ANKENY, Iowa -- Certainly, some of the advantages of company growth through acquisitionsare obviouslarger economies of scale, backoffice efficiencies and, ideally, more profit. But with every purchase comes the potential for some intangible benefits.
Such is the case as Casey's General Stores goes through the process of welcoming 33 Handimart stores into the chain. We have 10 Blimpies and one A&W [restaurant] that we now are franchising, said Casey's CFO Bill Walljasper. We felt with this that the boxes are big enough to add our prepared-food operations [image-nocss] to complement the Blimpie sandwich program. So we think we have an opportunity here to really enhance the whole food-court concept in those locations.
Thus, Ankeny, Iowa-based Casey's finds itself working on a new business model that could open the door to future acquisitions.
I would not look for us to go out and start branding quick-serve restaurants by any means, but we felt this was a unique opportunity and a very inexpensive opportunity to see whether we can coexist with a quick-serve restaurant, he said during the company's second-quarter 2007 earnings conference call. If you look at larger acquisitions, a lot of them are branded with some type of quick-serve restaurant, and we certainly didn't want to discard those operations just because they had a quick-serve restaurant going forward.
Casey's purchased the 33 Handimart stores in the Cedar Rapids, Iowa, area in August. The company has established growth goals of acquiring 50 stores and building 10 new sites in fiscal 2007, and oftentimes, those acquisitions come with unexpected benefits.
Take Casey's purchase of 51 Gas 'N Shop stores in the Lincoln, Neb., area one year ago. Little did the company know it would find a whole new way to look at its fountain program after absorbing the stores.
We had Pepsi in our fountains up in the state of Wisconsin for a couple years, and we knew those stores on average were higher in fountain sales than the remaining stores in our nine-state area, Walljasper said. But when we took over Gas 'N Shop and really dug into their financials, it became very apparent that their fountain sales were double, on average, our fountain sales in the state of Nebraska. That was the straw that broke the camels back for us to make a move to a dual [-branded] cola program.
Other lessons learned from recent acquisitions:
With the Gas N Shop acquisition, they own their ATM, and that was actually a revenue stream for them and not just a service that was put into a store, Walljasper said. And we're learning from that. We're looking at whether it's possible for us to own our ATMs and have another source of revenue throughout our 1,400 locations. So that's being tested now, and it's doing very well.We're learning a little bit on the coffee program from Handimarts, he said. They had a wide product offering in their coffee program, and we're taking a hard look at that to see if that's something that we can dovetail into our operations.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.