Hot dispensed coffee continues to make convenience stores destination worthy for many Americans, especially for younger consumers, according to the National Coffee Association’s (NCA) “2024 Quick Service Restaurants & Convenience Stores” report.
Thirty-three percent of respondents in an NCA survey said they bought a coffee from a convenience store or gas station in the past month. Of those consumers, 44% said they bought only coffee and no other foods and beverages.
“Overall, U.S. consumers spend $7.4 billion on coffee in convenience stores annually, and $110 billion on coffee and related goods across all venues,” noted NCA CEO and President William “Bill” Murray. “Also, a whopping 99% of past-month convenience store coffee buyers were satisfied with the coffee they purchased.”
Murray pointed out that younger consumers purchase the most coffee from convenience stores and gas stations, with 40% of millennials and 37% of Gen Z buying coffee from these outlets in the past month. Younger consumers are also driving growth in specialty coffee sales made from premium-grade beans.
“Past-day specialty coffee consumption is at a 13-year high,” Murray explained. “Last year, for the first time, we saw that more coffee drinkers (45%) had specialty coffee in the past day than had traditional coffee (38%).”
At Cubby’s convenience stores’ 39 locations in Iowa and South Dakota, coffee unit sales are down slightly, but profit dollars have marginally increased, noted Brian Davis, manager of the company’s fountain, age-sensitive and cold-vault categories. Since the third quarter of last year, the chain has been replacing the drip brewers in the c-stores with bean-to-cup equipment.
He added that, in addition to brewing a fresh cup every time, the change allows the stores to give customers more choices. From the three to four varieties available in the drip pots, Cubby’s can offer up to eight roasts with the newer bean-to-cup technology.
“It’s all about giving our customers the best experience to keep them coming back,” Davis stated.
Boosting Bakery
Mintel’s “In-Store Bakery — US — 2024” report found in-store bakery sales were close to $19 billion last year, reflecting a growth of 5.4% over the previous year. The research firm predicted another 4.5% increase through 2028.
“Building longer-term loyalty, shopping habits and growth in the in-store bakery will require a healthy balance of indulgence and meeting everyday needs,” the report suggested.
The report noted that exponential growth in the category will slow as inflation cools. However, the bread, bun and breakfast bakery segments are expected to “pave the path for future growth.”
Breakfast is big business for the in-store bakeries at Kwik Trip and Kwik Star stores, which have 900 locations in Wisconsin, Minnesota, Iowa, Michigan, Illinois and South Dakota. The stores bake between 25 and 30 different items every day, said Paul Servais, retail food service director for the company.
“We have it all — multiple varieties of doughnuts, muffins, cookies, cinnamon rolls, bars and brownies — and they all do well,” Servais explained. “Our central bakery makes the products and ships them frozen to the stores where they are thawed and frosted.”
Items are available in a self-serve format and prepackaged for grab and go. Bakery sales are consistently increasing at Kwik Trip and Kwik Star, which Servais attributed to heavy promotion — including rotating sales prices — and continued innovation.
“We do a lot with limited-time offers, and we have some new doughnuts and flavors of cookies we’re excited about for this year,” Servais noted.
Innovation on the menu can create new occasions and so can getting creative with pairings and merchandising that embrace the full power of the perimeter, Mintel emphasized.
“Social media engagement, daily specials and even in-store experiences can draw consumers into the bakery and inspire intentional visits to this department,” the report concluded.
