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The Association for Convenience & Fuel Retailing
The State of the Industry Convenience & Fuel Retailing in the U.S.
Idaho Petroleum Marketers & Convenience Store Association
2015 Annual Convention
Henry Armour President & CEO
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The Association for Convenience & Fuel Retailing
Presentation Overview
• What happening inside our house?! – Sales, gross profit and category trends
• Is Our Growth Really Going To Come From Foodservice? − What’s going with QSRs? − What can we learn?
• reFresh – Repositioning our industry’s image − Our image is inhibiting our growth − We’re being targeted with unwarranted and
ineffective regulations and legislation − A 10 year plan to do something about that!
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The Association for Convenience & Fuel Retailing
Snapshot 2013 2014 % Change
Store Count 151,282 152,794 1.0%
Employees (millions) 2.2M 2.4M 9.1%
Total Sales (billions) $695.5B $697.5B 0.3%
Inside Sales $204.0B $214.9B 5.3%
Fuel Sales $491.5B $482.6B (1.8)%
Fuel Gallons 242.4B 249.6B 3.0%
Pretax Profit (billions) $7.1B $10.2B 43.9%
Card Fees (billions) $11.2B $11.4B 2.3%
Transactions/day (millions) 163.0M 167.0M 2.5%
Big Picture
Source: Nielsen TDLinx , NACS State of the Industry Survey of 2013 Data & CSX, LLC & U.S. Energy Information Administration
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The Association for Convenience & Fuel Retailing
Store Level Sales (same firms)
Per Store/Per Month Jan-Dec 2013 Jan-Dec 2014
Total All Sales $560,531 $560,419 0.0%
Fuel Sales $460,803 $452,683 (1.8)%
Fuel Gallons 133,218 136,255 2.3%
Average Selling Price $3.46 $3.32 (4.0)%
In-Store Sales $130,778 $137,762 5.3%
Foodservice Sales $24,494 $27,198 11.0%
Merchandise Sales $106,884 $111,170 4.0%
Mdse less Cigarettes $64,704 $68,425 5.7%
Cigarettes $42,916 $43,437 1.2%
Source: CSX, LLC
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The Association for Convenience & Fuel Retailing
Store Level Sales (same firms, Jan – May 2015)
Per Store/Per Month Rest of US Region 6
Total All Sales $428,732 $469,194 9.4%
Fuel Sales $307,387 $376,377 22.4%
Fuel Gallons 130,904 129,377 (1.2)%
Average Selling Price $2.35 $2.91 23.9%
In-Store Sales $141,445 $88,576 (37.4)%
Foodservice Sales $24,481 $7,880 (67.8)%
Merchandise Sales $117,265 $81,214 (30.7)%
Mdse less Cigarettes $64,872 $49,680 (23.4)%
Cigarettes $52,393 $31,535 (39.8)%
Source: CSX, LLC
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The Association for Convenience & Fuel Retailing
Store Level Gross Profits (same firms)
Per Store/Per Month Jan-Dec 2013 Jan-Dec 2014
Total Gross Profit $69,807 $77,767 11.4%
Fuel $24,914 $30,281 21.5%
Pool Margin 18.70 22.22 18.8%
Margin less CC Fees 13.36 16.88 26.4%
In-Store $43,043 $45,870 6.6%
Foodservice $14,080 $15,645 11.1%
Merchandise $29,308 $30,573 4.3%
Mdse less Cigarettes $23,293 $24,802 6.5%
Cigarettes $6,248 $6,053 (3.1)%
Source: CSX, LLC
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The Association for Convenience & Fuel Retailing
Store Level GP$ (same firms, Jan – May 2015)
Per Store/Per Month Rest of US Region 6
Total Gross Profit $71,059 $74,923 5.4%
Fuel $24,690 $42,692 72.9%
Pool Margin 18.86 33.00 75.0%
Margin less CC Fees 14.16 27.76 96.1%
In-Store $43,277 $26,950 (37.7)%
Foodservice $12,609 $3,339 (73.5)%
Merchandise $30,823 $23,831 (22.7)%
Mdse less Cigarettes $24,833 $18,900 (23.9)%
Cigarettes $5,989 $4,931 (17.7)%
Source: CSX, LLC
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The Association for Convenience & Fuel Retailing
Regular Unleaded Margins
Source: CSX, LLC
12.8
14.8
13.8 14.2
18.1
13.1
16.3
18.5 18.4 19.0
22.3
12.0
14.0
16.0
18.0
20.0
22.0
24.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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The Association for Convenience & Fuel Retailing
Has Gas Consumption Bottomed Out?
