Convenience Stores (Short Hostess Twinkies)

As the food space evolves considerably, there is an increasing chorus of concern for c-stores. According to Bloomberg, the $550b c-store industry saw its slowest growth in 2017 in four years. Now they are losing share to dollar stores and fast food outlets. Interestingly, "[c]onvenience stores with gas stations have enjoyed a major advantage in the past. While gas typically makes up 60% of sales, the items bought inside provide two-thirds of a c-store's profit...." So, what happens if consumers no longer stop at gas stations for gas? (Not where you thought we were going with this, was it?)

Last week, Yoshi, a San Francisco-based subscription-based provider of on-site car maintenance and gas delivery, raised $13.7mm in Series A funding from Y Combinator, Arab Angel, Kevin Durant, General Motors Ventures ($GM) and ExxonMobil ($XOM). The company makes money off of deliveries or, alternatively, monthly subscription fees (probably better for those who rip through gas) and other services. We'd bet there's margin on the gas, too, of course. The service is only available in select cities but with the new funding, it will seek to expand to other areas (good luck making this work in Manhattan). While this business is nowhere near scale, we can't help but to think about the convenience of such a service and how many people would probably opt to save themselves the time and worry of filling up if the price seemed trivial in relation to the convenience. The negative effect on concession sales - in that hypothetical - could be meaningful. Similar to Amazon Go cutting out impulse checkout buys, gas delivery would eliminate impulse purchases of Twinkies while you wait to fill up the tank. In other words, if this sort of business catches on, that aforementioned 2/3 profit could be very much at risk.