In 2015, a new word for “convenience store” was added to the Oxford English Dictionary: “depanneur”. Originated in the 1970’s by a corner store owner in Quebec, “dépanneur” means “to render a service”. For years, laws in Quebec prohibited grocers from opening Sunday’s or evenings so the convenience stores stepped in with a retail option. In the early 1990’s, the law was repealed and many believed that was the end for c-stores. However, Alain Bouchard, the founder and Chairman of Alimentation Couche-Tard (ATD), the second largest c-store operator globally, continued to scale ATD to over 14,000 stores globally and the stock has compounded 20%+ per year for 20 years.

In the US, there are over 150,000 convenience stores of which 70% are run by owners with only 1-10 stores. It’s a fragmented industry where stricter regulation is pushing mom and pop owners to sell to larger corporations. Also, sales inside the c-stores have grown for 16 consecutive years at 3.6% CAGR. This resilience plus the continued consolidation is what originally attracted us to the industry.

The c-store business sells gas and merchandise such as food, beverages, and tobacco. We interviewed an executive at ARKO, one of ATD’s competitors, to understand how the store is run and to explore the implications of EV’s on the traditional c-store business.

Two statistics immediately stood out when researching ATD:

  1. ATD report 65% of transactions are convenience only
  2. Nielsen reports c-stores account for 86% of US cigarette sales

During ATD’s FY21, 25% of transactions were fuel only and 10% are a mix of both gas and merchandise. Tobacco is a major driver of traffic:

"All competitors in the C-store space have over 70% of their volume based on tobacco products. Customers are forced to shop at our sites because other vendors have been eliminated. 18,000 CVS stores and 5,000 Walmart sites no longer carry tobacco. You will never stop people from smoking, vaping or utilizing tobacco, so that bodes well for C-stores." - VP, ARKO

Just as c-stores stepped up to fill the opening time gaps of grocers 40 years ago, they are stepping in today to supply tobacco as grocers cut back their offering. Over 40% of ATD’s merchandise revenue is tobacco; effectively, the c-store is a specialised tobacco store with a food and beverage offering.

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