Convenience stores offering more groceries, prepared foods

At a Corner Store on the Northwest Side, the shelves of candy bars, potato chips, cheap DVDs and energy drinks have made room for a newcomer: a display of fresh fruit and vegetables.

The cornucopia of apples, oranges, potatoes, tomatoes and avocados — crowned by a pile of bananas — stands in front of a cigarette-laden checkout counter. To the right, shelves are full of bread, eggs, dairy products, pasta and frozen dinners. In the back, customers can grab six-packs of ales and IPAs along with Millers and Bud Lights.

Corner Store, which is owned by San Antonio-based CST Brands Inc., has found room for grocery areas in about 50 of its 1,027 U.S. stores this year, including 15 in its San Antonio stores, and it has plans for more. Nearly all new stores it opens — there are 35 planned for this year and the same number for 2016 — will offer groceries, CEO Kim Lubel said. The chain also has built kitchens in about 40 percent of its stores, where employees make empanadas, meat pies and breakfast tacos with homemade tortillas.

Across the country, convenience stores and gas stations are making similar efforts to offer more groceries and healthy snacks, and to expand their menus of prepared foods beyond the hot dog. 7-Eleven has in recent years begun selling fresh salads and sandwich melts, while Pilot Flying J has launched the PJ Fresh Marketplace, with burgers, chicken wings, fresh fruit and breakfast sandwiches. The trend is especially strong in the East, where fast-growing chains such as Sheetz and Wawa have grocery aisles and lengthy take-out menus in many stores.

In large part, the trend is a response to the increasingly hectic lives of consumers, who often don’t have time to venture into the labyrinth of a grocery store for their dinner ingredients, analysts and industry leaders say.

“Time is so much more of a premium. We’re connected to technology 24/7, so we’re working a lot more,” CST Brands CEO Kim Lubel said at the Northwest Side store, about a half-mile east of UTSA. “This store lets us address that convenience need.”

On top of that, a higher portion of Americans are living alone, with less need for big shopping expeditions, industry leaders say. Consumers are looking for healthier food, and in the age of the food truck, they’re more willing to venture outside a restaurant to grab a bite.

Another factor is the shaky outlook of gasoline and cigarette sales. As vehicles become more fuel-efficient and smoking rates drop, convenience stores are looking for new sources of revenue. For CST brands, same-store cigarette sales declined almost 5 percent between the first quarters of 2012 and 2015, according to Securities and Exchange Commission filings.

“Customers want different foods, and it fits in nicely in that convenience stores are looking for alternative profit channels,” said Jeff Lenard, a spokesman for the National Association of Convenience Stores. “There are consumer trends at work, and there are retail trends at work, that are driving this change.”

Most of the grocery purchases made in convenience stores seem to be for immediate consumption, Lenard said, rather than “going in the pantry.” About 84 percent of convenience store products are consumed within an hour of sale, he said.

Supermarkets also are responding to the consumer demand for more convenience. Walmart has opened hundreds of its smaller Walmart Express and Neighborhood Market formats in the past few years, and H-E-B is building a 12,000-square-foot store downtown, much smaller than the company’s average of 70,000 square feet.

CST Brands — which spun off from Valero Energy Corp. in 2013 — dove into the grocery business a few years ago, when it added milk, eggs and bread to its shelves. Last year, the company boosted its culinary know-how when it bought New York-based Nice N Easy Grocery Shoppes, which has a long menu of chicken wings, hot subs, pizzas, strombolis and sandwich melts. Some of Nice N Easy’s recipes are now used in Corner Store kitchens.

On a recent Friday afternoon, most of the customers at the Corner Store on the Northwest Side bought typical convenience store staples: cigarettes, cheese snacks, tall boys and colossal fountain drinks. A few customers took advantage of the groceries and the craft beers, including Patrick Milligan, who grabbed a banana. He said he buys produce at the store every now and then to avoid the lines at the supermarket.

“When I’m on the go, after work, I need a quick stop,” he said. “It’s a little bit more expensive, but more convenient.”

The effort to transform convenience stores faces challenges. It’s hard for a company to create a food service operation from scratch, especially while competing against entrenched brands that consumers trust, said Dick Meyer, an industry consultant. Also, the sector’s high rate of employee turnover could make it difficult to build expertise in food service.

Another challenge is consumer perception. Meals from gas stations and convenience stores have been mocked in popular culture, such as in “The Simpsons,” in which a bite of a Kwik-E-Mart hot dog carries a risk of food poisoning, and in “National Lampoon’s Vacation,” in which Clark Griswold remarks that he’s so hungry he “could eat a sandwich from a gas station.”

Lubel scoffs at the negative image of gas station food. She’s enthusiastic about her company’s new dishes, proudly offering samples of them. She plans to raise awareness of the new offerings with advertising campaigns and by adding signs within stores pointing them out. Eventually, Corner Stores with groceries could have different styles of exterior signs.

She has other ideas for changes to Corner Store locations, including adding more seating and giving more prominence to their kitchens, encouraging customers to watch the cooks at work. The company is designing a “store of the future” at its corporate campus on Bulverde Road on the Northeast Side, which it plans to unveil in mid-2016.

“It’ll be a big surprise,” Lubel said.