Source: Energy Information Agency
7,500
8,000
8,500
9,000
9,500
10,000
Jan 06,2006
Jan 06,2007
Jan 06,2008
Jan 06,2009
Jan 06,2010
Jan 06,2011
Jan 06,2012
Jan 06,2013
Jan 06,2014
Barr
els p
er d
ay (t
hous
ands
)
Weekly through December 19, 2014
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The Association for Convenience & Fuel Retailing
Core Direct Store Operating Expenses
Per Store/Per Month Jan-Dec 2013 Jan-Dec 2014
Wages & Benefits $21,428 $22,760 6.2%
Card Charges $6,686 $6,838 2.3%
Rent $4,668 $4,971 6.5%
Utilities $2,964 $3,165 6.8%
Repairs & Maintenance $2,854 $3,132 9.7%
Supplies $1,213 $1,295 6.7%
Total DSOE $41,105 $43,349 5.5%
Source: CSX, LLC
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The Association for Convenience & Fuel Retailing
NACS Regions
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The Association for Convenience & Fuel Retailing
8587899193959799
101103105107
Dec-
11Ja
n-12
Feb-
12M
ar-1
2Ap
r-12
May
-12
Jun-
12Ju
l-12
Aug-
12Se
p-12
Oct
-12
Nov
-12
Dec-
12Ja
n-13
Feb-
13M
ar-1
3Ap
r-13
May
-13
Jun-
13Ju
l-13
Aug-
13Se
p-13
Oct
-13
Nov
-13
Dec-
13Ja
n-14
Feb-
14M
ar-1
4Ap
r-14
May
-14
Jun-
14Ju
l-14
Aug-
14Se
p-14
Oct
-14
Nov
-14
Dec-
14Ja
n-15
5 CENTRAL
3 MIDWEST
4 SOUTH CENTRAL
Regional Trends in Fuel Consumption Trailing 36 Mos. through Jan 2015, Dec 2011 = 100
6 WEST
USA
2 SOUTHEAST
Source: EIA Prime Supplier Sales Volumes
1 NORTHEAST
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The Association for Convenience & Fuel Retailing
Sales By Region Same Firms (Jan-Dec 2014 Change YOY)
Per Store/Per Month NE (1) SE (2) MW (3) SC (4) CE (5) WE (6)
Total All Sales (0.2)% 0.2% 0.1% 1.4% (1.2)% (0.3)%
Fuel Sales (2.0)% (0.4)% (1.1)% 0.2% (4.2)% (1.4)%
Fuel Gallons 1.9% 3.8% 2.9% 4.7% (0.2)% 1.5%
Avg. Selling Price (3.9)% (4.1)% (3.8)% (4.3)% (4.0)% (2.9)%
In-Store Sales 3.4% 4.2% 4.2% 6.3% 5.1% 5.5%
Foodservice Sales 9.0% 12.7% 7.1% 8.5% 10.4% 3.4%
Merchandise Sales 1.6% 2.9% 3.9% 5.9% 3.9% 5.5%
Mdse less Cigarettes 3.3% 3.5% 6.4% 7.6% 6.2% 8.7%
Cigarettes (2.4)% 1.7% 1.2% 2.7% 0.5% 1.6% Source: CSX, LLC
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The Association for Convenience & Fuel Retailing
GP$ By Region Same Firms (Jan-Dec 2014 Change YOY)
Per Store/Per Month NE (1) SE (2) MW (3) SC (4) CE (5) WE (6)
Total Gross Profit 10.1% 10.1% 6.7% 13.5% 8.1% 15.0%
Fuel 23.0% 21.7% 13.2% 26.4% 13.3% 20.6%
Pool Margin 20.6% 17.2% 10.0% 20.7% 13.6% 18.8%
Margin less CC Fees 28.8% 24.5% 14.6% 30.9% 19.3% 24.6%
In-Store 4.4% 3.9% 3.0% 7.2% 6.18% 8.2%
Foodservice 8.1% 13.9% 9.6% 7.0% 8.2% 15.2%
Merchandise 1.8% 1.5% 1.2% 7.0% 5.1% 6.5%
Mdse Cigarettes 2.9% 4.0% 3.6% 10.1% 7.0% 9.0%
Cigarettes (3.3)% (8.5)% (5.2)% (2.5)% (1.9)% (4.1)% Source: CSX, LLC
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The Association for Convenience & Fuel Retailing
Two Stories To Tell
Candy & Fresh Fruit • Why the explosive growth in candy during the
recession. Why? • And why are fresh fruit sales simultaneously
increasing? Coffee • Why did McDonalds capture Starbuck’s
customers during the recession instead of us?
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The Association for Convenience & Fuel Retailing
Takeaways • Record profits!
