category,” said Maya Erwin, vice president of innovation and R&D, Blue Diamond.

Anything with flaming hot, ghost pepper or other ‘super spicy’ branding is in demand.” 48 MARCH 2022 convenience.org

Just the Facts In 1912, the Scoville scale was created by American pharmacist Wilbur Scoville to measure the heat level in peppers. Using an exact weight of dried peppers dissolved in alcohol, Scoville assigned a number rating to the peppers based on how often he had to dilute the solution to eliminate the heat. Jalapeño peppers, for instance, have a Scoville rating of 10,000, which means a jalapeño solution would have to be diluted 10,000 times before the heat is neutralized. Today scientists use a technique called High-Performance Liquid Chromatography (HPLC) to obtain more accurate results. The HPLC technique measures the pungency of a pepper in American Spice Trade Association Pungency Units, and that number can be plugged into a formula that converts it to Scoville Units.

Consumers also have the option of cold— and spicy—beverages. In 2020, Modelo launched Chelada Mango y Chile, a Mexican brew combining mango with a hint of chili peppers, and several craft brewers boast of adding Scotch bonnet peppers, habaneros or chipotles to their libations. Last summer, PepsiCo introduced “MTN DEW FLAMIN’ HOT,” a canned limited time offer (LTO) that combined Mountain Dew with the flavor of Flamin’ Hot Cheetos. And if food isn’t hot enough, there are scores of condiments available to heat up a meal, such as Plochman’s Chicago Fire Mustard with Tabasco sauce or Frank’s RedHot sauce, which is credited with launching the Buffalo wing craze in 1964. Even pickles can pack a peppery punch. Van Holten’s of Waterloo, Wisconsin, inventor of the “pickle in a pouch,” created its first spicy pickle 50 years ago, and demand for the product continues today. “Hot is interesting, and everyone has a different opinion,” said Steve Byrnes, president, Van Holten’s. “We test our pickles on the Scoville scale, and they come in at jalapeño hot. We also use products from the Tapatío hot sauce company in one of

maxsol7/Getty Images; bdspn/Getty Images

“84%

Research by Datassential finds that 38% of men and 29% of women surveyed say they love spicy flavors. According to Mark DiDomenico, Datassential director of customer success, “there’s not much of a regional skew [among spice lovers], but it’s a little lower in the Northeast and higher in the West and the South.” “As a chef, spicy does not always mean hot,” said Gary Patterson, executive chef and culinary development director for McCormick & Company. “There are so many different types of peppers that offer spicy flavors but varying degrees of heat. Think of sweet bell peppers versus reaper peppers. They bring different aromas and flavor profiles to dishes and products.” In addition to meat products with traditional flavors, Johnsonville Sausage of Sheboygan Falls, Wisconsin, offers heat-seeking consumers Hot and Spicy Sausage, Jalapeño Cheddar Sausage and Hatch Green Chili Links. “We know that 84% of consumers have tried spicy flavors,” said Kim Main, director of marketing, Johnsonville. “Spicy items are found on over 70% of restaurant menus, with jalapeño being the most popular. While spicy flavors don’t appeal to everyone, they index high with younger consumers ages 18 to 34.” Just the word “spicy” on a product’s package can fire up sales. NielsenIQ reports that for total U.S. convenience stores, sales of items that mention “spicy” as a base flavor increased 3.1% from 2019 to 2020, on top of a 4.5% increase from 2018 to 2019.

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“70% of restaurant menus have spicy items listed.”

50 MARCH 2022 convenience.org

HOT RETAILERS Commercially bottled cayenne sauce is nothing new. The nation’s first bottled sauce was introduced in Massachusetts in 1807. In October 2021, Irving, Texas-based 7-Eleven continued the trend, rolling out its own proprietary 11-Pepper Sauce made from 11 varieties of peppers: ghost pepper, habanero, chili powder, black pepper, white pepper, chipotle, jalapeño, ancho, pasilla, guajillo and red pepper. The LTO sauce was part of the chain’s One Slice Challenge that encouraged shoppers to eat one slice of any 7-Eleven pizza topped with the sizzling sauce, along with a twoounce bag of Paqui Haunted Ghost Pepper chips from Amplify Snack Brands Inc. and a can of Liquid Death Mountain Water. Participants who posted on social media photographic evidence of their reactions to the challenge were eligible for a prize. Texas-based TXB Stores offers proprietary Scorpion Red Salsa to customers desiring extra fire in their breakfast and lunch tacos. “We also offer it packaged in the stores for at-home consumption,” said Benjamin Hoffmeyer, vice president, marketing and merchandising, TXB. “It’s important to offer various heat levels to meet customers’ evolving taste buds. The farther south you go, heat levels tend to elevate higher than in our northern markets.” The TXB foodservice menu includes Spicy Chicken Tenders and TXB Jalapeño Poppers, which have “just the right spice level and seasoning to satisfy any spicy craving, and that helps us sell more TXB fountain and package beverage drinks,” he said. “We also offer a variety of Hispanic products with a spicy flavor profile, including chamoy pickles, pork skins, jerky, chips, candy and beer salt,” he added. “In 2022, we’ll introduce private-label spicy peanuts and seeds with chili and jalapeño flavors.” The Mid-Atlantic area is famous for Pennsylvania Dutch cuisine featuring dishes

