COVER STORY

THE DISAPPEARING Several midsize chains are gobbled up by this year's Top 20 Growth Chains MIDDLE A News Staff Report , , ROADRUNNER MARKETS, PDQ FOOD STORES, JET- PEP, HONEY FARMS, FLYERS ENERGY, MAD MAX, PIC QUIK, JIFFY STOP, SAV-O-MAT, WES-T-GO. These are just some of the midsize con• venience store chains that were sold and acquired in the past year, gobbled up by the 2018 Convenience Store News Top 20 Growth Chains. Led by Alimentation Couche-Tard Inc. — which alone grew its U.S. store count by 23.4 percent between January 2017 and January 2018 by adding 1,253 net new stores — this year's top growth chains combined added 2,573 stores, equating to an 11.5-percent increase. What's more, they added nearly 1,200 more stores year over year than 2017's top growers. The 2017 Top 20 Growth Chains added 1,396 stores combined, equating to a 5.9-percent increase. "Consolidate, then fragment. Consolidate, then fragment again. It seems like it's been going on for many years," Jeff Miller, president of Norfolk, Va.-based Miller Oil Co., said in reference to the past 40 years of mergers, acquisitions and breakups in the convenience store industry. Lately, interest rates for buyers have been so low and EBITDA multiples (earnings before interest, taxes, depreciation and amortization) for sellers have been so high that a midsize retailer who's even thinking of selling, or has no family succession plan, is greatly tempted to sell, according to Miller, who himself is a mid• size retailer, operating 20 c-stores in . "One thing that's changed from the past is that technology has advanced to the point where an acquirer can scale up pretty efficiently. In the past, it was much more difficult to absorb large groups of stores because of all the infrastructure changes they'd have to make," he added. With many midsize convenience store chains being private, family-owned and operated businesses, Dennis Ruben, exec• utive managing director of NRC Realty & Capital Advisors LLC, also sees succession planning, or rather lack thereof, contributing to the disappearing middle. "We've seen a lot of instances with these companies where the guy who started

