Speedway Discusses Benefits of Hess Acquisition
ENON, Ohio — Speedway LLC's acquisition of the former retail arm of Hess Corp. will have benefits beyond boosting its store count, according to Speedway President Tony Kenney. Fuel sold at the 1,245 locations will primarily be supplied through parent company Marathon Petroleum Corp.'s system, adding more than 3 billion gallons in sales annually, reported the Springfield News-Sun.
"Just the uplift of the added business that these Hess stores provide our parent company will also be an attractive feature," Kenney told the news outlet. He further noted the company may be able to increase its efficiency by adding fuel capacity through underutilized pipelines or terminals.
Following the $2.8-billion purchase, Enon-based Speedway now operates in 22 states and has more than 2,700 stores in the Midwest and along the East Coast.
The size and placement of Hess' assets were key considerations in Speedway's decision to go through with the acquisition, according to Kenney.
"A chain of this size that has good quality assets and was well run. These sort of things don't come along in our business very often at all," he said.
Further consolidation in the convenience store industry is likely to occur in the next few years, according to Kenney, citing slim profit margins on products such as food and fuel as the costs of labor and other necessities increase.
"That puts pressure on these smaller operators that don't have the scale to be able to invest in technology, like a Speedy Rewards program or some other form of technology that requires investments to become more efficient," he said. "There's going to be a little pressure put on their profitability."
Further pressure comes from the fact that c-stores are competing with fast-food restaurants, dollar stores, drugstores and other retail outlets that offer similar products.
"We're all competing for that same customer," Kenney said. "It is a changing competitive market out there and you've really got to be sharp. You've really got to be good; you've got to have a focus on taking care of the customer because that customer has a lot of choices."