Alimentation Couche-Tard is adjusting what it sells and how it uses space inside its convenience stores as consumers become more selective about their spending, with growth increasingly coming from food, energy drinks and functional products while some traditional convenience categories soften.
The shift was outlined by Couche-Tard President and CEO Alex Miller during the company’s fiscal 2027 first-quarter earnings call Wednesday morning. Miller said elevated living costs and fuel prices continue to weigh on discretionary spending in some markets, while customers remain willing to spend when they see sufficient value.
Carbonated soft drinks, salty snacks and packaged sweets are among the categories performing below historical levels. At the same time, Couche-Tard is seeing stronger demand for energy drinks, enhanced hydration, protein beverages, prepared food and other products aligned with changing consumer preferences.
The company is responding by reallocating space, refining assortments and adjusting promotions around where demand is moving.
Canadian Sales Improved Through the Quarter
The changes are particularly relevant in Canada, where Couche-Tard operates its namesake banner alongside Circle K. Canadian same-store merchandise sales were flat during the first quarter, but Miller said the headline figure masked an improving trend.
Sales improved materially as the quarter progressed and turned positive in the final reporting period. Canadian fuel volumes also increased 1.1%, extending the country’s run of positive same-store fuel-volume growth to eight consecutive quarters.
Several merchandise categories are growing considerably faster than the overall Canadian business.
Energy drinks posted high-single-digit growth during the quarter. Miller said energy remains one of Couche-Tard’s strongest traffic-driving categories globally, alongside growing demand for protein beverages, enhanced hydration and other functional products.
Food is also becoming increasingly important. Canadian food sales grew 4.3% during the quarter, with sales and unit volumes improving year-over-year as Couche-Tard emphasized value offers, meal deals and efforts to convert more store visits into food purchases.
The performance helps explain why flat Canadian same-store merchandise sales do not indicate weakness across the entire store. Growth in food and beverages is being offset by pressure elsewhere, particularly in nicotine.
Miller said Canada’s illicit tobacco market and evolving regulatory environment continue to weigh on legal nicotine volumes. Couche-Tard has been using pricing, promotions and targeted offers to retain customers in the category, although the pressures remained broadly consistent with recent quarters.
Traditional Convenience Categories Face Pressure
The changing mix extends beyond Canada. Couche-Tard said some long-established convenience categories are attracting less spending as customers become more deliberate about what goes into their baskets.
Packaged carbonated soft drinks have softened, while centre-store categories including confectionery and salty snacks have also been under pressure. Miller told analysts that the company is responding by shifting assortment toward products such as protein and functional bars and adjusting shelf allocation as demand changes.
The shift is especially apparent in beverages. In the U.S., Miller said energy drinks are now twice the size of carbonated soft drinks within Couche-Tard’s business, with the energy category continuing to post double-digit growth. Protein beverages and enhanced hydration are also gaining.
Couche-Tard is adjusting cooler space and assortments to reflect those trends, while working with major suppliers to bring new products into stores. Miller said the company continues to outperform the broader energy category and sees further opportunity across energy and functional beverages.
GLP-1 Drugs Could Be Influencing Snack Purchases
One of the more notable comments during the earnings call concerned the potential impact of GLP-1 weight-loss medications on convenience-store purchasing.
Asked about weakness in confectionery and salty snacks, Miller said he believes GLP-1 drugs are having some impact on those categories. He stopped short of attributing the broader slowdown to the medications, acknowledging that it remains unclear how much of the change is temporary and how much could represent a longer-term shift in consumer behaviour.
The observation comes as food manufacturers and retailers pay closer attention to demand for protein, functional benefits and other products associated with changing eating habits. Recent consumer research has similarly pointed to GLP-1 users shifting toward nutrient-dense products containing protein, nuts and grains while reducing consumption of some sweet and fried products.
For Couche-Tard, the immediate response is primarily a merchandising one. The company is adjusting assortment and space as demand moves rather than assuming traditional category patterns will return.
Food Becomes a Larger Part of the Convenience Proposition
Food represents one of Couche-Tard’s largest opportunities to change the economics of its stores.
It now accounts for 13.2% of the company’s merchandise sales. Couche-Tard sold nearly 14 million meal-deal bundles during the first quarter, approximately 20% more than a year earlier, as customers responded to packages combining food, snacks and beverages at defined price points.
The strategy extends beyond competing on the lowest price. Miller said Couche-Tard is developing food offerings across value, middle and premium price points, giving customers opportunities to trade up while retaining the value proposition that has helped meal deals gain traction.
In the U.S., food sales increased 5.2% and hot food grew more than 11%. Canadian food sales rose 4.3%, while Europe recorded growth of 3.6%. Management’s longer-term objective is for food to grow at three to four times the rate of Couche-Tard’s core convenience-store business.
In Canada, that value strategy can already be seen through Circle K’s meal-deal platform, which offers several food-and-beverage combinations at defined price points.
Couche-Tard is also working with large consumer packaged goods companies on prepared-food collaborations. Its Flamin’ Hot Boneless Wings program with PepsiCo and Frito-Lay is now selling more than 40,000 units per week in the U.S., according to Miller, providing an example of how the retailer is using established consumer brands to expand its food offer.
Technology Will Help Shape Store Assortments
Couche-Tard is investing in technology intended to make assortment and inventory decisions more precise as the merchandise mix changes.
Its deployment of the RELEX forecasting, replenishment and space-planning platform is expanding from approximately 200 stores to more than 1,000 locations across North America. Couche-Tard said product availability on RELEX-managed items has improved by more than 5%, supported by stronger forecasting and replenishment.
Most U.S. business units are expected to deploy the technology during fiscal 2027, with Canada scheduled to follow in fiscal 2028. Management expects the system to improve product availability while reducing complexity and spoilage.
The investment also supports Couche-Tard’s efforts to adjust assortments more quickly. As demand shifts among beverages, snacks and prepared foods, forecasting and space-planning tools can help determine what products receive additional space and how inventory is distributed through the network.
New Stores Point to Couche-Tard’s Direction
Couche-Tard’s newer stores provide another indication of where the company wants its broader network to go.
Management said food sales at newer stores are running 120% above the network average, while merchandise sales and average basket size are each approximately 20% higher. Couche-Tard expects to open more than 100 stores during fiscal 2027 and remains committed to its longer-term target of 750 new locations by 2030.
Miller also told analysts that the company’s new-store program has generated average returns on capital in the high teens in recent years. Couche-Tard is increasing its pursuit of individual stores and small groups of locations as another route to expanding the network.
The performance of newer locations is notable as Couche-Tard pushes further into prepared food and other higher-growth merchandise categories. The results suggest that newer stores are increasingly being built around a broader range of customer visits than the traditional combination of fuel, cigarettes, packaged beverages and snacks.
A Changing Convenience Store Basket
Couche-Tard’s first-quarter results showed a Canadian merchandise business that was flat overall, but management’s earnings call provided a more detailed picture of what is happening inside its stores.
Food sales are growing, energy drinks remain strong and Canadian merchandise trends improved enough to turn positive late in the quarter. At the same time, nicotine faces regulatory and illicit-market pressure, while some traditional packaged snacks and beverages are losing momentum as purchasing habits evolve.
Couche-Tard is responding through changes to its shelves, coolers, prepared-food offer and technology investments. The emerging model places greater emphasis on food, energy, protein, hydration and value, providing an early indication of how one of the world’s largest convenience retailers expects the convenience-store basket to evolve.
