Why Is Circle K So Expensive? (10 Reasons)
Circle K is a gas station and convenience store chain beloved by many for its welcoming environment and convenient locations.
Whether stopping in to refill the game day cooler with ice and snacks or making a pit stop for gas and a road trip snack, Circle K has everything you need for a successful day with family or friends.
However, as inflation has caused prices to drastically increase, many are left wondering why Circle K’s prices are as high as they are.
Why Is Circle K So Expensive? (10 Reasons)
Many factors contribute to the rising costs of gas, food, and other goods at your local Circle K store.
These range from the higher quality of gasoline provided, rebranding efforts, the convenience factor, state regulations for liquor, high demand and low inventory, and more.
The rising prices cannot just be blamed on one sole contributor.
Rather, it is the accumulation of factors that work together and cause an increase or prices among their gas, food, drinks, and other goods.
1. Quality Gas
Circle K wants to be the best option for its customers.
In order to do this, the company strives to obtain and provide the best quality of gas possible.
Circle K’s gasoline is a high-grade fuel that is sourced responsibly from refineries and has added cleaning detergents for engine health.
These cleaning detergents allow the vehicle to have fewer emissions that are harmful to the environment.
This is part of Circle K’s sustainability efforts, which have become an integral part of the company’s business.
Higher quality gasoline also means that the engine can operate at its best, and ideally, it will require less maintenance and prevent future problems.
Circle K reports that they ensure that their gasoline meets the standards that are set in place by the Environmental Protection Agency (EPA).
The Environmental Protection Agency’s standards for gasoline were put in place to encourage companies to target environmental effects and aim to reduce smog and other toxic emissions that are common with fuel burn-off in vehicles.
Circle K is so confident in the quality of their gasoline that they guarantee that they will reimburse their customers for any repairs or additional costs that occur as a result of a problem that was caused by their fuel.
Their customer service line, found at the link above, will help with the documentation of the problem or repair required.
After the documentation has been reviewed and approved, the customer will receive the reimbursement.
The documentation must be submitted within two days of the issue occurring.
Unlike some gas stations known for their cheaper and therefore lower-quality options, Circle K’s gasoline is a reliable option that the company states customers do not need to have concerns about.
2. Their European Miles Fuel Products Have Undergone Specific Testing
It is one thing for a company to state that they provide their customers with the highest quality gasoline and another thing to actually do so.
Circle K’s European miles fuel products, which include both diesel and unleaded fuel options, have been tested by Bosmol 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 methods to appropriately test fuel.
Circle K’s miles fuel products are in addition to the other gasoline options they have at their locations.
The miles products have undergone testing on a variety of car and engine types to ensure that the fuel products meet their standards and are trustworthy for their customers.
It is important to note that the age and condition of the vehicle’s engine, as well as the driving style of the operator, can play a part in the effectiveness of the fuel.
The miles diesel and unleaded fuels reduce fuel consumption from 3% to 3.3%.
It cleans and protects the engine, works to enhance engine efficiency, and reduces harmful emissions released into the air.
3. Rebranding Efforts And Remodeling Throughout The Chain
The company has made efforts to rebrand their stores and improve their image to appeal to more customers and increase business.
Rebranding has included the remodeling of hundreds of stores, which, as one can imagine, is an expensive endeavor.
Specifically in the European Circle K locations, they have redesigned the entire layout of their stores, parking lots, and fuel stations to make car flow more seamless and convenient for customers.
This remodeling has included wider aisles, on-brand decor, and lighting to provide a more welcoming experience that invites their customers to return.
The finances necessary to support this rebranding and remodeling may play a role in the company increasing the prices put on products.
This rebranding is part of Couche-Tard, Inc., the parent company of Circle K’s consolidation of Circle K, Statoil, Mac’s, and Kangaroo Express retail brands into one global Circle K brand.
Under the Couche-Tard umbrella are the brands Couche Tard, Circle K, and Ingo.
4. Convenient Food-To-Go Options
Like many convenience stores and gas stations, Circle K offers convenient food-to-go options that include pre-prepared sandwiches and other snacks for customers to grab during their gas station stops.
These pre-prepared food options are typically more expensive than other packaged and processed snacks.
This is because of the time and effort required for staff members to prepare these items ahead of time, as well as the use of kitchen supplies like ovens and refrigerators if preparing hot foods for customers.
When a customer visits a convenience store, they are paying for the convenience of having food, drinks, snacks, and gas all in one easy location.
Similar to many other companies, such as those that offer subscription services, the customer pays more for the convenience of what that company or brand offers.
For example, clothing subscription boxes or food delivery subscriptions like DashPass are convenient for those unable to get out of the house, but they come at a higher price.
These companies profit from this service.
Circle K, while not a subscription service, still profits from the convenience that they offer.
The efforts to rebrand and improve their customer’s experiences are part of their mission, which is “to make our customers’ lives a little easier every day.”
5. Convenience Store Vs. Grocery Store
According to PriceListo, an online destination for consumers to compare prices of local services, the average item price at Circle K’s stores is $5.74.
