External forces are driving big changes in how people consume foodservice, said Chris Costagli, vice president, food insights, NIQ, who presented a session on learning from QSRs at the 2025 NACS State of the Industry Summit.

“A lot of consumers are simply not feeling as good about the state of their finances,” Costagli said. “There are a lot of changes coming in. A new administration, changes to the SNAP benefits program, inflation, immigration, healthcare, education, tariffs. There are a lot of things weighing heavily on consumers. … A lot of things are putting pressure on consumers and causing them to make changes.”

And most significantly, he said, “We’re seeing the frequency of dining out declining.”

That said, the demand for foodservice is still strong—people feel a need to eat outside the home. Costagli said that one in five consumers “say they’d be lost without the ability to go out. Dining out is incredibly important for consumers.”

“It’s about being together, it’s about friendship, connection, about social fabric, its spending time with people, it’s a treat, it’s relaxation,” Costagli said.

What does this moment mean for convenience stores? The value equation is paramount. Often, Costagli said, people think about value in terms of price. But price is not the only component of value. “There’s value in promotions; there’s value in memories and associations; there’s value in nostalgia. ... There are all sorts of things that drive value for consumers.”

Value could be quality, it could be that a meal is healthy, that a brand is trustworthy, that the food is local, comforting or is something the consumer can’t make at home. At the end of the day, “We want the consumer to perceive the value that we deliver as far outweighing the price they paid,” Costagli said, and value is the total experience that consumers receive in exchange for their money paid.

“We are in a challenging economic period. There’s a lot that shoppers are going through right now,” said Costagli. “It demands that we have a response that’s really rooted in empathy and understanding. As we think about our consumer base, we have to be more shopper-centric than ever. It’s about changing the paradigm. We don’t sell to consumers anymore; we support consumers, we support the weight loss journey that you’re on, the dietary goals that you have, the need you have to just have a moment of joy. It’s all about supporting consumers today.”

I think the biggest gap in my view is how [c-stores] measure innovation and what they do with that information.”
—John Benson

Innovation on the Menu

Convenience is “playing a bigger and bigger role in foodservice in the U.S. … There’s a tremendous amount of potential here, but we have to fight and win for a share of the stomach within this very hypercompetitive ecosystem,” said John Benson, senior director, Alvarez & Marsal.

Innovation is critical, said Marco Valentini, managing director, Alvarez & Marsal. More restaurant companies are investing in innovation centers, innovation kitchens, test labs, “as they roll out foodservice innovation, of course, but also even innovating around new equipment and operational changes,” said Benson.

And companies are doing this when they’re much younger, much smaller. Shake Shack, which at first did its testing at its New York headquarters, recently announced that it’s opening a larger innovation and training center to test everything from equipment to formats. “More companies and different channels are making this investment, and they’re making it earlier on, because innovation is becoming a more important part of how they’re competing,” Benson said.

Convenience stores should partner with their suppliers, who can offer lots of innovative ideas, Benson pointed out. “They’re coming to you with intelligence on what’s happening in the market and what they’re seeing, and they have the capabilities to help you operationalize and execute the ideas that your team comes up with,” he said. “They’re agile, they have good research and development teams of their own.”

Innovation doesn’t show up on the menu in the same way for everyone. Benson pointed to Taco Bell’s strategy, through which “they’re willing to throw a lot of stuff on the wall and see what sticks.” Meanwhile First Watch, a café chain with more than 500 locations, spends about 18 months developing new menu items. The key in either approach, is to evaluate each item and determine what were the traits to led to its success or failure.

A big mistake many retailers make, he said, is that they innovate a category and then don’t look at it again for the next five years.

LTOs by Generation

Costagli shared that 80% of consumers say LTOs are important on a QSR menu. But there are some generational differences: Gen Z is really interested in seasonal beverages and appetizers; Millennials want seasonal desserts for LTOs; and Boomers are seeking seasonal main courses. “Know what your consumer is looking for. If you over-index with younger consumers, you probably want to look at having some LTOs in your appetizers, your beverage space.”

Offering better-for-you options is also becoming more important, Costagli said, as consumers seek menu items for needs such as vegan and vegetarian, allergen-free and GLP-1 friendly. “This is a place to tap into for growth.”

Pushing and Pulling With Social Media

“Social media is an incredibly powerful tool that we can tap into,” Costagli said. “It’s extremely influential in the consumer decision-making process. “We have consumers going out and trying products because they saw them on social media or their friends recommended them. We see this exact same trend when it comes to foodservice. Consumers visit foodservice chains because they saw it on social media, because their friends recommended it on social media, because they saw specific menu items on social media.”

Social media, he said, is mostly used to push, to let shoppers know what a c-store is offering. But retailers shouldn’t forget, he added, that it can be used to pull—to find out what consumers want and to pull in that data. Consumers might be posting the meals they’re interested in, and agile retailers can then take that information and quickly offer something seasonal or an LTO. “When something goes viral, are you in a position to move quicky, to bring it into your portfolio and have that as part of your offering?” asked Costagli.

When something goes viral, are you in a position to move quickly, to bring it into your portfolio?”
—Chris Costagli

The Bad News and How to Deal With It

Over the past couple of years, c-store sales have fallen slightly. There are two main reasons, Costagli said. Household penetration fell, meaning fewer households are coming into c-stores, and c-stores lost repeat buyers. Consumers switching to other channels like grocery stores and mass retailers accounted for 79% of this loss, he said. “You’ve lost shoppers and the ones you have retained are coming in less. So we need to bring people in.”

“We have to be thinking about seasonal opportunities, those viral products we can bring to market,” he said. “Think about the whipped coffees that went viral on social media. The cookie croissant mashup. Those are the types of things we can use to drive traffic and bring people back into our stores,” Costagli shared.

Another problem is that the convenience store industry has “an awareness issue.” Costagli pointed out that only 18% of consumers said that they completely agree that c-stores are just as capable of offering fresh, quality, prepared food options as QSRs are.

So what are stores doing to bring shoppers back? Social media, email marketing, in-store promotion, exclusive offerings, bundle deals and flash sales, “can all attract new consumers and retain those we already have,” Costagli said.

The assortment a store offers is also very important. “We need to be the place that has the affordable, essential products just as much as the place that has the indulgent, the sweets, the on-the-go consumption products,” Costagli said.