Couche-Tard Expands New Fresh Food Concept Across North America

LAVAL, Quebec — Like all convenience store retailers, Alimentation Couche-Tard Inc. has adjusted its operations during the COVID-19 pandemic. However, it has not taken its foot off the gas when it comes to key initiatives, such as the rollout of its new food program throughout North America.

The new program, which Couche-Tard calls "Fresh Food Fast," presents a significant organic-growth opportunity, with expectations for both top-line and margin improvement, according to President and CEO Brian Hannasch.

"We continue to be excited about its potential. In markets where the new program has been available, customer feedback has been very positive, and both food unit sales and overall sales in the stores with the program have significantly outpaced comparable sales at other stores in those same markets," he reported during the company's fourth-quarter fiscal year 2020 earnings call, held June 30.

As the world entered the coronavirus pandemic, Couche-Tard moved quickly to cut costs, but there were a few items the company felt were "sacred," Hannasch explained. These included IT initiatives, new-to-industry builds, and the new food program.

The parent company of Circle K did hit the pause button temporarily on rolling out the program because, according to Hannasch, Couche-Tard did not think "it was prudent" to allow sampling or to conduct training during the health crisis.

"However, we will continue to build out the program, and we continue to install equipment as planned. We laid the groundwork with approximately 500 stores during the [fourth] quarter and continue to expand rapidly toward our target of 1,500 installations for the calendar year and 2,300 stores during the fiscal year," he stated.

Couche-Tard has resumed training on the new program, and all of its converted c-stores will soon offer the new food assortment.

In addition, the retailer continues to roll out its on-demand coffee program. The U.S. rollout is now complete, and Couche-Tard has shifted its focus to rolling it out across Europe, according to the chief executive, who added that the espresso-based beverage equipment was deployed with 450 machines during the fourth quarter.

Also in Europe, its Froster frozen dispensed beverage program is now available at more than 200 stores. The program has been a Circle K mainstay in North America.

"We continue to see great opportunity to scale this offer in that region, as it's been a solid driver of incremental trips to our stores, especially in Ireland where we started testing last year, where traction with customers has been impressive, and more recent in the Baltics as we moved into warm summer months," Hannasch said.

As of April 26, Laval-based Couche-Tard's network comprised 9,414 c-stores throughout North America, including 8,221 stores with road transportation fuel. Its North American network consists of 18 business units, including 14 in the United States covering 48 states and four in Canada covering all 10 provinces.

In Europe, Couche-Tard operates a retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. As of April 26, its European network comprised 2,710 stores, the majority of which offer road transportation fuel and convenience products while the others are unmanned automated fuel stations that only offer road transportation fuel.

In addition, under licensing agreements, close to 2,350 stores are operated under the Circle K banner in 15 other countries and territories, bringing the worldwide total network to close to 14,500 stores.