andy jones - convenience · source: nielsen answers, january 2013 – december 2017, total u.s. all...
TRANSCRIPT
Andy JonesPresident & CEOSprint Food StoresNACS Research Committee
The Numbers, Part I:Financial & Industry Overview
1. Another flurry of M&A
2. Low fuel prices = More gallons
3. More Gallons = More Inside
4. Cost and availability of labor
5. THIRD consecutive record year of profit
Tale of TwoIndustries
Billy’s Wrap Last Year
1. Another flurry of M&A
2. Low fuel prices = More gallons
3. More Gallons = More Inside
4. Cost and availability of labor
5. THIRD consecutive record year of profit
Tale of TwoIndustries
Billy’s Wrap Last Year
1. Trip/transaction decline2. Labor3. Industry consolidation 4. Store opportunities 5. Future business models6. Speed of technological change
Research Committee Concerns
1. Trip/transaction decline2. Labor3. Industry consolidation 4. Store opportunities 5. Future business models6. Speed of technological change
Research Committee Concerns
What happened to trips?
Total CONSUMER shopping TRIPS DECLINE over the long term
Source: Nielsen Answers, January 2013 – December 2017, Total U.S. All Outlets Combined, Total Retailer Trips per HH
Total Consumer Shopping Trips Decline Over the Long Term
3736
3534
33 33
35
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
TOTAL US RETAILER TRIPS PER HH
Total CONSUMER shopping TRIPS DECLINE over the long term
Source: Nielsen Answers, January 2013 – December 2017, Total U.S. All Outlets Combined, Total Retailer Trips per HH
Total Consumer Shopping Trips Decline Over the Long Term
3736
3534
33 33
35
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
TOTAL US RETAILER TRIPS PER HH
3.6 3.32.4 2.6
0
1
2
3
4
2014 2015 2016 2017
Convenience Trips per Week
Source: NACS Convenience Tracking Program, n= 56,000How often do you visit this particular c-store chain?
Tailwinds Headwinds
Low Unemployment Low Working Rate
Low Gas Prices Aging Population
Low Prices Low Population Growth
Interest Rates Spending Challenges
Economic Conditions
Source: Nielsen and NACS
Consumer Confidence at Record Highs
Source: Bloomburg
1. Fuel prices 13% higher YoY2. Low income HH left behind3. Growth in eCommerce4. Political climate for Hispanics5. Aggressive QSR tactics
What happened to trips?
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00Ja
n-13
Mar
-13
May
-13
Jul-1
3Se
p-13
Nov
-13
Jan-
14M
ar-1
4M
ay-1
4Ju
l-14
Sep-
14N
ov-1
4Ja
n-15
Mar
-15
May
-15
Jul-1
5Se
p-15
Nov
-15
Jan-
16M
ar-1
6M
ay-1
6Ju
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Sep-
16N
ov-1
6Ja
n-17
Mar
-17
May
-17
Jul-1
7Se
p-17
Nov
-17
$3.4919.3¢
2013 2015
$2.4021.8¢
$3.3622.8¢
2014
$2.1120.9¢
2016 2017
22.0¢$2.38
Motor Fuel Price & Pool Margin
Source: NACS
US Households
Source: Deloitte “The great retail bifurcation”
Low Income, 40%
Middle Income, 40%
High Income, 20%
Low Income, 40%
Middle Income, 40%
High Income, 20%
US Households
• Income < $50,000• 49% Homeowners• Decrease in
discretionary share of wallet
• No discretionary spend
Source: Deloitte “The great retail bifurcation”
Low Income, 40%
Middle Income, 40%
High Income, 20%
US Households
• Income < $50,000• 49% Homeowners• Decrease in
discretionary share of wallet
• No discretionary spend
• Income $50,000 -$100,000
• 68% Homeowners• Income +$12,624 since
2007• Discretionary spend
$3,162
Source: Deloitte “The great retail bifurcation”
Low Income, 40%
Middle Income, 40%
High Income, 20%
US Households
• Income < $50,000• 49% Homeowners• Decrease in
discretionary share of wallet
• No discretionary spend
• Income > $100,000• 83% Homeowners• Income +$46,000 since
2007• 10yr 401k gain +$360,000• 101% of growth in
discretionary spend
• Income $50,000 -$100,000
• 68% Homeowners• Income +$12,624 since
2007• Discretionary spend
$3,162
Source: Deloitte “The great retail bifurcation”
Household Income Growth, 2007-2016
Source: Deloitte “The great retail bifurcation”
Low Income HHs Expense Growth
Source: Deloitte “The great retail bifurcation”
Total Outstanding Debt Hits 26% of Disposable Income
Source: BEA, Board of Governors
Brick & Mortar, 91% Online, 9%
US Retail Sales
Source: Deloitte & Bureau of Economic Analysis
4.7%
-9.1%
2.2%
8.1%6.8%
4.0% 3.8% 3.7%1.3%
4.1% 4.3%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
B&M
Brick & Mortar Sales Growth vs. Online Sales Growth
Source: U.S. Census Bureau
4.7%
-9.1%
2.2%
8.1%6.8%
4.0% 3.8% 3.7%1.3%
4.1% 4.3%
18.0%
-5.5%
14.4%16.1% 15.5% 15.6% 16.0%
14.6% 14.7% 14.3%
18.4%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
B&M Ecommerce
Brick & Mortar Sales Growth vs. Online Sales Growth
Source: U.S. Census Bureau
So who buys online?
