Drivers who recently refueled or grabbed a coffee at popular regional chains like E-Z Mart, Fas Mart, Village Pantry, or Scotchman might be surprised to learn that major structural changes are underway behind the counter.
As fuel prices remain much higher than many would like them to be, consumers around the country are tightening their wallets, directly impacting convenience store sales right at the register.
The National Association of Convenience Stores (NACS) documents that lower-income consumers are cutting back on quick stops, driving down in-store transaction volumes nationwide.
“Inside transactions were down 1.9% year over year for the first half of the year,” pointed out Chris Rapanick, managing director of NACS research, speaking of 2025.
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At the same time, pump prices have surged year-over-year, putting added pressure on both drivers and station operators. The national average for a gallon of regular gas sat at $4.01 as of August 11, 2026, up significantly from around $3.14 during the same period last year, according to AAA.
To navigate these headwinds, parent company ARKO Corp. has quietly surrendered corporate control of more than 471 store locations over the past two years, shifting away from direct retail management toward wholesale fuel supply.
ARKO, the powerhouse behind E-Z Mart, Fas Mart, Village Pantry exits 471 stores
ARKO Corp. recently reported its second-quarter earnings, disclosing revenue of $2.35 billion, up from $2.00 billion in the same period of 2025, driven by higher wholesale fuel supply volume and elevated fuel prices.
The company also reported that it converted 21 company-operated retail stores into dealer locations during the second quarter. This brought the company’s total count to 471 converted stores since launching its “dealerization” initiative in 2024.
Under this setup, ARKO hands over store operations, payroll, and inventory to independent dealers instead of running the physical storefronts itself. The company keeps collecting rent and acts as the wholesale fuel supplier, which cuts down expensive store-level costs like store labor and credit card swipe fees.
“Consumer demand softened during the second quarter as sustained higher fuel prices continued to pressure household budgets. Even so, our teams remained focused on the areas within our control, maintaining disciplined fuel and merchandise margins while continuing to deliver value for our customers. Importantly, our Wholesale and Fleet Fueling segments continued to perform well,” stated Arie Kotler, Chairman, President and Chief Executive Officer of ARKO.
Why has ARKO been converting its stores to dealerships?
Management explained in its SEC Form 10-Q filing that these locations generate better profits as wholesale dealer sites than as corporate-run retail stores.
“Conversions of certain retail stores benefit both our retail and wholesale segments, as these sites have yielded, and we expect will continue to yield, greater profitability once converted. In such cases, we realize higher profit from ongoing fuel supply agreements and rental income than from continued operation of these stores in our retail segment,” the company disclosed in the filing.
ARKO added that these conversions allow it to better prioritize investment across remaining retail stores.
In its annual report for 2025, the company highlighted that “This channel optimization strategy is delivering tangible benefits, including reduced operating costs, lower maintenance capital requirements, and improved cash flow. By focusing on core locations and leveraging our wholesale network, we are enhancing returns while creating a more efficient base of stores.”
ARKO isn’t alone in feeling this pressure.
Convenience store consolidation has intensified industry-wide as smaller and mid-size operators struggle to keep pace, according to Dennis Ruben, executive managing director at c-store advisory firm NRC Realty & Capital Advisors.
“Unless somebody’s got a company with a succession plan or a family member that wants to keep in the space… frankly, there’s a lot of incentives for somebody to sell right now,” Ruben told C-Store Dive.
ARKO says its strategy works, plans more store conversions as card fees surge
Among reasons why some operators are transferring store-level financial responsibility to independent dealers is the surge in transaction costs.
While direct store operating expenses, including wages and benefits, card fees, utilities, maintenance and merchandise, increased 4.2%, at the slowest rate since the pandemic, credit and debit card fees reached a record of $21.3 billion, according to NACS April report.
Subsequently, ARKO confirmed that the strategy is working, as second-quarter site operating expenses decreased by $16.6 million or 9.4% for the same quarter of 2025, driven by “$25.8 million of reduced expenses related to retail stores closed or converted to dealer locations.
The reduction in operating expenses was partially offset by “an increase in same-store operating expenses of $8.3 million, or 5.6%, primarily due to higher credit card fees associated with elevated fuel prices, insurance, personnel costs and rent.”
During the second-quarter earnings call, CEO Kotler noted that around 70 additional stores are set for conversion or already converted since the quarter ended.
“Each conversion moves us further towards a lower cost, more capital efficient operating model with stronger cash flow characteristics. While the pace of conversion moderated this quarter, our expectation for the program remained unchanged,” Kotler said.
What ARKO’s exit from 471 stores means for consumers
While ARKO says it is already seeing positive effects of this turnaround strategy, transforming company-operated convenience stores into dealerships has its challenges, and it might not be the right tactic for every company.
For example, retail giants like 7-Eleven and Alimentation Couche-Tard (parent of Circle K) operate using both models, while CrossAmerica Partners is converting dealer-operated locations over to company-operated sites.
Each strategy has its upsides and downsides, according to experts. C-store consultant Julie Jackson said converting a large volume of stores “could be a huge organizational realignment that has to happen.”
“This strategy also brings the risk of getting into business with a franchisee or dealer who mishandles operations or doesn’t comply with the agreement,” Jackson told C-Store Dive.
When a company transitions from company-operated locations to dealers, headquarters gives up direct control over store employees, branding execution, and proprietary product programs, which can directly affect consumers’ experience.
In addition to loyalty program changes and potential brand inconsistency, the dealers have the right to set their own final pump prices. This means that the company whose sign is on the canopy (e.g., Shell, BP, or E-Z Mart) is often not the entity setting the local fuel price; rather, it is the dealer.
“In contrast to corporate-owned stores, franchised stores typically carry shelf prices anywhere between 5% and 20% more expensive than their counterparts (Humphrey 2007). This is partially due to the inability of franchise stores to achieve economies of scale,” according to an exploratory study on the store image in a franchise setting.
Related: Another grocery chain quietly shuts down more stores