In 2022, Arko Corp. saw its store count grow by 21 units, same-store sales increase by 4.3% and the addition of new coffee equipment boost sales by 7.2%, on average. The parent company of convenience retailer GPM Investments reported operating income for the fourth quarter of $33.7 million, compared to $28.4 million in the prior year’s quarter. For the year, operating income was $167.0 million, compared to $142.1 million in 2021.
“ARKO had another excellent year in 2022, with strong performance that highlights our strength as a convenience retailer, with a clear strategy that has continued to drive growth in our business,” said Arie Kotler, chairman, president and CEO of Arko. “Our core convenience-store business performed very well as the many initiatives undertaken this year matured.”
The retailer completed two acquisitions—Quarles Petroleum and Pride Convenience Holdings—with two additional retail purchases pending: Transit Energy Group and WTG Fuels Holdings.
For fourth-quarter 2022, c-store operating expenses increased $13.6 million, or 8.7%, due to incremental expenses related to the Pride acquisition and an increase in expenses at same stores, including $7.0 million of higher personnel costs, or 11.5%, and $0.7 million of higher credit-card fees, or 3.5%, due to higher retail prices. For the year ended Dec. 31, 2022, store operating expenses increased $75.9 million, or 12.8%, as compared to the year ended Dec. 31, 2021, due to approximately $36 million of incremental expenses related to the Pride acquisition and the acquisitions completed in 2021 and an increase in expenses at same stores.
- GPM Investments is No. 6 on CSP’s2023 update of the 40 largest U.S. convenience-store chains by store count.
Also in 2022, the company fully remodeled six stores, and commenced the planning and engineering phase of a new-to-industry store in Atlanta, Texas, with expected construction completion in 2024.
The company continued to make progress on numerous in-store sales growth and margin enhancing initiatives, including preparing its store network for activation of the enhanced, customer relationship-focused fas Rewards loyalty mobile app, with new features for the benefit of its approximately 1.3 million currently enrolled members and new loyalty customers.
For the year, the company successfully installed 548 bean-to-cup coffee machines. As this initiative matures and marketing gains traction, stores with bean-to-cup machines have increased coffee unit sales by an average of 7.2% since installation, according to the company, and loyalty members taking advantage of the $0.99 coffee program enjoyed more than 741,000 more cups compared to 2021.
The company now has 18 Sbarro, the Original New York Pizza, locations and is working on additional new food offerings.
“We are focused on disciplined capital allocation, enhancing stores, building value for our customers through multiple initiatives, and pursuing strategic acquisitions,” Kotler said. “With our strong cash flow and balance sheet, I have confidence that we can continue to execute and create stockholder value over the long-term.”
For the fourth quarter, retail fuel profitability (excluding intercompany charges) increased approximately $14.6 million to $104.3 million, and, for the full year, increased $66.3 million to $416.2 million, both compared to the prior-year periods. Strong fuel margin capture of 41.4 cents per gallon (CPG) increased 23.6% for the fourth quarter and increased 22.8% to 41.4 CPG for the full year compared to the prior-year periods. There was an increase in same-store fuel profit of $11.3 million for the quarter, and an increase of $47.4 million for the year.
Same-store merchandise sales excluding cigarettes increased 4.3% for the quarter and 2.6% for the year and increased on a two-year stack basis by 9.2% for the quarter and 7.4% for the year. Total merchandise contribution increased $3.9 million, or 3.3% for the quarter, with merchandise margin increasing 50 basis points compared to the prior-year quarter. For the year, total merchandise contribution increased $28.3 million, or 6.0% compared to the prior year. Merchandise margin increased approximately 110 basis points to 30.4% for the year as a result of favorable changes in sales mix, the company said.
Arko’s GPM Investments owns and operates c-store brands including Fas Mart, Shore Stop, Scotchman, BreadBox, Young's, Li'l Cricket, Next Door Store, Village Pantry, Apple Market, Jiffi Stop, Admiral, Roadrunner Markets, Jiffy Food Marts, E-Z Mart, 1 Stop, TownStarr, ExpressStop and Handy Mart.
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