made with potatoes and cabbage. But even York, Pennsylvania-based Rutter’s stores have spiced up offerings to satisfy customer cravings. “We continue to see demand for spice options in our stores, and we’re certainly tapping into it,” said Chad White, manager, foodservice category, Rutter’s. “We recently added Buffalo chicken roller bites that have a touch of heat, and that’s done very well. Other items we offer are our Boom sauce, which is a popular sauce option, and Rajun Cajun sausage.” When it comes to packaged products, “anything with flaming hot, ghost pepper or other ‘super spicy’ branding is in demand,” White said. The chain has enjoyed impressive sales from Takis, a rolled corn tortilla chip produced by Barcel USA of Coppell, Texas, and Paqui, a gluten-free chip made from non-GMO corn. Both brands are available in assorted flavors. Casey’s in January introduced three spicy snacks in collaboration with fellow Des Moines, Iowa-based company Lola’s Fine Hot Sauce. The crunchy snacks include Casey’s Zesty Jalapeño Peanuts, Casey’s Zesty Jalapeño Cashews and Casey’s Zesty Jalapeño Pretzels. “Our generational family recipe hot sauce has the perfect flavor with just the right amount of heat that Casey’s guests are looking for and is the perfect partnership,” said Taufeek Shah, founder and CEO of Lola’s Fine Hot Sauce. Even the roller grill is getting spicy. Recently, 7-Eleven launched the Spicy Garlic Chicken Roller, an LTO of chicken with a Swiss cheese blend breaded in a zesty coating. “We love coming up with new takes on popular treats that will continue to excite and delight our customers,” said Alexis Luewellyn, senior manager of fresh food, 7-Eleven. Don’t expect consumers to extinguish spicy food sales any time soon. “The demand for spicy flavor will continue to grow,” said Patterson. “Heat is everywhere, from grocery store shelves to upscale dining establishments, and eating spicy for fun, delight and dares are now social pastimes. I expect menus and products to continue to raise the bar with creative pairings of heat in applications like cocktails, baked goods, marinades and more.” Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer. See more of her articles at patpape.wordpress.com.

Theeradech Sanin and BlackJack3D maxsol7/Getty Images

our pickles, which has more of a chili and garlic flavor. Both products are on-the-go snack items.” Byrnes noted a current fad among daring spice fans: “They take our hot pickles, Hot Cheetos and a product called chamoy—a fruit-flavored item—and make a sundae that has a sour, hot kick to it,” he said. “It’s big in the Southwest.”

April 12-14, 2022

Hyatt Regency O’Hare Chicago, Rosemont, IL

LOOK FORWARD. Insights only you can get. When you attend NACS State of the Industry Summit, you’ll secure access to the convenience industry’s premier benchmarking tool—NACS State of the Industry Report®. These exclusive data and insights are not available anywhere else.

Become a data-driven decision maker.

Whether you are a convenience retailer, a manufacturer, or supplier, the NACS SOI Summit and the NACS State of the Industry Report® positions you to use data-driven benchmarking to improve your business strategies and outcomes.

Clearer. Better. More relevant.

We’re going deeper than ever before with live, insights and sessions on regional and category data. The in-depth discussions will be invaluable to you.

Actionable Information. Real Excitement. Your entire team will be inspired by this years SOI experience. There’s no better want to come together to demystify data, transform insights into strategy, and develop meaningful new benchmarks to navigate the coming year.

Take the Wheel. Drive Results. /

convenience.org/SOIsummit

The Cenex®-branded location in Cumberland, Wisconsin, recently underwent a complete rebuild through the LIFT initiative.

Thanks for the LIFT A lighting, image and facilities transformation revs up sales at one Wisconsin c-store. BY JERRY SOVERINSKY

ess than six months into a global pandemic that saw most companies holding their collective breath, trying to stay afloat at a time when consumer spending was plunging and unemployment soaring, Kyle Knutson assessed conditions at his rural Wisconsin convenience store, double-checked his math, and decided that the time was right … to build a new store. The decision was an easy one for the c-store veteran and CEO of Synergy Cooperative, whose quarter century of industry experience told him that while the timing to commit to a multimillion-dollar project may

52 MARCH 2022 convenience.org

have been imperfect, renewing his lease at an aging store at which the state mandated that he comply with upgrades was even less palatable. “We studied the investment as well as other competitive changes that were happening in our community and decided that a rebuild would position us best for the future,” he said. With a history dating back more than 50 years in Cumberland, Wisconsin, Synergy Coop has carved out a sizable following as a local gathering place for the town’s 2,200 residents, one whose cooperative legal structure conveyed ownership status to its members. It’s also a popular stop for vacationers

The article is brought to you by Cenex, a NACS Hunter Club member.

seeking outdoor adventure among the area’s hundreds of lakes. To provide maximum value for his investment, Knutson decided that the rebuild would need to cater to both locals—“we have farmers that stop by regularly”—as well as vacationers. “We felt that anything we could do to benefit the store would benefit the entire community,” he said. Knutson performed his due diligence and settled on a partner for his rebuild: Cenex. TIME FOR A FACE LIFT Recognizing the growing retailer need to distinguish stores and offerings, the Cenex brand offers its LIFT initiative—a lighting, image and facilities transformation process— designed to revamp Cenex-branded c-stores through a series of exterior and interior updates. The two-pronged initiative includes an In-Store Loan Program, which offers optional zero-percent loan funding for qualifying in-store improvements aimed at enhancing customer experience and safety, a critical factor in Knutson’s decision. “That’s something we definitely wanted to take advantage of,” Knutson said. “Plus, the Cenex brand made it a win-win.” There’s also the Cenex brand’s Halo Image program, which elevates the forecourt appearance of Cenex-branded locations by incorporating improvements made to the canopy, forecourt and main ID sign. Combined, LIFT’s In-Store Loan Program and Halo Image would help Knutson reach his vision to create a next-generation shopping destination for Cumberland residents and visitors. “We wanted people to come into the store and say, “‘Wow,’” Knutson said. GETTING STARTED Outside Breaking ground in August 2020, Knutson worked closely with the Cenex brand, leveraging its Halo Image program to design a store concept that attracted customers from hundreds of yards or more down the road, making it a location that passersby couldn’t help but visit. The Halo Image program is about casting a bright first appearance on the canopy with a 360-degree LED light band, a prominent Cen-

