Wawa Food Market, better known simply as Wawa, is a popular convenience chain store that sells fresh, made-to-order foods and drinks. In particular, it specializes in built-to-order hoagies, freshly brewed coffee, hot breakfast sandwiches, specialty beverages, and other various soups and snacks.
Wawa began as an iron foundry in New Jersey in 1803. But in 1902 the firm transitioned to dairy production in the Wawa region of Pennsylvania, from which the company gets its name from. In 1964, the first Wawa food market opened. Since then, it has grown to over 950 stores across the United States. They are primarily located across the Mid-Atlantic seaboard in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and Washington DC. But recently the company has expanded into Florida.
Of these stores, over 750 also offer gasoline, allowing customers to fuel their vehicles while quickly purchasing fresh, custom-made food and drink. Nearly all of its stores are open 24 hours a day. This makes them a convenient option for a wide variety of customers. Additionally, these stores are famous for having ATM machines with no surcharge.
The U.S. Retail Products and Services industry is well-established and depends on a strong distribution channel for all types of retail companies. The market provides several different goods such as food, apparel, furniture, jewelry, as well as many others. The retailer’s subsector within the industry employs 1 out of 5 Americans. In addition, independent and privately held retail businesses account for 95% of the whole retail industry. The Retail industry directly employs 29 million people and supports over 42 million jobs. It accounts for 5.5% of gross domestic product (GDP) and generates around $5.3 trillion in sales.
For the businesses we have studied in the retail space, we have seen a range of investment amounts that can start at $8,800 and can go all the way up to $14,261,150. Based on the retail business you decide to choose, it can be a very large retail space in a high foot-traffic location or a small shop in a local neighborhood. Additionally, in our research, the average royalty fee was around 5.7%, and the average marketing fee is 2.5%.
Wawa has been privately held since it started all the way back in 1964. All Wawa stores have been company-owned since then.
Nevertheless, prospective franchisees who intend to explore franchising opportunities in the convenience store industry should assess comparable businesses, such as 7-Eleven which we are going to discuss below. This article will briefly explore some of the financial figures provided by Wawa. And estimate the expected franchise cost – if it were to be franchised – from comparable competitors in the convenience store industry.
Wawa reported $11 billion in annual revenue in 2020, up from $10 billion in 2018 and $9 billion in 2016. Evenly split, this would mean that each of its 950 stores recorded about $11.58 million in revenue.
A 2018 industry report found that the average convenience store in the United States made about $4 million in revenue per store. This means that the average store made significantly more in revenue than the average convenience store. Wawa’s increasing annual revenue. Its above-average per-store revenue indicate that it’s ability to sell goods has been spectacular in recent years.
There are multiple alternatives in the convenience store industry – 7-Eleven is the biggest of them. Let’s look at it first.
7-Eleven began its story in 1927 when Joe C. Thompson began selling milk, bread, and eggs across its stores. Until then they were only selling ice blocks. With the growing success of the store’s innovation, Joe Thompson was eventually able to buy Southland Ice Company. Then converted to Southland Corporation – a company focused on opening convenience stores across the state. By 1946, the new store model had increased dramatically across several locations.
This success led the stores to extend their opening hours from 7 am until 11 pm, seven days a week. Hence, the store’s name. Franchising began in 1964 after the Southland Corporation purchased an additional 126 Speedee Mart franchised convenience stores in California.
These are part of the 7-Eleven business model. Today, 7-Eleven currently has more than 9,000 stores across the United States. Also additional units across several continents such as Europe, Asia, and Oceania. 7-Eleven continues to this day, headquartered in Dallas, Texas. At the moment, its President and CEO, Joseph DePinto, who has been in this position since December 2005 runs it.
The estimated total investment necessary to begin (or take over) the operation of a 7-Eleven Franchise ranges from $53,600 to $1,163,000. The following costs are part of the upfront costs that the initial investment for a 7-Eleven include.
Based on the median sales estimated for 7-Eleven’s franchise locations, at an average of a 5% profit margin it will take around 9 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 5% profit margin which would elongate getting a return on your investment.
As an owner of multiple 7-Eleven franchises, you do have the ability to make a profit. Owners in the Retail Goods & Services Industry with over $5 million in sales have a median multiple of .38. So, if you had 5 7-Eleven franchises this would be $10,000,000 in sales. That would sell for $3,800,000. This is higher than the initial investment of around $3,041,500.
7-Eleven is a strong business in the USA with a strong financial presence. They do not disclose franchise-specific financials anymore, so we recommend talking to at least 3-5 &-Eleven store owners in your area to figure out the financials. We also recommend that because the viability of a 7-Eleven also varies from area to area. And median figures might not paint an accurate picture of your location.
Next, let us have a look at Speedway.
Speedway (SuperAmerica) is a gasoline and convenience store chain with locations primarily in the Midwest United States. They were founded in 1998. The company is headquartered in Enon, Ohio. Speedway is a subsidiary of Marathon Petroleum.
Speedway has over 2,700 stores across 21 states. It offers customers many services including fuel, car washes, ATMs, restrooms, and snacks. The company also sells merchandise such as T-shirts, hats, and other gear. Speedway’s gas prices are usually lower than the competition. The company offers many discounts and promotions that make it a popular choice for drivers looking to save money on gasoline. Speedway is a convenient option for drivers looking for gasoline, snacks, and other basic needs while on the road. The company’s wide array of locations makes it easy to find a Speedway near. Its competitive pricing also makes it a great choice for budget-minded drivers.
Last, let’s have a look at Circle K.
Circle K Stores, Inc. (stylized as Circle Ⓚ) is an international chain of convenience stores. It was founded in 1951 in El Paso, TX. The company filed for bankruptcy protection in 1990 and went through several owners, before Alimentation Couche-Tard of Canada acquired it in 2003. As of February 2020, Circle K has 9,799 stores in North America (primarily in the US and Canada), 2,697 stores in Europe, and an additional 2,380 stores operating under franchise agreements worldwide.
Within the United States, Circle K owns and operates stores in 47 states (the three states where there are no Circle Ks are Nebraska, Utah, and Wisconsin). The largest concentration of Circle K stores is found in Arizona, California, Colorado, Florida, Georgia, Illinois, Louisiana, North Carolina, Ohio, South Carolina, and Texas.
The total investment necessary to begin operations of a Circle K Business franchise is from $2,134,250 – $4,718,250 for a newly constructed Circle K Business. And $979,250 – $3,461,250 if you are converting an existing convenience store and a gas station to a Circle K Business, which estimates assume that you will choose to operate an optional car wash as part of the Franchised Business. The median Circle K net sales figure is $1,323,683 in 2021.
Wawa stores are not available for franchising. However, there are alternative convenience store franchises available to the public. You cannot open a Wawa franchise store but you might want to consider the alternatives we have listed above.
Wawa remains privately held and ownership does not plan on making the stores franchised anytime soon. The company recently disclosed some financial information regarding revenue. It shows that Wawa’s ability to sell goods in its stores is strong and has shown signs of growth in recent years.
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