Amid weak demand for retail space around downtown Chicago, a competitor in the convenience store market is preparing a challenge for long-established 7-Eleven locations.
Circle K, a brand best known for its combo stores and gas stations along U.S. highways, leases smaller-format outlets in and around the Loop. The company’s website lists 10 locations in the city center as “opening soon”.
The first, at 190 W. Madison St., is expected to open by the end of August, company spokesman Chris Barnes said, with more to follow in the coming weeks.
“We are developing the Circle K brand,” he said. “We are finding new ways to meet customers where they are.”
Barnes said the company’s city formats are about half the size of typical freeways and don’t have gas pumps or car washes. It’s similar to a format Circle K rolled out in Dublin, Ireland. Barnes said the company also has the format in Hong Kong, Montreal and Boston.
Chicago, he said, provided a “unique opportunity to secure space.” The company’s interest is good news for commercial building owners who have been stuck with a vacant street-level facade since the pandemic kept customers away. Even mainstays such as Starbucks have knocked down a few places.
With its promise of better-than-convenience coffee, Circle K could also undercut Starbucks’ business.
John Vance, director of brokerage firm Stone Real Estate, said Circle K “is making an educated bet that the loop will come back to some level”. His firm reported that at the end of 2021, the Loop’s business vacancy rate was more than 27%, the highest in memory. In West Loop and North Michigan Avenue, vacancy rates were somewhat lower but still historically high.
He said Circle K looked at the situation and decided, “That’s where we can pull off good real estate, mostly on the corners, and we’re going to come in strong to compete.”
Vance, who has not been involved in any Circle K leases, noted that two of his next locations, 190 W. Madison and 211 W. Adams St., were occupied by Pret a Manger. The chain of sandwich and take-out restaurants closed its downtown locations at the start of the pandemic.
“I believe the Loop retail market has bottomed out and is recovering,” Vance said.
He said Circle K has been bold while other businesses have held back, taking a wait-and-see stance as metrics for downtown activity show a slow upward trend.
In recent months, many workplaces have allowed hybrid schedules, allowing staff to work from home on certain days. But a broad return to office life still hasn’t happened.
This month’s data from security firm Kastle Systems shows that downtown Chicago offices are about 40% occupancy, a figure that has changed little since the spring. Downtown pedestrian numbers are steadily increasing, according to the Chicago Loop Alliance, but remain about 25% below pre-pandemic levels.
Additional Circle K locations are slated to open in or near the Loop, according to the company’s website: 2 N. Wabash Ave. ; 36 W. Ohio St.; 139 S. Clinton Street; 180 N. Wacker Dr.; 200 N. LaSalle Street; 676 N. LaSalle Street; 733 S. Dearborn Street; and 850 N. State St. Barnes declined to discuss those locations or their opening dates.
Its entry into the urban core pits it against the larger 7-Eleven chain, which has dominated the convenience store market here since it absorbed the White Hen Pantry chain in 2006. The 7-Eleven website lists nearly three dozen of locations downtown and on the Near North, West and South sides.
A representative did not respond to a request for comment.
Like 7-Eleven, Circle K also operates many locations with gas stations in suburban and city neighborhoods.
Barnes said Circle K has 7,000 locations in the United States and 14,000 worldwide. US sites include concentrations in the Midwest, South and Southwest.
Circle K and 7-Eleven are part of overseas-based retail conglomerates. Circle K is owned by Alimentation Couche-Tard, headquartered in Laval, Quebec, while 7-Eleven is part of Tokyo-based Seven & i Holdings Co.