ARKO Drives Value in Foodservice, Fuel & OTP Categories
RICHMOND, Va. — As consumers continue to face persistent inflation and constrained spending, ARKO Corp. remains committed to delivering immediate value to shoppers through continued execution of the company's three key merchandise and marketing pillars.
These pillars, as previously defined by the company, are designed to enhance its relationship with customers by providing them with value through a strategic focus on loyalty, core destination categories and foodservice offerings.
"Over the course of 2024, we consistently observed a consumer who continues to struggle, as well as evolving customer preferences — including increasing demand for OTP [other tobacco products] and higher expectations for foodservice," Arie Kotler, chairman, president and CEO of ARKO, said during the company's fourth-quarter and full-year 2024 earnings call, held Feb. 27. "In response to what we are seeing, we have made and continue to make investments to meet our customers' needs."
Looking first at the tobacco category, ARKO launched a backbar refresh initiative, which has allowed the retailer to improve space allocation and expense project assortment to align with shifting consumer demand. By the end of the fourth quarter, the company completed more than 800 tobacco backbar refreshes and expects to refresh 100 more in the coming weeks.
"Our strategy around OTP during the fourth quarter led to a 200 basis-point improvement in gross margin for the OTP category, further widening the gap between higher-margin OTP and traditional cigarettes," Kotler explained. "Notably, OTP represented nearly half of our total tobacco category contribution in the fourth quarter. Continuing with this momentum in the category since the start of 2025, we have ramped up promotional activity in OTP and cigarettes, offering significant deals to customers to further drive sales momentum."
Moving to foodservice, ARKO is working toward securing permits for the company's seven pilot stores that will include enhanced offerings. According to Kotler, the chain has seen strong customer response to sites that have upgraded their foodservice offerings, reinforcing ARKO's focus on delivering value-driven options and promotional efforts with frozen and hot pizza, Nathan's Famous hot dogs and other roller grill deals that continue to gain traction.
"In fact, we have sold more than 600,000 pizzas since launching our $4.99 pizza special in Q1 2024," the chief executive shared. "We are refining our foodservice strategy to enhance convenience, quality and profitability, driving trial and repeat purchases through targeted promotions and bundling strategies."
Turning to fuel, ARKO reported that it remains committed to making fuel more affordable while helping families and small businesses manage rising costs. This, in turn, will help drive incremental inside sales, the company noted.
During the first quarter of 2025, ARKO and its wholly owned subsidiary GPM Investments LLC launched the "Fueling America's Future" campaign, which allows consumers to save up to $40 per fillup through the ability to stack discounts earned through qualifying purchases for anyone enrolled in the company's fas REWARDS loyalty program.
According to the company, this kind of promotional offer has never been done by any gas station nationwide.
"We recently launched our Fueling America's Future campaign, which allows customers to earn up to $2 off per gallon up to 20 gallons when purchasing value promotions inside the stores," Kotler said. "This not only provides relief to our customers but, importantly, we reward our enrolled [fas REWARDS] loyalty members, which we believe will help grow our loyalty program during the quarter. Enrolled members spend an average of $104 a month, which is nearly 60% more than nonenrolled customers."
Looking ahead, Kotler said the company remains committed to driving sustainable long-term growth and value creation for stakeholders. ARKO will do so by strengthening its competitiveness through investments in higher-growth categories, delivering further value to customers and continuing to optimize its store portfolio.
"We are acutely focused on delivering innovative, value-driven solutions that enhance the customer experience while maximizing profitability and expanding revenue opportunities," the CEO said.
Richmond-based ARKO owns 100% of GPM Investments 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 its retail and wholesale sites and charges a fixed fee, primarily to its fleet fueling sites.
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