Source: Deloitte “The great retail bifurcation”
43%40%
31%27%26%
22%22%23%
17%12%13%
22%
34%32%
37%36%
32%32%32%29%
28%26%25%
32%
23%28%
32%37%
41%46%47%
48%55%
62%62%
46%
Dollar StoresConvenience/Gas
Value GrocerySupercenters
Drug StoreConventional Grocery
Mass Merch (ex. Supers)Online
Pet StoreWarehouse Club
Premium GroceryAll Outlets
$29k or less $30 - $69.9k $70k +
Where people shop depends on income…
% of Households 28% 33% 39%Source: Nielsen Homescan, Total U.S. 52 w/e 12/31/2016; excludes gas only or Rx only trips
AMZNYE 2016$366.5B
AMZNToday
$691.8B1.9x
Source: Bloomberg
16.0
16.2
20.1
23.0
24.8
27.3
37.8
53.4
86.1
166.3
0 20 40 60 80 100 120 140 160 180
Collectibles & Fine Art
Tools & Home Improvement
Industrial & Scientific
Cell Phones & Accessories
Automotive Parts & Accessories
Sports & Outdoors
Electronics
Books
Home & Kitchen
Clothing, Shoes & Jewelry
Products Sold (in millions)
* 160,681x the average c-store
Amazon Sells 562,382,292 Products*
Source: ScrapeHero
Amazon Sells 562,382,292 Products
Gift Cards, HBC, Automotive
Grocery
Source: ScrapeHero
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
'10 '11 '12 '13 '14 '15 '16
16.3%
Amazon
11.1%
7.8%
6.8%2017 Convenience
Walmart
2.26%
Source: WSJ, The Daily Snapshot
Amazon’s Low Prices Still Produce High Net Retail Margins
Brick & Mortar Retail UniverseTrade Channel 2016 2017 Unit
Change % Change
Convenience Store 154,535 154,958 423 0.27%
Single Stores 97,504 97,643 139 0.14%
Category Killer 87,983 86,306 (1,677) (1.91%)
Liquor Store 47,073 46,257 (816) (1.73%)
Drug 43,636 43,169 (467) (1.07%)
Supermarket 51,191 51,134 (57) (0.11%)
Dollar 28,832 30,332 1,500 5.20%
Cigarette Outlet 11,085 11,006 (79) (0.71%)
Mass Merchandiser 6,727 6,470 (257) (3.82%)
Wholesale Club 1,370 1,387 17 1.24%
Kiosk/Other 20,699 19,921 (778) (3.76%)
Total Retail 453,131 450,940 (2,191) (0.48%)
Source: Nielsen, TDLinx
1470
700
600
400 400358 330
250 220 200 190 180 171 160 138 124 120 110 106 100 100 100 100 74 74 70 70 70 68 65 61 60 60 55 50 48 45 44 40 32 31 27 23 12 10 8 6 6 6 30
200
400
600
800
1,000
1,200
1,400R
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Year-to-Date (January 5, 2018) Major U.S. Store Closure Announcements
2017 Store Closures
7,795 Total Announced
279% YoY
Source: Yahoo Finance
1500
1290
650
400320
190111 100 100 100 90 90 80 75 70 60 60 59 52 50 50 30 24 20 19 17 10
0
200
400
600
800
1,000
1,200
1,400
1,600
2017 Store Openings
5,617 Total Announced
163.5% YoY
7-Eleven: 412Couche-Tard: 318
Source: Forbes
600500
396 379
200 200144 124 102 100 100
64 50 50 45 40 39 30 18 12 100
100
200
300
400
500
600
2018 Store Closures
3,203 Total Announced
Source: Business Insider
Source: Deloitte analysis of various annual reports
25%
19%
15%
0%
5%
10%
15%
20%
25%
30%
2015 2016 2017
Buys c-store food >3 times per week
Frequent Food Buyers (>3 times/week) Hispanic Percent
Source: NACS Convenience Tracking Program, n= 56,000How often do you visit this particular c-store chain?
