Tried and true: Convenience-gas operators turn to QSRs for turnkey foodservice solutions
C-store and fuel retailers are taking big swings in foodservice with the opening of quick-service restaurant franchises at their locations, with offerings that extend beyond coffee and donuts to burritos, pizza, fried chicken and more.
BarBurrito. Mucho Burrito. Little Caesars. KFC. All these QSR chains have recently opened in the channel for the first time. “C-stores can try and bring in unbranded or quasi-branded sandwiches and other food,” says Vince Sgabellone, a foodservice industry analyst at Circana. “However, a strong QSR brand brings instant credibility to a store’s foodservice and a whole new base of customer traffic. And the QSRs benefit from getting in front of c-store customers they otherwise wouldn’t.”
Petro-Canada and BarBurrito have entered into a franchise agreement on the launch of four pilot locations. Three of the locations are in Ontario—Nepean, Brampton and Mississauga—while the fourth is in Calgary. The Nepean location, at 3766 Fallowfield Road, opened in mid-November, followed by the Calgary site at 177 Country Hills Blvd NW on Nov. 26, and the Brampton site at 2985 Sandalwood Parkway on Nov. 29. The Mississauga location, at 3030 Artesian Drive, is set to open in January.
“BarBurrito always believed that our offering was well suited for the convenience/petroleum channel,” says Jeff Young, who joined the fast-growing QSR as chief development officer in September 2022 after having served as president of Yogen Fruz Canada. “Over many years, I have witnessed the success of the partnership between Esso and Tim Hortons, as well as Petro-Canada and A&W. As a result of this, in the first month of my joining BarBurrito, I reached out to Petro-Canada to start the conversation. The feedback was positive.”
Mexican food is a dynamic category and has become mainstream in North America. Young says it’s also well-suited to eating on the run. With customizable burritos, bowls and tacos, “we offer comfort food that travels well, and our hand-held items and bowls cater nicely with mobile consumers, so a convenience store/gas station is an ideal setting to serve these consumers,” he says. “Our program offered Petro-Canada the opportunity to partner with a highly successful franchise concept that would fit into a small space (200 to 300 square feet) at a modest investment level. Additionally, there is a lot of runway in both systems that allows for accelerated growth throughout the BarBurrito and Petro-Canada network.”
Petro-Canada’s footprint aligns with BarBurrito’s development focus on neighbourhoods in Toronto, Calgary, Edmonton, Vancouver, Montreal and Ottawa densely populated with families and people working from home. “In our business, delivery has become a significant part of our sales mix. The ability to offer third-party delivery from Petro-Canada locations was a perfect fit due to those six core markets,” explains Young.
The QSR has also adapted its menu to maximize sales in the channel. “Since the Petro-Canada facilities are open 24-hours a day, we launched a breakfast program specifically for Petro-Canada,” he says. The morning menu features a selection of premium quality breakfast burritos to satisfy commuters.
“I feel very strongly about the success of our partnership with Suncor–the Petro-Canada team is comprised of highly skilled professionals and has a network of accomplished retail associates who are highly committed to the program,” he adds. “Ultimately the success of the program will be the financial performance of the food and beverage program and the positive impact that it has on other areas of the host asset with c-store sales, fuel volumes and car wash revenues.”
A spokesperson for Petro-Canada told CSNC: "Together with BarBurrito, we’re excited to introduce a fresh and flavourful Fresh Mexican experience to our customers at four Petro-Canada locations. Our customers love the convenience and value that quick service restaurants like BarBurrito bring to their visit."
In addition to BarBurrito, Petro-Canada also recently teamed up with KFC Canada. The first Petro-Canada location with a KFC opened in Markham, Ont., at 9249 Ninth Lane, this summer. KFC Canada has said two more locations will open in Ontario soon.
Petro-Canada has deep experience in QSR space, partnering with A&W in 1997. Today there are more than 80 Petro-Canada locations featuring the burger chain and there are up to 100 more locations planned to include an A&W over the next few years.
A Waypoint convenience store at a Mobil fuel station located at 2330 Battleford Road in Mississauga, Ont., meanwhile, has opened a Little Caesars Express franchise. “We always had the intention of a QSR integration when we brought that site into our portfolio in 2022,” says Thea Bourne, partner marketing manager at BG Fuels, which operates 250 locations nationwide under the Mobil, Esso and Waypoint Convenience brands. “We landed on Little Caesars after conducting an analysis to figure out who would be the right partner and fit for the area.”
A stone’s throw from a high school and five minutes from an Amazon warehouse, it’s proving a hit with teenagers, families and adults alike.
“We’re seeing a different set of consumers coming in,” she says. “And with beverage alcohol having expanded in Ontario, a parent can enjoy getting an adult beverage with their pizza while kids can enjoy a Pepsi and a Kit Kat chocolate bar for dessert. Everything is all right there.”
The redemption rate of a Little Caesars coupon handed out at the grand opening event on Nov. 8, which included a free pizza for the first 100 guests, has doubled expectations. “And we still have two weeks left on the offer,” adds Bourne. While the intention is to introduce Little Caesars Express, which can operate in as little as as 450 sq. ft., into additional locations, she says “we’re going to give this some time and make sure it’s what our customers want. But we’re thrilled with how the community has received it.”
One of the pioneers in the franchising of QSRs into c-stores is MTY Food Group, which has a franchise program for c-stores with Country Style on self-serve units, as well as a “twin” program, a Country Style/Mr. Sub combination. “They share the same staff and counter, with Country Style, which is super strong in the morning, flipping to a Mr. Sub for the lunch and day part, and then returning to coffee in the evening,” says Karen Weldman, VP, new business development – express brands, MTY Food Group. “They work harmoniously together.”
A QSR franchise is an investment. Royalty fees with MTY Group-franchised QSRs range from 4.5% to 6.0% annually, while advertising fees range from 3.0% to 3.5%. Upfront costs include investments in equipment and POS systems.
“But I have locations in gas and convenience that outperform traditional Mr. Sub and Country Style locations,” says Weldman, who says the key is having “a dedicated manager. It will fail if you don’t have one, so we make sure that’s in the franchise agreement before moving forward.”
MTY Food Group has also seen interest in its other QSRs, most recently MUCHO Burrito, which will for the first time be going into a c-store, a Centex location in British Columbia (along with a Country Style) in December. “We’re going to see more and more QSRs going into c-store environments, as c-stores look to them for their main foodservice offering,” predicts Weldman. “And for the QSRs, this provides more points of distribution.”
