El Dorado, Ark.-based Murphy USA, which operates nearly 1,500 sites located primarily in the Southwest, Southeast and Midwest U.S., announced that it will acquire Whitehouse Station, N.J.-based, family-owned QuickChek Corp., with 157 stores in central and northern New Jersey and the New York metro area, in an all-cash transaction for $645 million. The transaction is expected to close during the first quarter of 2021.
Brandon Lawrence, founder of Fuel Insight, a data science consultancy, said that while many may be surprised by the news, it’s a a decisive step into Murphy USA’s new capital allocation strategy.
“In the context of COVID-19, generally anemic fuel demand growth and the rise of the consolidation players, this move makes sense for Murphy USA to leverage its scale and strong financial position to begin diversifying what used to be a fuel-first strategy,” he said. “Acquiring in new geography minimizes sales cannibalization and extends the reach of their fuel supply and distribution network. The increased network scale and assets in the NYH bulk supply market will help unlock value across their S&D value chain by creating additional flexibility and volume leverage.”
While Murphy USA remains committed to accelerating its new-to-industry program, he said, this news is a clear signal that they are looking for acquisition opportunities where it fits into their strategic plan.
According to Murphy USA, QuickChek records per-store per-year merchandise sales of $3.5 million, combined merchandise margins of 38% with food and beverage representing over 50% of the mix, and per-store per-year fuel gallons of 3.8 million. Additionally, Murphy USA said, QuickChek has a proven history of same-store-sales growth and a rich real estate pipeline to sustain unit growth within its existing footprint.
“There is no question that QuickChek was a desirable acquisition for any c-store operator looking for growth or a private equity firm looking to penetrate the industry,” said Steven Montgomery, president of b2b Solutions LLC. “That being said, I was surprised the Durling family was selling.”
Focus on Foodservice
Ultimately, Montgomery said, the acquisition provides Murphy USA with an opportunity to leverage QuickChek’s foodservice expertise across its existing network as well as any future acquisitions.
“(QuickChek) was well known for many items, including its coffee,” he said. “Murphy locations heretofore were known as a place to buy gas at a good price and for drinks and snack, but not foodservice.”
This shift in focus should come as no surprise, Lawrence added, given that Murphy USA’s Q3 earnings call specifically mentioned enhanced food and beverage capability.
“Murphy has signaled an interest in foodservice in recent quarters, but their challenge is unique as they’re basically starting from scratch with a brand that has never been known for foodservice,” said Frank Beard, director of Safe Shop and CStore Decisions’ director of special projects.
QuickChek has long been ahead of the curve with regards to foodservice, he pointed out, such as introducing touchscreen ordering back in 2006. The acquisition will save Murphy USA the hassle of starting from scratch and building capabilities internally.
“Acquiring QuickChek gives Murphy access to the necessary knowledge and know-how,” he said. “It also opens up new options for their organic growth strategy. The latter will be interesting to watch, however. While QuickChek is an established name in foodservice, brand recognition will decrease the further they go from New York and New Jersey.”