"This is a new growth market for GPM, and we are absolutely focused on growing this region.”
From that quote, you can tell that Chris Giacobone, COO of Richmond, Va.-based GPM Investments, is excited these days. It seems he’s always talking about another acquisition for this growth-minded retailer that is rapidly seeing its territory move beyond its Mid-Atlantic base.
“We currently have concentrations in the Southeast, Mid-Atlantic, Northeast and now the Midwest,” Giacobone said in an exclusive interview. “Contiguous growth is always easiest, but not necessary.”
This latest purchase is the culmination of a nearly 18-month effort of a deal that started in August 2013, when GPM acquired VPS Convenience Store Group’s Southeast division of 263 company-owned and 33 dealer locations across North and South Carolina, Tennessee and Virginia. That deal ushered in a slew of brands for GPM, including Scotchman, Young’s, Li’l Cricket, Everyday Shop, Breadbox and Cigarette City.
GPM last month closed on the second leg, acquiring the remaining portion of VPS’ c-store network: 163 company-operated c-stores located in the Midwest, with 116 stores in Indiana, 10 in Ohio, 30 in Michigan and seven in Illinois under the Village Pantry and Next Door Store brands.
“We have started 2015 with a continued focus on store expansion,” GPM president and CEO Arie Kotler says. “This acquisition is our largest purchase in this region of the country, and we are excited to continue our plan of strategic growth.”
“It is more important for us,” Giacobone says, “that we continue to focus on deals that allow us to take full advantage of our systems and efficiencies.”
GPM’s growth trajectory is remarkable when one considers that its anchor operation, the Fas Mart chain, had endured nearly two decades of pendulum swings with multiple owners and bankruptcies and near bankruptcies.
But less than four years after regaining the helm of the company, Kotler and GPM Investments have not only stabilized a foundering business, but they also have reinvigorated it, led by Giacobone and a team of veteran operation and category specialists.
While GPM is growing, its selling partner, Sun Capital Partners of Boca Raton, Fla., is exiting. After a more than eight-year run in the c-store arena, during which it rapidly grew to 430 stores through multiple acquisitions, Sun Capital is shifting to other investments.
In some ways, its stay in the c-store channel was like an extended, unplanned vacation. The private-equity group got into the industry in September 2006 through the acquisition of Marsh Supermarkets in Indiana.
“The primary target for Sun was the Marsh grocery store operation and not the c-store business,” VPS chairman and CEO Jeff Turpin recalled during an interview with CSP. “The c-store division was a bonus.” (See sidebar, below, for more from Turpin.)
But the bonus soon turned into an opportunity. Sun Capital, which is also vested in the restaurant segment with the likes of Friendly’s and Boston Market, recognized the fragmented nature of the convenience sector and embarked on a buying spree. From 2006 to 2013, Sun completed a series of c-store transactions that included, most notably, Next Door Stores from Imperial Co., Scotchman and Young’s from Worsley Cos., and Li’l Cricket. (In April 2009, Sun Capital combined the Southeast and Midwest stores to form the VPS Convenience Store Group.)
Among the deals:
- September 2006: Village Pantry (154 stores)
- October 2007: Next Door Stores (33 stores)
- February 2008: Ameristop Markets (9 stores)
- March 2008: Scotchman, Young’s (122 stores)
- May 2008: Li’l Cricket Food Stores (88 stores)
- May 2011: Virginia Oil (17 stores)
- May 2012: Colonial Pantry (7 stores)
- March 2013: Myrtle Beach (2 stores)
- June 2013: Bread Box Stores (17 stores)
CONTINUED: Turpin's Time in C-Stores
Turpin’s Time
Following GPM Investments’ acquisition of the second bundle of retail outlets that made up VPS Convenience Store Group, VPS chairman and CEO Jeff Turpin is absorbing life’s changes and is looking for his next adventure. But the c-store industry hasn’t seen the last of him.
“I’m ready for more travel, biking adventures and family time,” he says. He and his wife are biking enthusiasts who last summer completed a 200-mile, six-day bike ride as part of Rails for Trails Sojourn group. “But I’ve had too much fun in this industry. I’m not ready to say goodbye.”
Nor is he thinking about retirement: “Yes, I plan to stay in the business. I’m not quite ready for the transition of overseeing 430 stores and working with many dedicated employees across eight states to fıshing off a pier at Wrightsville Beach.”
On now being the seller instead of the buyer, he says, “What I enjoyed the most was working with many different co-workers in eight different states. … I still continue to have business relationships with the former operators that go back to 2001. It’s much more fun to buy than to sell.”
Since joining the industry, Turpin has seen tremendous changes—from in-store upgrades, most notably in foodservice, to the emergence of deep-pocketed outside investment groups and the rise of master limited partnerships (MLPs).
“Twenty years ago, when I joined the c-store business [after leaving public accounting], the c-store space generally owned the fuel business and cigarette business,” he says. “Look at the new players in the fuel business today (grocery, Walmart, Sam’s, Costco). Cigarettes are now offered by dollar stores at low margins.
“The focus is now on fresh offerings, foodservice, larger sites with more variety and, yes, very competitive fuel pricing—much less focus on fuel, cigarettes and beer.”
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