No Holiday for Couche-Tard on Foodservice Journey

LAVAL, Quebec — Alimentation Couche-Tard Inc. President and CEO Brian Hannasch has talked often about the learnings the retailer seeks to gain from every acquisition it makes. It appears foodservice expertise is something Couche-Tard is eager to receive from its pending purchase of Holiday Cos.

On July 11, Couche-Tard announced that it signed an agreement with Holiday Cos. to acquire all the issued and outstanding shares of Holiday Stations Inc. and certain affiliated companies. Based in Minnesota, Holiday's assets include more than 500 company-operated and franchise convenience stores, a food commissary, and a fuel terminal.

Of the 522 Holiday Stationstores locations, 374 are company-operated and 148 are franchises. The stores span 10 states: Minnesota, Wisconsin, Washington, Idaho, Montana, Wyoming, North Dakota, South Dakota, Michigan and Alaska.

Holiday has operated a commissary in the Minneapolis area for roughly 15 years. 

"They've had a long time to really refine the offers they have, the products they have, what travels well, what freezes well, what can be reheated, and turn out a high-quality product," Hannasch stated during Couche-Tard’s fourth quarter and fiscal year 2017 earnings call this week.

"We certainly see an opportunity to leverage not only the commissary itself, but the learnings that Holiday has in terms of doing that in a broader sense and certainly outside of core markets where you are delivering fresh every day," the chief executive continued.

Speaking about Couche-Tard’s current made-to-order food program, Hannasch explained that while the retailer prepares onsite food in 300 locations, "a more robust menu" is currently in 44 stores and there are plans to roll it out to another 125 stores in fiscal year 2018.

He noted that CST Brands Inc. — which Couche-Tard officially acquired on June 28 — was pursuing a similar made-to-order program. That program is in about 85 locations, with a slightly different menu. There are common features like fresh sandwiches and fresh bakery, but CST’s stores tailor the product mix more to the Southern consumer with items such as tacos, burritos and kolaches.

"As of 14 days ago, we've combined our foodservice teams and they are working to identify best practices in both of the offers, menu and SKU rationalization, what are the best items that we can do in both, and continue to work on bringing that offer into the NTI [new-to-industry] stores," Hannasch shared. 

The newly combined Couche-Tard and CST foodservice team is also working on a scaled-down version of the made-to-order program for smaller-format stores, the CEO added.

Couche-Tard has always been open to having multiple models to fit its varied footprint. While the prepared-onsite, made-to-order concept works well in large, high-volume stores, the low-labor commissary approach "still remains very attractive in many of our locations and many of our more remote markets,” according to Hannasch.

The Holiday network "provides a very interesting dimension to this that I think accelerates our food journey," he said. "We're excited for when we can start talking to Holiday about it and how we can leverage that into the existing network."

As of June 30, Laval-based Couche-Tard's network comprised 9,424 convenience stores throughout North America. Couche-Tard's European network comprised 2,754 stores. In addition, under licensing agreements, more than 1,700 stores are operated under the Circle K banner in 13 other countries and territories.