Single Store Owner

JUN 2016

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20 / Convenience Store News for the Single Store Owner / JUNE 2016 Cover Story "The industry was able to take advantage of lower fuel prices to help drive inside sales, while enjoying historic fuel margins," said Steve Montgomery, president of c-store consulting team b2b Solutions LLC, one of several industry experts that our editors tapped to lend their perspective to the industry's finan- cial results. Motor fuel gallons sold, which peaked for the industry in 2007, set a new high last year at 151.3 billion, with 75.4 billion of those gallons pumped by single-store owners. Motor fuel dollar sales declined 22 percent industrywide as the average price fell from $3.41 per gallon to an aver- age of $2.58 per gallon last year. Total gross profits for single-store owners rose 2.9 percent to $47.7 billion. Fuel profits were a record-high $17.6 billion, an increase of 0.5 percent. Both these figures follow record profitability figures in 2014. More importantly, in-store gross profit dollars for single-store owners were up a solid 4.3 percent over the previous year. Low gas prices and an improving economy appear to be driv- ing sales of premium brand products, according to many retailers. Gross mar- PerCenT of groSS PerCenT of in-STore SaleS Margin dollar ConTribuTion Single SToreS ToTal induSTry Single SToreS ToTal induSTry Cigarettes 31.54% 30.84% 11.91% 15.28% Foodservice 15.59 15.71 26.40 25.48 Packaged beverages 12.27 12.69 15.76 15.44 Beer/malt beverages 9.64 9.51 6.99 6.60 Edible grocery 4.97 5.11 6.21 5.97 Other tobacco products 4.73 4.91 4.63 4.43 Candy 3.24 3.22 5.44 5.25 General merchandise 3.32 3.25 4.91 4.61 Salty snacks 2.63 2.73 3.28 3.19 Fluid milk products 1.82 1.89 1.12 1.06 Source: Convenience Store News Market Research, 2016 Motor Fuel Volume (gallons in billions) Low gas prices helped single stores pump out more gallons than in 2014. Top 10 In-Store Categories Single stores generate a higher percentage of their sales from cigarettes than the industry average, but at a lower gross margin dollar. Single SToreS (in billions) ToTal induSTry (in billions) 2015 2014 % Change 2015 2014 % Change Motor Fuels $196.3 $252.7 -22.3% $389.9 $501.4 -22.2% In-Store $119.9 $114.9 4.4% $213.0 $203.1 4.9% ToTAL $316.2 $367.6 -14.0% $602.9 $704.5 -14.4% Source: Convenience Store News Market Research, 2016 Total Sales Although overall revenues declined because of low fuel prices, single stores, like the industry at large, generated a strong in-store sales gain last year. gin as a percentage of sales rose to 15.09 percent, up from 12.62 percent in 2014. In pretax profits, single-store owners again beat the record gains of the previ- ous year, achieving pretax profits of $4.2 billion in 2015. Foodservice sales (including prepared food, hot, cold and frozen dispensed beverages) were just as strong at single stores as they were at chains. Single stores achieved foodservice sales growth of 6.9 percent, nearly matching the total industry's 7.1-percent growth, which was the category's highest per- centage gain since 2012. Merchandise sales (excluding food- service) were up 3.4 percent to $100.8 billion for single stores, easily topping the 2.6-percent gain of 2014. "Foodservice has been one of the primary drivers of growth for c-stores, and 2015 proved that," said Tim Powell, vice president of consulting for Q1 Productions. "Discretionary income was 2015 2014 2013 75.4 73.4 71.8 151.3 147.0 143.3 Single SToreS Single SToreS Single SToreS ToTal induSTry ToTal induSTry ToTal induSTry % Change % Change % Change % Change % Change % Change 2.7% 2.2% 1.4% 2.9% 2.6% 1.6% Source: Convenience Store News Market Research, 2016

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