ex logo and a three-dimensional backlit blue arch. And for Cenex retailers, the Halo Image aligns well with research that shows bright outdoor lighting boosts foot traffic during nighttime hours. “Not only does bright lighting draw people into the store, but it helps customers feel safer when they’re at a Cenex-branded location,” said Akhtar Hussain, director of refined fuels marketing, CHS Inc., the parent company of Cenex. “We want to make sure the Cenex brand resonates with consumers. By investing in our energy brand, we’re supporting our cooperatives and the communities they serve.” Knutson agrees. “I truly believe that the new Cenex Halo Image has been the No. 1 driver of people stopping at our store at night. I’d been looking for something like that for a long time. Just to highlight that canopy like they do is phenomenal. It was so exciting when we powered that Halo Image up the first time. It was just perfect.” Interior On the interior, Knutson chose a Northwoods-themed store with vaulted, knotty pine ceilings, a modern warmth with comforts that eschew the traditional convenience store vibe. And he spent considerable attention on enhancing the store’s bathrooms, a top priority for him and his team. “We focused on features that would have a long-term return on investment,” he said. “We wanted to ensure the bathrooms were spacious—bigger than what’s normally found at gas stations. We found that if customers stop in stores with welcoming restrooms, they’re more likely to look around and grab some food and drinks, too.” While many store owners look at sales per square foot, trying to maximize the use of space, Knutson’s priority was about making the store layout welcoming for his customers. As with all Cenex-branded locations, Synergy Coop is locally owned and operated, making it a community gathering place. It’s common for friends to linger over a cup of coffee, so Knutson set aside tables for in-store eating. “As we looked at the layouts of other convenience store chains, we didn’t find tables to sit down at or any place to meet,” he said. “We wanted to make sure there was the ability for

“The amount of business we’re doing compared to what we were selling at our old store is not even comparable.”

NACS MARCH 2022 53

Kyle Knutson and his team leveraged the partnerships available through Cenex® to create a space designed for the Cumberland community.

“If customers stop in stores with welcoming restrooms, they’re more likely to look around and grab some food and drinks, too.” folks to feel comfortable enjoying each other’s company in our store.” There’s also a prominent display of open air, refrigerated cases that highlight local products, like meats and cheeses. “That’s been very well received,” he said. HEAVY LIFTing For Knutson, the entire Cenex rebuild took a little more than five months to complete, and the end product has been transformational. “Business has been great,” he said. “The amount of business we’re doing compared to what we were selling at our old store is not even comparable. We’re pretty proud of how it turned out and what we have here for the community.” Those are impressive results, especially during a pandemic. Knutson credits the LIFT initiative with that improvement, for delivering a store that aligns well with today’s consumers who have rising expectations from 54 MARCH 2022 convenience.org

their local convenience store. That’s why many Cenex retailers like Knutson are pursuing rebuilds. It’s not surprising, too, that the company is receiving a growing number of inquiries from non-Cenex fuel marketers interested in learning about the LIFT program. “The Cenex brand has helped locally owned and operated stores take advantage of over $75 million worth of interior improvement projects through the first year of the LIFT initiative alone,” said Hussain. “There are more than 300 locations currently undergoing projects, making us more ready than ever to meet customer demands.” “It’s no secret. Their customers are expecting more. And they want to be able to meet those expectations.” Jerry Soverinsky is a Chicago-based freelance writer and NACS Magazine contributing writer.

POWERFUL BRAND. HOMETOWN FEEL. RUNNING YOUR BUSINESS YOUR WAY. POWERED LOCALLY.

We know that the true power behind the Cenex® brand comes from our locally-owned retailers – valued partners who are invested in their customers and community. That’s why we’re committed to your success and helping you build your business from the moment you become a Cenex® retailer. From flexible brand conversion and marketing, to convenient payment processing and training programs, we can provide your business with the support it needs to help you grow.

A name your customers trust, a brand you can count on – visit cenex.com/businessopportunities to learn more.

Cool New Products Guide This advertorial-style guide of services and packaging appears monthly and is an information-packed tour of ideas and approaches that can change how consumers view your store or choose your brand. It spotlights the newest thinking in convenience and fuel retailing and gives you an advance look at ways of staying in front of industry trends. Products are categorized the same way we organize the Cool New Products Preview Room at the NACS Show each year in October— New Design, New to the Industry, New Flavors, Health & Wellness, Green (EcoFriendly), New Services and New Technology. Products are considered “new” this year if they’ve been introduced since October 2021. The products featured here also can be seen in the Cool New Products Discovery Center at www.convenience.org/coolnewproducts.

NEW FLAVORS

Monster Energy Company

Diageo Beer Company

Ultra Peachy Keen

Smirnoff Ice Poco Pico Pack

Ultra Peachy Keen

A Spicy & Sweet Opportunity

The summer of love was about hope, peace and connecting to something bigger than yourself. A time of carefree fun, limitless possibilities and believing anyone but the man. So don’t take our word for it, check it out for yourself ‘cause it’s all good when you’re sippin’ Ultra Peachy Keen. Zero sugar, juicy peach flavor and the Monster Energy blend from our secret stash. Everyone from boomers to zoomers is down with that. Unleash the Ultra Beast! For more information, call (800) 426-7367 and visit www. monsterenergy.com 56 MARCH 2022 convenience.org

Introducing the all-new Smirnoff Ice® Poco Pico Pack. “Poco Pico” translates to a little bit of spice, and it will translate to more variety for your shoppers. With today’s demanding consumer base, you need more than just what’s new – you need what’s next! Smirnoff knows Flavors, as a leader in Flavored malt beverages. So this new pack is packed with the hottest trend of mixing sweet and heat together – with fascinating flavors like Mango Chili, Pineapple Jalapeno, Spicy Tamarind and Spicy Margarita. For more information, call your Smirnoff Ice distributor.

NEW TO THE INDUSTRY

NEW DESIGN

E&J Gallo Winery

True North Beverage

High Noon 700ml Can

True North Pure Energy Seltzer

High Noon Big Can - Coming Soon!

True North Pure Energy Seltzer

High Noon is going big with a 700ml can available in May 2022. This size will be available in both Pineapple and Peach flavors.

True North Pure Energy Seltzer fuels you with a blend of plant based organic energy blend, enhanced immunity support and zero sugar, calories or artificial sweeteners or colors. It’s not about the destination, it’s about the journey — and how you get there matters. TRUE NORTH IS ENERGY FOR THE JOURNEY! For more information, call (844) 538-7742 and visit www.truenorthenergy.com

NEW TO THE INDUSTRY

Ty Inc. Beanie Bellies

Want to carry our product? Please contact Peter Olbrys at 630.432.3329 or polbrys@tymail.com about bringing Ty into your locations.