MAR 2018 Convenience Store News 41 COVER STORY

and is running the business wants to retire and there's nobody to run it. So, a lot of times, [these businesses] Andeavor a 3,000-station are selling just because they have no one to take them TOP 20 company and on the con• over," Ruben explained. venience store side, gave GROWTH it locations in , He also believes midsize retailers are selling — or, In other , , New cases, buying other midsize retailers — because of the CHAINS Mexico, and Wis• Increasing difficulty of competing in a marketplace with a lot consin, operating primarily of bigger players. Going up against the Circle Ks and NO. 1 ALIMENTATION under the Giant, Howdy's 7-Elevens of the industry is especially challenging on account COUCHE-TARD INC. and SuperAmerica brands. of their greater buying power and lower overhead costs. Tempe, Ariz. (U.S. headquarters) Before the summer was 2018 Store Count: 6,597 over, Andeavor also pur• "I think a lot of them have figured out that they need to 2017 Store Count: 5,344 chased and added the 39 grow or they need to get out," Ruben said of those conve• Increase: 1,253 (23.4%) c-stores and gas stations nience channel players currently sandwiched in the middle. of Auburn, Calif.-based Fly• About the company's ers Energy to its portfolio. To stay competitive, smaller operators must Invest in growth: Alimentation larger-format stores, but may be limited by property size, Couche-Tard had a big financial constraints, overall scale, and continuous com• year in 2017, adding more NO. 3 petitive pressure, noted Mark Radosevich, president of than 1,200 stores through GPM INVESTMENTS LLC PetroActive Real Estate Services LLC. three key acquisitions. Richmond, Va. In June, the retailer 2018 Store Count: 933 "The overall timing Is right for a strategic exit, and many completed a $4.4-billion 2017 Store Count: 849 have finally realized that there Is life after the c-store purchase deal for CST Increase: 84 (9.9%) business," Radosevich said. "Purchase multiples continue Brands Inc., the San Anto• to hold at historic levels. The large guys have an insatia• nio-based parent company About the company's ble desire to grow and can finance said growth through of Corner Store. Couche- growth: GPM Investments sale-leaseback and debt financing. New international Tard closed out the year has been on a shopping players continue to enter and explore the viability of the by tying up its purchase spree for several years, U.S. c-store business." of Holiday Stationstores, and 2017 was no differ• a chain of 522 Midwest ent. In the spring, the Other factors contributing to the exodus of the middle convenience stores. Both retailer began operating men, according to John Schaninger, marketing guru and transactions required 92 Roadrunner Markets owner of The Schaninger Group LLC, are: some divestures as part of in , South their regulatory approv• Carolina, Virginia and • Channel-blurring, with convenience products now avail• als. In between, Tennessee. GPM acquired able in many outlets; Stores Inc., a subsidiary of these stores from Johnson Couche-Tard, acquired 18 City, Tenn.-based Moun• • Escalating wage costs; retail sites, a fuel terminal tain Empire Oil Co. The and associated trucking company then grew in • Uncertainty around the fuel needs of the future; and equipment from Alabama- with the addition based Jet-Pep for an of seven stores from Jiffy • A decline in fuel and c-store trips being caused by remote undisclosed amount. Stop Food Mart, based in working, online ordering and delivery services. Lake of the Ozarks. Look• ing ahead, GPM is already Given the staying power of these factors, and the continuing NO. 2 ANDEAVOR CORP. poised to appear on next desire among convenience channel growers to expand their year's Top 20 Growth brands and efficiencies, Schaninger — a former top market• 2018 Store Count: 815 Chains ranking as the com• ing executive for New Jersey-based QuickChek Corp. — 2017 Store Count: 277 pany is in the process of expects the trend of small and midsize chains being acquired Increase: acquiring 273 stores from to continue for the foreseeable future. 538 (194.2%) Texarkana, Texas-based About the company's E-Z Mart Stores Inc. This In fact, the acquisition of midsize chains is so appealing to growth: Formerly known move will expand its foot• the market right now that some smaller retailers are grow• as Tesoro Corp., Andeavor print into the Southwest. ing just to become a midsize chain and go up for sale. saw most of its growth in the past year come from "I am presently representing a private equity group that is a June 1 acquisition of El NO. 4 KWIKTRIP INC. consolidating small chains of stores, from five to 50 stores Paso, Texas-based West• La Crosse, Wis. in size, in hopes of getting to the 200-plus-store size. When ern Refining Inc. — last 2018 Store Count: 607 I asked them why they wanted to be a 200-store chain, year's No. 1 growth chain. 2017 Store Count: 525 they said it makes them an easier acquisition target by a The $4.1-billion deal made Increase: 82 (15.6%) larger chain," Terry Monroe, a professional mergers and

