Americans are increasingly choosing convenience stores for pizza, with Casey's emerging as a formidable competitor in the fast-food landscape. The Midwest-based chain, known for its gasoline and snacks, has quietly become the fifth-largest pizza operation in the United States, according to Bank of America Research. This growth places Casey's in direct competition with major pizza chains.
Tom Brennan, Casey's chief merchandising officer, confirmed the ranking and stated the company is actively gaining market share. Casey's operates nearly 3,000 stores across 19 states, with a significant presence in smaller towns. Approximately half of its stores are located in communities with fewer than 5,000 residents, and about two-thirds are in areas with fewer than 20,000 people. This geographic footprint often means Casey's is the only pizza option available within a competitive distance for many customers.
Casey's pizza is notably more affordable than its competitors, with a large pie costing around $13.99, compared to prices closer to $20 for similar offerings from Domino's, Papa Johns, and Pizza Hut, according to William Blair. This price advantage, coupled with growing popularity on social media platforms like TikTok and YouTube, has fueled a surge in sales. Prepared food and dispensed beverage same-store sales growth at Casey's has outpaced Domino's in 18 of the last 20 quarters, according to Wells Fargo data.
Introduced in 1984, Casey's pizza menu includes unique items such as taco pizza and breakfast pizza. The company prepares its dough from scratch and uses in-store pizza ovens, differentiating its product from the typical perception of convenience store food. Online creators have documented positive experiences with Casey's pizza, contributing to its growing appeal, particularly among Gen Z.
Casey's expansion comes as the broader U.S. quick-service pizza market faces challenges. The category saw a decline in 2023 after minimal growth in the preceding year. However, Casey's has carved out a distinct niche by integrating pizza offerings with the convenience of a gas station, allowing customers to refuel, shop for groceries, and purchase a freshly made pizza in a single stop.
Several factors contribute to Casey's competitive pricing and profitability. Its company-owned store model, as opposed to franchised locations, eliminates the need to pay franchise royalties or fees. Furthermore, the scale of its operations, with revenue streams from fuel, groceries, and tobacco, helps to distribute labor and fixed costs. This diversification, combined with improved fuel margins due to rising overall costs, allows Casey's to maintain competitive pizza prices.
Bank of America estimated that the prepared food and beverage category at Casey's achieved a 58% gross margin in fiscal year 2023, more than double the company's overall margin of approximately 23.5%. The company has substantial room for growth, especially in consolidating the fragmented convenience store market.
Texas has been identified as a key target for Casey's expansion, with its large population offering significant market potential. The company aims to establish a presence in smaller Texas communities before traditional pizza competitors. Casey's is also diversifying its prepared food offerings, with items like its Sauced Wings expanding across nearly 900 stores. While now the third-largest convenience store operator in the U.S., pizza remains central to Casey's growth strategy.