Region Breakdowns

Data from the six NACS regions shows that even when big trends align, there are important differences in performance around the country.

Region Breakdowns

June 2024   minute read

By: Leah Ash , Jeff Lenard , Ben Nussbaum

As part of its State of the Industry reporting, NACS separates the United States into six regions, which are based on the fuel PADDS that the U.S. government uses. Data from these six regions allows operators to compare like with like, given the large differences in performance between c-stores in different parts of the country.

Region 1: The Northeast

Region 1, the Northeast, is the longstanding foodservice leader. Foodservice accounted for 15.0% of the region’s sales mix (with merchandise at 24.8% and fuels at 60.2%). Nationally, foodservice accounted for 9.7% of sales.

Foodservice gross profit is where the region really shines in the 2023 data, with the category delivering $84,009 gross profit per store, per month, a 9.2% increase year over year and more than $50,000 higher than the national average.

More good news for the region: Inside transactions tipped up slightly to 42,469 per store, per month, a 1.9% increase. Additionally, inside operating profit per transaction was 68 cents. “That is very, very strong. It’s the highest across all the regions,” said Jayme Gough, director, research, at NACS.

With busy stores and robust foodservice offerings comes higher costs. The region easily leads the other five in wages and benefits, at $76,362 per store, per month. Total DSOE was $130,973 per store, per month, almost twice the amount in Region 5, which had the lowest DSOE of any region. The investment is paying off, with inside gross profits of $161,886 per store, per month more than double the figure for any other region except Region 3.

Unit sales were a less positive side of Region 1’s 2023 performance. Only beer posted an increase, with a modest 1.2% gain. Cigarettes posted a -10.2% change.

Andrew Baill, senior manager of customer insights and strategy at Wawa, shared that “some of the work we’re doing within our team” is continuing to refine the retailer’s understanding of how declining cigarette sales is impacting other categories. “That customer is clearly buying more than cigarettes,” he said.

Region 2: The Southeast

“A little bit of good, a little bit of bad” is the recurring theme in looking at data from Region 2, which encompasses seven states in the southeastern United States.

Let’s start with the good news, particularly related to fuels. Retailers in the region sold nearly 50,000 more gallons per store, per month than the national average (188,667 vs. 139,936). Overall, fuel accounted for 47.4% of gross profit dollars, almost 8 percentage points higher than the national average.

Strong traffic at the pump—transactions were up 5.7%—also drove customers inside the store, with in-store transactions up 1.2%, leading to sales growth in most categories. Customers coming inside the store also spent more money; basket size increased 60 cents to $9.38, significantly higher than the $7.80 national average.

For the just-okay news, foodservice sales were up a strong 13.1% but are still 33.8% less than the national average ($40,051 vs. $60,578). While many retailers nationally see foodservice as a huge profit driver, that’s not the case in Region 2: Only 10.4% of gross profit dollars came from foodservice, less than half the percentage nationally (23.1%).

Now for the bad news. While in-store categories did well, inflation rose faster than sales growth—and costs outpaced sales, whether inflation adjusted or not. Wage & Benefits was the only expense that was less than the national average, but turnover was much higher (171.4% vs. 118.8%). Every state in the region had quit rates above the national average.

Factoring in all these expenses didn’t just squeeze in-store profits; it eliminated them. While the national in-store profit was 5 cents per transaction, retailers in Region 2 lost 37 cents on every in-store transaction.

Strong sales at the pump helped offset the losses per transaction inside the store. More careful management of expenses, especially expenses related to turnover, can help turn around in-store profits in 2024.

Region 3: The Midwest

Region 3, the Midwest, includes six states and about 15% of the total U.S. c-store count. The region bucked national trends by increasing in-store transactions, which grew 2.3% to 33,457 per store, per month.

Jenna Collard, director, education engagement at NACS, noted that “2023 inside sales look great compared to 2022 and is tracking against 2019 (pre-pandemic) pretty well.” On the fuel side, 2023 pump transactions beat 2022 transactions by 3.2% and bested 2019 significantly.

Mark Buscher, regional VP at 7-Eleven, stated that operators in the region have noticed the same pattern, and also reported optimistic patterns for the future. “Customer transactions have been very favorable for us in this region. One thing that we’ve noticed is that customers responded very favorably to deals and promotions, mostly value-added propositions, and that’s where we saw the most gain. With the deals, operators feel encouraged because this traffic feels similar to pre-Covid and possibly even stronger. They feel optimistic about the seasons ahead,” Buscher said.

The good news continues when looking at the key metric of foodservice gross profit, which was $28,951 per store, per month, in the region, a 15.9% increase year over year. The region’s foodservice gross profit is second only to that of Region 1.

From an overall sales mix perspective, foodservice has increased 1.6 points since 2019. With the rise of foodservice, in-store merchandise took a slide back over the same period of time, falling 2.5 points.

Another Region 3 improvement was in turnover. Non-manager turnover decreased by 3.7 points to 90.9%, while manager turnover decreased by 2.6 points to 22.7%. Both metrics are the best of any region.

Region 3 is also the top performer when it comes to other income, which includes things such as car washes, ATMs and lottery sales. This catch-all segment earned $9,026 per store, per month.

