Casey's Leans Into Growth

The Midwestern chain has loaded its plate with everything from its largest acquisition to opening a third distribution center to digital engagement.

Casey's Leans Into Growth

May 2021   minute read

By: Renee Pas

Cutting edge is not the best description for Casey’s. It never really was. The Ankeny, Iowa-based company has historically taken a conservative approach to growth with steady expansion in rural areas serving as a core tenet. The past year, however, has brought substantial change to both how consumers conduct business with Casey’s and how the chain presents itself to those customers. The chain revamped its digital ordering platform last year, modernized its brand image and reset stores in an effort to improve store merchandising.

The next six months may set a whole new pace of growth in motion. Two big milestones on the horizon for Casey’s include closing on the acquisition of Omaha, Nebraska-based Buchanan Energy and opening a third distribution center. The Buchanan acquisition—an all-cash transaction to the tune of $580 million—will add 94 Bucky’s Convenience Stores to the Casey’s mix, all of which will eventually be rebranded as Casey’s. It will also add 79 dealer locations; Casey’s will take over the related fuel-supply agreements. The deal remains in regulatory review but when complete will expand Casey’s presence in Midwest markets, adding dominance in the greater Chicagoland area and enlarging Casey’s comparatively smaller presence in Omaha, Nebraska. Once it all comes together, it will also mark the largest single acquisition in Casey’s 53-year history.

Casey’s hopes its rewards program will help retain customers who started using its digital platforms during the pandemic. More than half—59%—of orders at Casey’s are digital. Starting last November, the chain shifted store layouts to improve traffic flow. The curbside pickup program implemented last spring was accelerated when the pandemic struck.

“One great example of our continued pursuit of the initiatives in our strategic plan is the acquisition of Buchanan Energy Group and its Bucky’s Convenience Stores. This acquisition is a perfect strategic fit for Casey’s,” said Darren Rebelez, Casey’s president and CEO. In addition to geographic expansion, another advantage of the integration of Bucky’s may be the chain’s car wash operations. Almost all Bucky’s stores include a car wash, and the chain has advanced programs around the offering beyond what Casey’s currently offers, for example, an unlimited wash subscription program. Fewer than 10% of Casey’s 2,200+ stores include a car wash currently.

Also in the works: the acquisition of 49 Circle K stores in Oklahoma. In late March, Casey’s announced it agreed to acquire 46 leased properties and three owned properties from Circle K for $39 million in cash. The deal is expected to close by July 31.

Another 2021 milestone—this one organically driven—comes by way of a new distribution center in Joplin, Missouri, which opened in April. “The new distribution center sets the stage for more growth,” said Julie Jackowski, chief legal officer for Casey’s and former NACS chair (2019–20). Casey’s looks to have distribution centers strategically located less than 500 miles from stores, she noted. Casey’s other distribution centers are in Ankeny and Terre Haute, Indiana. Casey’s said the Joplin distribution center will serve 400 to 600 of the company’s stores.

The self-distributed aspect of the chain is something COO Ena Williams views as a huge advantage. “We rely on ourselves to distribute goods to the store. We are not restricted by case sizes or pack sizes, and we can distribute anything, even equipment.”

Pizza Precision

Looking back through Casey’s history, the biggest mile marker of all would have to be the decision to incorporate a pizza program in the early 1980s. Pizza is unequivocally the crown jewel of the chain’s overall prepared foods program.

Sales justify pizza as a prized possession. Same-store unit sales of whole pizza pies were up 17% over the three-month period ended January 31, 2021, compared with the third quarter of 2020, noted Rebelez on Casey’s March 8 review of third-quarter fiscal 2021 results. Pizza’s strong sales offset weakened sales in other in-store categories harder hit by pandemic shifts, such as bakery and dispensed beverages. The offset from pizza, however, was not quite enough for Casey’s to avoid a dip in total prepared food and fountain same-store sales (which include pizza), which decreased 5% during the quarter, compared with the year-ago quarter.

Expect some new pizza-related and prepared food innovations to come down the pipeline this fall, said head chef Farrokh Larijani. With less than a year under his belt at Casey’s, Larijani is intensely working on ways to leverage pizza’s success. For example, he’s been pondering how to use the chain’s made-from-scratch dough in new ways. “What else can I do with this dough aside from make pizza?” Larijani wonders.