42 Convenience Store News CSNEWS.com COVER STORY

acquisitions expert in the convenience store and petro• leum properties industry, shared with CSNews. About the company's the-year acquisition of growth: A mix of acquisi• assets from Holly Pond, Meanwhile, on the buyers' side, In addition to low inter• tions and organic growth Ala.-based Jet-Pep for est rates and low cost of capital, the timing is right to landed at No. 4 $72 million, plus working acquire midsize retailers because of the economies of on this year's ranking. In capital and closing costs. scale gained In both store operations and the purchasing early October, the retailer The purchase consisted of of fuel; the trend in the market to diversify income given took ownership of the 101 commission-operated changes in the fuels landscape; and the fact that It takes PDQ Food Stores chain in retail sites. CrossAmerica almost the same amount of work to buy a large package Middleton, Wis., with 34 Partners' general partner, of stores as it does a small package of stores, explained c-stores across the state. In CrossAmerica GP LLC, John C. Flippen Jr., a managing director of Petroleum addition, new stores under is indirectly owned and Capital & Real Estate LLC (PetroCapRE). construction in 2017 totaled controlled by Alimentation 56, including 36 in its home Couche-Tard Inc. What's a Midsize Retailer to Do? state. Kwik Trip is now Although the past year saw the disappearance of multiple undertaking a $300-million midsize chains in the convenience store industry, many capital investment project NO. 7 YESWAY remain. This beckons the question: What's a midsize to meet the needs of the Des Moines, retailer to do? growing company. 2018 Store Count: 77 2017 Store Count: 31 Step one is to have a professional assessment (network Increase: 46 (148.4%) rationalization process) done on the chain and each site NO. 5 CASEY'S GENERAL within the chain, Including facility, financial, operational STORES INC. About the company's and competitive considerations, says Radosevich of Ankeny, Iowa growth: Yesway is PetroActive Real Estate Services. This should result In a 2018 Store Count: 2,020 appearing for the first strategic plan that illustrates various actions, such as a 2017 Store Count: 1,947 time on the Top 20 sale, investment or divestment. Increase: 73 (3.7%) Growth Chains ranking. The operating banner of "You need to know where you are (current state) before you About the company's BW Gas & Convenience know where you are going (desired state), and most small to growth: Casey's opened took several steps in the midsize operators don't really have a clue," he stated. its second distribution past 12 months to boost center, in Indiana, in 2016 its footprint, including the PetroCapRE's Flippen agrees that operators need to take with a goal to expand its acquisitions of - stock of their current situation. He suggests they consider reach into new markets based KAPS LLC, a five- the following questions: Who are my current competitors? and accommodate fur• store chain; 35 Wes-T-Go Do I have a strategic advantage? How can I increase ther growth. The retailer and Chillerz Convenience that advantage? What is my long-term strategy for the made progress on that Stores in Texas; five Pic business? How do I Increase my competitive advantage goal throughout 2017. Quik stores in Kansas; through growth? The publicly traded com• and the New Deal Travel pany had 47 new stores, Center in Texas. BW "If your competitive advantage is eroding away, then you 27 replacement stores has publicly stated its should look to sell," said Flippen. and 16 major remodels plans to acquire, improve under construction as of and rebrand approxi• Monroe advises those without any succession plan to sell September, and cele• mately 500 convenience for the retirement cash, but he thinks those that do have brated the milestone of stores in selected regions its 2,000th store opening of the U.S. over the next in November. several years.

NO. 6 CROSSAMERICA NO. 8 STINKER STORES PARTNERS LP Boise, Allentown, Pa. 2018 Store Count: 106 2018 Store Count: 133 2017 Store Count: 64 2017 Store Count: 76 Increase: 42 (65.6%) Increase: 57 (75%) About the company's About the company's growth: Stinker Stores growth: CrossAmerica kicked off 2017 with the made its way Into this purchase of Bradley Petro• year's Top 20 Growth leum Inc. and Sav-O-Mat Chains with a late-ln- Inc. in February. This deal

