QuikTrip makes inroads in Charlotte convenience store market

US Airways technician David Csiszer stops by the QuikTrip convenience store near Carowinds for iced tea refills on his way to work.

FedEx driver Alexander Little picks up a hot dog or an egg roll for a meal between deliveries.

Retiree Charlie Zambrano says he likes the plentiful gas pumps and perks such as free air for filling up tires.

Unknown in the Charlotte area just three years ago, QuikTrip, or QT, is gaining fans around the region with its super-sized stores, made-to-order fresh food options including sandwiches and personal pizzas and row after row of drink dispensers offering sodas, teas and frozen drinks called “Freezonis.”

With an ongoing building blitz across the Carolinas, the Tulsa, Okla.-based chain has rapidly become a significant player in an increasingly competitive convenience store landscape. The largest chain, 7-Eleven, has also been expanding in the Charlotte area, and two other major players are set to combine after Circle K’s parent announced plans to buy Kangaroo Express’ parent for $1.7 billion, including debt.

So far, QT is winning high marks from customers such as Zambrano.

“It’s a great place,” he says. “They’re popping up everywhere.”

The privately held company has grown faster in the Carolinas than in any other previous expansion in the company’s history, says Mike Thornbrugh, QT’s manager of public and government affairs. The company, which offers gas at all locations, already has 55 stores in the two states – about 29 of which are in the Charlotte area – with eight more under construction.

“We have just touched the surface,” Thornbrugh said. “Our competitors would love to know our number. But it’s no secret we’re there to stay, and we’re going to continue to build in the right places.”

The company’s expansion suffered a setback recently when the Charlotte City Council voted against a rezoning petition that would have allowed a QT on North Tryon Street, near Interstate 485. Council members sided with city staff, who said the 5-acre site between Salome Church Road and West Pavilion Boulevard should be developed as residential.

Council member Claire Fallon said she liked the QuikTrip brand but said she voted against the project because she was concerned about the difficulty of accessing the site.

“We were disappointed,” Thornbrugh said, “but will continue to find great sites and build new stores.”

Increasing competition

Despite its fast growth, QT is still a small player compared with industry giant 7-Eleven. That Dallas-based chain has about 7,700 stores in the U.S., more than 11 times as many as QT, the 18th-largest, according to Jersey City, N.J.-based Convenience Store News, which reports on the industry.

After a 24-year absence, 7-Eleven made its return to Charlotte in 2012 when it bought 55 Sam’s Marts in the region and began converting them into 7-Elevens. It has also acquired CB Mart and Fast Track locations in the Carolinas, and built new stores.

7-Eleven now has 71 locations in Mecklenburg and five neighboring counties, and it’s planning on opening at least 10 more Mecklenburg stores in 2015, company spokeswoman Margaret Chabris said.

“We are flexible in locations,” Chabris said, “but are particularly interested in walk-up sites in downtown Charlotte and locations where we can sell gasoline.”

7-Eleven is known for a host of proprietary products, including “Slurpee” frozen drinks, hot meals such as pizza and wings, and fresh foods such as cut vegetables and hummus dip.

QT and 7-Eleven will face a bulked-up competitor after Canada’s Alimentation Couche-Tard, the parent of Circle K, completes a planned acquisition of Cary-based The Pantry, which operates primarily under the Kangaroo Express banner. The two chains have about 110 stores in the Charlotte area combined, according to their websites.

Couche-Tard is the fourth-biggest convenience store chain in the U.S., while The Pantry is eleventh, according to Convenience Store News. The Pantry declined to comment, and Couche-Tard did not respond to a request for comment.

Head-to-head competition between major brands is increasing around the country as convenience stores seek growth, said Linda Lisanti, editor-in-chief of Convenience Store News. Total industry sales eclipsed $700 billion in 2013, about the same as the previous year, according to the publication.

In Charlotte, QuikTrip is facing brands such as 7-Eleven and Kangaroo Express that have been taking their own steps to innovate and improve their offerings, she said.

“QuikTrip is a formidable competitor,” Lisanti said. “It’s one of the chains with a cult following. It will be interesting to see how things shake out.”

In ramping up their food offerings, convenience stores are trying to lure health-conscious, on-the-go consumers, while also eyeing new revenue sources beyond declining cigarette sales, said Andrew Alvarez, an analyst with market research firm IBISWorld in New York.

“Operators are looking at a wider variety of food options to be a more profitable and sustainable source of demand,” Alvarez said. “It’s expected that’s going to increase offerings going forward.”

Touch-screen menus

QT, founded in 1958, got its start as a small grocery store before adding gasoline in the 1970s.

This year, the company was No. 27 in Forbes magazine’s annual private company rankings, with $11.5 billion in revenue, and it’s become a regular on Fortune magazine’s annual Best Companies to Work For list.

About 10 years ago, the company decided to make a push into fresh food, Thornbrugh said. Its latest “Generation 3” stores have a kitchen where customers can order everything from soft pretzels to flatbread sandwiches. Customers use touch screens to put in their orders, similar to Sheetz convenience stores, which stretch from Pennsylvania to just north of Charlotte.

The QT stores have also gotten bigger, with new locations now reaching about 5,700 square feet. The average size of a 7-Eleven ranges between 2,500 to 4,000 square feet, according to CSP Magazine, which covers the convenience and petroleum retailing industry.

Another QT trademark is low gas prices, which is especially noticeable across the border in South Carolina.

“QuikTrip has been known through our history for being a high-volume, low-margin operator,” Thornbrugh says. “That’s on all products.”

Like all of QT’s Carolinas locations, the store near Carowinds, off U.S. Highway 21, is a Generation 3 model.

The manager, Mary Beth Biga, moved with QuikTrip from Iowa, as the company shifted experienced employees to expanding markets. Thornbrugh says moving veteran workers to new locations allows the company to install its culture and promote hundreds of employees.

‘They get you in and out’

On a recent afternoon, a steady stream of customers pulled up for gas at one of the store’s 18 fueling stations and browsed the widely spaced aisles inside.

Little, the FedEx driver, said he used to frequent other convenience stores but now makes a point of stopping by QT.

“The food is good,” he said. “They get you in and out. You don’t stand in line.”

Csiszer, the US Airways technician, has made QT trips part of his daily routine. He takes advantage of the iced tea refills – 64 ounces for 86 cents – and has also been impressed by the food selection.

“If you can’t find something you like,” he said, “something is wrong.”