CHAMPAIGN, Ill. -- There's only one thing that can stop Superman, and that's Kryptonite. It was no single reason, however, that finally made the Stewart family sell the Super Pantry convenience store chain earlier this year.
It was because of the competitive environment, increasingly onerous financial demands and regulations, Jon Stewart, president and CEO of Tri Star Marketing, recently told The News-Gazette.
The sale of the 55-store chain to close in October, a little more than two months after the companies announced the asset purchase agreement.
"We felt it was the right decision for the family," Stewart told the newspaper.
The timing seemed right, he said. The convenience store sector is becoming more competitive and is rapidly consolidating. Margins on the fuel side of the business are shrinking, as supermarkets and wholesale clubs compete with convenience stores for gasoline sales. Had Super Pantry remained on its own, it would have faced more competition and would have had to make "significant" capital improvements, he said. And it would have faced additional regulation and costs related to enhanced security for credit cards.
Laval, Quebec-based Couche-Tard has rebranded the Super Pantry convenience stores to Circle Ks.
Stewart said his family had been considering a sale of Super Pantry for about three years. The family hired an adviser and shopped the chain to "strategic buyers" that were publicly traded companies. Indications of interest from potential buyers came at the end of June, and the company signed a letter of intent with Couche-Tard in early July.
The companies signed the asset purchase agreement on July 29, and the sale's closing in October took place over five days, with 11 stores changing hands each day, Stewart said.
Now that Tri Star has sold the convenience stores, as well as a warehouse and three bulk plants, Tri Star Marketing is pitting the money into commercial real estate.
"We're taking the proceeds and reinvesting in commercial real estate, predominantly in Texas, Arizona, Tennessee and Colorado," Stewart said.
Revenue for the Super Pantry chain ranged between $450 million and $500 million annually, with most of the variance related to the cost of fuel, Stewart said.
At one time, most of the chain's profit margin came from the forecourt. But now most of the margin comes from snacks, drinks, tobacco and other products sold inside the store, the backcourt. Now about two-thirds of the profit margin comes from the backcourt, while one-third comes from the forecourt, he said.
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