Casey’s General Stores didn’t really get into the acquisition game until 2000. Prior to that, it was active in acquiring franchised stores bearing the Casey’s brand as part of a consolidation effort. By the turn of the century, however, “we developed a way to value [third-party stores] and it became part of our growth strategy,” says Brian Johnson, who has been with the publicly owned company for 16 years and in his current role for three.
Most of the chain’s acquisitions are small deals, with one store here and three there. That doesn’t mean the chain dismisses the megadeals that have shaken up the industry in recent years, just that it’s judicious in where it spends its money.
“There’s a lot of M&A growth in the industry, and we typically participate,” by watching deals and placing bids, Johnson says. “But more often than not, the premium value is at a level that we’re not comfortable with.”
Instead, Casey’s primarily grows though new construction, seeking out markets that fit the company strategy: small communities, often lacking a full-size grocery store.
“The majority of our shareholders are growth-oriented, and our stock trades at a premium due to our steady rate of growth, year over year,” he says. “New-to-industry allows us to control that better.”
Over the past three years, Casey’s has acquired 67 stores and built 189. For its 2020 fiscal year, which ends in April, Casey’s forecasted it would build at least 60 sites and acquire 25. “We’re on pace for the 60,” Johnson says.
Casey’s will get an additional boost to its new-store efforts in the near future when it opens a third distribution center in Joplin, Mo., in the southern portion of the company’s operating territory. The new facility will initially serve 400 to 600 of the company’s more than 2,100 stores.
“It’s going to enable us to push our footprint of stores further,” Johnson says. With its original distribution center in Ankeny, Iowa, the company opened a second facility in Terra Haute, Ind., in 2016, enabling growth into eastern Indiana, Michigan and Ohio. The third site is expected to open opportunities in Oklahoma, Kansas, Arkansas and north Texas.