44 Convenience Store News CSNEWS.com COVER STORY

a solid succession plan and an ability to keep the business growing should do so. And for those in the latter camp, he gave the retailer 40 conve• line of advanced Synergy has two key pieces of advice. nience stores in Colorado gasoline and diesel fuels. and one location in Wyo• The corporation intends to "They should constantly be culling through their list of ming. Founded in 1936 open more than 50 stores and selling or leasing the weak stores that do not with one service station in stations in Mexico during have a lot of upside to them, and taking the money and Twin Falls, Idaho, Stinker the first quarter of 2018. Investing It In making their good stores great," he said as Stores today employs his first recommendation. "Don't hang onto stores that are more than 500 people and underperforming, but Instead build on the good stores." its holdings include a mix NO. 11 INC. of convenience stores and Media, Pa. His second recommendation: Keep growing by building or truck stops, mainly in Its 2018 Store Count: 791 acquiring additional stores. home state. 2017 Store Count: 753 Increase: 38 (5%) "The convenience store business is a great business and is going to be around for a long time. And If you have a good NO. 9 LP About the company's location, you are going to have a profitable business for a growth: Wawa jumped long time, but you have to grow," he said. "Too many times, 2018 Store Count: 2,285 seven spots in this year's I see the family getting bigger and more people trying to 2017 Store Count: 2,244 ranking. The retailer's port• live out of a certain number of stores without building or Increase: 41 (1.8%) folio increase was driven by acquiring additional stores. The cash flow starts to get tight organic growth, particularly and before long, they have themselves in a jam." About the company's the opening of its first growth: After completing stores in northeast Florida. $335 million in merger and Wawa expects to open six "You have to have zero acquisition activity in 2016, northeast Florida stores which added 38 company- in 2018 and three to five tolerance for inefficiencies operated locations and annually for the following more than 300 million several years, eventually and high costs or you won't gallons of fuel annually, reaching 25. This past make it. You really have to be Sunoco had a mixed 2017. year also saw Wawa enter The partnership worked , D.C., with its a great operator." on a project to rebuild and first store in the nation's outfit locations along the capital opening in mid- -Jeff Miller, Miller Oil Co. Indiana Toll Road, expand• December. The D.C. store is ing its network of locations the chain's largest to date Van Tarver, president of the Van Tarver Group and chairman westward. But, also during at 9,200 square feet. of GreenPrlnt Corp., advises midsize operators — and really the year, Sunoco struck a c-store operators of all sizes — to take a hard look at what deal with 7-Eleven Inc. to their goals are; what do they want to accomplish? Then, sell more than 1,000 of its NO. 12 REID PETROLEUM secondly, he says they should ask: What Is the value to me of c-stores for $3.3 billion, Lockport, N.Y. selling? What Is the value to me of acquiring stores? marking the start of its exit 2018 Store Count: 87 from the retail scene. 2017 Store Count: 50 The Industry as a whole also needs to address the problem Increase: 37 (74%) of "secondary locations," Tarver said, which he describes as small properties that don't have the space available to make NO. 10 About the company's the improvements necessary to succeed in today's conve• MOBIL CORP. growth: After years in the nience retailing industry, where competition Is getting better Irving, Texas fuels business, Reid Petro• and the consumer Is getting more and expecting more. 2018 Store Count: 3,404 leum entered the conve• 2017 Store Count: 3,365 nience store arena in 2002 "There's secondary locations in the big companies, midsize Increase: 39 (1.2%) and has since steadily grown companies, and small companies," the former CEO of The its footprint in southwest Co.'s c-store division said. "You have to ask: Am About the company's New York and northwest going to relocate, reposition or dispose of these sites?" growth: In addition to inch• Pennsylvania under the ing its store count higher Crosby's retail banner. The After addressing secondary locations, Tarver said another in the last company expanded further crucial piece of the puzzle is to make sure your business year, Exxon Mobil set forth in 2017 with the acquisition model Is keeping pace with today's customers, and change plans to move south of the of Arrow Mart stores and It If It doesn't. "Build around product, programs and Infra• border into Mexico's fuels Yellow Goose Markets from structure based on customer data," he stated. market with the opening of MWS Enterprises Inc. These eight Mobil-branded sta• new additions are located in He foresees the following business model changes increasing tions and a new signature New York. In the industry: home delivery, click-and-collect, scan-bag-go

