Kum & Go Continues to Grow

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Kum & Go Continues to Grow

WEST DES MOINES, Iowa -- Kum & Go, the 448-unit c-store chain based here, opened 21 new stores this year and plans on building about the same number next year, while continuing to divest locations that don’t fit the retailer’s larger, higher-volume generating concept.

In an interview with CSNews Online, president and CEO Kyle Krause said Kum & Go is seeing "excellent sales increases" and "a great inside-sales customer count." Fuel gallons were a little soft over the last couple of months, but are up for the year, reported Krause, who is the son of company co-founder William Krause.

"We’ll have the best same-store sales growth this year than we’ve had for a while," he said. "We’re getting great customer exception, which reaffirms our strategy."

Kum & Go’s store growth targets have evolved over the last five years, partly by its own decisions and partly as a result of the marketplace. One example of the former is its choice to build larger, more costly stores. The company is spending twice as much on new sites to accommodate the customer base and their changing needs, according to Krause. New sites feature a larger building, broader product mix, additional fueling positions and varied fuel offerings, such as ethanol.

Areas where Kum & Go is building new stores include Des Moines, Iowa; Sioux Falls, S.D.; Omaha, Neb.; Springfield, Mo.; Tulsa, Okla.; northwest Arkansas; and Greeley/Fort Collins, Colo.—a new and promising market for the convenience store chain.

"As we looked within our market areas, we wanted to build where there is higher growth. You want a marketplace that’s expanding," said Krause. "We screened towns in the states we’re in and adjoining states, and decided these were the most attractive cities for us."

With the move toward higher-volume locations, there has been a need to divest older, smaller stores that cannot deliver the uniform brand experience Kum & Go is working to attain. Over the past five years, a total of 83 stores have been divested.

Kum & Go’s shift in how it goes to market also has made the retailer more selective from an acquisition standpoint, another factor that has impacted its store growth targets. "The multiples for acquisitions in the marketplace were higher than what we were willing to pay, and we continue to get pickier in what we will buy," he noted.

While such factors have gotten in the way of amassing a larger store count—a five-year goal set forth by Krause in 2004—he said what’s of greater importance is that the company is now more consistent in what it is providing the marketplace, both in customer service and product offering.

"In general, we’re offering a broader product mix now than what we were doing in our stores in 2003," he added. The chain’s stores now feature a wide-ranging array of prepared foods, a proprietary coffee program branded Java Ridge, an expanded frozen carbonated offering, as well as a larger wine selection in certain states.

While growth is still the goal, the exact target will evolve from a strategy standpoint. "We will continue to build new sites and look for acquisitions. Part of our company vision is to profitably grow Kum & Go, and we will continue to do that," Krause vowed.

Convenience Store News checks in on the progress of Kum & Go’s five-year strategy in greater detail in its Dec. 8, 2008 issue.