U.S. convenience stores experienced a 15th straight year of in-store sales and a fourth straight year of $10 billion-plus in pretax profits, according to newly released State of the Industry data from the National Association of Convenience Stores (NACS).
U.S. convenience stores sales overall surged 9.3 percent to $601.1 billion in 2017, led by a 14.9 percent increase in fuel sales. Convenience stores sales overall were 3.2 percent of the overall U.S. gross domestic product of $18.57 trillion (2016 data). According to NACS, one of every 30.9 dollars spent in the country was spent at a convenience store in 2017.
The sales increase at convenience stores last year was largely because of higher gas prices in—up 12.8 percent to $2.38 in 2017—and a 1.9 percent increase in gallons sold.
Convenience stores sell an estimated 80 percent of the fuel purchased in the U.S. While fuel sales account for 61 percent of sales dollars, fuels margins are still relatively slim. Fuels only account for 38 percent of total profit dollars at convenience stores.
Overall, convenience store profits were $10.4 billion, a 1.6 percent increase vs. 2016.
Meanwhile, in-store sales increased 1.7 percent to a record $237.0 billion.
Foodservice is a broad category that mostly includes prepared food (69 percent of both category sales and profits) but also commissary foods and hot, cold and frozen dispensed beverages. Foodservice sales overall in 2017 were $53.3 billion, accounting for 22.5 percent of in-store sales in 2017 and 33.9 percent of gross profit dollars. The category also was the biggest differentiator in terms of profits; top-quartile performers had prepared food sales that were 3.6 times greater than bottom-quartile stores; coffee sales at top performers were 5.2 times greater that than those of the bottom quartile.
Convenience stores sell 23.8 percent of packaged beverages in the U.S., according to Nielsen data, and saw a slight 0.4 percent sales increase in 2017. Within the category, enhanced water saw the strongest sales increase (9.1 percent). Ready-to-drink iced teas (3.5 percent), alternative beverages (3.5 percent) and bottled water (0.6 percent) also posted sales increases.
Snacking categories all had sales growth as salty snacks (up 5.6 percent), candy (up 2.6 percent) and alternative snacks (up 2 percent) all had strong growth as some consumers, especially Millennials, moved toward snacking and away from traditional meals.