Introduction

In a daring shift of strategy, the Canadian convenience-store giant Alimentation Couche-Tard Inc. is making moves to position itself as a major player in the food industry. Following its foiled attempt to acquire Carrefour SA in 2021, CEO Brian Hannasch announced that the company views its future beyond traditional retail and instead sees food as the key to growth.

The Shift in Focus

This ambitious vision has been put to the test through a substantial US$39-billion offer made by Couche-Tard to Japan's Seven & i Holdings, the parent company of the globally recognized 7-Eleven chain. Although the bid was rejected, Seven & i indicated it might still entertain further talks if a more attractive proposal comes along.

Changing Perceptions of Convenience Stores

Convenience stores, particularly the ones in Japan known as "konbini," are famous for their impressive selection of ready-to-eat food items, including gourmet bento boxes, savory teriyaki skewers, and delectable mochi desserts. Meanwhile, many North American convenience stores have struggled with the stereotype of being less about quality food and more about snacks like potato chips, sugary drinks, and greasy pizza.

Adapting to New Consumer Behaviors

However, the trend is changing rapidly. Anne Kothawala, president and CEO of the Convenience Industry Council of Canada, stated, "Every single company is focusing on it. They recognize that’s the future." This newfound emphasis on food services is a response to declining tobacco sales and changing consumer behaviors influenced by inflation. Younger shoppers, in particular, are gravitating toward convenient food options as they seek affordable meals on-the-go.

The Impact of Electric Vehicles

Moreover, as the world increasingly shifts towards electric and hybrid vehicles, convenience stores that historically relied on fuel sales are bracing for change. About 46% of Canadian convenience stores are located alongside gas stations. As charging stations become more common, operators are eager to attract customers who will spend more time waiting for their vehicles to charge, offering savory snacks or drinks to tantalize their taste buds.

Integrating Food Services

Ian White, president of Parkland Canada, a major operator of gas stations and convenience stores, noted that the decline in fuel demand is prompting a more intense focus on food offerings. Since the company acquired M&M Food Market, it has successfully blended frozen meal options into many of its On the Run stores, catering to the growing appetite for convenient, high-quality food.

Partnerships with Food Brands

Others in the convenience store sector are also waking up to this need. Retailers are increasingly partnering with popular fast-food chains like Subway and Tim Hortons to leverage their recognizable brands and draw in more customers. For example, Petro-Canada's connection with A&W has expanded to over 80 locations and is poised for further growth.

Innovation from Smaller Chains

Smaller chains, like Orangestore in Newfoundland, are establishing their own food lines, adding items like gourmet sandwiches, wraps, and even innovative snacks such as taquitos. David Button, president of Orangestore's parent company, acknowledges that there has been a significant shift in thinking over the past decades, emphasizing the importance of diversifying revenue streams beyond just fuel sales.

Couche-Tard's Food Service Initiative

Couche-Tard is also developing its food service with the "Fresh Food Fast" initiative, which sees sandwiches, pizzas, and more being offered in thousands of its convenience locations worldwide. The company has made significant strides in expanding its food business through acquisitions like GetGo Café + Markets, showing a clear strategy that incorporates food as a major revenue driver.

Seven & i's Focus on Fresh Food

Similarly, Seven & i is looking to enhance its food offerings in North America, leveraging its experience from Japan, where convenience stores are synonymous with quality meals. Ryuichi Isaka, CEO of Seven & i, stated that their future strategy pivots around fresh food, highlighting the need to evolve alongside changing consumer preferences.

Challenges Ahead

In light of these transformative efforts, the convenience store industry faces challenges; last year saw an average of 1.5 stores closing in Canada every day. With food becomes a focal point, operators are reinventing themselves to draw customers into their stores, striving to make their establishments more than just brief stops but rather vibrant culinary destinations.

Conclusion

With industry heavyweights recognizing the importance of this transition, the question remains: can convenience stores truly become the go-to destinations for quality food? Exciting times lie ahead as the culinary landscape continues its evolution within this traditionally fuel-focused industry!