1. Fuel prices 13% higher YoY2. Low income HH left behind3. Growth in eCommerce4. Political climate for Hispanics5. Aggressive QSR tactics
What happened to trips?
Labor
It’s Never Been Harder to Fill a Job in America
Source: Deutsche Bank
Retail has Suffered Worse Job Losses
Source: BLS
$7.95
$8.37 $8.27 $8.46 $8.56 $8.51
$8.76 $9.02
$9.44
$9.99 $10.19
$7.80
$8.30
$8.80
$9.30
$9.80
$10.30
$10.80
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Average Store Associate Wage
Source: Historic NACS Compensation ReportSource: NACS Compensation Report
123%
104% 107%
73%
95%
75%
86%
91% 95%
133%
115%
60%
70%
80%
90%
100%
110%
120%
130%
140%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Store Associate Turnover
Source: Historic NACS Compensation ReportSource: NACS Compensation Report
Average Cost to Hire, Train & Equip
Source: 2016 NACS Compensation Report
Interviews A (1-10 stores)
B (11 - 50 stores)
C (51 - 200 stores)
D & E (> 200 stores)
Total
Mean $938 $1,254 $1,960 $1,763 $1,303
Median $500 $1,000 $2,100 $1,475 $772
Source: NACS Compensation Report
Hourly Store Associate
26%
22%
25%
15%
18%
12%14% 14%
10%
27%
18%
0%
5%
10%
15%
20%
25%
30%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Store Manager Turnover
Source: Historic NACS Compensation ReportSource: NACS Compensation Report
Average Cost to Hire, Train & Equip
Source: 2016 NACS Compensation Report
Interviews A (1-10 stores)
B (11 - 50 stores)
C (51 - 200 stores)
D & E (> 200 stores)
Total
Mean $2,541 $3,587 $4,036 $7,400 $3,573
Median $1,750 $3,000 $3,000 $4,500 $2,750
Source: NACS Compensation Report
Store Manager/Assistant Manager
Cost Reduction vs. Meeting Employee Needs
What job seekers care about:
• Getting enough hours
• Pay
• Opportunities for growth
Source: Snagajob Hourly Worker Survey, n=2,000
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%U
nem
ploy
men
t
Unemployment Rate
4.1%
Through Nov 2017
10.0%
Labor Force Participation vs. Unemployment Rate
Source: Bureau of Labor Statistics
60.0
61.0
62.0
63.0
64.0
65.0
66.0
67.0
68.0
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Labo
r For
ce P
artic
ipat
ion
Une
mpl
oym
ent
Unemployment Rate
4.1%
Through Nov 2017
Labor Force Participation Rate
62.7%
10.0%
Labor Force Participation vs. Unemployment Rate
Source: Bureau of Labor Statistics
Labor Force Participation Heat Map
Source: BLS
Labor Force Participation
<60.7%
62.7% avg +/- 2pts
>62.7%
Value of Welfare by State Heat Map
Source: Cato Institute “The Work versus Welfare Trade-Off”
<$12/hour
Total Value of Welfare Benefits
$13.50/hour +/- $1.50
>$15/hour
1.1%
0.6%0.8%
0.3%0.04%
0.2%
0.4%
0.6%
0.3%
0.25%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
'77 - '86 '87-'96 '97-'06 '07-'16 '17-26
Native Born Immigrant
1.3%
1.0%
1.4%
0.6%
0.29%
Census Forecast
Percent Increase in Civilian Non-Institutional Population
Source: Census Bureau
Consolidation
59,876 67,612
78,395 76,044
84,770 84,574
89,957 90,683 89,567 90,049 91,815 93,209 93,819 95,056 96,318 97,359 97,504 97,643
59,876 56,904
54,029 54,615
