When EG Group bought Kroger’s 762-store convenience portfolio in 2017, heads turned.
Two years later, when the British upstart claimed the 562-store Cumberland Farms chain, the industry was again caught off guard by its bravado.
In a matter of three short years, the European juggernaut has amassed 1,700 U.S. locations, coming from nowhere to land in the top five of CSP’s Top 202 ranking of U.S. convenience chains by store count.
At the helm of this phenomenon are Zuber and Mohsin Issa, two brothers who started in the family business with a single petrol station back in England. Their entrepreneurial inclinations led them to dabble in mall-kiosk retailing until their own vision of a fuel-and-food, multibranded destination site swept through Europe, Australia and now 31 U.S. states.
This quick growth comes at a time of historically high multiples in the convenience-store channel, the brothers admit. “It’s a different world than that of several years ago, with incumbents, new entrants and oil majors all interested in pursuing c-store quality,” said Mohsin Issa, co-founder and co-CEO, via email to CSP.
To stay near the top, EG Group has employed a mix of financial strategies, including “engaging supportive debt markets, effectively utilizing free cash the business has generated and, for the Cumberland Farms acquisition, a meaningful equity injection,” Mohsin Issa said.
Yet while overcoming high multiples is a critical factor, more important to the brothers’ vision are centralized management, large boxes and the “ability to significantly grow the acquired business through synergy realization and operational excellence,” Mohsin Issa said.
“We recognize our [investments] can be strengthened in many ways,” said Zuber Issa, who focuses on front-line, day-to-day profitability. “When we acquire new sites, we go in and look at what we can do to capitalize our initial investment. It’s important not to just buy and not do anything but invest and do what’s best for our customers.”