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ARKO Begins Construction on First Pilot Store

The retailer also converted 59 retail stores to dealer sites during the three months ended March 31 as part of its transformation plans.
Danielle Romano
Arko Corporation

RICHMOND, Va. — Even with the economic headwinds of 2025, ARKO Corp. is moving forward with the multiyear transformation plan it kicked off earlier last year.

The convenience store and fuel retailer converted 59 retail stores to dealer sites during the three months ended March 31. In April, the company converted 18 additional retail stores to dealer sites and plans to convert a meaningful number of additional stores throughout 2025. 

The company continues to expect that, at scale, this channel optimization will yield a cumulative annualized operating income benefit in excess of $20 million, Arie Kotler, chairman, president and CEO of ARKO, noted during the retailer's recent first quarter 2025 earnings call.

Turning to ARKO's remodel program, the chain started construction on the first of seven pilot stores at the beginning of May. The store, a Fas Mart in Richmond, will debut a new branded foodservice program called Fas Craves. The menu includes enhanced hot and cold grab-and-go foods, baked goods, pizza, roller grill dogs and other fresh-prepared items.

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The pilot stores are expected to be completed by the end of 2025. Construction on the second pilot location is anticipated to begin in mid-May. The remodels, according to Kotler, are estimated to cost anywhere between $700,000 and $1.1 million.

"The idea is really to take the initial learnings and then basically apply them across a full region," Kotler said. "Probably towards the end of 2025 we'll have better results. … And assuming we are happy with the results, we're probably going to see an uptick [in remodels] in 2026."

"This initiative is fundamental to our long-term retail transformation strategy and represents our commitment to organic growth and store level reinvestment," he added.

Additionally, ARKO expects to open four new-to-industry (NTI) sites in the second half of 2025. Three sites have started construction, with one store awaiting a final permit. 

ARKO estimates that the second quarter average retail store count will be approximately 1,300 sites. 

Q1 2025 By the Numbers

ARKO's merchandise contribution for the quarter was $117.6 million vs. $134.9 million for the year-ago period. More than half of the merchandise contribution decline for the quarter was associated with the company's accretive dealerization program. 

Other earnings news the Richmond-based company reported included:

  • Net loss was $12.7 million.
  • Adjusted EBITDA was $30.9 million.
  • Merchandise margin rate for the quarter increased to 33.2%.
  • Retail fuel margin for the quarter was 37.9 cents per gallon vs. 36.4 cents per gallon for the year-ago period.
  • Retail fuel contribution was $85.3 million vs. $92.9 million in Q1 2024. 

ARKO owns 100% of GPM Investments LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. It operates in four reportable segments: retail, which includes convenience stores selling merchandise and fuel products to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; fleet fueling, which includes the operation of proprietary and third-party cardlock locations, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites; and GPM Petroleum, which sells and supplies fuel to the company's retail and wholesale sites and charges a fixed fee, primarily to its fleet fueling sites.

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