The remarkable financial success of the convenience store industry hit a snag last year as in-store sales rose only 2.1 percent after two years of solid gains of close to 4 percent and even 5 percent. Perhaps more surprisingly, though, foodservice sales increased at about half the growth rate of two years ago.
Total convenience store industry sales did rise 9.1 percent last year to $616.3 billion, but that dollar growth was mainly driven by a 12.4-percent increase in the average price of gas in the United States, according to the 43rd annual Convenience Store News Industry Report, the longest-running, continuously published annual report on the health and performance of the convenience retail channel.
Last year's in-store sales gain paled in comparison to the 3.8-percent and 4.9-percent increases registered in 2016 and 2015, respectively. In-store sales per unit were a record high of $1,473,386 per store, but the 1.5-percent increase was less than half of that achieved in each of the previous two years.
Foodservice sales (including prepared food and hot, cold and frozen dispensed beverages) increased only 3.6 percent — the lowest increase in many years. Foodservice sales had grown by 6.6 percent in 2016 and 7.1 percent in 2015. Prior to that, there were several years of double-digit percentage sales growth for the foodservice category at convenience stores.
Despite the slowdown in growth, foodservice still gained as a percentage of total in-store sales. Foodservice comprised 16.38 percent of in-store sales last year, up from 16.14 percent in 2016.
The highest percentage of in-store sales still comes from the cigarettes category. Cigarettes represented 29.82 percent of U.S. c-store sales last year, down slightly from 30.11 percent. However, rising taxes and manufacturer price increases combined to hide the annual 2-3 percent drop in volume the category has experienced for the past decade.
Packaged beverages, the third-highest grossing in-store category (after cigarettes and foodservice), also had a relatively difficult year in 2017. This category — dominated for years in size by carbonated soft drinks and driven by growth in the energy drinks segment — saw its share of in-store sales dip from 12.74 percent in 2016 to 12.5 percent last year.
In terms of percentage sales gains, the fastest-growing categories last year were other tobacco products (up 10.8 percent per store), wine and liquor (up 5.4 percent per store), and prepared food (up 4 percent per store). Categories that had the biggest percentage declines were ice cream (down 3.1 percent), publications (down 2.8 percent), and non-edible grocery (down 1.4 percent).
Click below to download the full 2018 Convenience Store News Industry Report.