46 Convenience Store News CSNEWS.com COVER STORY

programs, meal kits, and services like lockers. NO. 13 NO. 15 MURPHY USA INC. "Be very disciplined about your Investment of capital. LP/ El Dorado, Ark. Invest In programs that deliver the best returns. Don't get ALLIANCE ENERGY LLC 2018 Store Count: 290 emotionally attached to programs that are not perform• Waltham, Mass. 2017 Store Count: 255 ing," Tarver stressed. "You need to be where the customer 2018 Store Count: 241 Increase: 35 (13.7%) Is going, and they're changing faster than ever. ... And 2017 Store Count: 205 remember, some midsize chains have the best programs in Increase: 36 (17.6%) About the company's this industry." growth: Murphy USA About the company's prefers to take the organic Midsize operators will continue to survive as long as they growth: Global Partners path to growth. In 2017, remember to take care of their customers, develop a and Alliance Energy have the company was not only personal relationship with them, and become a key part been strategically growing occupied with opening new of the local community, according to Miller. They can also over the past two years, Murphy Express conve• continue to grow if they are very strategic. "It's hard to shedding non-core assets nience stores, but also compete with the huge consolidators with what they are while expanding in key razing and rebuilding exist• willing to pay, but you can go where they ain't," he said. geographies. Its boost in ing locations to fit its new 2017 came largely from business model. The retailer The Future C-store Landscape an October acquisition of has been proceeding with Most of the industry insiders CSNews spoke to for this Honey Farms for approx• its Independent Growth article believe the convenience channel will see continuing imately $36 million. The Plan since early 2016 consolidation in the years ahead, with more midsize retail• deal comprised 11 com• when it was announced ers disappearing from the landscape and possibly some of pany-operated retail sites that Murphy USA would the larger chains merging. with fuel and convenience no longer purchase land stores, and 22 standalone from , but instead Monroe points to demographics. "There are 77 million baby c-stores. The combined source new sites from boomers In the U.S. and they are getting older and tired. A portfolio of Global Part• third parties to build new lot of them do not have a succession plan for someone in ners and Alliance Energy Murphy Express stores. their family to take the business over, so they are wanting includes company-oper• to sell their business and use the proceeds from the sale to ated, dealer-leased and retire on," he said as to why he sees the midsize consolida• commissioned-agent sites. NO. 16 ENMARKET tion trend continuing. STATIONS INC. Savannah, Ga. As long as the acquirers keep getting the returns on their NO. 14 LOVE'S TRAVEL 2018 Store Count: 96 invested capital, consolidation will continue, Tarver agrees. STOPS & COUNTRY 2017 Store Count: 62 "Given the strong performance of our industry year after STORES INC. Increase: 34 (54.8%) year, it sets the table for people to say either we need to be City in this or we need to be further in this," he said. 2018 Store Count: 452 About the company's 2017 Store Count: 416 growth: Enmarket took Tarver also wonders If the oil companies are poised to Increase: 36 (8.7%) ownership of 35 Clyde's make a return to company-operated stores. He cites Market convenience stores Andeavor Corp. (formerly Tesoro), this year's No. 2 top About the company's in southeast at the growth chain behind Couche-Tard, which recently got back growth: Love's said 2017 end of 2017. With the close into company ops through acquisitions. In the past year, was going to be a busy of this acquisition, the Andeavor increased Its store count by a whopping 194 year and it was true to chain's footprint jumped percent, adding 538 net new stores. its word. The company to just four stores shy of opened 36 new loca• 100 locations across Geor• "I'm wondering if some of the major oil companies are tions — all ground-up gia, North Carolina and standing back right now and saying, 'Gee, did we make a new builds — including . Formerly mistake?" Tarver said. "They have tons of cash." eight in the month of known as Enmark, the December alone. The company opened its first NRC's Ruben not only expects to see more buying and expansion brought Love's two stores branded as selling of c-stores in the months and years to come, but he into for the first enmarket in 2015 and also expects to see companies rethink some of the acquisi• time, marking its 41st state has been continuing the tions they've already made. of operation. With these rebranding process since. new locations, Love's also "I've been getting some phone calls from people wanting to added approximately basically optimize their portfolio by selling stores that either 2,600 new truck parking NO. 17 MARATHON aren't profitable or aren't In good locations, or maybe are spaces and 190 more PETROLEUM CORP. duplicative of a store across the street," he said. "...I think showers to the nation's Findlay, you're going to see people try to shed stores that don't interstates and highways. 2018 Store Count: 4,401 make sense over the next couple of years."

