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The Future Of Technology Integration In Convenience Store Food Service

John Lamb is the Chief Marketing Officer at Elo.

Tech solutions are helping convenience stores deliver restaurant-quality food as part of an overdue image reboot.

In the age of convenience and customization, diversifying gas stations is becoming big business. In fact, food service now accounts for over 36% of in-store gross margin at gas stations nationwide. Apart from offering high-margin goods like beverages, snacks and grocery items, many gas stations and convenience stores have turned to technological advancements in food ordering and preparation to serve made-to-order breakfast, lunch and dinner items on-site. Self-order kiosks are increasingly driving higher checkout totals and margins through operational efficiencies.

These developments have changed the definition of convenience on the road. Convenience stores once meant efficient—but low quality. Today, they can deliver the full customer experience. Gone are the days of gas stations offering only soda machines and dirty restrooms. The leading players in this space are not just remaking the image of gas stations, but raising the stakes (and quality) for everyone.

Not Just Fueling Up On Gas

Convenience stores sell an estimated 80% of the fuel purchased in the U.S. Total fuel sales increased 41.2% to $603.2 billion in 2022, mostly due to higher gas prices. However, a Fortune study found that the advertised gas prices can be misleading and stations generally earn less as prices rise. Their net profit per gallon after expenses is about $0.03-$0.07, and the net profit margin of a gas station overall is less than 2%.

This relatively low margin partly explains the growth of food service and merchandise sales, as stores focus on ways to boost income. In 2022, prepared food accounted for 67.3% of all food service sales. As demand grows, technology solutions are helping operators streamline operations, produce meals to order, and improve food safety and quality. People have simply come to expect this form of convenience, and it represents the next logical evolution for gas stations and convenience stores.

The Road Ahead For Convenience Stores

Integrating this new technology is not without its challenges as stores attempt to adapt to new customer expectations. Independent franchisees own many locations, so it can be difficult to get buy-in and roll out new solutions uniformly across a network.

Legacy systems can also lack the modularity and flexibility to make the transition a seamless process. In fact, the longer a legacy system has been in place, the more resistance there can be because of fears that the entire system will be brought down—with the associated loss of revenue.

It can be a slow and cumbersome process to modernize when stores have added hardware on an ad hoc basis over time. However, this technology is here to stay. We suggest making incremental updates and iterations to keep the systems modern rather than trying to do a full overhaul all at once. This kind of staged approach may be necessary as convenience stores seek a point of difference in a crowded marketplace.

Innovation And Adoption Of Tech

Convenience stores cannot afford to fall behind industry trends. One study of 2,000 U.S. consumers found that 80% of in-store shoppers preferred nontraditional checkout options like self-service. Yum Brands, the multinational fast-food corporation, expects in-store kiosks to become ubiquitous at its brand stores worldwide by 2026. Currently, all of its U.S. Taco Bell locations feature kiosks, and they increased their kiosk penetration in KFC restaurants by 70% over the past year outside of China.

New innovations such as these will allow gas station chains to set themselves apart from the competition, as long as they adopt early and commit to constant improvement as it evolves.

Tech—The Point Of Difference

Great customer experience, designed through modern technology, can create a lasting impression. For example, a self-order kiosk along with tech-driven quality control systems—such as temperature monitoring, traceability and food tracking—can elevate a gas station’s reputation.

The modularity of tech systems also allows for ongoing innovation. Point-of-sale systems can track sales data and inventory levels, as well as automatically reorder stock; while self-order kiosks can be integrated with a kitchen display system for a total solution that can be built over time. The capacity of these screens to act as digital signage and a menu board can effectively help turn gas stations into miniature restaurants.

These developments will likely have a positive impact on the bottom line. Kiosks can drive a higher check and higher margins by upselling consumers or improving visibility into more options. The footprint of this tech will only continue to grow.

The Customer Experience Is Driving Growth

Providing the same customization that we have all become accustomed to in quick-serve restaurants is having a positive impact on service stations and fast making their old image outdated. In today’s age, people on the road will stop in for the food, the ease of service and the overall experience. This kind of success has redefined customer convenience for gas stations and convenience stores nationwide—and for the early adopters of the tech enabling this transformation, there will be no turning around.

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