Dive Brief:
- Despite experiencing scheduling setbacks with its new convenience store rollout last year, Murphy USA’s new-to-industry locations are heavily outperforming the company’s traditional sites, executives said during Murphy’s first-quarter earnings call on Thursday.
- Murphy added eight NTI stores to its network during the quarter, building off the 32 it added in 2024, according to its earnings report. These new locations, which are double the size of its traditional 1,400-square-foot sites, are outperforming Murphy’s older stores, with nearly 40% better merchandise margins and 20% more fuel gallons sold, CFO Gallagher Jeff said during the call.
- More of these new format stores are on the way, as Murphy had another 13 under construction at the end of the quarter, according to its earnings report. Although Murphy paused raze-and-rebuild construction toward the end of last year, it started remodeling another 17 of these stores during the period.
Dive Insight:
Not only are Murphy’s new c-stores performing better on a merchandise and fuel gallons level, but they’re contributing more to the company’s overall performance. These stores, Jeff said, produced an EBITDA that was 18% higher than the rest of Murphy’s stores on a per-store basis during the first quarter.
The strong results of these stores — whose larger footprint includes improved traffic flow, efficient queue areas and optimized food and beverage sales — is pushing Murphy to build more in the coming years.
“These new stores are driving value and winning new customers, which is why we're aggressively working on our new store pipeline to deliver more high-quality stores in 2025 and 2026,” Jeff said during the call.
But NTIs and remodeling programs don’t come without their challenges. Last year, Murphy underdelivered against its schedules for these sites, which hurt fuel and merchandise sales due to fewer store months in operation. During Thursday’s call, President and CEO Andrew Clyde also said that each new location takes about three years to “fully ramp up” to where its merchandise contribution exceeds operating costs.
“That creates kind of the headwind as we keep building more and more new stores,” he said. "We've monitored that closely every month, every quarter, by store, to make sure they’re ramping up appropriately."
Challenges aside, Clyde said that the increased room for products — especially beverages and center store items — compared to Murphy’s 1,400-square-foot kiosk stores has powered the strong performance at its new sites.
“We continue to see returns from those stores at levels that are very attractive, and we'll continue to invest in those,” Clyde said.
