Attracting talent in an inflationary environment continues to pose challenges for c-store operators.
To attract applicants, HJB Convenience Corp., which operates Russel’s Convenience and Russel’s Xpress locations across Colorado, California, Michigan and Hawaii, upped entry wages in 2024 and significantly raised pay for existing employees to boost retention. The labor market pressures are intensifying. Planned minimum wage hikes in Denver and California went into effect on Jan. 1. Denver’s minimum wage rose to $18.81, while California’s increased by 50 cents to $16.50. Los Angeles County already reached $17.27 in July 2024.
In Colorado, where the state minimum wage increased from $14.42 to $14.81 on Jan. 1, Russell’s is paying far above that baseline. “We have to pay a start rate of $16.60 just to get applicants,” noted Tom Bachrodt, general manager of HJB Convenience Corp.
The rising costs are creating ripple effects for businesses. “I have my marketing/HR department increase prices to cover these minimum wage increases and price increases,” said Raymond Huff, president of HJB Corp. “Our out (the) door cost of a candy bar and bottle of soda have become onerous. This could also be affecting sales.”
Russell’s is preparing for another round of price adjustments to maintain margins as a number of major vendors increase their prices in Q1 of 2025. It’s also elevating its high-margin snack bar items and moving its coffee program to bean-to-cup to protect profitability.
However, it remains difficult to attract applicants despite competitive wages. “Ghosting is a huge problem,” Bachrodt said. “We had two who got their first paychecks and left.”
Omaha, Neb.-based Cubby’s has also faced escalating labor costs with average wages climbing $7-$10 per hour, per employee over the last three years.
“With the jump in minimum wages in some of the states that we operate in, we made the decision to stay significantly above minimum wage,” noted Mike Wilson, chief operating officer at Cubby’s, Inc. “Some of our major competitors have been slower to do that, and we have benefited by keeping employees and staying open.”
Ever since the end of the COVID-19 pandemic, Cubby’s has taken an aggressive approach when it comes to state rate hikes. While the Nebraska minimum wage is set to hit $15 in 2026, Cubby’s is already averaging a much higher wage in the state today.
“We believe that since we have already absorbed much of these increases over the last two years, we will be in a much better position when the laws change,” Wilson said. “Because of our decisive action regarding wages, we are not seeing the issues others are regarding hiring and retaining our staff. While there are specific stores that can be a challenge, it is no worse than pre-pandemic for us.”
Meanwhile in Illinois, The PRIDE Stores, which operates 17 locations in Illinois and Indiana, is experiencing similar pressures. Since 2019, Illinois has implemented a series of minimum wage hikes, increasing the baseline from $8 an hour to $14. The wage rose again to $15 on Jan. 1.
“This has forced PRIDE to raise wages up and down the line to stay competitive,” said Mario Spina, owner and CEO of The PRIDE Stores.
PRIDE is also contending with heightened competition from large chains expanding rapidly in its already highly competitive market area. “Fortunately, we have been able to maintain staffing throughout the company at a high level, but continuing to ensure we provide competitive wages and benefits for our staff is key,” Spina said. To help offset the cost of wage hikes, PRIDE is identifying operational efficiencies while driving growth in other areas.
Looking ahead, labor challenges are expected to persist.
“The Conference Board Consumer Confidence Index in October noted 35% of consumers reported jobs as plentiful, which is a pretty high number,” noted Matt Riezman, partner, NexChapter, a c-store advisory firm. “That’s suggesting to me that the labor market’s tight and will continue to be tight.”
Peter Rasmussen, CEO and founder of Convenience & Energy Advisors, concurred. “The costs of staffing c-stores will remain high, and attracting and retaining quality employees may continue to be a challenge for operators,” he said. Retailers should expect wage growth for entry-level positions to remain elevated in 2025 as competition for workers continues.
The key, he said, is investing further in innovation to offset wage pressures.
“To mitigate labor costs, many convenience store operators will likely continue exploring automation solutions such as self-checkout kiosks, artificial intelligence-driven inventory replenishment and automated floor cleaning systems,” Rasmussen said. “While these technologies can reduce the strain on staffing, they also require upfront capital investment.”
Rising labor costs could also push c-stores to explore the gig work economy, Rasmussen predicted. “If Uber and DoorDash can disrupt how we catch a ride, get food delivered and have products delivered in last mile delivery, then it seems an obvious next step in labor innovation is gig work in convenience retail,” he said.
NexChapter also sees convenience stores turning to technology to enable more labor efficiency and improve the experience for employees.
“These aren’t tools that are replacing people. These are tools helping people do their jobs better, but also in a way that retains them as employees,” Riezman said.
As wage pressures persist, Riezman emphasized that improving the overall employee environment and benefit package beyond the wage itself will be the key to retention.
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