Selling More by Charging Less

Cigarette-pricing change drives nonfuel sales growth for TA

Steve Holtz, Editor in Chief, CSP Daily News

WESTLAKE, Ohio -- With TravelCenters of America reporting its strongest nonfuel sales ever yesterday (see story in this issue of CSP Daily News), CEO Thomas O'Brien is crediting a change to the company's cigarette pricing strategy as at least partially responsible for the growth.

"We changed our cigarette prices to state minimums from higher prices that we had previously," he said during an earnings call yesterday.

"By doing that, we are selling more cigarettes, but we're also selling more of other things to those people who are buying cigarettes, some of whom may have been a customer last year and some of whom may be a new customer."

Rebranding its gasoline pumps at 37 stores also drive traffic, according to O'Brien. Overall fuel volume for the 2011 third quarter increased 4.8% vs. the 2010 third quarter, and 1.8% on a same-store basis.

"During 2011 to date, we've rebranded 37 gasoline offers from unbranded or underperforming brands to market-leading national brands," O'Brien said. "Sales increases of gasoline at those sites have generally outperformed other sites."

Westlake, Ohio-based TA's travel centers operate under the TravelCenters of America, TA and Petro brand names and offer diesel and gasoline fueling services, restaurants, truck repair facilities, stores and other services. TA's nationwide business includes 235 travel centers located in 41 U.S. states and in Canada.

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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