Delek U.S. Parting Ways With 7-Eleven

BRENTWOOD, Tenn., and IRVING, Texas — Delek U.S. Holdings Inc. and 7-Eleven Inc. have agreed to exit a long-term convenience-store licensing agreement in West Texas and New Mexico, as reported in CSP Daily News.

“7-Eleven and Southwest Convenience have had a wonderful operational and marketing relationship for over 30 years,” said Tony Miller, executive vice president of Delek U.S. and president of Southwest Convenience Stores Inc., a unit of Alon USA Energy Inc. Delek U.S. acquired Southwest Convenience Stores through the acquisition of Alon USA in July 2017.

Delek U.S.’s strategic plans require it to grow its retail footprint outside its 7-Eleven licensed territory and into other markets supplied through its four refineries and pipeline network, Miller said.

In its fourth-quarter and full-year 2018 earnings report, Delek U.S. said that ending the agreement with 7-Eleven “will require the removal of 7-Eleven branding on a store-by-store basis by Dec. 31, 2021,” and it took contract termination and modification charges of $6.2 million.

“7-Eleven and Southwest Convenience have enjoyed a long-standing and productive relationship,” said Joe DePinto, president and CEO of 7-Eleven Inc., Irving, Texas. “We continue to wish them great success.”

Here are more details …

Brentwood, Tenn.-based Delek U.S. is a diversified downstream energy company with assets in petroleum refining, logistics, renewable fuels and c-store retailing. The refining assets consist of refineries in Tyler and Big Spring, Texas; El Dorado, Ark.; and Krotz Springs, La. Delek U.S. and its affiliates own approximately 63% (including the 2% general partner interest) of Delek Logistics Partners LP, a growth-oriented master limited partnership focused on owning and operating midstream energy infrastructure assets.

In November 2016, Delek U.S. sold its 350 MAPCO Express, MAPCO Mart and other c-store brands in Tennessee, Alabama, Georgia, Arkansas, Virginia, Kentucky and Mississippi to Santiago, Chile-based Compania de Petroleos de Chile COPEC SA (COPEC) for $535 million. Seven months later, Delek U.S. took ownership of Dallas-based Alon USA Energy Inc., becoming the largest 7-Eleven licensee in the United States, operating approximately 280 c-stores in central and West Texas and New Mexico.

Delek U.S. owns several Alon-branded c-stores in the Midland-Odessa region in Texas. It opened a new c-store in Midland on Feb. 26, the first under the DK brand, the new name for its convenience stores.

Delek’s Southwest Convenience Stores company-operated locations will rebrand to DK from 7-Eleven over a three-year period, from 2019 to 2021. During this transitional period, Delek will begin creating its own brand identity with its DK name. All company-operated stores will receive DK’s new Southwest contemporary facia upgrades and new interior merchandising elements. Delek will also introduce its mantra, “Making Your Day A Little Easier,” with a significant emphasis on making the customers’ shopping experience easy. This will be supported with new customer-friendly floor plans, advanced technology and new customer services.

At the opening of the DK store in Midland, Delek U.S. gave 17-year-old Make-A-Wish recipient Audrey, who is undergoing treatments for leukemia, the VIP treatment.

After arriving by limo to the new store, Audrey and her family were greeted by a cheering crowd of DK employees, the Make-A-Wish team and community members. Audrey was named the official Delek Wish Ambassador, an honor that includes having a DK frozen drink named after her. The “Audrey’s Aloha” is a blue raspberry flavor. Festivities also included a mini shopping spree inside the store, giving Audrey the chance to stock up on her favorite snacks and drinks. To end the day, Audrey’s family participated in a scavenger hunt to collect DK gift cards and other prizes.

In January, Make- A-Wish granted her wish of traveling to the Disney resort in Hawaii and sightseeing on the islands.

“These celebrations never get old,” said Tabatha Gonzalez-Olaechea, vice president of corporate partnerships for Make-A-Wish North Texas. “We couldn’t be more grateful for the opportunity to partner with companies like Delek U.S. to host enhancements.”

Meanwhile, for its fourth-quarter 2018, Delek U.S. reported net income of $121.6 million, compared to $211.1 million in fourth-quarter 2017.

On the Feb. 20 earnings call, Ezra Uzi Yemin, chairman, president and CEO, said the company sold “a few” c-stores in the Waco, Texas, market. “We exited that market,” he said, part of a strategy to sell underperforming stores, convert them to dealers, continue to sell them fuel from the Big Spring refinery and use the proceeds to build its “megastores,” including the new DK store in Midland.