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Yesway Real Estate Strategy Goes Big in Rural Markets

The company's efforts to be a big customer in low-population areas aid its growth goals.
Yesway & Allsup's logo

FORT WORTH, Texas — Yesway's current focus on rural site selections goes all the way back to knowledge shared by the late Lonnie Allsup, founder of the Allsup's convenience store chain, which Yesway acquired in 2019.

Allsup scouted new sites by flying his airplane over highways in Oklahoma, west Texas and his home state of New Mexico, looking for clusters of motor traffic surrounded by wide open spaces, according to Tom Brown, director of real estate acquisitions for Yesway

"Lonnie would put his store at the intersection of the Interstate and the state highway and buy all the open land surrounding the store for defensive purposes," Brown said. "He was one of the first people in the convenience store business to build larger stores with food and grocery items. In recent years, it was easy for him to build a bigger store because he owned all the land around it."

Brown and Yesway CEO Tom Trkla both came to Yesway through their lead executive roles at Beverly, Mass.-based Brookwood Financial Partners, a private equity real estate investment firm that specializes in acquiring and managing value-add commercial real estate, reported Chain Store Age, a sister publication of Convenience Store News.

Brookwood buys office buildings and shopping centers for 50 to 60 cents on the dollar when markets are down for their high-net-worth investors.

Brown and Trkla also acquire operating companies and, when markets stabilize and property prices rise, they stop buying and start running the businesses. According to Brown, they chose to run c-stores because it was easy to learn how.

"It was shocking how willing other c-store companies were to tell us about their businesses," Brown said. "They're mostly regional. You have 7-Eleven and Couche-Tard and then you have the 65 percent of operators who own 10 to 12 stores."

Early in Yesway's existence, Brown identified a large hole in the so-called c-store doughnut in the Midwest. After acquiring multiple smaller chains in Iowa, Missouri, Kansas and Nebraska to build a 150-store portfolio, Brown set the company's sights farther south to Texas, Oklahoma and New Mexico, where it purchased the Allsup's portfolio from Lonnie Allsup's family.

"That acquisition allowed us to hone our focus and see what we wanted to be when we grew up. One of the things we learned was that bigger in this industry was better than smaller," Brown said. "We started developing stores that were 5,000 square feet and then got up to 8,000 to 9,000 square feet. That's where we hit the pause button."


Yesway's current goal is to complete 48 stores this year. To achieve it, company management decided to get through all the supply chain delays and labor shortages by becoming the biggest customer of a few companies. It hired one architectural firm that promised it could design 100 stores for the chain; took on 10 contractors, promising each of them six or seven stores; and hired a group of five people to handle to handle the permitting processes, plus one project management team to draw up the site plans.

"Because we are in rural locations, we don't get a lot of headwinds obtaining permits from cities. They're happy to have us. But we also took getting permits out of the hands of the contractors," Brown said. "The big hurdles we face are the Oklahoma and Texas departments of transportation. They have mandates that severely limit the number of access points to highways."

The supply chain issues posed larger problems, but Yesway made headway with this same "big customer" strategy.

"We were buying steel from four or five guys. Then we went to two of them and said, 'We're going to give you a contract for X-amount of years,' and now we have only two steel suppliers," Brown said.

The company's ambitious development goals serve as powerful sledgehammers in getting stores built these days, according to Brown.

"I would hate to be out there trying to build just a store or two," Brown noted. "Amazon sucked all the steel out of the market."

Established in 2015, Fort Worth-based Yesway's portfolio consists of 410 stores located in Texas, New Mexico, South Dakota, Iowa, Kansas, Missouri, Wyoming, Oklahoma, and Nebraska, including the Allsup's convenience store chain.

Chain Store Age and Convenience Store News are properties of EnsembleIQ.

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