53,435 56,081
55,162 55,611
55,308 54,492 54,526 54,917 55,401 56,226 56,476 56,836 57,031 57,315
- 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000
200020012002200320042005200620072008200920102011201220132014201520162017
Single Stores
All Others
Dec, 2017 154,958 stores
FLAT
NACS & Nielsen/TDLinx Store Count
Source: Nielsen, TDLinx
2,006 1,959 1,880 1,900 1,852 1,813 1,814 1,7811,679 1,597
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Company Count
Source: Nielsen, TDLinx
20
25
30
35
40
1000
1200
1400
1600
1800
2000
2200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Company Avg. Store Count Linear (Company) Linear (Avg. Store Count )
Company Count and Average Store Count
Source: Nielsen, TDLinx
2018 Rank Company Total 2018 U.S. Store Count1 7-Eleven Inc. 10,0002 Alimentation Couche-Tard Inc. 7,7723 Marathon Petroleum Corp. (Speedway) 2,7304 Casey’s General Stores Inc. 1,9805 Murphy USA Inc. 1,4236 GPM Investments LLC 1,1147 BP America Inc. (ampm) 9508 Pilot Flying J 7679 Chevron Corp. 766
10 EG Group (Kroger) 76211 Wawa Inc. 76012 QuickTrip Corp. 75913 Cumberland Farms 60014 Sheetz Inc. 56415 Kwik Trip Inc. 56016 Andeavor 55017 TravelCenters of America LLC 49518 RaceTrac Petroleum Inc. 45519 Love’s Travel Stops & Country Stores 43820 Kum & Go LLC 413
Top 20 Total Store Count 33,858
Top 20 U.S. Convenience Brands
Source: CSP – Ranking the top 40 C-Store Chains
M&A Activity• Yesway
• Acquired 40 locations from various deals• Pester Marketing Co.
• Acquires 61 locations from various deals• Global Partners LP
• Bought 33 stations from Honey Farms• EG Group Acquires Kroger Convenience
• $2.1B for 791 Stores• Alimentation Couche-Tard Inc.
• Reached a deal to purchase CST Brands cleared in June • Holiday Stores 500+ stores
• 7-Eleven • Signed an agreement to purchase 1,108 Sunoco locations; will sell 26 outlets to Sunoco, and Sunoco will retain 33 fuel outlets it intended to sell due to
SEC• Petroleum Marketing Group
• Acquired 223 dealer-operated sites owned by Gulf Oil LP (Undisclosed terms)• GPM Investments LLC
• Acquired 273 E-Z Mart Stores convenience stores • Acquired 20 Jiffy Mart convenience stores • Acquired 92 Roadrunner stores
• Brookwood Financial Partners LLC• Acquired 72 locations in various deals
• Kwik Trip • Acquired 34 PDQ stores convenience stores
Number of Public Companies1996: 7,439
2017: 3,616(51%) Change
US IPO Market, 1991-2016
Source: Dealogic, Ernst & Young
Source: Dealogic, Ernst & Young
Acquisitions of US Private Companies with $100M+ Valuations
VC Backed M&A Strong – Valuations Drive Deal Values Up
Source: Dealogic, Ernst & Young
Performance Benchmarks
Snapshot 2016 2017 % Change
Store Count 154,535 154,958 FLAT
Inside Sales $233.0B $237.0B 1.7%
Fuel Sales $316.8B $364.1B 14.9%
Total Sales $549.9B $601.1B 9.3%
Pretax Profit $10.2B $10.4B 1.6%
Credit Card Fees $9.5B $10.1B 5.8%
Employees 2.50M 2.48M (0.8%)
Fuel Margin (cpg) 20.09 22.02 9.6%
Net of CC Fees (cpg) 14.93 16.57 11.0%
Key Industry Metrics
Source: NACS, Nielsen, TDLinx & EIA
173.
