Diving letter:
- 7-Eleven has opened a business with two restaurants in Manassas, Virginia – Raise the Roost Chicken and Biscuits and Parlor Pizza. The two in-house restaurants are located next to each other in the shop and have separate order counters as well as common indoor and outdoor seating.
- The store is part of the convenience store chain’s Evolution Store prototype, which was first launched in March 2019. According to a press release, the stores serve as testing grounds for customers to try out items before they are further introduced. There are now eight Evolution Stores, each with a restaurant concept.
- In a press release, 7-Eleven EVP and Chief Operating Officer Chris Tanco described the chain’s expansion plan as aggressive and indicated their intention to compete specifically in the area of fast service. “Today’s opportunity is in the QSR space, and we are responding by aggressively rolling out restaurants across the country – both in Evolution Stores and beyond. Our plan is to open nearly 150 restaurants in 2021,” he said.
Dive Insight:
The blurring of the lines between quick service restaurants and convenience stores isn’t new, but competition between the two continues to grow. In 2019, Chris Gheysens, CEO of Wawa, discussed evolving his brand into a “takeaway restaurant” to further develop the concept and win consumers’ food budgets. Wawa, 7-Eleven, Casey’s, and QuikTrip recently expanded their retail and food choices.
Those efforts make a bump. In 2019, the State of the Industry report by the National Association of Convenience Stores found that 23% of convenience store sales came from food service. That same year, GasBuddy published a study that found that 43% of Americans ages 18-29 bought more C-store meals than they did three years earlier.
As C-stores add more food service options, including restaurant concepts and drive-thru models and deliveries, the opportunities to lure diner dollars away from QSRs increase. 7-Eleven recently announced its first in-house drive-thru restaurant, serving up the in-house Laredo taco menu and traditional slurpees. Wawa recently opened its first transit location with fresh groceries, inexpensive meals, combo meals and specialty beverages. The location also includes roadside collection.
According to The Shape of Food Retailing in the New Normal report earlier this month, innovations for segments of the day – the takeaway dinner category that poses some of the greatest challenges – represent “a significant opportunity for roadside retailers” increase pedestrian traffic and sales. For the newest Evolution Store in Virginia, diners not only have the option of two restaurants to choose from, but also a wine cellar and beer cooler, freshly baked produce, bespoke espressos, and other convenience options that many QSRs don’t offer.
These C-store chains pose a competitive threat not only because of their food service offerings and off-premise channels, but also because of their enormous presence. 7-Eleven has more than 12,000 stores in North America, which is on par with the top five QSRs. For context, there are roughly 7,000 Taco Bell restaurants in the U.S. and just over 7,000 Burger Kings. Wawa has around 900 locations, which is slightly fewer than Carl’s Jr.
If 7-Eleven is to be successful with this evolution concept, the addition of both a fried chicken concept and a pizza concept is a good start. Demand for both has fluctuated over the past year and some restaurant brands have even drawn attention to a possible shortage of chicken based on this demand.
The Manassas store will also serve as a testing ground for the emerging brand program Sips and Snacks. This means customers can purchase items submitted by aspiring entrepreneurs as well as the retailer’s latest innovations. These features are more likely to create a target standard that QSRs don’t have and could lead to new traffic for testing Raise the Roost and Parlor Pizza.