TUCSON, Ariz. -- With Alimentation Couche-Tard's Circle K and QuikTrip taking a growing interest in the Tucson, Ariz., market, "It was becoming increasingly difficult for us to remain competitive and compete," Bob Mahlstede told CSP Daily News yesterday as the reason he Loma Catalina Co. is handing the keys to its 17 Catalina Marts to Western Refining Southwest Inc.
"For a 17-store operation without a closer tie to an actual source of refined product," it got tough,said Mahlstede, president of the company. "I think Western's leverage and vertical integration will [image-nocss] allow them to be much more competitive in a very tough gas and convenience market."
As reported exclusively in a Morgan Keegan/CSP Daily News Flash yesterday, Western Refining Southwest will take over operation of the 17 stores over a four-day period beginning Monday, June 20.
Mike Polo, director of retail marketing for Western Refining Southwest, the retail arm of Tempe, Ariz.-based Western Refining Inc., said that the company is leasing the locations and will be operating them under the Western name.
Western Refining operates about 150 convenience stores in New Mexico, Arizona and Colorado. Its brands include Giant, Mustang, Thriftway, Sundial and Western Express. A number of locations feature the fuel brands of Conoco, Shell and Phillips66, in addition to the private labels, Giant and Western.
For Mahlstede, who originally worked on the construction side of the c-store industry, the sale of the stores is a matter of having come full circle. He spent much of the first half of 2003 assembling a group of investors $14,000 at a time to raise enough money to purchase his first store. Later aligning with Tom Keating, Loma Catalina puchased 12 stores from Chevron Inc. Since then, Mahlstede has worked hard to faithfully conduct business in line with the chain's motto: "Convenience at Its Best."
After adding a handful of additional stores over the years, Mahlstede came to a realistic conclusion: "We're not going to grow," he told CSP in early 2010. "We're 17 locations. We are going to make these 17 locations the best they can be." (Click here to read more of Mahlstede's 2010 interview.)
Handing the stores over to Western Refining Southwest was a final step in that reality.
"This is a good deal for our ownership and for the continuity of our stores," he said. "They will pick up all of the operations staff, and we have been able to place the few they do not need, which is a comfort to me and the ownership.
"I am not sure yet where I will land," he added. "I need to get the transition completed for the owners before addressing that."
In a letter to vendors, Mahlstede stressed that Catalina Mart's parent company, Tucson, Ariz.-based Loma Catalina Co., "is solvent and there is no threat of insolvency. We want to continue safe operations and quality customer service until Western takes over," he wrote. "Loma Catalina Co. will continue as an ongoing concern for the foreseeable future. We will simply not be a gas station or convenience store operator."
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