918
2.4
190.
419
5.0
199.
320
4.0
213.
422
5.8
233.
023
7.0
450.
232
8.7
385.
2 486.
950
1.0
491.
548
2.6
349.
031
6.8
364.
1
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Dol
lars
in B
illio
ns
Inside SalesMotor Fuels Sales $601.1 vs. $549.9
Up 9.3%
Industry Sales
Concern:Fuel Up 14.9%Inside Up 1.7%
Source: NACS
7,900
8,100
8,300
8,500
8,700
8,900
9,100
9,300
9,500
9,700
9,900
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
2016 2017B
arre
ls a
Day
(tho
usan
ds)
Week
First 6 months, consumption off (2.4%) YoY
U.S. Fuel Consumption
Source: EIA
Equivalent to 4.4 Days of no fuel sold in the US
7,900
8,100
8,300
8,500
8,700
8,900
9,100
9,300
9,500
9,700
9,900
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
2016 2017B
arre
ls a
Day
(tho
usan
ds)
Week
(0.8%) YoY Decline in Consumption
U.S. Fuel Consumption
Source: EIA
7,900
8,100
8,300
8,500
8,700
8,900
9,100
9,300
9,500
9,700
9,900
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
2016 2017 2018B
arre
ls a
Day
(tho
usan
ds)
Week
U.S. Fuel Consumption
Source: EIA
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00Ja
n-13
Mar
-13
May
-13
Jul-1
3Se
p-13
Nov
-13
Jan-
14M
ar-1
4M
ay-1
4Ju
l-14
Sep-
14N
ov-1
4Ja
n-15
Mar
-15
May
-15
Jul-1
5Se
p-15
Nov
-15
Jan-
16M
ar-1
6M
ay-1
6Ju
l-16
Sep-
16N
ov-1
6Ja
n-17
Mar
-17
May
-17
Jul-1
7Se
p-17
Nov
-17
$3.4919.3¢
2013 2015
$2.4021.8¢
$3.3622.8¢
2014
$2.1120.9¢
2016 2017
22.0¢$2.38
Motor Fuel Price & Pool Margin
Source: NACS
Industry Profits
($2.0)
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Dol
lars
in B
illio
ns
$10.4 vs. $10.2Up 1.6%
Source: CSX
Profits vs. Credit Card Fees
$3.2
$10.1
$4.0
$10.4
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Bill
ions
of D
olla
rs
Card Fees Pretax Profit
Source: NACS
173.
918
2.4
190.
419
5.0
199.
320
4.0
213.
422
5.8
233.
023
7.0
450.
232
8.7
385.
2 486.
950
1.0
491.
548
2.6
349.
031
6.8
364.
1
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Dol
lars
in B
illio
ns
Inside SalesMotor Fuels Sales $601.1 vs. $549.9
Up 9.3%
Industry Sales
Concern:Fuel Up 14.9%Inside Up 1.7%
Source: NACS
S Curve Phases
Smokes
CokesGas
Our Business Model
S Curve Phases
Per Store/Per Month 2016 2017
Total All Sales $366,619 $409,163 11.6%
Fuel Sales $298,510 $342,846 14.9%
Fuel Gallons 141,169 143,800 1.9%
Average Selling Price $2.11 $2.38 12.8%
In-Store $159,751 $162,435 1.7%
Foodservice $35,613 $36,749 3.2%
Merchandise $124,423 $126,220 1.4%
Mdse Less Cigarettes $78,700 $79,045 0.4%
Cigarettes $45,454 $46,555 2.4%
Sales
Source: CSX
Per Store/Per Month NE (1) SE (2) MW (3) SC (4) CE (5) WE (6)
Total All Sales 9.6% 9.5% 8.2% 12.2% 9.8% 12.6%
Fuel Sales 9.8% 16.2% 4.6% 17.4% 14.4% 15.2%
Fuel Gallons 0.3% 0.3% 0.7% 3.4% 2.0% 3.6%
Avg Selling Price 13.8% 12.5% 10.6% 13.5% 12.2% 11.2%
