RaceTrac’s $566M Bet: Acquiring Potbelly to Ride the C-Store Foodservice Wave

The acquisition of Potbelly by RaceTrac is a strategically significant move on multiple fronts. At its core, RaceTrac is pushing deeper into foodservice—not merely by enhancing existing convenience store offerings—but by owning an established, fast-casual restaurant brand. This represents one of the rare instances of a c-store operator acquiring a restaurant concept outright. Such vertical integration reflects confidence in the profit potential of prepared food, a category that now generates over a third of gross margins in‐store for convenience chains.

RaceTrac’s stated goals—to grow Potbelly from ~445 shops to 2,000—imply aggressive franchise development, real estate expansion, and capital deployment. Given that only ≈ 105 locations are currently franchised, scaling via franchise partnerships will be crucial. Success will depend on product consistency, maintaining brand identity, and ensuring adequate service levels, particularly given Potbelly’s emphasis on its “neighborhood” experience.

The macro environment supports this change: according to the National Association of Convenience Stores, foodservice in U.S. convenience stores drove strong growth in 2024, accounting for 27.7–28% of in-store sales and 38-39% of gross margin dollars. Prepared food is the dominant segment within foodservice and has steadily grown share over recent years. These trends suggest both consumer demand and margin opportunity align with RaceTrac’s strategic acquisition.

However, there are key risks and open questions. First, whether Potbelly’s fast-casual experience can be maintained under a convenience retailer: menu complexity, customer expectations, and service models differ input-intensively from typical c-store operations. Second, real estate strategy: will Potbelly stores be co-located with RaceTrac/RaceWay/Gulf stores, or expanded independently? Third, competitive response: as c-stores increasingly compete with QSRs, expect both price and innovation pressure. Finally, potential regulatory, labor, supply chain, and margin pressures may challenge scaling ambitions.

In conclusion, this transaction signals that the convergence between fast food/fast casual and convenience-store foodservice is accelerating. For incumbents in both arenas—from McDonald’s and Subway to Sheetz and Wawa—this changes the competitive landscape. Investors should watch for capabilities in food preparation, supply chain, franchising, and omnichannel delivery as key differentiators.