The Cigarette Store Corp., doing business as Smoker Friendly, rose from No. 41 with 182 stores on the 2022 Top 202 list to No. 28 with 291 stores this year.
With such a large jump in convenience and tobacco stores, President and CEO Terry Gallagher Jr. doesn’t expect 2023 to be a big year of M&A for the Boulder, Colorado-based company.
“Coming out of 2022, we knew that really biting off about 110 stores within about four months of each other would lead us into a period where we really wanted to make sure that those stores were fully integrated,” he says.
Smoker Friendly acquired 79 Tobacco Superstores, Forrest City, Arkansas, and 30 stores across Indiana and Kentucky from Collett Enterprises Inc. in 2022. The integration process required merging cultures and point-of-sale platforms, and rebranding products and store signage to Smoker Friendly in most cases.
Smoker Friendly owns a mix of tobacco stores, cigar lounges, liquor stores and fueling locations under the Smoker Friendly, Tobacco Depot, Smoke ‘N Go, Havana Manor and Gasamat banners.
In Gallagher’s view, the country has already hit a recession.
“We kind of feel that we are working through recessionary times right now anyways, and the cost of money is up some,” he says.
The cost of labor has also gone up—and that’s something Gallagher is paying extra attention to when looking at future M&A deals. As a result, the company likely won’t make any moves until at least the end of the year.
“I don’t think it’s tempered our enthusiasm for further acquisitions, but I think that as we do those, the one thing we don’t want to get careless with is that we’re not really doing the amount of due diligence that is necessary. And that we don’t overpay for a business,” he says.
“And so we’re watching what our debt load is, and we’re watching our interest rates and all the things that we should be doing as a good retailer in terms of operating a family business and moving forward with more acquisitions.”