ARKO Leans Into Growth Across Core Categories & Loyalty Offers
RICHMOND, Va. — Persistently high inflation, high consumer debt and an unpredictable tariff environment put increased financial pressure on lower- and middle-income households — especially in the communities where many of ARKO Corp.'s convenience stores are located.
Despite the economic challenges, ARKO believes that it is well positioned to deliver the value that its guests are seeking through the chain's promotional and merchandising efforts, Chairman, President and CEO Arie Kotler said during the convenience company's recent first quarter 2025 earnings call.
"Like many in our industry, we're seeing consumers stretch their dollars further increasingly shifting their purchases toward value-oriented options and exhibiting more price sensitivity," he said.
ARKO continues to make progress on its multiyear transformation strategy as well as 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.
1. Grow sales in core destination categories through data-driven decisions and strong supplier partnerships.
Looking first at fuel savings, ARKO kicked off the "Fueling America Future" campaign on March 12. fas REWARDS members are eligible for fuel savings by buying qualifying items and receiving cents off fuel rewards that will go into their virtual wallet. These rewards can be stacked, allowing customers to accumulate up to $2 off per gallon, up to 20 gallons. In addition, they'll earn points on qualifying purchases, which can also be redeemed for fuel discounts.
"While the campaign just started, we have seen an increase in our average enrollment per day by 35% and an increase in gallons for previously enrolled loyalty members taking advantage of this great offer from approximately 6.8 gallons to 9.8 gallons per transaction, with an average basket increase of approximately $2.38 or 16%," Kotler shared.
Moving to the tobacco category, ARKO completed a backbar refresh, improving space allocation and expense project assortment in more than 900 stores. The move is driving improvement in merchandising and assortment for total nicotine, the company reported.
"When combined with our expanded promotional efforts, we're capturing market share across select OTP [other tobacco products] categories, creating momentum for in-store performance as we broaden our assortment and fine-tune our promotional strategy to drive growth," Kotler said. "We have implemented very strong monthly OTP promotions supplemented by a store manager and district manager sales contest to assist in driving OTP sales. Our OTP mix continues to evolve to meet customer demand and we view it as a lever to drive basket growth amid challenging macro backdrop."
2. Develop high-margin food programs.
Turning to foodservice, ARKO's new, consumer-centric remodel program is centered on learnings from seven pilot locations, which are expected to be open by the end of 2025. These pilot locations include an enhanced and expanded merchandise mix and foodservice offers. The in-store experience is focused on hot and fresh grab-and-go food, bakery pizza, roller grill and other prepared foods, including a new branded food offering, Fas Craves.
In addition to the remodel program, ARKO opened a new Dunkin' store in a Fas Mart location.
3. Drive increased frequency and total spend through order and delivery, and relevant in-store and in-app personalized deals via the fas REWARDS program.
During the quarter, ARKO added approximately 27,000 enrolled members, surpassing 2.3 million enrolled fas REWARDS members in total. This is an increase of 11% year over year, Kotler reported.
For the quarter ended March 31, enrolled fas REWARDS members spent 47% more and visited 2.5 times more per month than nonenrolled members. Enrolled loyalty OTP sales now account for 18.5% of OTP sales vs. 18.1% in Q4 2024. Additionally, enrolled loyalty members are purchasing 23% more gallons per transaction than nonenrolled members.
"We continue to learn and evaluate the rich customer data and adjust our tactics to ensure we provide meaningful value to our most loyal customers. As adoption grows, we believe loyalty will continue to be an increasingly powerful lever to improve same-store performance over time," Kotler said. "The team is executing many initiatives in our retail segment to drive results despite the current macroeconomic headwinds."
The Richmond-based chain is gearing up for the return of the "100 Days of Summer" promotion program, in which enrolled fas REWARDS loyalty members will receive exclusive limited-time offers and opportunities to save money at the pump, Kotler concluded.
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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