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NATIONAL REPORT -- The convenience store industry hit some rough patches last year, with total sales and motor fuel revenue slightly down, foodservice sales growth slower than in previous years — particularly for hot and cold dispensed beverages — and higher expenses all negatively impacting profit growth in 2013.
According to the soon-to-be-released Convenience Store News 2014 Industry Report, the longest-running annual accounting of c-store sales, profit and operational performance, convenience stores in the United States generated more than $700 billion in total sales for the second consecutive year in 2013. However, total revenue was flat because motor fuel sales dropped 1.1 percent and in-store sales growth slowed significantly to 2.1 percent, after climbing by 4.7 percent the previous year.
For the second year in a row, slower motor fuel price hikes dampened fuel revenue growth. But unlike the previous year, when the industry experienced its highest in-store sales surge of the past five years, in-store sales in 2013 grew only modestly. The coup de grâce was that operating expenses continued to rise at a faster pace than gross profit dollars.
In addition to the rising operating expenses, other troubling results included:
- Inside sales per store increased only 1.2 percent to $1.34 million per store.
- Soft dispensed beverage sales kept foodservice from growing at its traditionally high rate. Hot dispensed beverages were down 1.4 percent, while cold dispensed were up only 1.5 percent and frozen dispensed up only 1.1 percent.
- Aside from cigarettes, other soft product categories last year included edible grocery (up only 1 percent), general merchandise (up 1.5 percent), non-edible grocery (down 1.5 percent), fluid milk (down 7.5 percent), ice cream (down 1.3 percent), and health and beauty care (down 2.3 percent).
SOME GOOD NEWS
Amid all the rough patches, a few good spots could be found. For instance, in-store merchandise and foodservice sales grew faster than the overall population in 2013, with per-capita sales up 1.4 percent. The industry’s overall sales mix also tilted slightly more toward the more profitable in-store sales (27.9 percent of total sales) than motor fuel sales (72.1 percent).
The gross profit dollar mix remained the same as the previous year, with in-store sales generating 66 percent of gross profit and motor fuels generating 34 percent.
After declining for the previous two years, motor fuel volume rose slightly in 2013 to 143.3 billion gallons pumped, a 1.6-percent increase over 2012. An improving economy and less volatile fuel prices likely contributed to the slight uptick in usage. However, total volume is still well below the 148-billion gallon level reached in 2007 and is not expected to grow significantly in the coming years.
Finally, the industry's store count continues to expand. The channel added more than 2,000 net new stores last year, a 1.38-percent increase to 151,282.
Check out the June issues of Convenience Store News and Convenience Store News for the Single Store Owner for complete coverage of the 2014 Industry Report.