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Wawa’s Florida Migration & Competition

Wawa Front

If you’re a resident of Central Florida, you probably can’t help but notice Wawa gas station/c-stores popping up everywhere. That’s because they are! If you’re a resident of South Florida, be on the lookout because the “goose” is migrating south.

Wawa’s first Florida location opened July 2012 near Sea World in Orlando. In just three years, Wawa has opened 66 gas station/c-stores tWawa Insidehroughout Florida with plans to continue growing.[1] Here’s a list of stores scheduled to open in the near term.

Wawa’s long-term plan includes opening 100 to 150 stores over a ten-year period in South Florida with building projected to start in 2016.[2] Palm Beach, Broward and Miami-Dade counties are east coast target markets, but the South Florida ramp-up already began with Wawa’s three-store opening in Ft. Myers earlier this year.

Wawa Openings

So what has made the Pennsylvania-based company so popular in Florida? Is it northeast transplants that recognize the brand or Wawa’s unparalleled fresh-food options? Possibly! But, what it seemingly comes down to is customers still want “convenience” that matters. Lets take a look at Wawa’s closest competitors in Florida, 7-Eleven and RaceTrac.

Unlike Wawa’s monster footprint, 7-Eleven has found success with a much smaller store. This arguably has much to do with it being the most recognizable c-store brand in the US with 7,800 stores. 7-Eleven’s brand expands internationally7 11 Front with 55,800 convenience stores in 16 countries.[3] Reportedly, 7-Eleven has opened 231 Florida stores in the past four years and 121 were in South Florida.2 Despite its dominant presence, 7-Eleven’s growth is outpacing Wawa—for now. South Florida is a good plug for 7-Eleven because of the scarcity of land and smaller store. Interestingly, even the powerhouse 7-Eleven expanded their prepared food selections. In recent years, US stores began including wings, chicken tenders, full pizzas and more. Was this a reaction to Wawa? Potentially, but food margins are strong and especially important with fuel margins compressing.

In the eaCompetition Matchrly to mid-2,000’s RaceTrac moved toward a larger store size, but the major shift in their model occurred in recent years. Was this a result of Wawa’s coming to market? From a timing perspective, it has traction. However, the c-store market is trending to bigger stores with bigger sites to increase in-store selections and encourage maneuverability at the dispenser.

Racetrac frontRaceTrac’s current model intends to expand their in-store selection, but it will not offer a “built-to-order” food station as Wawa does. Alternatively, RaceTrac’s focus for new stores is to provide features like self-serve frozen yogurt stations and sublease space to coffee providers, donut distributors, and the like. RaceTrac’s new store model is a formidable competitor for Wawa and their brand is established in the Florida region with more than 160 stores.[4]

These three operators are attacking the market through different methods, but the common denominator is a focus on a larger in-store selection inclusive of more prepared foods. The financial upside for prepared foods is obvious with profit margins ranging from 45% to 55% for c-stores. The profit gain in this category is especially beneficial to Orlando gas stations, which was identified by NACS as one of the top ten worst markets for fuel margins. Wawa and RaceTrac’s larger site sizes will decrease congestion at the dispenser and encourage more diesel sales (improvement in maneuverability for larger trucks). Diesel margins vary per market, but are often significantly higher than traditional gas margins. Additionally, these operators keep stores open 24-hours a day, seven days a week, to increase sales.

Racetrac inside

While there’s some overlap between the major operators, Wawa stands on its own in customer service. In my experience, 7-Eleven understaffs their stores and it contributes to longer checkout times during peak hours (morning rush to work, lunch, and evening rush from work). I’ve had similar experiences at RaceTrac, but at a lower frequency than 7-Eleven. This is notably different from Wawa, which offers multiple checkout stations for different buyers. For instance, the cigarettes and lottery are behind only one station, freeing up other stations for swifter checkout. Take note the next time you’re in a Wawa—is there a line to checkout?

While Wawa’s surge into the market is impressive and their will prototype building is new and different in Florida, it’s difficult to imagine Wawa derailing 7-Eleven or RaceTrac. In fact, 7-Eleven’s volume of stores should make it difficult to unseat them from the top spot. But, Wawa, 7-Eleven and RaceTrac are all contenders for the number one position in the brand race. Florida’s long-term growth—inherently driven by good weather, over 660 miles of beaches[5] and undeveloped land—should support expansion for all three operators. The key factor for growth will be convenience that matters—clean facilities, larger in-store selection, more fueling positions and site accessibility.

Feel free to email me at thomas@edgerealtyadvisors.com with comments or questions. Otherwise, check back soon for discussion on cap rate trends, site selection and the impact on local operators.

1) Park, Clayton, “Wawa to open first area store…”, Daytona Beach News-Journal, June 11, 2015
2) Valverde, Miriam, “Wawa plans South Florida expansion”, Sun Sentinel, January 23, 2011
3) http://corp.7-eleven.com/corp/about
4) Valverde, Miriam, “Wawa plans South Florida expansion”, Sun Sentinel, January 23, 2015
5) http://www.stateofflorida.com/facts.aspx