Brad Chivington is vice president of Center Independent Energy. He is an industry veteran with 30 years of experience serving in a variety of roles covering all aspects of the business, and has held senior leadership positions at GPM, Turkey Hill and High’s.
If you look at the history of convenience stores, from the early days of 7-Eleven up through the modern era, one of the key ways these retailers distinguished themselves from others was with longer hours of operation.
While other retailers closed early or didn’t open on Sundays, many c-stores came to operate 24 hours a day, seven days a week. This became the new definition of “convenient” for a changing country. As America progressed and highway systems crisscrossed the U.S., people needed the greater availability of goods and services that convenience stores could offer anytime. The consumer became used to having immediate access to the items they needed and wanted in-store and online.
When the COVID-19 pandemic hit, everything changed. While convenience stores were deemed essential businesses, many operators confronted a lack of motor vehicle traffic, soft customer counts, remote work policies and more that hurt their business and made it challenging to find employees. Many convenience operators had to adjust their hours of operation.
A lot of these problems have eased since those early days of the pandemic, but many c-store operators are still wondering about their operating hours. Does it still make sense to operate stores all day, every day?
Let’s dive in and weigh whether 24/7 is right for your business.
What are the common cases for 24-hour operations?
There are many valid reasons for convenience stores to operate 24 hours a day. Some of the most common I hear from operators include:
- I need to be open 24 hours in all my locations for consistency, so that customers know they can count on my stores any time.
- I use the overnight shift for restocking, cleaning and prepping the stores for the next day’s business.
- I have customers who work the third shift and count on me being open for them.
But not every convenience store operator sees these conditions or has customers with these same needs. Some towns and communities close down early and there isn’t enough traffic to justify staying open. Store locations can be spread out geographically, in which case it makes more sense to vary hours by location.
Many companies are also struggling to find quality employees who will work overnight shifts.
Assessing the business for overnight operations.
What are some of the business assessments convenience store operators can use to determine the financial implications of overnight business relative to their expenses?
First, I recommend you look at your customer count by hour. This is very helpful if you can break it down between fuel customers and store customers. In addition, look at the days of the week, as Friday will likely look very different from Monday.
Second, what are your sales in both merchandise and fuel by hour and in total for the overnight period? Consider what is being purchased, the basket size and the margin generated off the transactions.
Third, what are your labor costs to run an overnight shift? Are you running single coverage or double coverage for safety? Do you lock your doors and use a pass-through window? Is your kitchen open? Do you pay a shift premium for overnight workers? What are the expectations for this shift? Who supervises this shift and how do you communicate effectively with those overnight associates?
Fourth, what does your market look like? Who are your competitors and what do they offer compared to you’re offering? Do you have a primary competitor across the street with a bigger location, more fueling and food available 24 hours a day? Or is that competitor a smaller location with limited offer and no food available?
I suggest that at minimum, you look at all this data over a 6-week average, though thirteen weeks would be even better. You should also examine how seasonality plays into your business.
When you combine the above elements, it begins to draw a factual picture of your business and can help you determine what works best for you, your store(s) and your customers.
What other factors should be considered?
There are many questions that convenience store operators need to ask when weighing 24/7 operations, and there’s no one-size-fits-all answer.
Other factors to consider include:
- What are the community needs you are serving or not serving?
- Do I have a drive thru and how do I best utilize it?
- What does your brand and operation stand for or want to be known for and how would 24-hour operations play into that?
The convenience industry is well known for testing concepts and ideas to improve how we serve our customers and remain relevant. We are an industry with over 152,000 locations and we have many ways to make it work.
When it comes to hours of operation, and the question of if you should be a 24-hour operation, the answer is: It depends. It depends on what is right for you, your business and your customer.