NACS MARCH 2022 57

NEW TO THE INDUSTRY

NACS NACS State of the Industry Survey®

Now Accepting Submissions for NACS SOI 2021 Data

More than ever, convenience retailers must take advantage of every tool available to help drive profitable sales in their sites. With over 50 years of financial and operational benchmarks, NACS provides the ultimate tools for industry stakeholders in the State of the Industry Report and the State of the Industry Summit. The State of the Industry (SOI) Report contains over 200 pages of tables, charts, and analysis of the previous year’s operational data for convenience sites across every region of the United States. When you confidentially submit your data at www.convenience.org/SOISurvey, you’ll get two digital licenses to the report of 2021 data, one complimentary registration to the 2022 NACS SOI Summit, as well as a custom report of your company’s data compared to the SOI aggregate data. For more information, email Chris Rapanick, Director, Business Development, at crapanick@convenience.org.

NEW TO THE INDUSTRY

INDEX NEW DESIGN

E&J Gallo Winery............................................................57

NEW FLAVORS

Diageo Beer Company.................................................. 56 Monster Energy Company........................................... 56

NACS

NEW TO THE INDUSTRY

2021 NACS Show On-Demand Education Session Packages

True North Beverage......................................................57

On-Demand Education Avaliable

TY Inc...................................................................................57

More than 40 education sessions took place at the 2021 NACS Show, offering insider knowledge retailers need to compete and thrive in these tumultuous times. We have carefully curated 4 on-demand digital packages for you to choose from—ranging from access to the entire 2021 suite of NACS Show education sessions to the top 10 most popular sessions to our EV and thought leadership packages. Take this opportunity to revisit and immerse yourself in all the NACS Show education has to offer! Visit www. nacsshow.com/Sessions/Education-Sessions/Sessions-On-Demand. 58 MARCH 2022 convenience.org

NACS Education Sessions........................................... 58 NACS State of the Industry......................................... 58

May 15-20, 2022 Glen Allen, VA

A CHALLENGE WORTH PURSUING. OWN YOUR FUTURE. NACS Leadership for Success offers rising industry leaders an invaluable experience for growing their skills and becoming stronger performers in their companies and in their careers.

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GAS STATION GOURMET

A Taste of Nepal in Virginia Everest Momo Plus sells as many as 2,000 Nepalese-style handmade dumplings each day. BY AL HEBERT

rishna Shrestha shares a little of his native Nepal through the food he serves. Shrestha and his wife, Rita, own Everest Momo Plus, located inside a Liberty-branded gas station in Chantilly, Virginia. There’s a lot of buzz about the momos. What’s a momo? “It’s like a dumpling. The Nepali Momo is different. It is made with different kind of herbs that help the body digest it. It has cumin, durum and garlic,” described Shrestha, adding, “Every country does it differently.”

Krishna Shrestha, who hails from Nepal, and his wife, Rita, own and operate Everest Momo Plus in Chantilly, Virginia. 60 MARCH 2022 convenience.org

Momos came from China to Nepal, where the dish was modified with Himalayan spices. “Momos are made with ground chicken, cabbage, onion, spring onion, cilantro, Himalayan spices, olive oil and soy sauce,” Shrestha explained. “Some people call them dumplings, but we call them momos.” The momos at this gas station are authentic family food like you’d find in Kathmandu. “Momo is a common food back home,” he said. He named the gas station after Mount Everest in Nepal. “It’s the top of the world,” Shrestha said of the famous mountain. And the momos he serves? “It is food from the top of the world. People know that. I’m trying to introduce my country by the food,” he said. Shrestha sells 1,000 to 2,000 madefrom-scratch momos each day. That’s an impressive volume, but it hasn’t always been that way. “In the beginning we sold 30 or 40 pieces a day,” he said. Everest Momo Plus is now a food destination. “My priority is to serve fresh and healthy food to my customers,” Shrestha said. People drive from neighboring Maryland and West Virginia for the gas station’s momos, he says. “I had one customer from San Francisco,” Shrestha shared. “They came to visit family and tried momo. They were very excited.” For many customers who stop in, this is their first experience with Nepalese dumplings. But that’s not the case with

the other culinary draws at the gas station: fried chicken and pizza. Specifically, Krispy Krunchy Chicken Al Hebert talks “Great Food Finds and Hunt Brothers at Gas Stations” Pizza. with Convenience “Krispy Krunchy Matters. Scan the Chicken is very QR code to listen. popular. People come for it and love it. In the beginning they came for chicken, and then tried the momo. Without Krispy Krunchy, I couldn’t introduce my food,” Shrestha explained. He recently added Hunt Brothers Pizza to round out the menu. MAKING MOMO Preparing this Nepalese dumpling is tedious. To handle the volume, Shrestha has a staff of five to assist in the process. “Making momos is not easy. It’s hard to prepare everything. I make a huge amount. I mix 100 pounds of chicken a day for the momos,” he said. Most c-stores like to limit food preparation to a few simple ingredients and steps, so Everest Momo’s approach is extra special. The chicken and vegetables are ground, and Himalayan spices are added and carefully stuffed into the dough by hand. The result is elegant by any foodservice standards. Shrestha takes pride in each little dumpling. “The momos look like works

Shrestha (left) views the momos he and his staff shape by hand each day as works of art. Customers can pick from three kinds: vegetable, chicken and chicken chili. He says he uses 100 pounds of chicken each day for the dumplings.

Samaya Bazi (authentic food from Nepal). It has grilled chicken marinated with Himalayan spices, beaten rice (crunchy rice), black-eyed peas, potatoes (steamed potatoes marinated with spices), roasted soybeans marinated with freshly chopped ginger and garlic with spices,” Shrestha said. “We serve it with radish pickle on the side. Also, we are serving freshly made, very delicious noodles and plan to introduce chicken chow mein and veggie chow mein.”