– Continuing strong growth in store profitability – Fuel margins were the kicker in 2014
• What’s driving the industry? – Immediate Refreshment – Immediate “Refueling” – The last one standing in Cigs – And an industry under transformation!
• Watch out! – Wage pressure – Outrageous cost of payment continue – Cost control is vital
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The Association for Convenience & Fuel Retailing
Is Our Growth Really Going To Be From Foodservice? (2013/2015 Major QSR Sales) Per Store/Per Month Previous Current Change
McDonalds (U.S Same Store) 3.3% (0.2)% (3.5)Pts
McDonalds (U.S. Franchised) 4% 1% (3.0)Pts Burger King (N. America Same Store Growth) 3.5% (0.9)% (4.4)Pts Burger King (N. America Total Sales Growth) 3.0% (0.9)% (3.9)Pts Wendy’s (N. America Same Store Company Owned) 1.6% 1.9% 0.3Pts
Wendy’s (N. America Same Store Franchised) 1.6% 1.7% 0.1Pts
Taco Bell 5.0% 5.5% 0.5 Pts
KFC 5.0% 1.0% (4.0)Pts
Pizza Hut 5.0% 1.5% (3.5)Pts Source: NACS Research
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The Association for Convenience & Fuel Retailing
Burger IPOs in 2014
Habit Burger 100 locations in 4 states (HABT) IPO closed Nov 25, 2014. Raised $92.4m at $18/share. Trading at $29.85, 65.8% increase.
Shake Shack 63 global locations
(SHAK) Filed for IPO Dec 29, 2014 Seeking $100m
$82m in sales, 2013
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The Association for Convenience & Fuel Retailing
Food Trucks…Convenient Food!
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The Association for Convenience & Fuel Retailing
Learnings From QSR
• QSR Sales Dynamics – Short brand life cycles – Constant menu (brand?) innovation is vital – Be convenient and Fun!
• We have a broad “Competitive Set” – The consumer doesn’t think about “channels”
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The Association for Convenience & Fuel Retailing
reFresh(ing) Our Industry’s Image!
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The Association for Convenience & Fuel Retailing
We Have to Change the Dialogue! C-Stores
• Purveyors of death • Addictors to gambling • Enablers of drunk
driving • Contributors to obesity • Dead end jobs • Dirty stores • Crime ridden facilities
Gas Stations • Destroying the
environment • Petroleum=Ultimate
Villain • Helpless to “control” the
cost of an essential commodity
• Necessary evil
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The Association for Convenience & Fuel Retailing
A Contrary View of Our Industry/Stores • We create opportunities
– 2.4 million jobs – First jobs, teaching responsibilities – First businesses
• We are responsible retailers – 3X more ID verifications than TSA
• We contribute to our communities – 4X more youth sports teams – $175 billion in taxes – 152,794 stores in every community
• We provide Choice – Healthy options & indulgent delights
• 167 million transactions/day!!!
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The Association for Convenience & Fuel Retailing
A Contrary View of Our Industry/Stations • Petroleum = Affordable Fuel • Alternatives are being introduced
– Ethanol – CNG – Electric – Hydrogen
• Increased fuel efficiency • Improved air quality • Close and convenient fueling facilities regardless of
the fuels of the future • 96% of the retail facilities independently operated
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The Association for Convenience & Fuel Retailing
reFresh! Changing the Dialogue • The Model – Pricing Gouging
– 10 year commitment, targeting specific audiences • Telling our story (or others will)
– Industry “story-telling” advocacy – P/R Toolkit to activate and hone our members’ voices – The venues (Zoning, In-Store) – Don’t run from who we are; Emphasize “Choice”
• The targeted “Ears” – “Officials” – Senior editors of mass media
• The “Voices” – NACS – State associations – YOU!
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The Association for Convenience & Fuel Retailing
Telling Our Story – Early Work
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The Association for Convenience & Fuel Retailing
Telling Our Story – Early Work
Countering NIMBY: Convenience Store
Site Approval Toolkit
A primer on the approval process, and strategies for retailers seeking approva
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The Association for Convenience & Fuel Retailing
Early Work – Telling Our Story!
It was a great event. The Congressman had fun engaging with customers and learning about our business and our industry. For customers to come in and see cameras and the member of Congress, it gives our operation a heightened view within the community.“ Lynn Rasmussen, Regional Director - Maverik
Congressman Joe Wilson (SC) Congressman John Barrow (GA)
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The Association for Convenience & Fuel Retailing
Early Work – Telling Our Story!
Senator Mike Enzi (WY) Congressman Mike Coffman (CO)
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The Association for Convenience & Fuel Retailing
NACS Contact Information
Hank Armour President & Chief Executive Officer +1.703.518.4282 [email protected] www.nacsonline.com