RaceTrac recently announced its acquisition of Potbelly Sandwich Shop for approximately $566 million, a strategic move that potentially fills an urgent need for the Atlanta-based convenience retailer to strengthen its competitive position. While it’s not unexpected to see the lines between quick-service restaurants and convenience stores continue to blur, it’s rare for a convenience retailer to buy a restaurant brand outright. Let’s take a closer look at why this acquisition makes sense for RaceTrac, and why we’re likely to see similar M&A activity continue in this space. 

Seeking Convenience and Value 

The Potbelly acquisition is simply the latest in strategic consolidation for convenience retailers. Brands like RaceTrac are continually seeking scale and operational efficiencies amid economic inflation and shifting consumer preferences.  

Convenience store foodservice has undergone significant growth over the last 20 years. Last year, foodservice sales made up over 27% of in-store sales and roughly 38% of in-store grow margin dollars. Consumers are not only seeking convenience but also value.  

With nearly a quarter of c-store guests now purchasing meals in stores, we’re beginning to see c-stores as a legitimate competitor to quick-service restaurants. Given these trends, it’s very likely we’ll see others follow suit for a variety of strategic reasons. 

Strategic Rationale 

Incorporating competitive foodservice offerings in a c-store’s portfolio makes good strategic sense for several reasons. 

• Competitive Pressures: In the case of RaceTrac, they have long offered basic foodservice options but lacked a standout brand. Compared to Wawa’s hoagies or Sheetz’s made-to-order meals, RaceTrac needed an established, well-respected brand to elevate its broader transformation. 

• Transforming the Destination: RaceTrac, like other c-stores, wants consumers to view them as more than just gas stations. We’re seeing traditional c-stores transforming themselves into places to gather. In Asian markets like Taiwan, we have seen c-stores become a central part of daily routines, almost to the point of becoming extensions of home. As traditional quick-service restaurants go the opposite direction by doubling down on drive-thru, Potbelly’s reputation for having an inviting neighborhood feel supports RaceTrac’s desire to evolve into a place to hang out.  

• Mutual Benefits for Growth: Potbelly has long been seeking to expand its footprint beyond 445 locations, with a target of eventually reaching 2,000 shops. RaceTrac and Potbelly both share core competencies as multi-unit, multi-market, consumer- facing businesses, but Potbelly is sure to amplify RaceTrac’s real estate, franchising, operations, food innovation and marketing capabilities. By combining Potbelly’s established franchise model with RaceTrac’s expansive retail footprint, both entities are expected to unlock new opportunities for profitability. 

• Diversification of Offerings: It’s no secret that acquisitions like these are meant to elevate a retailer’s total offerings to consumers. In this case, RaceTrac can diversify beyond fuel and snacks into fast-casual dining. Though the two entities will operate independently for now, it will be interesting to watch over time the extent to which we see the Potbelly brand incorporated into RaceTrac’s locations nationwide. 

What does this mean moving forward? 

As the convenience retail landscape continues to evolve, RaceTrac’s acquisition of Potbelly signals a bold step toward redefining what a convenience store can be. This move not only strengthens RaceTrac’s competitive positioning but also sets a precedent for how c-stores might leverage established foodservice brands to meet changing consumer expectations.  

As more retailers seek to diversify offerings and create destination experiences, we can expect to see similar mergers reshape the boundaries between fuel, food, and community. The RaceTrac-Potbelly deal may just be the beginning of a new era in convenience-driven dining. 

Reach out to us to chat more and visit our C-store industry page.