Welcome to Retail Watch, a new Restaurant Business column highlighting news from convenience stores, grocers and other retailers that compete with restaurants.
There’s much industry hand-wringing about the potential that exists with McDonald’s beverage-focused spinoff, CosMc’s, which opened its first location in a Chicago suburb late last year.
CosMc’s has just four stores currently, but nobody has the scale of McDonald’s, right? So, there could potentially be hundreds, if not thousands, of outposts selling signature lemonades, iced teas, slushes, frappes and more.
And then there’s fast-growing beverage concept Swig, known for its seemingly endless menu of Dirty Sodas and various combinations of carbonated drinks and juices, which is also looking to corner the growing snacking-beverage market.
At the same time, however, we’re seeing Starbucks stumble. Its coffee shop traffic fell 7% last quarter, spurring a 3% drop in same-store sales. The chain’s cold drinks, with all of their fancy add-ins and customizations, appear to be becoming too expensive for inflation-pressed consumers.
But do you know who sells tons of dispensed and packaged beverages, at a relatively low price point, with prime locations off just about every highway exit ramp in America? Convenience stores.
C-store chain Circle K, which has more than 7,000 U.S. locations, is billing itself as “America’s Thirst Stop” this summer, playing up its signature Polar Pop and Froster beverages and adding in an exclusive Gatorade LTO called Lightning Blast.
From May through August, Circle K is selling any size of those drinks for just 79 cents, while members of the chain’s rewards program can hydrate for 10 cents less than that.
Like Panera Bread, Circle K also operated a beverage subscription program that debuted in May 2021. But the retailer suspended that program last month, according to a report in RB sister publication CSP Daily News, saying it will look for other ways to provide value with its beverage offerings.
C-store giant 7-Eleven, meanwhile, is taking a page from Starbucks’ cold beverage innovation playbook, introducing its first flavored cold brew drinks. It’s adding a Mocha Cold Brew Latte, French Vanilla Cold Brew Latte and a Caramel Cream Cold Brew. (A 30-ounce unflavored cold brew delivered to my house in Chicago from the nearest 7-Eleven, without taxes, fees or tip, runs $2.29, according to the chain’s website. That would buy me about four sips of a similar Starbucks drink.)
Convenience stores, of course, have always sold an assortment of beverages to keep thirsty travelers hydrated and alert on the road.
But, seeing the growing popularity of beverages among consumers, c-stores appear to be amping up both their innovation pipeline and their value messaging. And restaurant operators ought to grab a refreshing drink of choice and take notes.
ICYMI
RB Editor-in-Chief Jonathan Maze interviews Jim Norberg, CEO of Krispy Krunchy Chicken, on his A Deeper Dive podcast this week about the rapidly expanding quick-service chicken chain that has most of its units inside convenience stores.
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