“My priority is to serve fresh and healthy food to my customers.” of art,” he said. What’s more, Himalayan herbs “give lots of immunity power to the body to fight diseases,” he said. “Nowadays, most people are very conscious about their health and want to eat healthier food. So, Momo is a one-of-a-kind healthy food in my experience,” he said. Opening a restaurant wasn’t on Shrestha’s radar when he arrived in the U.S. “When I came here, I never expected to sell momos. I was in the IT field. My company wanted me to go out of state. I decided to start my own business and make hygienic, healthy food,” he said. In August 2018, Shrestha and his partners opened a dine-in restaurant, Everest Kitchen, in Ashburn, Virginia. The COVID-19 pandemic took its toll on

the venture, and Everest Kitchen closed in October 2020. CRAZY HOT At Everest Momo Plus, customers can choose from three kinds of momos: vegetable, chicken and chicken chili. “I make it as spicy as customers desire,” Shrestha said. Who doesn’t love a great sauce? Shrestha offers two. One is an orange sauce made with fresh tomatoes and Himalayan spices, and the other a spicy chili sauce made from dried chili and Himalayan spice. “It’s called crazy hot chili sauce and makes the momo delicious,” Shrestha said. The menu includes another Nepalese dish. “Besides momos, we are serving

THE MIRACLE Shrestha described his c-store’s location on U.S. Route 50 just south of Dulles International Airport as “hard to find.” He credits a story in the Washington Post for making people aware of the store and the food. “It’s a miracle,” he said, describing his newfound national attention. “The reporter found us on Google. We had good reviews. She saw the food and asked to try the momo. She came here three times in one month just for the momo. She called me one morning and asked to write a story,” he said, adding, “After that, it was crazy busy.”

Al Hebert is the Gas Station Gourmet, showcasing America’s hidden culinary treasures. Find him at www.GasStationGourmet.com. NACS MARCH 2022 61

CATEGORY CLOSE-UP LIQUOR

Cocktail Hour Liquor sales moderate, but long-term prospects remain strong. BY Terri Allan

62 MARCH 2022 convenience.org

Eight of our top 10 sellers as measured by units in the liquor category are of the 50-ml. variety.”

alenkadr/Getty Images

fter a pandemic-driven demand surge in 2020, the liquor category appears to be settling back down. But emerging products and packages, along with trading-up trends by consumers, are encouraging distilled spirits marketers and convenience store operators that the category—while a small contributor to overall sales—is primed for continued growth. “Liquor sales increased tremendously from 2019 to 2020, primarily as a result of COVID-19 lockdowns and bar and restaurant closures,” remarked Jayme Gough, NACS research manager. “Not only were customers unable to go out to purchase liquor in the form of cocktails from a restaurant, but they were confined to their homes in many cases, giving ample opportunity to consume more than their typical amount,” Gough said. Indeed, according to the NACS State of the Industry Report of 2020 Data, average sales at c-stores that sell liquor jumped 15% to $44,348. C-store liquor sales, like other in-store categories, benefited from the channel’s small-footprint and convenience-focused stores at the height of the pandemic. The category reached peaks in monthly sales in April and May 2020, Gough reported. By the spring of 2021, however, sales trends for liquor in c-stores began to moderate. According to monthly CSX

INDUSTRY SALES

JUST THE FACTS Average sales at c-stores that sell liquor jumped 15% to

$44,348 in 2020, according to the NACS State of the Industry Report of 2020 Data.

Sjo/Getty Images

data, sales for the second quarter of 2021 slipped below that of the year-ago period. While calendar year data for 2021 will be released in April at the NACS State of the Industry Summit, Gough noted that c-store liquor sales overall were up versus 2019 but lagging 2020. The Hub convenience store chain in North Dakota is among those experiencing healthy demand for distilled spirits. The chain—which only added alcoholic beverages in 2020—saw a 14% increase in liquor sales last year, Jared Scheeler, CEO of The Hub and current NACS chairman, said. “The pandemic altered habits of the average liquor consumer,” he remarked. “The more time we spend at home—whether we’re working or skipping vacations or visits to restaurants—the more liquor will be consumed.” Two of The Hub locations feature liquor sections branded “The Cellar,” offering about 120 SKUs and bottles priced up to $100. “Our objective is to provide a product mix that gives consumers enough reason not to go to a competing liquor store,” Scheeler explained of the stores’ spirits selection. TRADING UP While liquor only comprises 1.3% of total in-store sales and less than onethird of all c-stores carry the products, the category provides for high ticket averages and is experiencing a movement toward premiumization. “In 2021, we saw premiumization occurring as c-store assortment started to include

% of In-Store Sales

higher-end spirit selections,” remarked Tara Epps, vice president - national accounts, off premise, at Beam Suntory, marketer of brands including Jim Beam and Maker’s Mark bourbons, Courvoisier cognac and On the Rocks ready-to-drink (RTD) cocktails. “We believe this is going to continue as consumers look for a faster outlet to do their spirits shopping for core name brands.” Carl Carlson, president at Skrewball Spirits, marketer of the popular Skrewball peanut butter whiskey brand, added, “Authenticity and quality make a difference with today’s consumer, and we see a premiumization movement in the c-store channel.” Whiskies, such as bourbons, are seeing a renaissance. “Millennials and Gen Z are bringing back whiskey,” said Gough, adding that new flavors, such as cinnamon, peanut butter, apple, honey and peach, are helping to drive the interest. Skrewball is available in stores including Circle K and 7-Eleven, and according to Carlson, “the impulsive nature of c-store outlets is the perfect fit for trying Skrewball for the first time.” Scheeler said that while vodka is the top-selling spirits type at The Hub, “whiskey is certainly closing in, with innovative flavors like peach, peanut butter, salted caramel and pickle.” While demand for large liquor bottles rose during the first wave of the pandemic, more recently, smaller packages are trending. Herb Smith, vice president, customer development, at E&J Gallo Winery, which markets New Amsterdam Vodka and High Noon Sun Sips RTDs, pointed to “tremendous

1.15% 1.31% 2019

2020

Avg. Sales/Store

$38,463 $44,348 2019

2020

% of Stores Selling

29.9% 30.2% 2019

2020

Source: NACS State of the Industry Report of 2020 Data NACS MARCH 2022 63

CATEGORY CLOSE-UP LIQUOR

Per Store, Per Month Sales

n 2018

n 2019

n 2020

n 2021

$11,754

$12,000

$10,000

$8,000

$6,000 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX LLC; csxllc.com

CSX, the engine behind category metrics and NACS State of the Industry data, provides current and customizable tools for financial and operational reporting and analysis in the convenience industry. Retailers can measure their company by any of the myriad metrics generated via our live database. Contact Chris Rapanick at (703) 518–4253 or crapanick@convenience. org for a complimentary executive walkthrough.

