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Susser Approaches Halfway Point in Rebranding

CORPUS CHRISTI, Texas -- Susser Holdings Corp. said it is approaching the halfway point in the ongoing rebranding of the Town & Country stores the company acquired in 2007 to its Stripes convenience brand.

Steve DeSutter, president and CEO of Susser's retail division, said a total of 70 former Town & Country stores had been rebranded to Stripes through the end of 2009. In addition, the retailer converted 47 locations from Town & Country's Country Cookin' restaurant concept to Susser's foodservice program, Laredo Taco Company.

The current plan is to complete another 50 conversions this year, and finish the remainder in 2011. "However, we may opt to spread that out or speed it up depending on our financial performance this year," DeSutter noted in a conference call last week.

Currently, Susser operates 302 restaurants, representing 58 percent of its store base. Chainwide, foodservice account for 20 percent of the company's sales.

Customers are responding positively to the rebranding, which is translating into higher sales, according to DeSutter. In the months of November and December, merchandise sales trends in rebranded stores outperformed Town & Country stores that haven't yet been rebranded by more than 6 percentage points, he said.

Additionally, stores converted to the Laredo Taco Company program outperformed stores with Country Cookin' by more than 20 percentage points in foodservice units, or items purchased, he reported. On average, the customer count in rebranded stores was more than 5 percentage points better than at those stores not rebranded. "We're pleased with the initial results and believe this is the right long-term strategy," DeSutter said.

During the second half of 2009, however, Susser experienced its first-ever decline in restaurant sales. Sam Susser, president and CEO of Susser Holdings Corp., attributed the drop to the economic downturn, combined with its shift to more value-oriented pricing as additional stores are converted from Country Cookin' to Laredo Taco Company.

"While we are experiencing a small, short-term revenue impact from the switch to the lower-priced Laredo Taco menu, we're also seeing an increase in the number of food units sold," Susser told investors during last week's conference call. "In the long term, based on our experience in South Texas, we expect this trend to drive an increase in gross-profit dollars not just from the restaurant [sales], but also from related sales of higher-margin items elsewhere in the store, such as drinks and snacks."

Along with continuing to rebrand and convert its existing stores, the retailer plans to construct several new stores this year. At the end of 2009, Susser operated 525 convenience stores in Texas, New Mexico and Oklahoma. The company recently opened a new location in South Texas and currently has four more convenience stores under construction, one of which is expected to open by the end of the first quarter.

Company executives also said roughly 18 of the 20 sites in its land bank are ready to go, and the chain continues to buy real estate and further expand its land bank.

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