Casey’s General Stores is on a roll. Or is it a donut? Or pizza crust? Whatever it is, you can bet it was baked fresh from scratch in one of its store kitchens in the wee hours of the morning.
After meeting with investors in New York City earlier this month and ringing the NASDAQ opening bell the following day, Casey’s President and CEO Darren Rebelez found time to talk with CSD about the chain stepping up its already-robust foodservice, its relentless focus on the guest experience, strong stock performance, and future plans for store growth and investment.
CSD: Talk to me about the company; things are going pretty well?
DR: Yeah, yeah, things are going really well here at Casey’s. We wrapped up our second quarter a month or so ago and we had our sixth consecutive quarter of 20% earnings per share growth, so pretty big numbers.
CSD: You folks are looking at doing some expansion?
DR: We’ve been doing a lot of small-scale acquisitions over a number of years. In fact, over the last 10 years we’ve acquired almost 350 stores and they’re not headline-grabbing. They’re two stores, five stores, 10 stores at a time. But what they also don’t come with is big price tags. And so what we’ve found is that we can acquire these smaller businesses in more rural communities where we operate at much more attractive multiples and bring far more synergies to the equation.
Rewards Program Unveiled
CSD: Casey’s recently introduced its first rewards program. Can you tell me a little about that and how that got started?
DR: The Casey’s Rewards program is really part of our larger digital engagement strategy. It started earlier this year when we relaunched our mobile app and our e-commerce platform. For a lot of companies in our space, the e-commerce piece of it has been a challenge to stand up. The rewards piece maybe not, but the e-commerce has.
But for us, because of our huge pizza business, it really plays well for e-commerce. So, we started off of that – and then just this week we officially launched Casey’s Rewards.
CSD: Customers can redeem rewards points for fuel discounts or merchandise?
DR: … or they can convert them into cash that we call ‘Cash for Classrooms,’ where they’re able to pick a school in their local community and donate that money back to the school.
… the convenience stores are really a part of the fabric of the community and that’s definitely the case with Casey’s. People recognize that throughout our geography. And so, doing something to enable our guests to give back to their communities through our stores was important to us.
Make It Fresh … Every Day
CSD: I understand that all of your pizza dough and your bakery is made from scratch every day. That’s a tall order.
DR: Yeah, but that’s what makes it so good, right? We have kitchens in virtually all of our stores, and we have donut makers coming in at 3 o’clock in the morning to make the donuts – I mean, literally. And we make our pizza from scratch. We have mixers in every kitchen and we’re mixing the dough, rolling it out, topping it with our 100% whole milk mozzarella cheese. And so that pizza is as good as it gets. We’re confident in competing with anybody on the basis of quality.
CSD: Well, if you’re the fifth largest pizza chain in the country, for a convenience store to do that as far as all pizza companies go, that’s pretty impressive.
DR: Yeah. We’re really beginning to think of ourselves as being in the restaurant business. Sometimes people ask me, “Well, can a gas station have good food?” I kind of think of it the other way. We’re a restaurant that sells gas, not a gas station that sells food.
So yeah, we’re in the food business and we just hired our chief merchandising officer, Tom Brennan, who just came from CKE Restaurants. He was the chief operating officer there. We’re adding some other food service talent as well. We’re going to stand up a fully dedicated culinary team to help drive the innovation process around food. I’ve got a little bit restaurant background, too, so we’re going to take the food business seriously.
CSD: The industry is changing, and I think, once again, changing for the better because the stores are not just gas stations; they’re places where people hang out and eat and shop and all that stuff. It sounds like you guys are on the right track with that.
DR: Well, yeah. I think that’s why we’re bullish on this acquisition activity of some of these smaller operators because what you just talked about, evolving a food offer, having more technology, those are difficult to do unless you have scale and really need to be able to have the scale to invest in a technology platform, in a loyalty program, in a culinary team to really be able to do these things effectively.
And so, as it gets more and more difficult to make those investments and compete, we see more and more operators looking for an exit and that enables us to acquire those at attractive multiples, and then add the value that we do for all our capabilities and really make a compelling offer to the guests and to invest.
… And then, lastly, is accelerating that store growth. … We’re able because we have a really strong balance sheet, we’re able to fund all of that out of free cash flow. So, we don’t have to take on any existing debt to be able to fund all that.
Building a Bigger Company … Literally
CSD: Okay. Can you talk numbers on your new builds?
DR: For this year, the guidance we’ve provided – and we’re on track with that – is to build 60 organic stores and acquire 25. We’re on track to do that. By 2023, what we shared (with investors) is we would accelerate that to 90 organic and roughly 40 acquisition stores.
It’s a pretty meaningful acceleration from 85 total stores this year to 130 by the end of this three-year time period.
CSD: That’s pretty aggressive.
DR: Yeah. Well, and the nice thing is that when you look at our store footprint, we’ve got just about 2,200 stores in 16 states. But if you peel the onion back a little bit, about 2,000 of those stores are only in nine states. The other seven states, we’re just kind of getting started in right now.
Casey’s General Stores also launched a new brand campaign, “Here for Good,” doubling up on its commitment to quality food and merchandise, as well as to the communities it serves. Rebelez also mentioned that as the chain grows, the scale of its operation allows it to increase efficiencies while cutting costs.
Rebelez took over as Casey’s CEO in June of 2019. He’s spent his career learning the retail, food and service industries with some fairly heavy hitters. Rebelez is a former president of IHOP Restaurants, VP and COO at 7-Eleven, and filled other management roles with, among others, ExxonMobil and Thornton Oil Corp.
Oh, he’s also a graduate of West Point, former Army Ranger and Gulf War veteran.
If Casey’s was looking for well-rounded, experienced leadership, it sounds like they found it.