Dive Brief:
- Casey’s General Stores is boosting its three-year new store target from 350 to 500 sites, President and CEO Darren Rebelez said during the retailer’s fiscal-first-quarter earnings call on Thursday.
- Casey’s is currently on track to hit its initial goal “nearly 18 months early,” Rebelez said, partly thanks to its recently announced acquisition of Fikes Wholesale — parent of CEFCO Convenience Stores — that’s expected to close by the end of the year. That deal included 198 locations.
- Casey’s unveiled the 350-store goal and its three-year growth plan during its investor day in June 2023. At the time, Rebelez said the company was looking to buy small operators, but he noted on Thursday that the same macro environment that’s making small chains attractive also applied to CEFCO.
Dive Insight:
Rebelez said CEFCO’s owners were “in the business for a very long time, and they just decided it was time to monetize that business and to move on to other things.” The market remains ripe for family-owned businesses of all sizes to continue exiting the c-store industry, he added.
“They’re just really struggling to survive, and that creates a great opportunity, from an M&A perspective, for folks like us who have the capacity and the ability to acquire and integrate those businesses,” Rebelez said.
Casey’s expected store count growth for fiscal 2024 has also increased from 100 to 270. As it works to close the deal with CEFCO and integrate those stores, Casey’s will ease up on new builds, Rebelez said.
“The M&A team will continue their work on the small acquisitions that we always do,” said Rebelez.
CFO Steve Bramlage noted that once the CEFCO transaction is complete, Casey’s expects to spend about $145 million over the next few years adding or renovating foodservice prep areas in these stores. “The majority of them will end up with a Casey's kitchen in them.”
Casey’s is already well known for its pizza, but Rebelez noted that the hot sandwich lineup that debuted in March continues to see strong growth, with sales up 70% in the most recent quarter.
Prepared food and dispensed beverage margin in fiscal Q1 was 58.3%, up 10 basis points year over year.
Rebelez noted that in addition to the stores themselves, Casey’s was excited to acquire CEFCO’s fuel terminal and the experienced people working there.
“We're actually acquiring some expertise in this area and a different asset that we can leverage to our benefit,” Rebelez said. He added that Casey’s is working on a project it calls Fuel 3.0, in which it seeks to buy fuel further upstream.
Ankeny, Iowa-based Casey’s operates over 2,650 c-stores, mainly in the Midwest. Once the CEFCO deal closes, it will have nearly 2,900 locations.
