Steady for Now, Shakeup Coming

With several large M&A deals on deck, this year’s Top 100 ranking is like the calm before the storm

This year’s Convenience Store News Top 100 ranking looks a lot like last year’s ranking. But if you were to wait a few months and then revisit the list, you would see some pretty noticeable changes thanks to currently pending acquisitions.

Speedway LLC, the retail division of Marathon Petroleum Corp. (No. 7 on the Top 100), soon will become the second-largest c-store retailer in the United States. Speedway has agreed to acquire the retail network of Hess Corp. (No. 13 on the Top 100). Once the transaction is completed, Speedway will have 2,733 company-owned stores, up from its now 1,487.

Energy Transfer Partners LP (No. 9 on the Top 100) will also be moving up the list shortly. The, parent of Sunoco Inc. is in the process of acquiring Susser Holdings Corp. (No. 21 on the Top 100) and recently completed the purchase of 40 Tigermarket stores in Tennessee and Georgia. Susser’s retail operations consist of 630 convenience stores, largely branded Stripes. Adding these stores to its current unit count, the company will have a total of 2,320 c-stores.

Until these deals close later this year, however, the Top 100 list — the industry’s longest-running accounting of the largest convenience store chains by store count — is holding relatively steady compared to 2013. The top six companies were unchanged year over year, albeit for Alimentation Couche-Tard Inc. moving into the No. 4 position and Chevron Corp. dropping down to No. 5. 7-Eleven Inc. once again leads the pack with a store count of 7,749.

The only company to drop out of the top 10 this year is The Pantry Inc., operator of Kangaroo Express stores. It was bumped by Marathon Petroleum, which went from No. 11 to No. 7.

The CSNews Top 100 report is compiled in partnership with TDLinx, a service of Nielsen. TDLinx defines a convenience store as a small-format store of at least 800 square feet; with 500 to 1,500 SKUs; that operates at least 13 hours a day; and carries a limited selection of grocery items, including at least two of the following: toilet paper, soap, disposable diapers, pet food, breakfast cereal, tuna fish, toothpaste, ketchup and canned goods.

According to TDLinx store count figures, this year’s top 100 chains operate 60,640 stores. Compared to last year’s 59,598, this is an increase of 1,042 units or 1.7 percent. These 100 chains represent 40.1 percent of the industry’s total stores, equal to last year’s result. The top 10 chains alone represent 24.3 percent of the total industry’s stores with 36,827 units.

Some other interesting tidbits revealed in this year’s Top 100 report:

• GPM Investments LLC gained 18 spots, going from a No. 42 ranking last year to No. 24 this year. GPM acquired VPS Convenience Store Group’s Southeast division, composed of 263 company-operated units and 33 dealer locations. Consequently, VPS dropped 22 spots on this year’s Top 100, falling from No. 28 to No. 50.
• Getty Realty Corp., associated with Lukoil NA LLC, fell 25 spots from No. 14 last year to No. 39 this year. The company has been dealing with the fallout from the December 2011 bankruptcy of Getty Petroleum Marketing Inc., which had a 799-location master lease with Getty Realty. The company has sought to sell or lease many of those properties.
• Murphy USA Inc., spun off from Murphy Oil Corp. in September, jumped up eight spots on this year’s Top 100 now that it’s on its own. Murphy USA sits in the No. 45 spot.
• Making its first appearance on the Top 100 list is My Goods Market (at No. 78), the new c-store brand from the company formerly known as Pacific Convenience & Fuels LLC. The retailer announced last year that it would be changing the name of the company and rebranding its stores to My Goods Market, a more upscale convenience concept.
• One name missing from the Top 100 is Mid-Atlantic Convenience Stores (MACS). A year after being acquired by Energy Transfer Partners, Sunoco made headlines in October when it purchased MACS and in the process, gained 301 convenience stores and gas stations in Maryland, Delaware, Virginia and Washington, D.C.

The Top 10 Chains

No. 1 7-Eleven Inc.

Having acquired more than 1,000 locations in the previous three years, Dallas-based 7-Eleven is now in transition mode. The company is working diligently to study each location and determine its potential; remodel, re-merchandise and convert sites to the 7-Eleven banner; and sell off those stores that simply do not fit the chain’s current business model.

So far this year, 7-Eleven has announced the sale of nearly 150 convenience stores across 19 states. Even so, this will barely make a dent in the convenience store giant’s overall U.S. store count, nor will it threaten its No. 1 position on the CSNews Top 100 ranking.