Inside Sales 0.9% 1.1% 1.5% 3.4% 3.1% 5.4%
Foodservice Sales 4.1% 6.8% (1.3%) 7.1% 3.2% 12.5%
Merchandise Sales 0.7% 0.3% 1.9% 2.6% 3.1% 4.1%
Merch – Cigs 1.4% 1.0% 3.6% 2.8% 3.2% 5.0%
Cigarettes (2.9%) (1.9%) (0.2%) 0.7% 2.9% 2.8%
Regional Sales Change
Source: CSX
Per Store/Per Month 2016 2017
Total Gross Profit $78,421 $83,231 6.1%
Fuel $28,361 $31,670 11.7%
Pool Margin 20.09 22.02 9.6%
Margin – CC Fees 14.93 16.57 11.0%
In-Store $54,600 $55,985 2.5%
Foodservice $18,263 $19,084 4.5%
Merchandise $36,482 $37,179 1.9%
Mdse Less Cigarettes $29,490 $30,077 2.0%
Cigarettes $7,031 $6,980 (0.7%)
Gross Profits
Source: CSX
Per Store/Per Month NE (1) SE (2) MW (3) SC (4) CE (5) WE (6)
Total Gross Profit 4.3% 8.1% 3.5% 7.3% 4.7% 4.0%
Fuel 14.2% 12.9% 11.4% 15.6% 6.4% 0.8%
Pool Margin 9.4% 15.8% 3.8% 11.8% 4.4% (0.4%)
Margin – CC Fees 10.1% 18.8% 3.1% 12.0% 3.3% (2.6%)
In-Store 1.1% 3.1% 2.8% 4.5% 4.0% 8.2%
Foodservice 4.1% 6.8% (1.3%) 7.1% 3.2% 12.5%
Merchandise 2.2% 4.2% 4.7% 3.3% 1.8% 4.9%
Merch – Cigs 1.4% 2.9% 7.4% 3.1% 2.6% 6.2%
Cigarettes (2.7%) 7.0% (2.9%) 0.1% (1.7%) (1.5%)
Regional GP$ Change
Source: CSX
Per Store/Per Month 2016 2017
Wages & Benefits $18,872 $20,401 8.1%
Card Fees $5,047 $5,652 12.0%
Utilities $3,033 $3,183 4.9%
Repairs & Maintenance $2,910 $3,042 4.5%
Supplies $1,713 $1,733 1.2%
Total DSOE $47,325 $50,767 7.3%
Facility Expense $11,875 $13,003 9.5%
Total DSOE & Facility Expense $59,200 $63,771 7.7%
Core Direct Store Operating Expenses
Source: CSX
Per Store/Per Month 2016 2017
Wages & Benefits $18,872 $20,041 8.1%
Wages $15,260 $16,520 8.3%
Payroll Taxes $1,396 $1,493 6.9%
Workers Compensation $365 $352 (3.8%)
Health Insurance $1,368 $1,495 9.3%
Other Benefits $660 $727 10.1%
Wages & Benefits Detail
Source: CSX
DSOE Growth
80
90
100
110
120
130
140Ja
n-15
Mar
-15
May
-15
Jul-1
5
Sep-
15
Nov
-15
Jan-
16
Mar
-16
May
-16
Jul-1
6
Sep-
16
Nov
-16
Jan-
17
Mar
-17
May
-17
Jul-1
7
Sep-
17
Nov
-17
DSOE Total 113
Card Fees 95
Repairs and Maintenance 136
Supplies 108
Utilities 103
Subtotal W&B 116
Source: CSX
Wages & Benefits Growth
80
90
100
110
120
130
140Ja
n-15
Mar
-15
May
-15
Jul-1
5
Sep-
15
Nov
-15
Jan-
16
Mar
-16
May
-16
Jul-1
6
Sep-
16
Nov
-16
Jan-
17
Mar
-17
May
-17
Jul-1
7
Sep-
17
Nov
-17
Other Benefits 120
Health Insurance 132
Payroll Taxes 117
Workers Comp 94
Wages 125Subtotal W&B 123
Source: CSX
Per Store/Per Month NE (1) SE (2) MW (3) SC (4) CE (5) WE (6)
Wages & Benefits 3.2% 2.2% 4.7% 1.26% 7.1% 9.3%
Card Fees 8.9% 6.7% 8.1% 13.6% 9.2% 12.0%
Utilities 2.9% 2.7% (1.9%) 2.7% 3.1% 4.9%
Repairs & Maintenance 2.4% 6.1% 5.2% 8.8% (1.4%) 4.5%
Supplies (3.3%) (1.4%) (5.6%) (0.1%) 22.7% 6.3%
Total DSOE 3.4% 3.1% 5.1% 4.7% 4.4% 6.7%
Facility Expense 9.3% (3.1%) 1.0% (4.1%) 10.9% 10.1%Total DSOE & Facility Expense 4.5% 1.8% 4.4% 2.7% 5.6% 7.5%
