Casey's Reveals Second Distribution Site

Will break ground in November to facilitate further expansion

Greg Lindenberg, Editor, CSP

Casey's Convenience Store

ANKENY, Iowa -- Casey's General Stores Inc. said Tuesday that it plans to break ground on the company's second distribution center in Nov. 2014, announcing for the first time where it will be built. The facility will be located in Terre Haute, Ind., and will employ more than 150 people, the company said.

The distribution center will be at least 250,000 square feet with an estimated cost of $30 million. The Ankeny, Iowa-based company said that it expects the construction project to be completed in 12 to 18 months, and the new facility to open its doors by fall 2015. A second distribution center will allow it to reach new markets and increase distribution efficiencies.

Indiana Govenor Mike Pence joined Casey's executives in making the announcement (for the economic details, see the related report and slideshow).

"One of Casey's objectives is to continue to grow our store base in our existing 14 state territory, at the same time expanding our presence in new markets," said Robert Myers, chairman and CEO of Casey's. "Casey's devoted a significant amount of time and resources to the site selection process for this facility. We believe Terre Haute is the most strategic location that will enable us to expand our territory further south and east, while at the same time providing a more efficient distribution system to our existing stores."

Along with the construction of this facility, the company has also recently begun building a 38,000-square-foot addition to its current distribution center in Ankeny.

In March, CFO Bill Walljasper said during the company's fiscal third-quarter 2014 earnings call that within "four or five years, we [will] probably start to thinking about a third distribution center."

The second distribution center will create "operational efficiencies" right away, said Walljasper. "Stem miles [will drop] dramatically," he explained. "Right now, we have three-day truck routes [that] will be relatively eliminated with the second distribution center and just one-day and two-day truck routes. And it's not just the miles driven, it's also the expenses of the drivers; we don't have a sleeper units in our tractors, so we pay for the expense of meals and overnights and hotels for our drivers, so that's another big expense that needs to be factored in."

Both projects, and a third site, will be instrumental in supporting the chain's growth. Walljasper confirmed the current observations being reported in the press that traditionally rural-focused Casey's is moving into more populated areas. Observers will see "a little bit more gravitation to what I'll call more suburban locations," he said. Its new stores and remodels are "geared towards a higher-traffic-type store."

Casey's operates c-stores in 14 Midwestern states, primarily Iowa, Missouri and Illinois. It also operates one standalone pizza delivery and carryout store. On Jan. 31, 2014, Casey's operated 1,783 corporate stores.

Part of CSP's 2014 Convenience Top 101 retailers