Contemporized yet classic, Casey’s revamped logo modernizes the recognizable barn shape and maintains the rooster on the weather vane.

“The dough is the foundation,” Larijani noted. “Casey’s makes a huge commitment around it.” He points to a March seminar held in the food and beverage lab at Casey’s headquarters as one example of the chain’s loyalty to its dough. Roughly 40 field leaders attended the session to learn more about Casey’s pizza dough with the intent to take that education out to the store level. The hands-on session provided an education of what the perfect pizza dough looks and feels like, Larijani said.

Each store makes the dough fresh every morning. Kitchen sizes and layouts vary. At some stores, customers can watch staff cooking; at other stores all the action remains in the back of the house. Larijani’s dream store would allow customers to watch staff kneading dough and ladling sauce onto pizzas. “I would want to showcase it all to guests,” he said.

Regardless of the kitchen placement, Larijani contends every store “produces a lot of food in a small area.” Convection ovens serve as the primary piece of equipment. “We run a fairly hot oven to get the caramelization we want on the crust and cheese,” he said.

While pizza holds a high equity stake in the chain’s food program, the menu also includes items such as sub sandwiches, chicken sandwiches, burgers and more. Grab-and-go offerings are commonplace at Casey’s now, noted Andrew Kintigh, prepared food category manager for Casey’s. “The pandemic shifted guest patterns a bit and reduced that in-person service element.”

Staking Out a Digital Footprint

When the pandemic took hold last year and changed consumer shopping patterns, it quickly became clear that convenience stores with a digital platform in place would benefit. The timing was good for Casey’s, which had relaunched a new website and app the year prior, along with a digital-based rewards program. When the pandemic hit, Casey’s amped up third-party delivery and added curbside pickup.

“We moved very quickly with third-party delivery,” said Chris Jones, chief marketing officer for Casey’s. “We went from 30 stores in a test with DoorDash to hundreds offering delivery.” Roughly 700 Casey’s stores now use DoorDash, and the chain also has a pilot program with Uber Eats under way.

As customers hunkered down at home, Casey’s saw its digital orders for pizza grow. More than half—59%—of all Casey’s orders are now placed digitally, either on the app, website or via DoorDash. “We’re optimistic that those ordering patterns will continue,” said Jones. “It’s tough to imagine customers will go back to calling orders in by phone.” While pizza dominates in digital orders, customers can also choose from 200 grocery and snack SKUs.

Keeping Country

Culture is hard to translate, but it remains an integral part of Casey’s story, particularly considering the size of the company—a network of more than 2,200 stores and annual revenue that surpassed $9 billion in 2020—and the fact that as a public company it answers to Wall Street. The executive team navigates the balance of ambitious-yet-genuine smoothly, a testament that the family-centric culture that set things in motion in the early days still exists. “It still feels like a family environment,” said Jackowski. She’s witnessed a lot of change during her 26-year tenure with Casey’s but not when it comes to the tightknit, down-home, no-nonsense environment. For Jackowski, the culture was instilled early on with the understanding that “the donut maker at the store is more important than me.”

Maintaining that culture may get harder as the chain expands, but Casey’s has a plan to keep it alive. One way is to ensure there is at least one person at the supervisory level who has lived the Casey’s culture if there are several new stores added at one time, explained Jackowsi.

What Don Lamberti and Kurvin Fish started in 1968 continues to grow in much the same way the founders approached development: steady, focused and community-centric. Lamberti continues to maintain ties with the organization and remains a shareholder. Fish died in 2003.

New leaders take the helm of any lasting company over time. Make no mistake: Casey’s intends to be around for the long haul. The new tagline is “Here For Good,” which means that Casey’s is “here for our communities,” but also taken literally, means it plans to stick around.

Acquisitions will happen “as long as it makes good economic sense,” said Jones. “The industry will continue to be ripe for consolidation,” he said. “There are some who build new stores and some that acquire. Casey’s strikes a balance between growing organically and finding great acquisitions when that’s the right opportunity.”

Adds Rebelez, “We kept up a pretty swift pace and even accelerated items in our strategic plan this past year, despite the pandemic. We are positioned well for the future, and I look forward to seeing what our team can do.”

Renee Pas

Renee Pas

Renee Pas’ writing draws from both her c-store background and her more than 20 years writing about various retail channels. She can be reached at [email protected].

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