Why is Circle K so expensive? (10 quick reasons)
Why is Circle K so expensive?: Circle K is a popular gas station and convenience store chain known for its friendly atmosphere and convenient locations.
However, because inflation has caused prices to skyrocket, many people are left wondering why Circle K is so expensive.
Circle K gas prices fluctuate like any other retailer and are largely determined by market forces.
Rising prices cannot be blamed solely for the problem.
Many factors contribute to the rising prices of gas, food, and other goods at your neighborhood Circle K.
These include higher gasoline quality, rebranding efforts, the convenience factor, state liquor regulations, high demand and low inventory, and more.
Let’s explore the reasons why Circle K is so expensive in detail.
About Circle K
Circle K Stores, Inc. is an American convenience store chain headquartered in Tempe, Arizona. Couche-Tard is the multinational corporation that owns it. Founded in 1951 in El Paso, Texas, the company declared bankruptcy in 1990 and changed hands several times before being acquired by Alimentation Couche-Tard in 2003.
Circle K had 9,799 stores in North America, 2,697 stores in Europe, and an additional 2,380 stores operating under franchise agreements worldwide as of February 2020.
Circle K debuted a new logo and brand identity in 2015, and Couche-Tard announced that the brand would be deployed globally, including English-speaking Canada (rebranding from Mac’s brand), Europe (rebranding from the Statoil brand), and the United States (rebranding from the Kangaroo Express brand and updating the existing Circle K brand).
Why is Circle K so expensive?
A number of factors interfere to raise the prices of Circle K’s gas, food, beverages, and other goods.
These factors include:
1. Gas Quality
Why is Circle K so expensive? Gas quality. That’s the number one factor.
Circle K aspires to be the best possible option for its customers. Hence, the company strives to obtain and provide the highest quality gas possible.
As part of Circle K’s ongoing sustainability efforts, which have become an essential component of the company’s operations, the company maintains a top quality of fuel.
Circle K gasoline is a high-quality fuel that is responsibly sourced from refineries and contains cleaning detergents for engine health. These cleaning detergents allow the vehicle to emit fewer harmful emissions to the environment.
Higher quality gasoline also means that the engine can perform optimally, requiring less maintenance and preventing future problems.
According to Circle K, they ensure that their gasoline meets the Environmental Protection Agency’s standards (EPA).
The EPA established gasoline standards to encourage companies to target environmental effects and aim to reduce smog and other toxic emissions that are common with vehicle fuel burn-off.
Circle K is so confident in the quality of its gasoline that they promise to reimburse customers for any repairs or additional costs incurred as a result of a problem caused by its fuel.
Unlike some gas stations known for their less expensive and thus lower-quality options, Circle K’s gasoline is a dependable option.
2. Circle K’s European Miles Fuel Products Have Undergone Specific Testing
Why is Circle K so expensive? Second reason… Their European miles fuel products have undergone specific testing.
Bosmol tested Circle K’s European miles fuel products, which include both diesel and unleaded fuel options, to ensure they do not contain any additives that may lower the quality of the fuel.
Bosmol is an independent institute that specializes in researching and developing fuel testing methods.
Circle K’s miles fuel products complement the other gasoline options available at their locations.
Miles products have been tested on a variety of car and engine types to ensure that they meet their standards and are reliable for their customers.
It is important to note that the age and condition of the vehicle’s engine, as well as the operator’s driving style, can all have an impact on the fuel’s effectiveness.
The miles diesel and unleaded fuels reduce fuel consumption by 3% and 3.3%, respectively.
It cleans and protects the engine, improves engine efficiency, and reduces harmful emissions into the atmosphere.
3. Rebranding efforts and remodeling throughout the chain
Why is Circle K so expensive? Third reason…
To appeal to more customers and increase business, the company has made efforts to rebrand its stores and improve its image. Rebranding has necessitated the remodeling of hundreds of stores, which is an expensive endeavor.
They have redesigned the entire layout of their stores, parking lots, and fuel stations in European Circle K locations to make car flow more seamless and convenient for customers.
This renovation included wider aisles, on-brand decor, and lighting to create a more welcoming environment that encourages customers to return.
The funds required to support this rebranding and remodeling may result in the company raising product prices.
This rebranding is part of Couche-Tard, Inc.’s, Circle K’s parent company, consolidation of the retail brands’ Circle K, Statoil, Mac’s, and Kangaroo Express into one global Circle K brand.
4. Convenient Food-on-the-Go
The fourth reason why Circle K is so expensive: Convenient food on the go.
Circle K, like many convenience stores and gas stations, provides convenient food-to-go options such as pre-made sandwiches and other snacks for customers to grab during their gas station visits. These ready-to-eat foods are usually more expensive than other packaged and processed snacks.
This is due to the time and effort required for employees to prepare these items ahead of time. In addition, the high prices could be due to the use of kitchen supplies such as ovens and refrigerators when preparing hot foods for customers.
A customer visiting a convenience store is paying for the convenience of having food, drinks, snacks, and gas all in one convenient location.
The customer pays more for the convenience of what that company or brand offers, similar to how many other companies, such as those that offer subscription services, do.
While Circle K is not a subscription service, they do profit from the convenience that they provide.
The company’s efforts to rebrand and improve customer experiences are part of its mission to “make our customers’ lives a little easier every day.”
5. Convenience Store Vs. Grocery Store
Why is Circle K so expensive? Because Circle K is a convenience store and not a regular grocery store.
A significant reason for the higher cost of food and drink items is that Circle K operates as a convenience store, as opposed to a grocery store.
