Remember when a convenience store meal meant a bag of chips, stick of beef jerky and a bottle of pop? You can still get all that. But you can also nab prepared meals, hot sandwiches, salads and wraps. And these increased offerings are hitting fast-food chains.
Coldwell Banker Commercial in its latest Trend Report focused on how convenience stores have shifted from a place for consumers to stop quickly for snacks and fuel to popular food destinations. This shift has made these stores an increasingly attractive asset class for commercial real estate investors, according to the Coldwell Banker Commercial report.
These stores are especially popular for investors in the net-lease market.
“The convenience store industry is evolving to meet changing consumer needs,” said Dan Spiegel, senior vice president and managing director of Coldwell Banker Commercial, in a statement. “With smaller households, more urban locations and evolving food preferences, the sector is undergoing significant transformation. Given their frequent visits, convenience stores must stay closely connected to shifting consumer lifestyles to remain competitive in the retail market.”
Convenience store product mix drives growth
The report highlights how convenience stores have evolved from fuel and snack retailers into quick-service food and grocery alternatives.
This shift is most evident in the type of products that convenience stores offer. According to Coldwell Banker Commercial’s report, the sales of prepared food at convenience stores have risen 12.2% year-over-year.
In bad news for the country’s fast-food restaurants, the report also found that 56% of consumers now consider convenience stores to be viable substitutes for fast-food chains.
This growth, fueled by consumers’ demand for convenient, affordable and healthier food options, has added to the sector’s stability, even though profit margins remain narrow at around 5% to 7%. Coldwell Banker Commercial reported that the high turnover of products and steady consumer visits overcome the tight margins, making convenience stores a reliable source of income for investors.
The shift in consumer behavior–especially as inflation raises grocery prices–has positioned convenience stores as an attractive alternative for those seeking fresh food at affordable prices, according to the trends report.
Changing real estate needs
As convenience stores continue to add to their food offerings, their real estate needs are expanding.
In its report, Coldwell Banker Commercial points to chains like QuikTrip, Casey’s General Stores, RaceTrac and Wawa. These chains are investing in larger store formats to accommodate their expanding food preparation areas.
Many operators are also opening new locations in urban centers and exploring non-traditional spaces such as college campuses and downtown locations. These provide new opportunities for real estate investors.
Investment 0pportunities for convenience stores
Even though 60% of convenience stores are independently owned, the sector is seeing significant consolidation. Major players like 7-Eleven plan to open 500 new stores in the United States and Canada by 2027, while regional chains such as Wawa, Sheetz and Buc-ee’s are expanding into new markets.
This consolidation creates opportunities for investors to acquire properties with stronger tenant profiles and more predictable cash flows.
The sector’s strong position, driven by convenient locations, long-term leases (up to 20 years) and low vacancy rates, makes this asset class a stable investment option in the net-lease market. These factors, combined with steady demand, make the sector appealing to net-lease investors seeking reliable, long-term returns.
