ANKENY, Iowa — Casey's General Stores Inc. pegged unit growth as one of its three strategic pillars in January 2020 and since then, the convenience store retailer has made good on its goal, notably with the acquisition of Omaha, Neb.-based Buchanan Energy, owner of Bucky's Convenience Stores, in an all-cash transaction for $580 million.
The late 2020 deal not only gave Casey's 94 stores primarily in Illinois and Nebraska., but it also marked the retailer's largest acquisition in its history. This purchase also was a key contributor to Casey's adding 354 convenience store units from 2020-2023.
Today, the Ankeny-based company operates 2,521 c-stores across 16 states. The 3,000 mark could come sooner rather than later as Casey's has once again put unit growth among its top strategies for the next three years. The retailer unveiled a new three-year strategic plan during its Investor Day in New York on June 27.
"Since 2010, the company has built or acquired close to 1,200 stores and has replaced or remodeled over 700 stores," Brian Johnson, senior vice president, investor relations and business development, said during Casey's Investor's Day presentation.
"Our differentiated business model with capabilities such as self-distribution and our best-in-class food offering enables us to successfully operate stores in both rural and suburban markets," he added.
According to Johnson, the company's two-pronged approach to growth — a mix of new builds and acquisitions — is proving successful. Partly, the success has been driven by the creation of a dedicated mergers-and-acquisitions team focused on outreach to smaller operators.
"The beauty of our approach to growth is that it can thrive in any economic environment. We have built as many as 85 stores in a single year in recent history, but can also pivot to acquire 200-plus stores in a year like we did in fiscal 2022," Johnson said. "This flexibility allows us to be selective on acquisitions and enables us to deliver predictable growth at attractive returns."
As he further pointed out, smaller transactions are "an excellent way to drive shareholder value." According to the executive:
Many smaller operators are overindexed to tobacco as a percentage.
They typically do not have a meaningful prepared foodservice program and do not have the capital to improve their stores for kitchen installations or general maintenance.
Smaller operators are often selling branded fuel, which is more expensive from a fuel procurement standpoint.
It's difficult for smaller operators to have a digital guest engagement loyalty program or any meaningful private label program.
"Our centralized support and self-distribution is an immediate synergy we bring to these acquisitions. We are able to quickly place these stores onto our national accounts for fuel and merchandise and deliver the goods with our own fleet of trucks," Johnson explained. "Our private label products are a strong value proposition to our guests and are also margin accretive."
However, Casey's is not exclusively dialed into smaller deals. "While our bread and butter may be the smaller transactions, we're still ready to take advantage of opportunistic larger deals when they become available. We still have the ability to bring synergies even though they tend to be more sophisticated operators. The Buchanan Energy transaction was a great example of this," Johnson noted.
A Science to Its Growth
Casey's overall strategic network plan "utilizes a market attractiveness scale in conjunction with predictive analytics and other data sets to mitigate risk and drive performance of new locations," according to Kendra Meyer, vice president of real estate.
The four pillars of the retailer's market attractiveness scale are:
Historical performance with stores within the area,
The competitive landscape,
Market economics, and
"We've had steady growth throughout the years and our last three years created strong momentum. We're going to continue to accelerate growth with a plan to add 350 new locations in the next three years," Meyer said. "We have the robust data to determine where Casey's should be, the ample space to grow, the capacity to do it, and the ability to serve all trade areas with the optimal offer and best return on investment."
"We operate 2,500 convenience stores in 16 midwestern states and what I'd like to point out is that with those 2,500 stores in the 16 states, about 2,000 of those stores are in only nine of the states we operate in," he said during a media briefing following Casey's Investor's Day. "So, the other 500 are scattered over the seven other states. We have a lot of white space to grow in our existing footprint. And of course, there's a lot more than 16 states in the U.S., so we have plenty of room beyond that."