Convenience stores sell “convenient” food, which is typically packaged and prepared for customers on the go.
These foods are pre-packaged, with only one or two servings per package, and are intended for single use rather than feeding for several days.
Grocery stores sell fresh produce, like fruits, vegetables, and meat.
Convenience store prices also tend to be higher than grocers because they purchase smaller quantities of necessary inventory from wholesales which are usually priced higher per unit.
Many wholesalers offer discounts to customers and grocers who purchase in bulk. The more product quantity purchased, the cheaper the price per product.
However, convenience stores like Circle K do not have the storage space to purchase such a large amount of bulk. As well as these, convenience stores like Circle K are not meant to function at as large a scale capacity as grocery stores. Hence, the higher prices they charge.
6. Circle K’s convenience stores are open for longer periods of time
The majority of Circle K convenience stores are open 24 hours a day, which adds to the convenience factor that the company considers when setting their prices.
As a result, they pay more for essential elements such as:
- Increased staff continuously throughout the 24-hour shifts
- Electricity and energy bills for lighting, heating, cooling, and so on.
- Internet connectivity to operate cash registers and credit card machines
- CCTV surveillance systems
Furthermore, the wear and tear on large machines that never truly “shut off” will be greater and thus more expensive to repair or replace as needed. These 24-hour convenience stores must invest in higher-quality machinery to withstand the expected wear and tear.
Dishwashers, ovens, coffee and smoothie machines, and heaters or refrigerators for pre-packaged sandwiches are all examples.
7. Liquor licenses and state regulations
Circle K is well-known for its extensive selection of domestic, imported, and craft beers. They also maintain and operate a “Beer KAVE” in some of their locations.
If a convenience store sells any type of liquor, it must take the necessary steps to obtain a liquor license and remain in good standing with state regulations.
Beer and liquor are more expensive in some states than in others. And stores must also pay for differences in taxes and insurance.
According to the Minnesota Legislature’s Office of the Legislative Auditor, off-sale beer prices in Minnesota are 5-7% higher than in Wisconsin due to fewer restrictions in Wisconsin.
Various levels of regulation influence the prices that convenience stores must pay to stock their stores. This, in turn, influences the prices that those convenience stores charge their customers.
8. Slower turnover of merchandise
Why is Circle K so expensive? Because of slower turnover of merchandise.
Convenience stores, such as Circle K, have a slower merchandise turnover than larger grocery stores.
This is because customers typically purchase only a few items, as opposed to a grocery store, where customers typically purchase multiples of the same food or household items that will last for several days at a time.
Another reason for the slower turnover is that customers entering a Circle K location are frequently looking to complete their transactions as quickly as possible. Customers do not take their time touring the building and perusing all of the options and products. Customers usually come in with a preconceived notion of what they want to buy, such as coffee or pretzels. They do not go to other parts of the store unless absolutely necessary. As a result, the convenience factor of convenience stores such as Circle K is a disadvantage.
Circle K positions “flashier” snacks and items near checkout lines in the hopes of catching their customers’ attention and encouraging an impulse purchases.
Fixed costs already paid by convenience stores are spread out over a smaller number of transactions to compensate for slower merchandise turnover. This is yet another reason why Circle K is expensive.
9. Transportation costs and supply chain issues
Transportation costs have risen as a result of staffing shortages and rising gas prices, particularly in the trucking industry.
Circle K is constantly attempting to fill this labor shortage by hiring Tanker/Hazmat Company Drivers for their local and regional routes.
Furthermore, many of the items ordered by Circle K require refrigeration during the transportation journey.
This technology for refrigerating large semi-trucks is costly to purchase and maintain.
In general, the maintenance required to care for and sustain these vehicles is expensive for the transportation company, which is reflected in the price charged to convenience stores.
Furthermore, supply chain issues around the world have made common items difficult to find and even more difficult to keep in stock within their stores.
These food items are more expensive for Circle K to purchase and ship to their stores across the country.
Trucks must adhere to local weight and amount limits when transporting multiple loads at once.
The food and other products that they do have in stock are in high demand, and the prices reflect the high demand and low inventory.
10. On-demand delivery
Circle K has been expanding its delivery capabilities in recent years to serve customers who are unable to travel to their convenience stores in person.
Circle K, in collaboration with its on-demand delivery company Favor Delivery, has expanded its delivery network in Texas to nearly 600 locations.
Favor enables the company to deliver items such as beer and snack foods from the store to the customer’s door in less than an hour.
In Texas, Circle K had completed a soft rollout of their delivery service with Favor in the Greater Houston area and, following its success, decided to expand as far as possible across the state.
Customers must download the Favor app to their smartphones and create an account before they can access their selection of restaurants, convenience stores, and other companies that deliver throughout Texas.
Eats Uber, DoorDash, Food Rocket, and Grubhub are among the other delivery companies that have partnered with Circle K.
Each delivery service has its own subscription and fee structure, which is applied to each order.
These fees can quickly add up to a customer’s order, and in some cases, they may exceed the cost of the food items. This makes it seem that Circle K is so expensive.
Good news: Circle K offers one of the largest gas sales ever
Customers can receive a 40-cents-per-gallon discount on ‘fuel day.’
At more than 3,600 Circle K branded fuel locations across the United States in advance of the Labor Day holiday weekend, customers can fuel up for the unofficial last weekend of summer and receive the deal directly at the pump.
Conclusively, products are more expensive at convenience stores like Circle K because they can’t afford huge inventories and a very large selection of products.
So we can submit that the major reason why Circle K is so expensive is because of quality and convenience.
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