Regional DSOE Change
Source: CSX
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cha
nge
in D
olla
rs
Inside GP$ DSOE Linear (Inside GP$) Linear (DSOE)
Change in Inside GP$ vs DSOE
Source: CSX
2017 TopQuartile
2nd
Quartile3rd
QuartileBottomQuartile
Store Operating Profit $38,267 $18,399 $10,111 $4,225
Store Operating Profit/SF $11.39 $5.98 $3.68 $1.47
Breakeven CPG 8.60 12.43 10.53 20.21
EBITDA $39,415 $17,573 $11,125 $3,881
EBITDARL $43,390 $21,307 $17,002 $9,349
Net Profit Margin(Pretax/Sales) 3.20% 2.35% 2.31% 0.50%
Return on Capital Employed 11.40% 12.84% 5.79% 5.61%
Capital Productivity
Source: CSX
2017 TopQuartile
BottomQuartile Diff
Store Operating Profit $38,267 $4,225 9.1x
Store Operating Profit/SF $11.39 $1.47 7.4x
Breakeven CPG 8.60 20.21 (11.61) cpg
EBITDA $39,415 $3,881 10.2x
EBITDARL $43,390 $9,349 4.6x
Net Profit Margin(Pretax/Sales) 3.20% 0.50% 2.70 pts
Return on Capital Employed 11.40% 5.61% 5.79 pts
Capital Productivity
Source: CSX
2017 TopQuartile
2nd
Quartile3rd
QuartileBottomQuartile
Motor Fuels Gallons Sold 202,834 116,056 106,054 94,610
Merchandise Sales $156,695 $109,613 $111,039 $91,884
Foodservice Sales $50,206 $30,793 $25,657 $11,863
In-Store GM% 34.01% 33.89% 33.31% 27.13%
Cigarette GM% 14.69% 15.56% 13.74% 15.31%
Average Square Feet 3,361 3,075 2,751 2,878
In-Store Sales/Sq. Foot $60.87 $45.54 $49.67 $36.01
Store Operational Productivity
Source: CSX
2017 TopQuartile
BottomQuartile Diff
Motor Fuels Gallons Sold 202,834 94,610 2.1x
Merchandise Sales $156,695 $91,884 1.7x
Foodservice Sales $50,206 $11,863 4.2x
In-Store GM% 34.01% 27.13% 6.88 pts
Cigarette GM% 14.69% 15.31% (0.62) pts
Average Square Feet 3,361 2,878 1.2x
In-Store Sales/Sq. Foot $60.87 $36.01 1.7x
Store Operational Productivity
Source: CSX
2017 TopQuartile
2nd
Quartile3rd
QuartileBottomQuartile
Non-Mgr Turnover (annual) 74.7% 110.9% 106.6% 98.8%
Manager Turnover (annual) 17.4% 31.3% 46.1% 21.3%
In-Store Sales per Labor Hour $99.88 $101.58 $75.91 $86.73
In-Store GP$ per Labor Hour $34.34 $31.27 $23.26 $24.13
Labor Cost per Hour $16.54 $18.00 $13.79 $15.22
People Productivity
Source: CSX
1. Trip/transaction decline• Impact of Amazon
2. Labor• Impact of welfare
3. Industry consolidation • Fewer firms, higher values
4. Store opportunities • Alan – “How to become a destination”
5. Future business model• Need to develop
6. Speed of technological change• Gray – “Technology Adoption is Not an Option”
Research Committee Concerns
Research Committee Concerns1. Trip/transaction decline
• Impact of Amazon2. Labor
• Impact of welfare3. Industry consolidation
• Fewer firms, higher values4. Store opportunities
• Alan – “How to become a destination”5. Future business model
• Need to develop6. Speed of technological change
• Gray – “Technology Adoption is Not an Option”