How are 1st Tier Retailers Doing It? Becoming a Meal Destination
Top Tier retailers are distinguishing themselves from the other tiers as meal destinations, highlighting the growing importance of foodservice for the industry.
Lunch time penetration is where Top Tier retailers distinguish themselves the most, highlighting the particular importance of that meal occasion.
The 50% Rule for Convenience Stores as a Meal Destination
When crossing our RPI data with Placer.ai foot traffic data, a clear rule emerges: retailers who have over half of their customer base using them for an occasional meal destination are thriving when the industry as a whole is treading water or declining. The growth rates shown are the average growth rates among retailers within each meal penetration band.
Retailers in our dataset who have reached that 50% threshold are:
Most of these retailers are also in our Top Tier, and this subset of the Top Tier is growing faster than the Top Tier in general.
By the way, RaceTrac, in our RPI dataset, is in the 40% - 49% range. That Potbelly acquisition was bold, and it is looking like it's the exact right thing they needed to get their meal muscle across that magic 50% number.
Andrew Baill, Customer Strategy & Insights at Wawa, described the importance of becoming a meal destination, at the 2025 NACS State of the Industry Summit. “We’re in the immediate consumption business. The fact that almost 30% of our shoppers are willing to do the most inconvenient thing imaginable and go to a second place [QSR] after coming to our stores is unthinkable. That’s a huge opportunity for us,” said Baill. Put into context, this translates to $130 billion in lost sales for the convenience retail industry each year, according to NACS.
Converting Meal Customers requires Frictionless Transactions
What matters to customers who view c-stores as meal destinations? This answer may be somewhat different than what matters in driving results for c-store customers in general.
In our analysis, we ran two separate RPI models: one among c-store shoppers who use their c-store as a meal destination and one among c-store shoppers who don’t use their c-store as a meal destination.
Interesting differences emerged. Quality was even more significant in the non-meal customer model. Clean bathrooms, quality traditional products carry the day.
Frictionless Transactions are clearly more important for meal customers than non-meal customers. Frictionless Transactions is all about tailoring and making easier the process of combining the right products together in a basket and making it possible for people to order when the mood strikes, however they want. Quality + Frictionless Transactions is a critical one-two combo for c-stores aspiring to compete with QSRs.
Pillar Importance determined through regression analysis, where each retailers’ Pillar Scores* are input variables and the dependent metric is a composite of the four market results (outcomes) shown above. *Pillar Scores = Customer perceptions of different dimensions of the customer value proposition. Retailers receive a Pillar Score for each pillar, based mainly on the customer perceptions of different attributes that have moderate/high factor loadings in each Pillar.