64 MARCH 2022 convenience.org

Gough, due to their convenience and year-round versatility. Tia Wines, director of marketing at BuzzBallz/ Southern-Champion LLC, marketers of spirits-based RTD cocktails, said the drinks “provide an easy solution for retailers seeking to expand their shelf offerings and clientele.” Where permitted, the beverages “have the opportunity to drive consumers’ trip mission, making it a one-stop shop for their needs,” she noted. (NACS category definitions were recently revised to include RTDs as a liquor subcategory.) At Pinnacle Peak, sales of RTDs, which are merchandised both in the cold vault and ambient, are strong. “We’re doubling our cooler space to allow for RTDs,” Sanders said. SEEKING BALANCE Despite the recent strong trends and prospects for continued growth, liquor can be a challenging category for c-stores. For many, due to state and local laws, sales of the products are prohibited. For those licensed to sell spirits, turnover and inventory can be concerns. “Liquor’s turnover isn’t like milk,” which turns over 26 times a year, remarked Gough. And it’s below that of beer and

AlenKadr and SofiaV/Shutterstock

The Power of CSX Data

movement in small, 50-, 200- and 375-ml. sizes for spirits.” That’s the case at Pinnacle Peak General Store in Scottsdale, Arizona, where general manager Chris Sanders reported a recent “uptick in 50- and 200-ml. bottles.” He surmised that’s because bars have reopened and “people aren’t keeping the large bottles on hand at home as they did during lockdown.” Pinnacle Peak has expanded its selection of small-sized liquor bottles, while at The Hub, a large display of 50-ml. bottles is featured. “Eight of our top 10 sellers as measured by units in the liquor category are of the 50-ml. variety,” Scheeler said. One of the biggest trends within liquor today could be a boon for c-stores. RTD spirits-based cocktails are surging. Smith cited IRI data for the 26 weeks ended November 28, 2021, indicating that dollar sales of RTD cocktails in c-stores jumped 82%. “Canned cocktails are a huge opportunity for c-stores,” remarked

CATEGORY CLOSE-UP LIQUOR

Subcategory Performance Percent of Sales

Avg. Sales/Store

Avg. GP$/Store

Gross Margin %

Liquor

2019

2020

2019

2020

2019

2020

2019

2020

Distilled Spirits

82.7%

85.8%

$31,804

$38,049

$8,955

$10,276

28.16%

27.01%

Cordials/Brandy/ Cognac

11.2%

8.3%

$4,321

$3,668

$1,154

$973

26.71%

26.52%

Other Liquor

3.9%

3.3%

$1,499

$1,461

$360

$321

24.00%

22.00%

Prepared Cocktails

1.8%

1.9%

$680

$850

$176

$224

25.93%

26.28%

Cocktail Mixes

0.4%

0.7%

$160

$319

$69

$133

43.28%

41.56%

100.0%

$10,717

$11,923

27.86%

26.89%

Total

$38,463 $44,348

Source: NACS State of the Industry Report of 2020 Data

In 2021, we saw premiumization occurring as c-store assortment started to include higherend spirit selections.”

66 MARCH 2022 convenience.org

wine, at 16 times a year. Moreover, inventory investment can be expensive and long to recover. Delma Borg, owner of Southside Mini Mart in Stuart, Nebraska, noted that while the store likes to order products upon customer request, when it comes to liquor, “a customer might only buy one bottle out of the case, leaving the remainder of the order for us to sell.” Scheeler added that it can be difficult for c-stores to balance the need to stock top-selling spirits with emerging innovations and craft spirits. “Wrestling with that retail philosophy can be tough,” he said. Spirits marketers say that good attention to the category and effective merchandising can go a long way in ensuring that liquor growth continues in c-stores. Smith advised that stocking the best-selling spirits and RTDs “will cover over 70% of the share of the business.” Beyond that, he recommends offering brands that are “trending with momentum,” and featuring a diverse selection of 50-, 200- and 375-ml. sizes. Those packages yield powerful merchandising options, “from high visibility behind the counter to impulse sales from a counter unit display,” the Gallo executive remarked. And Epps suggested that when it comes to spirits selection, “expand assortment to include trade-up opportunities to support the path to premiumization.”

The Beam Suntory executive believes that cross-merchandising tactics also can help drive c-store liquor sales. Placing necessary cocktail ingredients such as ginger beer, orange juice or soda adjacent to spirits can be beneficial, she said, as well as “cross merchandising spirit features with beer to increase the average transaction at the register.” And liquor should be included in any e-commerce or on-demand activations, where legal, she said, including delivery app partnerships, in-store and curbside pickup orders. With liquor gaining overall market share from the beer and wine categories, marketers like Smith and Epps see vast opportunity ahead for c-stores. Smith said more c-stores are likely to apply for licenses to sell spirits where they can, which “will drive penetration and conversion moving forward.” And for retailers who are already selling the products, enthusiasm is high. “I’m excited to watch this category continue to grow in my stores,” said Scheeler. “I’m happy to ride the wave as long as it’s around.”

Terri Allan is a New Jersey-based freelance writer, specializing in the beverage industry. She can be reached at terri4beer@aol.com, and on Twitter at @terriallan.

March 21-23, 2022 ChampionsGate, FL

Creating Connections The NACS HR Forum is a must-attend event for the people in our industry who recognize people are the number-one asset of successful businesses. Over three content-filled days, the NACS HR Forum connects you with peers from around the country. With engaging, interactive presentations and case studies, the forum offers fresh solutions to the issues you face daily—hiring challenges, delivering on DEI, and legislative issues, among other topics.

