C-Stores Set for Big Consolidation

There’s been a battle in the convenience store space in the U.S. Canada’s Alimentation Couche-Tard, owner of Circle K convenience stores. The parent has said it wants to acquire all remaining shares of Seven & i Holdings, which runs 7-Eleven internationally.

Seven & i has approximately 85,000 stores including 7-Eleven stores and Speedway gas stations in the U.S. in 19 countries and regions reaching about 59.9 million people daily, according to company filings. Couche-Tard claims a total network of 16,740 locations.

That’s brought up regulator scrutiny. Such an acquisition would result in an excess of 100,000 stores — quite a number for regulators to consider. The U.S. portion would account for approximately 20% of the convenience stores in the country. Regulators in Japan are also likely to skeptically eye the combination.

Whether or not the deal ultimately goes through, something in the industry is likely to give, suggests the Wall Street Journal. Unlike many industries here, convenience stores are unusually fragmentary. The 10 largest chains of convenience stores in the U.S. collectively have only a fifth of the total stores. Even if Alimentation Couche-Tard and Seven& I Holdings combined, that would include only about 12% of all convenience stores.

For years, there’s been a concentration. In 2017, 63.2% of all convenience stores were owned by single-store operators, a record high as large oil companies sold off their retail operations. That has declined to 60.2% in 2024.

It will likely continue to shrink because companies like to grow for many reasons: economies of scale, reproducible business models, franchise capabilities, larger and more profitable business relationships, better choices of opportunities, a combination of national strategy with local execution, and growth targets that investors pay close attention to. The assumption is that with bulk comes competitive strength, and often that is at least partly true.

There are two directions companies can take in terms of growth: acquiring smaller or larger companies. The reason Alimentation Couche-Tard has wanted Seven & I was the chance to add size at such a sudden rate that other competitors couldn’t keep up.

Should that deal fall through, and it might very well, both of the companies won’t sit still, as the Journal notes. Couche-Tard wants to increase its EBITDA by more than 70% through 2028. Seven & i wants to grow revenue 70% by 2030. Neither of these goals is likely to happen through organic growth only. They will require acquisitions.

There are only six other convenience store chains with at least 1,000 stores and “these aren’t the types that will accept lowball offers,” the Journal said. It’s likely to be an expensive experience.