Amid slow demand for retail space around downtown Chicago, a competitor in the convenience store market is plotting a challenge to long-established 7-Eleven locations.
Circle K, a brand best known for its combined stores and gas stations along America’s highways, is leasing smaller-format outlets in and around the Loop. The company website lists 10 sites in the downtown area as “opening soon.”
The first, at 190 W. Madison St., is expected to open by the end of August, said company spokesman Chris Barnes, and others will follow in coming weeks.
“We’re growing the Circle K brand,” he said. “We are finding new ways to meet customers where they are.”
Barnes said the company’s urban formats are about half the size of typical highway locations and don’t have gas pumps or car washes. It’s similar to a format Circle K has 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 some space.” The company’s interest is welcome news for landlords of commercial buildings who have been stuck with vacant street-level frontage since the pandemic kept customers away. Even stalwarts such as Starbucks culled a few locations.
With its promise of coffee that’s better than convenience store fare, Circle K also could cut into Starbucks’ business.
John Vance, principal at the brokerage Stone Real Estate, said Circle K is “making an educated bet that the Loop on some level will return.” His firm reported that at the end of 2021, the Loop’s retail vacancy rate was more than 27%, the highest in memory. In the 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: “Here’s where we can take down some good real estate, mostly on corners, and we’re going to come in strong to compete.”
Vance, who has not been involved in any Circle K leases, noted two of its upcoming locations, 190 W. Madison and 211 W. Adams St., had been occupied by Pret a Manger. The sandwich and grab-and-go restaurant chain closed its downtown locations early in the pandemic.
“I do believe the Loop retail market has hit bottom and is recovering,” Vance said.
He said Circle K has been bold while other businesses have held back, taking a wait-and-see stance while measurements of downtown activity show a slow uptrend.
In recent months, many workplaces have authorized hybrid schedules, allowing staff to work from home some days. But a broad return to office life still hasn’t happened.
Data this month from the security firm Kastle Systems show downtown Chicago offices are about 40% occupied, a figure little changed since spring. Pedestrian counts downtown are rising steadily, according to the Chicago Loop Alliance, but remain about 25% below pre-pandemic levels.
Other Circle K locations due to open in or near the Loop, according to the company’s website: 2 N. Wabash Ave.; 36 W. Ohio St.; 139 S. Clinton St.; 180 N. Wacker Dr.; 200 N. LaSalle St.; 676 N. LaSalle St.; 733 S. Dearborn St.; and 850 N. State St. Barnes declined to discuss those locations or their opening dates.
Its entry into the urban core puts it up against the bigger 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 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 numerous locations with gas stations in the suburbs and in city neighborhoods.
Barnes said Circle K has 7,000 locations in the United States and 14,000 around the world. The U.S. sites include concentrations in the Midwest, South and Southwest.
Circle K and 7-Eleven are part of foreign-based retail conglomerates. Circle K’s owner is Alimentation Couche-Tard, headquartered in Laval, Quebec, while 7-Eleven is part of Tokyo-based Seven & i Holdings Co.