Reserve your seat today! /

convenience.org/hrforum

Attendees earn an average of 10 professional development credits from HRCI and SHRM.

CATEGORY CLOSE-UP HOT DISPENSED BEVERAGES

Reheating a Once-Hot Category Retailers and manufacturers rethink strategies to get coffee fans back in stores. BY Pat Pape

brew their own java, increasing at-home coffee consumption and providing opportunities for house-bound workers to try new drinks. According to consumer researchers at Mintel, 27% of coffee consumers tried a new coffee brand during the pandemic, 22% created specialty coffee drinks at home and 13% purchased an entirely new coffee appliance.

Svetlana Monyakova/Getty Images

very day, Americans down about 656 million cups of coffee, reports the National Coffee Association, and historically, convenience stores have helped meet that need. But when COVID-19 began spreading in March 2020, many consumers chose to

68 MARCH 2022 convenience.org

JUST THE FACTS Sales of hot dispensed beverages in 2020 fell

32%,

and gross profit declined 34% from 2019, NACS State of the Industry data indicate.

“Hot dispensed beverages is the second largest foodservice category in convenience stores, making up 3% of total in-store sales and 12% of foodservice sales,” said Jayme Gough, research manager, NACS. “But because of the pandemic, 2020 sales were down 32.2%, and gross profit was down 34.4%.” The year started off well, but by the time COVID-19 was an official pandemic, “everything went awry,” she said. “Sales picked up going into 2021, but we were still behind in January and February compared with 2020. By April, sales were stable, but shoppers were still hesitant about going out, and then we had all the variants. Unfortunately, the category hasn’t yet recovered.” To lure coffee connoisseurs back into stores, distributors and retailers are reviewing their strategies for the hot beverage bar. WARMING UP THE COFFEE BAR Since the pandemic began, retailers have put extra emphasis on presenting a healthy, attractive coffee bar. “The

pandemic demanded and still requires retailers and suppliers to embrace wellknown basics—cleanliness, availability and freshness of product,” said Jennie Jones, senior vice president of convenience stores for Westrock Coffee Company. “No trend, whether in traffic patterns or flavor profiles, will override the importance of food safety and availability.” When it comes to selecting the latest in coffee equipment, Jones is a booster for bean-to-cup machines, which can grind coffee beans and brew a single cup of coffee in about 60 seconds. “The bean-to-cup machine has given our customers the flexibility to offer both hot and cold beverages from the same equipment,” she said. “We encourage them to capitalize on the cold dispensed beverage trend by serving iced coffees, which creates a line extension from each of their blends and gives customers the option to personalize the beverage with condiments.” Those are the reasons Baltimore-based High’s convenience stores installed bean-to-cup coffee machines in all locations. “We want to take advantage of our customers’ desire to customize hot and cold coffee drinks,” said Dallas Wells, vice president of foodservice, High’s. “These machines allow us to offer every cup fresh-brewed 24 hours a day, along with fresh-brewed iced coffee.”

Pilot Flying J, based in Knoxville, Tennessee, aims to give customers the “best coffee on the interstate,” said Zain Inklebarger, beverage manager, Pilot Flying J. The chain focuses on special promotions and new offerings produced by both bean-to-cup and drip coffee equipment. “This winter, we introduced fun holiday-themed coffee cups and several seasonal flavors, including Apple Cider and Apple Pie Cold brew,” said Inklebarger. “Our guests enjoy having delicious new flavors and condiments to try, along with their favorite classics like Pilot House.” Not every convenience operator is prepared to invest in bean-to-cup technology and may prefer to enhance a beverage program using existing coffee equipment. With that in mind, McLane Company recently introduced JAVAPERKS, an economical, branded hot beverage program. “JAVAPERKS gives our customers high-quality, great-tasting coffees and teas uniquely branded for their store,” said Adrienne Smith, product director, foodservice, beverage and supplies, McLane. “With multiple options of coffee, cappuccino, tea, iced coffee, cold brew and hot chocolate, the selection rivals those from popular coffeehouses while offering value and convenience. Products are priced without added

INDUSTRY SALES % of In-Store Sales

Avg. Sales/Store

4.50% 3.03%

$125,615 $85,166

2019

2020

2019

2020

% of Stores Selling

98.3% 98.9% 2019

2020

Source: NACS State of the Industry Report of 2020 Data NACS MARCH 2022 69

CATEGORY CLOSE-UP HOT DISPENSED BEVERAGES Per Store, Per Month Sales

n 2018

n 2019

n 2020

n 2021

$2,889

$3,000

$2,500

$2,000

$1,500 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX LLC; csxllc.com

equipment, which makes it easy to join the program with minimal expense.”

These machines allow us to offer every cup fresh-brewed 24 hours a day, along with fresh-brewed iced coffee.”

70 MARCH 2022 convenience.org

BREWING VARIETY Coffee consumers love variety. In 2020, 48.8% of coffee sales were traditional drinks compared to 38.4% of sales attributed to specialty coffees, Gough said. Consumers ages 18-24 are big convenience store shoppers and more likely than other age groups to drink specialty coffees, according to Packaged Facts. They’re also twice as likely to consume “gourmet” coffee, such as premium, non-instant arabica or arabica blend products. “Specialty coffee has been growing in terms of percentage of total category sales,” Gough said. “We’re seeing a lot of innovations around specialty coffee. Younger demographics trend toward the sugary, creamy, frothy and milky drinks. Plus, they customize their drinks as much as they can.” Last year, Farmer Brothers Company, a distributor of coffee and other foodservice items, conducted consumer research on self-serve hot dispensed beverages and found that the availability of fresh-brewed coffee, as well premium coffee offerings and bean-to-cup options, impacts purchase decisions for most c-store consumers,” said Nathalie Oetzel, vice president of marketing and innovation, Farmer Brothers. Plus, 23%

of survey respondents said they were willing to pay more for beverages that are fresh brewed. “Consumers ages 16 to 34 years old over-indexed on key drivers, such as limited-time offers, seasonal flavors and unique and innovative offerings,” she said. “And 28% of younger consumers said sustainability in sourcing and practices are important when deciding what convenience-store coffee to patronize.” High’s is taking advantage of those trends with its self-serve espresso/latte program offering specialty drinks at regular coffee prices. “Our customers want to customize their hot and cold coffee drinks, so our program includes a variety of flavorings,” said Sherryn Diamond, director of foodservice, High’s. “This program has increased cup sales and helped us attract customers who were paying a premium at high-retail outlets.” C-stores can level the playing field with “coffee house” retailers by offering customers the same add-ons that they do. “There has been a trend toward dairy alternative options for creamers and add-ins, such as almond or oat milk,” said Smith. “There’s also an increased demand for customizable and higher-quality options, including nonGMO, non-artificial and sustainably sourced ingredients. [Stores should]