48 Convenience Store News CSNEWS.com COVER STORY

Radosevich agrees. He, too, expects many sites to come back on the market "as some store aggregators choke on 2017 Store Count: 4,369 San Antonio and Austin subpar sites (within packages) that can't [generate] cash Increase: 32 (0.7%) regions this summer. flow enough to support rents or mortgage payments. This will be exacerbated when/If large unbranded operators About the company's arrive to eat their lunch, or if retailers like national dollar growth: Marathon Petro• NO. 19 INC. store chains embrace fuel, thereby putting Innumerable leum operates stores Altoona, Pa. (currently viable) rural sites In jeopardy." under several names, 2018 Store Count: 565 including Marathon and 2017 Store Count: 544 With interest rates already creeping up, Miller thinks the Rich Oil, but its most Increase: 21 (3.9%) industry will eventually settle down to another "calm" notable retail network period for mergers and acquisitions. He also points out, is Enon, Ohio-based About the company's "Eventually, the consolldators will realize they have to Speedway LLC. The growth: Sheetz marched actually operate these stores they are buying." company had explored along an organic growth selling Speedway in 2017, path in 2017, opening 21 The convenience store industry Is very strong. It's also very but ultimately decided to stores across its six-state competitive, and there's little room for just average operators, keep the retail midstream footprint. That number Miller added. "You have to have zero tolerance for inefflcien- segment as a focus. This included its sixth location year, Marathon expects in State College, Pa., close to invest $530 million in to its Altoona headquar• MAKINGS OF A NO. 1 Speedway, a $150-mil- ters. Also in its home state llon increase from the of Pennsylvania, Sheetz memmTOP GROWTH CHAIN previous year's plan. spent 2017 adding beer This investment boost is caves to several stores, Industry insiders say Alimentation reflective of Marathon's taking advantage of the Couche-Tard is just plain good renewed commitment to change in the state's Couche-Tard at acquisitions aggressively grow the liquor laws. Speedway business and build up an industry-lead• Alimentation Couche-Tard Inc. is no stranger to the ing position. NO. 20 MAVERIK INC. annual Convenience Store News Top 20 Growth Chains Salt Lake City ranking. In the seven years that this report has been 2018 Store Count: 312 published, the Circle K operator has earned a spot on the NO. 18 QUIKTRIP CORP. 2017 Store Count: 292 list six times — and each time, within the top six. Tulsa, Okla. Increase: 20 (6.8%) 2018 Store Count: 775 Couche-Tard is also no stranger to finding itself at No. 1 on 2017 Store Count: 745 About the company's the ranking, as it does again this year. The first time was in Increase: 29 (3.9%) growth: 2017 proved 2016, when it acquired Inc. and added 1,510 net to be a banner year for About the company's Maverik, which opened new stores, growing its U.S. footprint by 39.4 percent. This growth: QuikTrip con• its 300th convenience past year, it acquired CST Brands Inc. and added 1,253 net tinued its steady growth store. Located in Spo• new stores, growing its U.S. store count by 23.4 percent. in 2017, boosting its kane, Wash., the nearly footprint by 29 stores, 5,000-square-foot store The way mergers and acquisitions expert Terry Monroe up from 20 stores in the is one of the company's sees it, Couche-Tard will end up as the largest conve• year prior. One key area "adventure stores," nience store chain in the country before long. "They will of in-store growth for the a concept Maverik is eventually be the McDonald's of the convenience store chain is its QT Kitchens using for new builds. foodservice concept. Plans The retailer's current business because of their business model," he said of the are in the works for a new growth schedule calls for now roughly 6,600-store operator. "They will become the 250,000-square-foot opening 25 to 30 new national brand for convenience stores." manufacturing and dis• locations each year, and tribution facility in north to continue remodeling Monroe commends Laval, Quebec-based Couche-Tard for Tulsa to accommodate QT locations that still have being a good acquirer of stores, with a business model that Kitchens growth. QuikTrip its old store format. At makes things easy for the seller. will also expand this year its current growth rate, into more Texas markets, Maverik expects to reach "Let's say that Couche-Tard was buying a 500-store chain. with the first of roughly the 400-store mark in the next four to five years. Chances are about a third of the stores they are intending 100 stores opening in the to acquire do not fit the corporate business model, but they have a dealer program whereby the stores that may not fit the corporate business will fit the dealer model.

