Large Store Format Leads Susser’s Growth Plan

CORPUS CHRISTI, Texas -- With strong fourth-quarter 2010 results coming in, Susser Holdings Corp. is moving forward with a strong expansion plan on its radar. And one key driver of its future is growing its foodservice.

Speaking at the ICR XChange Conference in Dana Point, Calif., chief financial officer Mary Sullivan explained that the third generation, family-led business faired the economic downturn pretty well. "The recession really did not hit Texas until late 2009," she said, "but we are very pleased with our 2010 results."

And standing behind those numbers may be Susser’s strategic growth plan. The operator of the Stripes convenience store chain is taking a three-pronged approach to growth: selected acquisitions, build new large format store and continue to grow our existing store base, Sullivan explained.

When it comes to brick and mortar, the old store format had an average lot size of 20,000 square feet with a 2,400-square-foot building, six to eight parking spaces and four to six fuel positions. There was no foodservice, she said. However, in the large store format the average lot size is increased to 50,000 square feet with a 4,800-square-foot building, 25 to 40 parking spaces and 10 to 20 fuel positions. In addition, all new stores will have a Laredo Taco Co.

"Increasing the number of parking spaces and fuel positions is almost more important than the size of the building," Sullivan said. "If customers want to stop in but see that all the parking spaces are taken or all the fuel positions are full they will keep going."

And the formula may be working. In the past year Susser’s opened 14 new stores: 12 were ground-up construction and two were acquisitions. "Our new stores are performing very well for us. We are very pleased," she commented. "With the new stores we increased the average land and building size but we have also been able to increase merchandise sales. The bigger box stores have two to three times the amount of cash flow."

The improved foodservice is also a factor is Susser’s upward trend. "We got into the foodservice business about 10 years ago and we struggled for a few years before we got it right," Sullivan explained. The company began with a commissary, but it didn’t work. However, once it started making the food in the store foodservice took off, she said. "Customers want to see the food, smell it."

The foodservice is also increasing other business in the c-stores, she said. "Over 70 percent of the time our customers are buying something to go along with the food," Sullivan said. "It is one of the key drivers of our performance. Foodservice is almost 30 percent of our gross profit. We still have a lot of room to grow in foodservice and we are still learning."

Another factor in Susser’s continued success may be location, location, location. "We started the business in south Texas. In 2007 we had a major acquisition in west Texas," she explained. "We love where we are. If we have to bet on any state Texas is where you put all your chips."