How Casey’s has reined in its operating expenses

Dive Brief:

Casey’s General Stores expects its total operating expenses to grow at a pace that is significantly lower than recent years, reflecting the company’s continuing focus on controlling costs, CEO Darren Rebelez said Wednesday during the convenience retailer’s fourth-quarter earnings call.
The retailer expects operating costs to increase between 5% and 7% in fiscal 2024, according to its recent earnings report. Over the past two years, Casey’s actual quarterly operating cost growth has dropped from 24% in fiscal Q1 2022 to 6.5% in fiscal Q4 2023.
Casey’s slowdown in operating costs has come from the retailer’s “organization-wide commitment” over the past year to lower its total expenses, which includes a variety of measures being taken across different areas of the company, Rebelez noted during the call.

Dive Insight:

As operating costs continue to grow around the c-store industry, keeping expenses in check will be the number one priority for retailers in 2023, NACS said earlier this year. Direct store operating expenses per c-store per month grew 15% between January and October of last year compared to the same timeframe during 2021, marking the third straight year of double-digit direct store operating expense growth.

Based on its recent earnings report, Casey’s “continuous improvement team” has implemented a variety of methods to lower these numbers, including reducing same-store labor hours — which fell by 3.3% this past quarter — and cutting overtime and training hours, Rebelez said. Specifically, Casey’s dropped each of these by 20% during the past quarter, he noted.

Rebelez referred to these as “unproductive hours.”

“We expect to continue to work that turnover down, and as a result of that, we'll lower some of those training costs and overtime hours as well,” Rebelez said.

Rebelez also noted that Casey’s general and administrative expenses have remained flat throughout the year, which is “a big step in the right direction.”

“We still have our continuous improvement team in place, and we're going to continue to pursue finding more opportunities to operate our stores more efficiently,” he said.

Inside the store, Casey’s same-store sales gained about 6.5% during the quarter, while total inside gross profit increased 8.9% year over year to $445.5 million.

Casey’s operates more than 2,400 c-stores in 16 states and is the third-largest c-store chain in the U.S. by store count.