Resilience and reliability are two words we hear a lot in reference to convenience stores. Flexibility and adaptability are key descriptors as well, particularly in the last five years.

In 2024, the U.S. c-store industry experienced its 22nd consecutive year of record inside sales. Foodservice played a key role, delivering strong growth and healthy margins for operators: 39.6% of in-store gross margin dollars in 2024, up from 37.3% in 2023, according to preliminary NACS State of the Industry data for 2024.

Fuels and cigarettes are viable profit generators with high-frequency shoppers, but they have become less reliable. In 2024, total fuels revenues decreased 5.7% to $501.9 billion due to a 6.5% decrease in the average gas price ($3.31 in 2024 versus $3.55 in 2023). Among the top 10 in-store merchandise categories (excluding foodservice), cigarettes was the only category that did not have positive sales and gross profit growth.

When fuel gross profit is stripped from total store operating profit, only the top three deciles are profitable. In other words, 70% of the 2024 NACS State of the Industry survey sample would report negative in-store operating profit.

All that is to say that the business model is changing. C-stores continue to sell an estimated 80% of the fuels sold in the United States, and c-stores are the preferred channel for nicotine consumers. However, more retailers are becoming food-forward. They’ve upped the ante on fresh, quality and safe menu options that rival quick service competitors (more on that later).

Five categories comprise foodservice: prepared food, commissary, and hot, cold and frozen dispensed beverages. Last year, NACS State of the Industry data for 2023 showed that four of these were in the top 10 in-store sales categories.

In 2024, the foodservice trend accelerated.

Most foodservice sales in convenience stores are from prepared food—and that share has grown significantly in the last five years. In 2024, prepared food accounted for 68.4% of all foodservice sales, up from 63.8% in 2020.

Inside the In-Store Data

Andrew Baill, senior manager of customer insights and strategy at Wawa, delivered key performance metrics for in-store categories during the 2025 NACS State of the Industry Summit.

Baill highlighted broad inside merchandise trends. “When you think about the sales and gross margin breakdown in our channel, foodservice is a key contributor. On the merchandise side, six categories make up most of our sales and profit: packaged beverages, cigarettes, other tobacco products, beer, salty snacks and candy,” he said. Along with foodservice, these categories account for almost 90% of inside sales and profits.

Although inflation pressures eased in 2024, the top six merchandise categories showed unit declines in 2024. Baill noted that this headwind continued into the first two months of 2025 and is one to watch moving forward.

A Tale of Two Halves: Cigarettes and OTP

Both cigarettes and other tobacco products (OTP) have seen significant changes over the past decade—one has experienced a decline in sales and volume, while the other has grown substantially. OTP has nearly caught up to cigarettes in terms of total inside profit contribution: 5.8% versus 6.6%, respectively.

“OTP is almost at the point where it’s eclipsed cigarette margins in our stores today. I think that’s a big deal,” said Baill.

Where the stars align for cigarettes and OTP is in their ability to drive shopper frequency. NACS Convenience Voices research found that tobacco/nicotine shoppers are more likely to visit a c-store once per day or more. Retailers can capitalize on that frequency to encourage additional purchases, like beverages, to create larger baskets.

The same goes for OTP shoppers, who are also likely to frequent a c-store daily. Many of these shoppers are polyusers, meaning they often also purchase cigarettes.

We Got This: Beverages

The cold box is one of the most significant areas of a c-store —a huge differentiator compared to other retail channels. Convenience stores own the packaged beverage space.

Together, packaged beverages and beer are responsible for nearly 25% of both inside sales and gross margin in c-stores.

Among the packaged beverages subcategories, energy drinks and carbonated soft drinks combined for more than half (53.8%) of category sales in 2024 at 27.8% and 26.0%, respectively. “Energy has been on a tear for the last four to five years,” said Baill.

