Susser's Well-Rounded Growth
Texas chain banks of acquisitions, sale-leasebacks & foodservice growth
CORPUS CHRISTI, Texas -- In summing up his company's second-quarter results---including net income up 67%---Susser Holdings president and CEO Sam Susser said, I really feel like we're starting to fire on more and more cylinders.
This was evident in the variety of ways---from small store purchases to sale-leaseback deals to an expansion of the company's foodservice program---the company is finding to grow and increase capital.
Proprietary foodservice program Laredo Taco Co. continues to perform very, very well, and we expect this [image-nocss] to remain an important growth driver over the next several years, Susser said on a conference call with industry analysts on Thursday. We opened five new kitchens during the quarter as part of our new-store-build program, and we added a sixth kitchen to an existing store. Click here to read more about Susser Holding's second-quarter results.
But perhaps the most vital piece of Susser's foodservice growth is the recent addition of a dinner day-part that gives customers a reason to come back more than once a day.
We're taking the lunch menu offering that we have, and we continue to offer individual tacos, but we're also offering in a package meal with a soda and side dishes, Susser said. All these locations are now offering either rotisserie or roasted chicken at a great value. Some stores are cooking fresh bread [big French rolls] in the afternoons and evening, as well. I think we are pleased to have the menu extension opportunity, and it's a big part of why our sales continue to grow inside stores that are mature.
During the second quarter, the company added the dinner day-part to eight locations, and dinner is now available at 60 of the company's 156 Stripes stores.
In terms of expanding it, I think we'll continue to be careful, Susser said. We're going to continue to expand over the coming year, but it'll be along the same lines as what you've seen this year, about 10 or 12 stores a year.
He added, Seventy percent of the customers who come to our restaurant counters also buy items elsewhere in the store, so Laredo Taco provides a lot of traction for other merchandise sales.
Meanwhile, the Corpus Christi, Texas-based company has seen healthy growth via small acquisitions and sale-leaseback deals that will mean $30 million to put toward additional growth.
We have four separate stores under contract that upon closing will be remodeled to give the stores our image and merchandise offering, including Laredo Taco Co., Susser said. We're continuing to look at good acquisition opportunities that will be accretive to earnings. We are working on numerous one-, two- and three-store projects, and we continue to actively explore larger possibilities.
The chain also bought 17 stores it previous leased for $6 million. We had 17 stores that were subject to a lease [including the land, building and equipment], said executive vice president and general counsel Chip Bonner. And in that lease, we had the ability to acquire those stores at a very favorable purchase option. We exercised and closed [that option] in the first part of July.
Regarding organic growth, Susser said, We opened five large-format stores in the second quarter. We have seven more under construction currently and expect three more to begin construction during the third quarter.
Another arrow in Susser Holdings' quiver is a healthy sale-leaseback program that, during the third quarter, will net the company $30 million.
We're currently working on an 11-store sale-leaseback package that we expect to finalize in the third quarter that will produce cash proceeds of about $30 million, which we anticipate using to fund capital-expenditure requirements in connection with out organic growth plan, as well as store acquisitions, said Mary Sullivan, CFO.