50 Convenience Store News CSNEWS.com cies and high costs or you won't make it. for some, Schaninger sees "tremendous" Methodology You really have to be a great operator." promise for the future, and said there The Convenience Store News Top 20 are four knowns to remember when it Growth Chains report is based on store He can also foresee the future of the comes to convenience: count figures provided by TDLinx, a c-store industry perhaps including service of Nielsen. This is the seventh a further bifurcation of the indus• • We deliver convenience better CSNews try's store formats between large, than anyone. year that has partnered with high-volume operators with 8,000- to TDLinx to identify the c-store retailers 10,000-square-foot stores and smaller, • We can't win on price or that added the most convenience more convenient neighborhood outlets promotions alone. stores in the past year. A convenience that are easier and quicker for consum• store is defined as a store that includes ers to get in, buy what they want, and • The key for product sales is to deliver a broad merchandising mix, extended get out. the ultimate value equation for your hours of operation and a minimum of target consumer. 500 SKUs. Fueling stations with small "Sometimes, smaller is better," kiosk stores do not meet the official Miller noted. • A strong strategy, process and exe• definition and thus are not reflected in cution to drive customer loyalty wins TDLinx's store count figures. While it is an increasingly difficult time every time, CSN

Therefore, Couche-Tard will keep next competitor, you can pay more For now, Mark Radosevich, pres• two-thirds of the stores as corporate than your competitor," he stated. ident of PetroActive Real Estate and company-owned stores and the Services LLC, says Couche-Tard rest will be sold or leased to dealers "One of the first things we typically is keeping the multiples high for who will carry the Circle K brand and advise our clients on when bidding quality, high-performing facilities. contribute to the profitability of the on a package of assets is that it However, he questions if all of parent company," Monroe explained. is not about the current business the assets Couche-Tard is buying "Everyone wins — the seller, the EBITDA, but the projected EBITDA can withstand the test of time. He buyer and the dealers." that your company can produce. If believes the likelihood is high that the acquiring company is able to cut the retailer will have to divest many Couche-Tard's size, access to capital overhead, increase inside sales/mar• underperforming sites. and adeptness at assimilating assets gins and increase fuel margins, they into the company make the retailer will produce a higher EBITDA," Flip- Aside from its booming store count a formidable consolidator and "just pen continued. "And if you combine and geographic reach, Couche- a very good operator," according to those advantages with both tradi• Tard's strength also lies in the pricing Dennis Ruben, executive managing tional and non-traditional financing, pressure at the pump it is able to director of NRC Realty & Capital that is how you win these bids." exert on competing retailers, and Advisors LLC. its investment in fresh, said David But what impact is Couche-Tard's Bishop, managing partner of sales "They're just very efficient in how continued growth having on the and marketing firm Balvor LLC. they operate their acquisitions. c-store industry at large? Part of what they're able to do is Couche-Tard's fuel rewards pro• eliminate of lot of their corporate Flippen believes the retailer is gram additionally offers consumers overhead because as they grow, motivating other players to speed significant savings in the price per their overhead per store keeps going up the industry's consolidation due gallon they pay, which in turn drives down. So then, they've been able to to concerns about "missing out," more customers onto its store lots. At pay more," he explained. "And the while Ruben foresees Couche-Tard's the same time, by investing in fresh larger the company, the more buying growth leading to fewer players with its new hot dispensed beverage power they're going to have with bidding and buying c-store compa• and bakery programs, Couche-Tard suppliers and other vendors." nies — and then falling prices. is improving in-store traffic and mar• gins, according to Bishop. Petroleum Capital & Real Estate "The more big players that they or LLC Managing Director John C. somebody else buys, the fewer bid• 'The combination of these two factors, Flippen Jr. similarly points to ders there are going to be for some along with the fact that they have a Couche-Tard's economies of scale of these deals, which probably means strong private label cigarette program, in both operations and cost of cap• it's going to maybe drive prices down makes [Couche-Tard] a formidable ital. "If you can save more than the a little bit," Ruben pointed out. competitor for most," he said.

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