Consumer preferences suggest that c-stores are different things to a variety of people who are looking for refreshments. There are notable gender and age purchasing habits, according to NACS Convenience Voices research. Males gravitate to sports and energy drinks, while females over index on water and juice. Gen Z is more likely to purchase flavored sodas, sports drinks and juices, while millennials look for pick-me-ups like sports and energy drinks. Then there’s Gen X—this cohort buys coffee, iced tea and diet soft drinks.

Additionally, packaged beverages and foodservice are like peas and carrots—a great pairing for driving bigger baskets with strong margins.

Beer experienced less inflation and unit decline over recent years, including 2024. Premium beer is the No. 1 beer subcategory (31.2% of category sales). Flavored malt beverages, popular and imports were close seconds, with flavored malt representing 16.1% of category sales, popular accounting for 15.4% and imports just behind at 15.2%.

Beer customers are weekly c-store shoppers, and nearly three quarters (74.7%) plan to consume their product of choice within two hours of purchase. Beer shoppers were also the most likely across the top six categories to notice promotions in the store and have a strong affinity towards singles.

Impulsive Behavior at Center Store

“The key thing that the center of the store does for us is create impulse. This is the best area of the store to add excitement, to show customers what’s new and help build their basket as they’re shopping our stores,” said Baill, adding that candy and salty snacks have “the strongest innovation year over year.”

Potato chips continue to lead the salty snacks category, followed by other salty snacks, tortilla/corn chips, nuts/seeds and pretzels. Salty snacks is a high impulse category—most customers (95.2%) will consume their salty snack the day of purchase, and they are likely to buy a packaged beverage and another high-impulse product—candy—on their shopping trip.

“We often hear that younger consumers are replacing meal occasions with snacks. This is a potential area of growth if you’re looking for the new consumer who’s going to be with you for the next 40 to 50 years. Snacking is here to stay,” said Baill.

Chocolate bars/packs lead the candy category in terms of sales (34.3%), followed by bagged or repacked peg candy (24.5%), which is where you’ll find all types of flavors, textures and shapes of gummy candies. Like their center store partner salty snacks, most candy (94.6%) is consumed the day of purchase.

Why Our Customers Choose QSRs

Foodservice leakage refers to customers leaving a convenience store and almost immediately visiting a QSR.

“We’re in the immediate consumption business. The fact that almost 30% of our shoppers are willing to do the most inconvenient thing imaginable and go to a second place [QSR] after coming to our stores is unthinkable. That’s a huge opportunity for us,” said Baill.

Put into context, this translates to $130 billion in lost sales for the convenience retail industry each year.

NACS Convenience Voices found that customers say QSRs are more likely to have the items, variety and quality they’re looking for. Their QSRs of choice specialize in hamburgers. “[But] I wouldn’t look at this and say that the burger chains are eating our lunch. Burger chains just happen to be super prevalent, super convenient and everywhere,” said Baill.

“QSRs are unquestionably becoming more convenient,” said Baill, noting examples like touchscreen ordering, digital ordering and delivery, as well as the impact of the value wars.

However, convenience stores have competitive advantages that QSRs don’t possess: variety and the ability to accomplish multiple tasks in one shopping trip. “The challenge for us is how do we take those advantages and continue to evolve and build on them,” Baill said.

Baill added that foodservice is not a one-size-fits-all endeavor.

“There are a lot of different paths to success in our space. The one consistent thing is whatever you do, as long as you do it really well, consumers will notice. They’ll keep shopping your stores and will grow your business,” he said.

The Path To Purchase

When did you make the decision to purchase your item(s)?

Whether it’s cigarettes, OTP, beer, packaged beverages, candy or salty snacks, convenience stores deliver immediate consumption items and generate impulse sales that build bigger baskets.

Looking at when customers made their decision to buy products from these categories shows how consumers think and plan their shopping trip.

“Each of these categories plays a different role in building the basket for our stores, but there is one consistent truth across all these categories: People are shopping us for immediate consumption,” said Andrew Baill of Wawa.