Casey's CEO: Business Model Carries Retailer Through Challenging Times

ANKENY, Iowa — Casey's General Stores Inc. President and CEO Darren Rebelez credits the retailer's business model for helping it weather the current challenges affecting food, labor and fuel.

In January 2020, the convenience store operator unveiled a three-year strategic plan with three key pillars: reinvent the guest experience, create capacities through efficiencies, and be where the guest is through unit growth.

"All three pillars are supported by investing in and growing our talented team, and supported by technology. Inside the store, we have made great strides of joint business planning with our vendor partners, allowing us to manage product mix and strategically adjust retail prices, while maintaining a relative value position in the marketplace," Rebelez reported during a Sept. 9 earnings call detailing Casey's results for the first quarter of its 2023 fiscal year.

"This is reflected in the grocery and general merchandise results with mid-single-digit same-store sales and expanded margins. Our private label program has great momentum, exceeding 5 percent of the grocery and general merchandise penetration by the end of the first quarter, providing our guests a high-quality and cost-effective product," he added.

Rebelez also pointed out that the retailer's prepared food and dispensed beverage categories offer customers "an excellent value proposition alternative" to quick-service restaurants.

"Each of our dayparts has items for our guests to get a great meal at a reasonable price, especially important in these inflationary times," he explained. "Specifically, in the breakfast daypart, we’ve rolled out a $4 breakfast value offering. Additionally, our whole [pizza] pies and line pricing represent a great value for families vs. other dining-out alternatives."

Casey's mobile app represents more than two-thirds of its total digital revenue, which is primarily driven by whole pies. The chain has added more grocery and general merchandise items to the app to grow basket size.

On the forecourt, Casey's field team effectively managed a volatile fuel environment during its latest quarter. "Rising fuel prices in May put pressure on margin and in July, the opposite took place. Our centralized fuel team has allowed us to be able to react to market conditions quickly and effectively," Rebelez said, noting that the company expects fuel margins to normalize in the second quarter.

Other notable achievements during the quarter include:

• Growth in delivery for beer and hard seltzer, which complement Casey's pizza orders.
• The addition of approximately 125,000 more Casey's Rewards members vs. the same period last year — spurred by engagement around the retailer's Summer of Freedom campaign. The rewards program now has more than 5.5 million members.
• A continued focus on improving operating expenses with a reduction in same-store hours, and a cautious approach to hiring for positions outside of its stores.

"As we look ahead to the remainder of fiscal '23 and beyond, I remain confident in Casey’s business model in the face of uncertain times. In a difficult economic environment, we provide our guests with basic needs conveniently at a competitive price point. With our centralized fuel and procurement teams, we’re able to adapt and thrive in any economic environment. And with our digital rewards, we’re able to understand the needs of our guests better than ever before," Rebelez said.

"I can assure you, our entire team is excited to finish our three-year strategic plan on a high note and deliver on our commitments," he added.

Ankeny-based Casey's operates more than 2,400 convenience stores.