Region 4: South Central

The South Central region, anchored by Texas, is known for its high store counts and competitive convenience markets. In 2023, the region’s sales mix was 72.6% fuels, 21.3% in-store merchandise and 6.1% foodservice.

Chris Rapanick, managing director of research at NACS, noted that operators in the region have opportunities to grow inside operating profit.

The region’s inside transactions came in at 25,361 transactions per store, per month, lower than the national average by 22.3%. Additionally, the average basket value was $7.56, 24 cents lower than the national average. On a positive note, while inside transactions decreased 4.4% since 2022, the average basket value increased by 42 cents.

Stores in the region can look to address pump-to-store movement to draw in more fuel customers, perhaps moving their mix closer to the national average. Ben Hoffmeyer, vice president of marketing and merchandising at TXB, stated that the retailer is using its loyalty program to drive customers into the store. “Our loyalty program has been going on for two years, and we’ve been using gamification to get more people onto our loyalty program. A customer goes to our app, plays a scratch to win—just like a lottery ticket—and wins a digital coupon. The customer then has 24 hours to redeem the coupon and it drives immediate pump-to-store movement.”

Inside sales were boosted by foodservice sales, up 7.5%, with merchandise sales posting a -0.5% change. The region had some noteworthy in-store trends, with beer, which grew in every other region, posting a -10.4% change and OTP, which posted at least 7.1% growth in every other region posting a -0.8% change. However, the region saw the highest increase in salty snacks sales, at 14.0%.

Region 5: Central

Historically, Region 5, which stretches from Missouri to Montana, has closely matched the national average in terms of the percentage contributions of fuels, merchandise and foodservice—a trend that continued in 2023. The region’s mix was 9.9% foodservice, 22.0% merchandise and 68.2% fuel, while the national average was 9.7%, 23.0% and 67.3% in those areas.

One noteworthy positive was the improvement in inside store operating profit, which went from -$457 in 2022 to $1,797 per store, per month in 2023. “This highlights how high-margin foodservice items are becoming a larger part of the margin mix” in the region, explained Jenna Collard, the director of education engagement at NACS. Overall, inside operating profit per transaction grew from 5 cents to 32 cents.

The region saw positive change in inside transactions, registering 25,877 transactions per store, per month, for 0.5% growth, despite pump transactions dropping 12.6%, from 12,025 per store, per month to 10,513.

From a foodservice perspective, Region 5 lags the national average in sales but leans on profits from prepared food to compensate. The region’s stores generated $29,177 per store, per month gross profit on prepared food, a 7.1% increase year over year and slightly higher than the national average of $28,627.

While Region 5’s turnover numbers are worse than the national average, led by 165.4% non-manager turnover compared to 118.8% nationally, they show improvement on a year-over-year basis, with non-manager turnover dropping 14.0 points from 2022 and manager turnover dropping 0.2 points.

Mike Wilson of Cubby’s, based in Omaha, Nebraska, shared some steps that the retailer is taking to address turnover. Wages lead the way, with the company investing substantially more in that area. In addition, the retailer has a podcast its executives use to speak directly to frontline workers and a text message system for communication. “Everything is driven down to the employee level instead of just the managers,” Wilson said.

Region 6: The West

The West may be the most unique of the six NACS regions, with California playing an outsize role in the region’s metrics. Land is at a premium in Region 6, so store footprints are much smaller than in the rest of country; foodservice, though growing rapidly, lags well behind the national average; and healthy fuel sales and margins remain more essential to profitability than elsewhere. The region also has fewer inside transactions than the national average, but transactions came in at a much higher average value, with baskets averaging $13.58.

In Region 6, fuel sales were $704,168 per store, per month—more than $200,000 higher than the national average of $494,105. Those Region 6 sales represented a 9.3% decline from 2022, even though fuel gallons were up 4.8% to 172,414 per store, per month. “There’s plenty of opportunity to be profitable selling fuel in your region,” said Chris Rapanick, managing director, NACS research, although he noted that, in the coastal states especially, it’s imperative to think ahead and plan for the increased electrification of the fleet.

Foodservice results point to investments in this vital area. The region lagged behind the national average in every category except cold dispensed, falling almost $20,000 behind per store, per month in prepared food. But the growth story was solid, with prepared food leading the way with a 13.5% year-over-year increase.

Foodservice gross profit growth, though, lagged behind. Prepared food, for example, earned only a 1.2% increase in gross profit to $12,585 per store, per month. Rapanick cited shrink, overproduction, mismanaged promotions and the swings in food supply prices as possible reasons for this relatively small gross profit growth.

California fast food workers now make a minimum $20 an hour, and overall wage growth was evident in the region’s direct store operating expenses. Wages and benefits grew from $36,295 per store, per month in 2022 to $40,040 in 2023, a 10.3% bump.

Leah Ash

Leah Ash

Leah Ash is an editor/writer at NACS and can be reached at [email protected].

Jeff Lenard

Jeff Lenard

Jeff Lenard is NACS vice president of strategic industry initiatives. He can be reached at [email protected].

Ben Nussbaum

Ben Nussbaum

Ben Nussbaum is the editor-in-chief of NACS Magazine.

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