While $5 may seem like a small price to pay one or two times, if you are part of a family or group that is purchasing multiple items at one time, that $5 can very quickly increase to $40 for just a few small snacks.
To compare to Walmart, a common retailer used to purchase groceries, a 12-pack of 12-oz. cans of Diet Coke sells for $6.98 at Walmart while the same product at Circle K averages $7.39.
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 usually staple items that are packaged and prepared for their customers on the go.
These foods are pre-packaged with only one or two per package, designed for a single use rather than feeding for multiple 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 or likely the funds available 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.
Therefore, the higher upfront costs charged to the stores are reflected in the price of its goods.
6. Their Convenience Stores Are Open For Longer Periods Of Time
The majority of Circle K convenience stores are open 24 hours, which is another convenience factor that plays into the prices that the company sets on their goods.
This is because many factors must be taken into consideration, as well as funds that are required to successfully operate a convenience store that never closes.
These stores must have the income and funds to pay for important elements such as:
- Increased staff, continuously throughout the 24-hour shifts
- Electricity and energy bills for lighting, heating, refrigeration, etc.
- Internet connectivity to operate cash registers and credit card machines
- Security camera systems
Additionally, the wear and tear on large machines that never truly “shut off” is going to be greater, and therefore, more expensive to repair or replace as it becomes necessary.
These 24-hour convenience stores must purchase higher quality machinery to sustain the wear and tear expected.
This includes dishwashers, ovens, coffee and smoothie machines, and heaters or refrigerators for pre-packaged sandwiches.
7. Liquor Licenses And State Regulations
Circle K is known for their wide selection of domestic, imported, and craft beers.
They also maintain and operate a “Beer KAVE” at some stores.
If a convenience store sells liquor of any kind, they must follow the necessary steps to acquire a liquor license and maintain good standing within state regulations.
In some states, it is more expensive to purchase beer and liquor than in others.
Additionally, stores must pay for differences in taxes and insurance.
According to the Minnesota Legislature’s Office of the Legislative Auditor, off-sale beer prices are 5–7% higher in the state of Minnesota than they are in Wisconsin because there are fewer restrictions in Wisconsin.
Varying levels of regulations affect the prices that convenience stores must pay initially to stock their stores, which, in turn, affects how much those convenience stores charge their customers.
8. Slower Turnover Of Merchandise
Convenience stores like Circle K tend to have a slower turnover of merchandise than larger grocery stores.
This is because it is typical for customers to purchase just a few items, as compared to a grocery store where it is common for customers to purchase multiples of the same food or household items that will last for many days at a time.
Another reason for the slower turnover is that customers entering a Circle K location are commonly looking to complete their business relatively quickly.
Customers do not spend their time leisurely touring the building and looking at all of the options and products.
Instead, customers usually enter with an idea already in their minds of what they want to purchase, such as coffee or pretzels.
They do not detour to other parts of the store unless necessary.
In this way, the convenience factor of these convenience stores like Circle K is a disadvantage.
Circle K puts their “flashier” snacks and items towards their checkout lines in the hopes that it will catch their customers’ eyes and encourage an impulse purchase.
In order to make up for the slower turnover of merchandise, fixed costs that have already been paid by convenience stores are spread out over a smaller number of transactions.
9. Transportation Costs And Supply Chain Issues
Transportation costs, particularly in the trucking industry, have risen as a result of staffing shortages and increase in gas prices.
Circle K is continuously trying to bridge this gap in workers by hiring Tanker/Hazmat Company Drivers for their local and regional routes.
Additionally, many items ordered by Circle K require refrigeration throughout the transportation journey.
This technology to refrigerate these large semis is expensive to purchase and maintain.
In general, the maintenance required to care for and sustain these vehicles is costly to the transportation company and is reflected in the cost that is charged to convenience stores.
Additionally, supply chain issues across the globe have caused common items to become difficult to find and even more difficult to keep in stock within their stores.
These food items come at a higher initial cost to Circle K to purchase and have shipped to their stores across the country.
Trucks must follow local guidelines for weight and amounts that they can transport at a single time.
The food items and other products that they do have in stock are in high demand, and the prices they are set at reflect the demand and low inventory.
10. On-Demand Delivery
Over the last several years, Circle K has been expanding their delivery capabilities to serve those customers who are not able to get to travel to their convenience stores in person.
Circle K alongside their on-demand delivery company Favor, has enlarged their delivery network within the state of Texas to almost 600 of their locations.
Favor allows the company to deliver from the store to the customer’s door in less than an hour, and items for delivery can include beer and snack foods.
In Texas, Circle K had completed a soft rollout of their delivery service with Favor in the Greater Houston area and, after its success, decided to expand as far across the state as possible.
To order with Favor, customers must download the app to their smartphones and create an account to access their selection of restaurants, convenience stores, and other companies they work with to deliver throughout Texas.
Other delivery companies that have established partnerships with Circle K include Uber Eats, DoorDash, Food Rocket, and Grubhub.
Each delivery service has its own subscription and fees that get applied to each order.
These fees can add up quickly to a customer’s order, and sometimes the fees may be more than what the food items originally cost.