7-Eleven currently operates 7,749 c-stores in the United States. This total includes 6,221 franchised stores; 1,003 company-operated stores; 175 acquired stores that are not yet 7-Eleven branded, but which the chain operates; and 350 domestic licensed stores.

While the retailer’s overall store count this year is slightly less than its prior-year count of 7,760 stores, 7-Eleven still maintains a lead of 2,000-plus units over No. 2 chain, Shell Oil Co.

Along with converting acquired sites, 7-Eleven is also focused on its continuing journey to be a virtually franchised company in the U.S. An emphasis is being placed on finding new franchisees who want to take on multiple stores, thus helping to accelerate its franchising efforts. At this time, 85 percent of the chain’s stores are operated by independent franchisees.

No. 2 Shell Oil Products US/Motiva Enterprises LLC

Capitalizing on another year of growth, Shell Oil/Motiva Enterprises once again landed in the No. 2 spot on this year’s Top 100 list. According to TDLinx data, Shell’s retail network, which is comprised almost entirely of franchisees and licensees, includes more than 5,000 stores that generate annual sales of more than $11.3 billion.

Most recently, the Houston-based company made a big push into liquefied natural gas by forming a partnership with TravelCenters of America LLC (No. 36 on the Top 100) to jointly sell the alternative fuel to heavy-duty road transport customers in the United States at TravelCenters’ TA and Petro fueling centers.

Additionally, Shell has been making technological strides by implementing NCR Corp.’s Radiant Point-of-Sale (RPOS) petroleum and convenience solution, as well as making LED lighting products available to the Shell network of branded wholesalers and dealers throughout North America through a new agreement with LSI Industries Inc.

Simultaneously, Shell Oil’s parent company Royal Dutch Shell plc is striving to boost its brand globally with an aggressive digital and social media audience engagement strategy.

As revealed to CSNews earlier this year, Shell continues to develop its loyalty programs, particularly its Fuel Rewards Network (FRN), which launched two years ago and boasts millions of members. According to Excentus, the program provider, FRN members have saved more than $300 million in fuel costs to date, with the goal being to save consumers $1 billion.

No .3 BP North America

The more things change, the more things stay the same. That is certainly true for BP, which has secured the No. 3 spot on the CSNews Top 100 again. The retailer, with its U.S. base in Houston, also captured the No. 3 spot in 2013, 2012 and 2011.

TDLinx puts BP’s total store count at 4,378 — all of which are franchise/licensee locations. BP’s retail banners include Amoco, ampm, ARCO, ARCO Thrifty, BP, BP Connect and BP Shop. The company’s latest year-end sales amounted to approximately $15.6 billion.

BP’s unwavering position in the convenience store industry rankings comes one year after it marked the final milestone in its “strategic refocusing.”

In June 2013, BP completed a deal to sell its Southwest retail assets and its Carson, Calif., refinery to Tesoro Corp. (No. 29 on the Top 100) for $2.4 billion. Under the terms of the pact, BP’s ARCO brand and associated registered trademarks, as well as its master franchisee license for the ampm convenience store brand, transitioned to Tesoro. In turn, BP exclusively licenses the ARCO retail brand rights from Tesoro for northern California, Oregon and Washington. BP also retains ownership of the ampm brand.

So far this year, BP has further strengthened its focus by reiterating its commitment to be the No. 1 fuel brand east of the Rockies and unveiling plans to get there at the biennial BP Amoco Marketers Association Convention. In addition, BP launched a new retail image called “to go” in May.

No. 4 Alimentation Couche-Tard Inc.

Change has proven to be a good thing for Alimentation Couche-Tard, the Canadian parent company of Circle K convenience stores in the United States.

During the company’s latest earnings call, CEO Alain Bouchard announced that Couche-Tard is on the hunt for more acquisitions and is eyeing multiple convenience store operations of varying sizes. The retailer most recently made smaller purchases of stores in New Mexico, Florida and Illinois, while also maintaining a construction pipeline of new-build stores.

As of its latest fiscal year-end, Couche-Tard operated 4,326 stores in the United States, of which 3,337 were company-operated and 989 were franchised or licensed. Sales generated by these U.S. stores at the conclusion of the latest fiscal year-end totaled more than $19.4 billion.

In addition to unit growth, Couche-Tard is renewing its focus on foodservice with its new-build stores, which are considerably larger — a minimum of 3,600 square feet and as large as 4,500 square feet — than stores it built just five years ago, Bouchard noted.

“A tremendous pricing strategy and an excellent foodservice offer [has really paid off in] the U.S.,” the chief executive recently stated.

