Growing bigger is a natural desire of any business. The old adage is, when you stop growing, you start dying. For convenience store chains, this is the way of life. And the growth occurs in various ways. Some chains focus on organic growth, by expanding into new territories, and opening new stores, one or a few at a time. Others, not so patient, just buy up the competition, adding dozens, or even hundreds of stores at a time.
While organic growth is healthy and natural, it does not make for a catchy news. M&A deals tend to have more newsworthiness. For example:
Casey’s General Stores announced this week the acquisition of Fike’s Wholesale, the owner of CEFCO convenience stores, adding almost 200 stores to chain’s already massive network that is getting close to 2,900 stores. The price tag? Cool $1,145 Billion.
New England convenience retailer Nouria Energy is buying the c-store operator Enmarket, with all of its 132 c-stores and 26 car washes. The deal will nearly double the buyer’s size.And speaking of size, how about Alimentation Couche-Tard’s pursuit of 7-Eleven? Talk about a huge fish being swallowed by a giant fish, right?
Whichever way this growth takes place, the important part of the process is making sure that the added assets shall be profitable and justify the investment made into their acquisition.
Thus, it is vital to the future success that a proper due diligence includes careful, thorough analysis of key data. For each location included in the deal, check the demographics of the trade area: does it lose the population or is it stable? What about the median income stats? Is the income growing proportionally with inflation and rising prices? Get the latest traffic data, not just for the primary road the store faces, but on the secondary roads in the trade area, and observe the trends.If the population did not decline, income is stable and traffic is robust, then the store can be a valuable addition to the network of its new owner.
Oh, and all that data we mentioned earlier? Make sure it comes from a reliable, experienced provider, committed to supplying only accurate, cross-verified and human-checked analysis – like Ticon.
