For better or worse, gasoline played a major role in inside store sales—whether it was the oil-patch exodus in the South Central region, or favorable margins at the pump in the West. In-store sales were up in the West by 4.7%, while South Central saw a decrease of 0.4%.
“We saw the biggest exodus from the oil patch, and [the Bubba demographic] is a huge consumer of prepared food. That had a huge impact,” said Kyle McKeen, president and CEO of Dallas-based Alon brands. “Our area was really doing well and growing foodservice, but it’s been a challenge now in that area.”
Fuel gallons sold per store per month were up 0.9% in the West, while in the South Central they were down by 8.3%. And inside gross profits showed a similar gap, with South Central at a decrease of 1% per store per month, and the West gaining 4.6%.
Despite gains, challenges remain in the West in regard to employee retention. Nonmanager turnover increased by 10.3% in 2015.
“We continually lose staff to Uber and all that,” said Varish Goyal, president of Fremont, Calif.-based Vintners Distributors, in reaction to what he referred to as “1099,” a nod to self-employed tax-filing papers. “What we find is that a year later, they come back. We are at year two of this; it will be interesting to see what happens after.”
SOUTH CENTRAL
Key Productivity Measures
Dominating the South Central region, “Texas is the No. 1 state for the number of c-stores in the country,” said moderator Dae Kim of NACS. “It has more stores than any other state in the union. Texas alone is 10% of the store count in the country.”
And to that end, it is full of opportunity in foodservice. McKeen of Alon recognizes the possibilities inherent in the region’s lagging foodservice sales: “[Foodservice] is so powerful in the Northwest, but it’s an area in South Central that hasn’t been really developed.”
| 2015 | National | PCYA* | South central | PCYA* |
|---|---|---|---|---|
| Motor fuels gallons sold | 147,508 | 0.7% | 98,348 | (8.3%) |
| Merchandise sales | $124,001 | 4.8% | $89,197 | (0.5%) |
| Foodservice sales | $32,890 | 9.6% | $13,014 | (4.7%) |
| Store operating profit | $24,047 | 0.5% | $13,264 | (23.9%) |
| Break-even CPG | 9.75 | (8.4%) | 11.14 | 9.6% |
| EBITDA | $23,757 | 3.9% | $12,133 | (23.8%) |
| Nonmanager turnover (annual) | 86.5% | 12.2% | 103.4% | 11.2% |
| Manager turnover (annual) | 21.2% | (5.7%) | 16.2% | (25.2%) |
| Wages as a percent of gross-profit dollars | 25.0% | 4.4% | 25.0% | 10.8% |
| In-store gross-profit dollars per labor hour | $30.21 | 4.1% | $27.83 | 1.3% |
Direct Store Operating Expenses (DSOE)
“Wages and benefits across every region have gone up, and that’s something that everyone is looking at today,” McKeen said. “It’s a perfect storm.” Operating expenses, outside of credit-card fees, are becoming incredibly difficult to manage, especially in areas such as South Central that have seen dramatic changes in the local economy—likely due to the boom and bust of the shale business.
| Per store per month | National | South central | PCYA* |
|---|---|---|---|
| Wages and benefits | $26,297 | $16,368 | 2.3% |
| Credit card charges | $6,595 | $4,786 | (20.5%) |
| Utilities | $3,370 | $2,519 | (5.8%) |
| Repairs and maintenance | $3,468 | $2,602 | (0.6%) |
| Supplies | $1,648 | $981 | (10.9%) |
| Total DSOE | $48,786 | $32,380 | (3.1%) |
Top 10 Merchandise Categories in Gross-Profit Dollars
Beer is king in the South Central region—and for unique reasons. “If you go out West, a drug store in California looks like a packaged-liquor store in Texas,” said C.J. Watson, vice president of small-format sales for Anheuser-Busch. “The competitive dynamic is very, very different. Single-serve beer is a huge mix of sales. Ice bins of single-serve beers, almost anywhere else you go in the country—that’s not available. This geography tends to sell larger pack sizes. You tend to see more beer caves.” And because high-end beers have a much higher margin and tend to be sold only in single-serve in this region, it’s a valuable segment.
