Circle K: US C-Store Asset Quality & Unit Growth

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Looking at the US market today, Couche-Tard has roughly 5% market share? They have 9,000 stores in North America, 7,000 in the US yet there is still over 150,000 total stores in the US. How do you see the market structure evolving, over the next 10 years?

It is different throughout the markets. In some, you have fairly large jobbers. In Florida, for example, we have one jobber that probably has 800 stores that nobody has ever heard of. There are other operators, like the QuikTrips, the RaceTracs and the EGs of the world that have built regional presence where they have anywhere from 500 to 2,000 stores. Those players are still in the market, as well.

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What do you mean by good and not good? How do you define that?

We usually write the stores as either an A, which would be larger format, big gas presence, large lot, well lit, more modern; or a B store, which is maybe a newer store format, maybe 10 or 15 years ago, where it’s a 3,000 square foot building, with four or five pumps. The new ones would be 5,000 square feet, with eight to 10 pumps. Then you would get a C class, which would probably be the 1970s version, where it’s 2,000 to 2,400 square feet or maybe an under-canopy, with one or two pumps out front.

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What portion of Circle K’s 7,000 stores do you think are A, B and C formats?

It’s probably 25% A stores, probably around 40ish for Bs and the rest are Cs or Ds.

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