In May, Couche-Tard revealed it had been considering purchasing Hess Corp.’s 1,256-store network. Ultimately, the price was more than Bouchard was willing to pay and Marathon Petroleum Corp.’s Speedway LLC division won the rights.

Looking ahead, more change is on the horizon for the Laval, Quebec-based company with Chief Operating Officer Brian Hannasch poised to replace Bouchard as president and CEO effective Sept. 24, the date of Couche-Tard’s next annual shareholders meeting. Bouchard will become executive chairman of the board of directors at that time.

No. 5 Chevron Corp.

After four years in a row in the No. 4 position on the CSNews Top 100, San Ramon, Calif.-based Chevron slipped one spot this year. The company, which was bumped by aggressive acquirer Alimentation Couche-Tard Inc., last found itself in the No. 5 spot in 2010.

According to TDLinx, Chevron boasts a total store count of 3,987, including 423 corporate stores and 3,564 franchise/licensee locations. Its banners are Chevron, Chevron ExtraMile and Texaco. TDLinx also puts its latest year-end sales at nearly $21 billion.

For the most part, Chevron has been laying low over the past year. In April 2013, the company dispelled any talk of noteworthy acquisitions, stating that any cash surplus would most likely be used to repurchase shares and increase its dividend to shareholders. This came after Hess Corp. and Chesapeake Energy Corp. were linked as possible acquisition targets.

Instead, Chevron has been focusing on its existing retail outlets and customers, as well as its commitment to the communities it calls home.

Within the last year, Chevron extended its gas rewards program with Safeway Inc., particularly in northern California and the Phoenix area. Under the program, consumers can use their Safeway card to receive fuel discounts at Chevron and Texaco locations.

To show its community spirit, Chevron renewed its title sponsorship of the annual Chevron Houston Marathon through 2018. This year marked the ninth year that the race carried the Chevron name.

No. 6 Exxon Mobil Corp.

Solid and steady is the continuing trend for Irving, Texas-based Exxon Mobil Corp.’s retail arm, which ranks sixth on this year’s Top 100 — the same ranking it’s held for several years now.

ExxonMobil currently has 3,458 convenience stores, all of which are franchise/licensee locations, according to TDLinx, which also lists the company’s latest year-end sales at approximately $7.6 billion. Its c-store banners include Exxon On The Run, Exxon Tiger Mart, Mobil Mart, Mobil On The Run, Mobil and Mobil Snack Shop.

The company has emphasized speed and convenience in the last year, seeking to give consumers numerous reasons to visit its stores. It offered sizeable discounts to new users of the ExxonMobil Smart Card in the form of 18-cents-per-gallon rebates during their first two billing cycles, followed by ongoing rebates and a free Speedpass contactless payment device. ExxonMobil also piloted Speedpass+, a mobile payment app designed to get customers through the gas pump quickly.

Mobile payments received additional attention when the company launched EM1, a comprehensive retail fuel technology platform that enables Exxon- and Mobil-branded gas stations to introduce mobile payments and other new forms of payment. EM1 allows its branded gas stations to provide exclusive discounts and other offers to reward loyal customers, too.

Grant Doescher, U.S. branded wholesale manager for ExxonMobil, called the EM1 platform “a significant upgrade” and “an investment in the future” for its branded wholesale customers and consumers alike.

No. 7 Marathon Petroleum Corp.

After falling out of the top 10 in last year’s CSNews Top 100 list, Marathon Petroleum Corp. (MPC) and its Speedway LLC retail division are back. The Findlay, Ohio-based company climbed four spots year over year and now sits in the No. 7 position.

Soon, though, MPC is expected to jump all the way to No. 2 on the Top 100 thanks to Speedway’s pending acquisition of Hess Corp.’s retail network. The $2.87-billion purchase made a big splash when it was announced in May and is poised to be what MPC President and CEO Gary Heminger called a “transformative transaction” that will make Speedway the second-largest c-store operator in the United States once the deal closes.

Until then, MPC continues to operate 1,487 corporate-owned Speedway convenience stores and has 2,823 franchised and licensed c-stores under the Marathon and Rich Oil banners, according to TDLinx. Its latest year-end sales are estimated at more than $10 billion.

MPC’s unit growth is no surprise. In December, the company announced a $925-million capital infusion to expand Speedway through both organic growth and selective acquisitions. Speedway is targeting key growth markets, as well as “fill-in” opportunities in existing markets.

