CORPUS CHRISTI, Texas -- Contract renegotiations and "selective price increases" are helping keep Susser Holdings Corp. in the black in terms of its foodservice offerings.
Executives at Susser, dba Stripes Convenience Stores, are proud to note that the recession hit its markets late and ended early, but said on an earnings conference call with analysts this past week that rising costs reached a point recently that required action.
"Last year, we mentioned that rising commodity costs, although manageable, were putting some pressure on merchandise and foodservice margins," Steve DeSutter, president and CEO of Susser's retail division, said. "Our team's been working hard to find ways to combat these pressures and have been able to renegotiate several key items to offset approximately half of the expected cost increases. In addition, we've implemented selective price increases in some regions, which we believe should cover most of the balance."
While offering few specifics, CEO Sam Susser added, "We have taken some price [increases] on some foodservice items in some regions. It's not across the board. They're modest increases that correspond with modest cost increases."
Susser said the chain also is seeing inflationary pressure on merchandise such as beer, snacks, candy and coffee.
"We're seeing modest inflation pressure across our supply chain, and we feel pretty good about being able to pass along very modest increases where it's appropriate and necessary," he said. "It's not across all regions; we are still trying to manage the business site by site and community by community. So it's not one-size-fits-all, but we think it's manageable."
DeSutter reported that total foodservice now accounts for 21% of the chain's merchandise sales and 31% of merchandise gross profit.
"Our Laredo Taco Co. restaurants, which are the largest component of our foodservice category, performed exceptionally well in 2011, growing same-store units sold by 10% over the prior year," DeSutter said.
Currently, 331 of Susser's 542 stores include the proprietary Laredo Taco Co. foodservice offer.
Corpus Christi, Texas-based Susser Holdings Corp. is a third-generation, family-led business with approximately 1,100 company-operated or contracted locations. The company operates more than 540 convenience stores in Texas, New Mexico and Oklahoma under the Stripes banner.
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