Foodservice

Murphy USA Going All-In on Foodservice

Company is prioritizing food and beverage as one of its key growth strategies
Murphy USA
Photograph: Shutterstock

EL DORADO, Ark. — Foodservice has become one of Murphy USA’s key strategies to spur store expansion and to add shareholder value in the coming years.

“Given the importance of new-store growth and performance as it impacts our five-year plan, we are focusing management's attention on building a distinctive food and beverage offer that is fit for our purpose, our format and our customers to support the highest possible returns on our growth investments,” Andrew Clyde, president and CEO of Murphy USA Inc., said during the company’s third-quarter earnings call.

Murphy is currently investing in team members with the “expertise and experience” to help grow its foodservice program, Clyde said. The company is also on the cusp of a five-year contract extension with c-store foodservice distributor Core-Mark International Inc., Westlake, Texas, which Murphy expects to benefit the business in 2021 and beyond by improving and optimizing its food and beverage offer and cost of goods, Clyde said.

Although Murphy already offers made-to-order items, dispensed beverages, coffee, open-air dairy products, and hot options, foodservice is its “least-developed category” and was essentially shut down at the start of the pandemic, Clyde said. To help its foodservice efforts, Murphy is open to sourcing outside help that could compliment its current strengths and provide “distinctive offers that scale suitable” for its formats and customers,” he said.

“We recognize that building these capabilities internally is not easy, and it takes time,” he said. “The key for us is to come up with a distinctive offer for food, dispensed beverage, [and] hot and cold that we're already putting the platforms in our stores and getting the most out of there.”

To accelerate the development of these “critical” food and beverage capabilities, the company is “open to pursuing” targeted mergers-and-acquisition activity in addition to organic growth, Clyde said. Targets could include chains with successful, at-scale food and beverage programs “where an acquisition could deliver immediate benefits versus solely building the capabilities internally,” the company said.

"Given we are in the early stages of building these new capabilities, we are also open to acquiring a capability set from the outside that could complement what we do well, and that could also provide distinctive offers that scale suitable for our formats and customers," said Clyde.

Leveraging Murphy USA’s scale and reverse synergies from the acquired chain’s foodservice program, Murphy USA could upgrade its existing offerings in the short term or long term, it said. “Whether the company builds or buys these capabilities, it intends to develop a fit-for-purpose [food and beverage] model for its portfolio of stores and a differentiated offer to its customers to enable it to achieve the highest possible returns from its organic and inorganic growth plans.”

El Dorado, Ark.-based Murphy USA sells gasoline and convenience merchandise at nearly 1,500 sites located 25 states, mostly in the Southwest, Southeast and Midwest.

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