The extra space will be split roughly equally between larger beverage coolers and additional space for food, including a sub sandwich counter, a coffee bar and customer seating, [image-nocss] said the report.
Terry Handley, COO for Casey's, said the company's O-shaped design-so named because the cashier now will be in the middle of the store-is simply a reaction to customer demand for more kinds of beer, energy drinks and other items. "As producers have expanded their offerings of those products...the retailer has to be prepared to offer that to remain competitive," he told the newspaper.
Casey's executives said approximately a half-dozen stores with the new design are open or nearing completion, and the company hopes to complete a total of 20 by the end of April. Down the road, existing stores eventually will be remodeled to add food and cooler space, Handley said.
Michael Smith, a c-store analyst for Kansas City Capital Associates, told the paper that the trend is sweeping through much of the convenience business. "You do have a lot of people in the industry who are experimenting with a larger-prototype box," Smith said. "While they're going to be gas stations principally, they're finding that if they improve their merchandise, people will buy it."
For example, West Des Moines, Iowa-based Kum & Go LC has embarked on a strategy to divest smaller locations outside its core markets to focus on bigger stores. The average footprint of stores being divested is around 2,000 sq. ft., while stores being built are about 3,500 sq. ft. in size. The larger stores will typically provide additional convenience offerings for customers, including quick-serve restaurants, Sara Wille, a spokesperson for Kum & Go, told CSP Daily News in May. (Click here for coverage. Also click here.)
Casey's most recent financial statements show that gasoline was responsible for about 75.5% of the nearly $3 billion in sales that the company posted during the six months leading up to October 31; however, gasoline was responsible for less than 24% of the chain's profits. Instead, nearly 47% of Casey's $390 million profit during that period was attributed to sales of grocery items, including packaged food, packaged beverages and cigarettes. Another 26.9% of the profit came from prepared food and fountain drinks, according to financial statements cited by the paper.
According to the company, both retail categories have higher profit margins than gasoline-Casey's sells in-store items for 30% to 60% more than the company's cost, compared with a mark-up of 10 cents to 15 cents for every gallon of gasoline-and both retail categories have seen growing demand, unlike the demand for gasoline.
Bill Walljasper, Casey's CFO (pictured), acknowledged that the larger retail footprint means Casey's will be more insulated from swings in fuel prices. "The concept is not to be as reliant on gasoline as maybe some of our peers might be," he told the Register.
But Handley stressed that Casey's has no intention of getting away from its gasoline pumps. The chain has always aimed for providing customers with what they need, he said. For example, Casey's for decades has been a source for pizza, doughnuts and emergency gallons of milk in rural areas where restaurant chains may be hard to find. "This is just an extension of that," Handley said of the new design. "I don't think we're changing anything."
Smith called Casey's "probably about the best company in the industry," but he said not every c-store will follow the trend toward larger retail space because they won't be able to provide food that customers are willing to buy. "You're not just talking about a hot dog on a roller anymore," he said of c-store food. "You've got some pretty sophisticated offerings out there.... But it's not inevitable that everywhere you go to buy gas, you can buy a good sandwich."
[For more on Casey's new design, see the February issue of CSP magazine.]
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.