On the Marathon-branded side, MPC began offering customers an extra incentive to stop into its stores with the launch of an instant cents-off-per-gallon discount program across its Marathon-branded marketing network. Its previous loyalty program was expanded to let operators offer these discounts in the form of gift cards and promotional cards, making for a more “flexible, efficient” solution, according to the company.

No. 8 Casey’s General Stores Inc.

Despite focusing on pizza to the point where it plans to soon operate six pizza-only locations, Casey’s General Stores hasn’t drifted from its convenience roots. In fact, the Ankeny, Iowa-based chain’s pizza venture is just part of its overall unit growth through new builds and acquisitions, which landed it at No. 8 on the CSNews Top 100 list.

Casey’s currently owns and operates 1,808 corporate stores, with annual sales of approximately $7.8 billion as of its latest fiscal year-end in April.

One of the retailer’s notable moves so far this year was the purchase of 24 Stop-n-Go stores in North Dakota and Minnesota. Casey’s Chairman and CEO Robert Myers referred to the acquisition as a “springboard” into the upper Midwest. The company has further plans to purchase and build new stores in the region as it discovers the right opportunities.

To help it handle this growth and facilitate future expansion, Casey’s will break ground on a second distribution center in Terre Haute, Ind. The 250,000-square-foot facility will take 12 to 18 months to be completed. It will serve as a strategic location allowing the company to move further south and east from its current footprint, while increasing distribution efficiency to existing stores.

Looking ahead, Casey’s has more than 25 stores under construction. It plans to build or buy 72 to 108 new stores and replace 25 existing stores during fiscal 2015. Pizza delivery is also slated to be added to approximately 80 more stores. Additionally, Casey’s plans to expand its Fuel Saver program that it offers in coordination with Hy-Vee Inc., but company officials are also investigating the possibility of creating Casey’s own fuel loyalty program.

No .9 Energy Transfer Partners LP

Back in summer 2012, Energy Transfer Partners (ETP) and Sunoco Inc. grabbed headlines with news that Dallas-based energy company ETP was buying the Philadelphia-based oil giant. As the deal moved toward completion that October, the headlines gave way to speculation about the fate of Sunoco’s retail assets, including its APlus convenience stores.

Approximately a month after the deal closed, though, ETP publicly stated that it did not intend to sell the retail segment. Any remaining questions about its commitment to retail quieted down in 2013 when ETP acquired the 301-unit Mid-Atlantic Convenience Stores chain, which had previously rebranded its Uppy’s c-store locations to Circle K.

Now, less than two years after Energy Transfer Partners ventured into the c-store industry, ETP and its Sunoco Inc. division sit in the No. 9 spot on the CSNews Top 100 list.

Although the combined company fell two spots from last year’s ranking, it is still holding strong. According to a company spokesman, its operations included 550 company-operated locations, 1,100 dealer/franchisee locations and 3,500 branded locations as of April. These locations carry the Sunoco, APlus and Circle K banners.

Data provided by TDLinx puts ETP’s latest year-end sales at approximately $7 billion; however, a company spokesman declined to comment on that figure.

Since April, news of other ETP acquisitions has grabbed headlines. Its pending purchase of Susser Holdings Corp. would strengthen ETP’s retail portfolio by 630 convenience stores.

No. 10 CITGO Petroleum Corp.

CITGO dropped one slot in this year’s CSNews Top 100 ranking, but still secured a place in the top 10. The company has 1,639 c-stores, according to TDLinx, and all are franchised.

Factoring in all convenience store and gas station locations, the Houston-based chain’s network actually includes a total of 5,607 CITGO-branded locations, noted Public Affairs Manager Fernando J. Garay. (Not all sites meet the TDLinx definition of a convenience store.)

As it does every year, CITGO has introduced a new slate of initiatives for 2014 aimed at moving the CITGO brand onward and providing its branded marketers with best-in-class programs.

Among this year’s initiatives are:

• New offerings for convenience stores from the CITGO Retail Concept Center;
• Changes to the Trimark of Excellence mystery shop program that incentivize more high-scoring locations;
• Continued emphasis on Centennial Image implementation. The reimage deadline for all locations within the CITGO network is Dec. 31, 2015;
• Continued emphasis on TriCLEAN gasoline, with enhanced messaging on pump valances;
• Continued promotion of the CITGO Rewards credit card, which provides a 5-cents-per-gallon statement credit on every gallon of CITGO fuel purchased with the card; and
• Continued customization of events, promotions and marketing materials to drive consumer traffic and sales at the local level, including renewed associations with the Miss America organization and Bess the Book Bus.