| Per store per month | National | PCYA* | South central | South central index | PCYA* |
|---|---|---|---|---|---|
| Cigarettes | $6,740 | 0.5% | $4,505 | 67 | 1.0% |
| Beer | $2,900 | 3.5% | $3,744 | 129 | 1.3% |
| Packaged beverages | $9,651 | 8.4% | $6,806 | 71 | 5.6% |
| OTP | $2,124 | 4.3% | $3,247 | 153 | (6.5%) |
| Salty snacks | $2,799 | 9.9% | $2,222 | 79 | 4.0% |
| Candy | $2,169 | 2.4% | $1,957 | 90 | 0.2% |
| General merchandise | $951 | 5.2% | $1,337 | 141 | (0.4%) |
| Sweet snacks | $1,087 | 8.1% | $861 | 79 | (2.3%) |
| Milk | $921 | 10.2% | $599 | 65 | 23.8% |
| Alternative snacks | $1,581 | 12.1% | $639 | 40 | (3.6%) |
| Total merchandise | $33,682 | 6.3% | $26,681 | 79 | (0.2%) |
Source: CSX LLC | * Percent change from a year ago
Continued: West
WEST
Key Productivity Measures
The panelists agreed: There’s a lot of good news here. “In region six, we had a very good year,” said Goyal of Vintners Distributors. “While we have the issues with finding employees, for the most part, from the store and fuel perspective, we’ve been able to benefit from that growth.” Goyal went on to say that the company has seen a decline in transaction amounts across the board, attributed to fewer trips due to gas prices.
| 2015 | National | PCYA* | West | PCYA* |
|---|---|---|---|---|
| Motor fuels gallons sold | 147,508 | 0.7% | 141,303 | 0.9% |
| Merchandise sales | $124,001 | 4.8% | $89,311 | 4.8% |
| Foodservice sales | $32,890 | 9.6% | $8,087 | 3.8% |
| Store operating profit | $24,047 | 0.5% | $38,173 | 36.1% |
| Break-even CPG | 9.75 | (8.4%) | 9.50 | (35.1%) |
| EBITDA | $23,757 | 3.9% | $37,363 | 53.9% |
| Nonmanager turnover (annual) | 86.5% | 12.2% | 97.5% | 10.3% |
| Manager turnover (annual) | 21.2% | (5.7%) | 23.3% | 23.2% |
| Wages as a percent of gross-profit dollars | 25.0% | 4.4% | 19.7% | (6.1%) |
| In-store gross-profit dollars per labor hour | $30.21 | 4.1% | $23.96 | 10.0% |
Direct Store Operating Expenses (DSOE)
Vintners has seen turnover rate increase to levels they haven’t seen in 10 years, Goyal said. “There’s a lot of competition for employees,” he said. “Most of us are already at $12, $13, $15 per hour because that’s what it takes to get in the market. … Walk down the street in any metropolitan area in California and you will see ‘Help wanted’ signs in every window.”
| Per store per month | National | West | PCYA* |
|---|---|---|---|
| Wages and benefits | $26,297 | $18,889 | 5.2% |
| Credit card charges | $6,595 | $6,864 | (9.6%) |
| Utilities | $3,370 | $2,813 | 2.3% |
| Repairs and maintenance | $3,468 | $3,312 | 11.8% |
| Supplies | $1,648 | $1,327 | (4.2%) |
| Total DSOE | $48,786 | $34,583 | (5.6%) |
Top 10 Merchandise Categories in Gross-Profit Dollars
“A lot of our growth has been because of fuel margins,” Goyal said. “Especially in the West region, that fuel margin comes down, and if we can’t make that equivalent in direct-store operating cost, we will be in a very tough position.”
Across the board, the Western region tends to follow all national trends, diverging only when it comes to beer. “This is really a tale of two states,” said Kim, referring to Texas and California. “That inside sales number is so similar to both, but what’s driving those numbers is very different. I think that’s what’s so interesting here is that beer is so high in both places, and that’s not really the case in other places.”
| Per store per month | National | PCYA* | West | West index | PCYA* |
|---|---|---|---|---|---|
| Cigarettes | $6,740 | 0.5% | $5,007 | 74 | 5.1% |
| Packaged beverages | $9,651 | 8.4% | $7,201 | 75 | 7.5% |
| Beer | $2,900 | 3.5% | $4,129 | 142 | 1.6% |
| OTP | $2,124 | 4.3% | $1,681 | 79 | 14.4% |
| Salty snacks | $2,799 | 9.9% | $1,320 | 47 | 13.1% |
| Candy | $2,169 | 2.4% | $1,754 | 81 | 4.0% |
| Sweet snacks | $1,087 | 8.1% | $922 | 85 | 18.3% |
| General merchandise | $951 | 5.2% | $872 | 92 | 17.3% |
| Alternative snacks | $1,581 | 12.1% | $723 | 46 | 15.1% |
| Edible grocery | $516 | (5.0%) | $489 | 95 | 16.5% |
| Total merchandise | $33,682 | 6.3% | $25,428 | 75 | 7.2% |
Source: CSX LLC | * Percent change from a year ago
Continued: Northeast
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