Subcategory Performance Hot Dispensed Beverages

Percent of Sales

Avg. GP$/Store

Gross Margin %

2019

2020

2019

2020

2019

2020

2019

2020

Coffee

51.5%

48.8%

$64,692

$41,552

$39,788

$25,102

61.50%

60.41%

Cappuccino/ Specialty Coffee

42.5%

38.4%

$53,428

$32,708

$39,927

$23,819

74.73%

72.82%

Hot Chocolate

2.9%

8.9%

$3,600

$7,573

$2,412

$4,790

66.99%

63.25%

Refills

2.8%

3.1%

$3,544

$2,651

$2,303

$1,492

64.98%

56.28%

Coffee Club Mugs

0.2%

0.5%

$197

$450

$55

$169

27.67%

37.62%

Hot Tea

0.1%

0.3%

$154

$232

$69

$105

45.01%

44.99%

100.0%

$125,615

$85,166

$84,567

$55,477

67.31%

65.14%

Other Hot Dispensed Beverages Total

Avg. Sales/Store

Source: NACS State of the Industry Report of 2020 Data

offer a variety of coffee and tea products, along with traditional dairy creamers in different flavors, flavored syrups and non-dairy options, like almond or oat milk-based creamers.” Customers are fickle, and c-stores must be agile enough to tweak an existing hot-beverage program when fads and favorites change. “Strategy is critical to any business,” said Inklebarger. “Every quarter, the Pi-

lot beverage team reviews future trends and prioritizes our efforts. We use this time to make sure we’re staying on track with what our guests love and how we can continue to keep our program fresh and exciting.” “Hot beverages are a destination item for most of High’s guests,” said Wells. “We’re continually reviewing our hot and cold beverage strategies to maximize margins and offer the latest

ADVERTISER INDEX Contact Information

Page

Altria Group Distribution Company....................... Inside Front Cover AGDCTradeRelations@Altria.com www.altria.com www.tobaccoissues.com Cash Depot........................................................................................................3. (800) 776-8834 sales@cdlatm.com www.cdlatm.com Calico Brands Inc. (Scripto)........................................................................................41 (800) 544-4837 www.calicobrands.com Charleys Philly Steaks................................................................................................ 39 www.charleys.com CHS Inc. (Cenex)..........................................................................................55 www.cenex.com/businessopportunities Cool New Products Guide.............................................................56-58 www.convenience.org/Media/NACS-Magazine/Cool-New-Products

Contact Information

in equipment, flavors and coffee blends based on consumers’ ever-changing expectations.”

Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer. See more of her articles at patpape.wordpress.com.

Thank you to these advertisers who have demonstrated their support of the convenience and fuel retailing industry by investing in NACS Magazine. Page

Contact Information

Page

Diaego Beer Company US........................................................................65 www.diageo.com

NACS Convenience Matters....................................................................... 4.. www.conveniencematters.com

DMF Bait Company................................................................................... 31 (800) 332-2248 orders@dmfbait.com www.dmfbait.com

NACS HR Forum ........................................................................................67.. www.convenience.org/hrforum

Johnsonville Sausage LLC....................................................................... 49 www.johnsonville.com

NACS State of the Industry Summit ....................................................... 51. www.convenience.org/SOISummit

Liggett Vector Brands Inc............................................................ 13 (877) 415-4100 www.liggettvectorbrands.com

Premier Manufacturing Inc.......................................................................5 www.gopremier.com

Mars Wrigley................................................................................. 15 www.mars.com Mashgin................................................................................................... 29.. mashgin.com McLane Company ......................................................... Back Cover. www.mclaneco.com

NACS Leadership for Success ................................................................. 59.. www.convenience.org/leadershipforsuccess

Southern Champion (Buzzballz LLC).............................Inside Back Cover... www.buzzballz.com Swedish Match North America (yn)............................................. 9 (800) 367-3677 www.smna.com Trion Industries Inc....................................................................................7 (800) 444-4665 www.triononline.com NACS MARCH 2022 71

BY THE NUMBERS

C-Store Hourly Wages Rise Over 10% It comes as no surprise that the past year has been difficult for human resource professionals in the convenience industry. Amid uncertainty induced by the global pandemic, HR leaders were tasked with ensuring stores were staffed and keeping employees safe. This was a tall order, and

many convenience retailers across the U.S. employed a variety of strategies, including increased pay. NACS benchmarking data from 2021 show that during the past year, wages for a full-time hourly associate increased from $11.89 in 2020 to $13.14 in 2021—an increase of 10.5%. Part-time associate wages also increased, from $11.09 to $12.45 an hour, an increase of 12.3%.

se increa 10.5%

$15.00

se increa 12.3%

Full Time Part Time

$14.00 $13.00

ease in % incr

$9.99

$10.00 $8.46

$8.56

$8.51

$8.76

$9.02

$11.89

$11.75 $10.74

$11.00

Hourly Wage

$12.45

55.3

$12.00

$9.00

$13.14

11 yea

$10.19

$11.09 $10.67

$9.44

$8.00

Federal Minimum Wage ($7.25)

$7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Considered an essential guide for HR professionals for more than 40 years, the NACS State of the Industry Compensation Report® is the industry’s premier compensation benchmarking report for the convenience channel. The digital report provides the latest data, trends and best practices on compensation, benefits, recruitment and turnover as reported by retail companies. The report can be purchased online at www.convenience.org/compreport. 72 MARCH 2022 convenience.org

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