Bloomberg BusinessweekDarren Rebelez, CEO of Casey’s General Stores, discusses the company's three-year strategic plan and expanding the convenience store business.
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We've been talking a lot with We talked with the CEO of Smuckers earlier, we talked about General Mills. We're talking a lot about food and the food space today.
It's been well in the last few days, right because Kellogg's also had a great day after Gold and Sacks upgraded them. So there's been some up and down arrow stories, but it's a it's a hot issue right now.
Well, take a look at shares of Casey's General Stores up three point four percent today, up two percent in yesterday's trade. And we've got the CEO of the president and CEO in our studio here, Darren Rebella's is with us. They're based in Iowas. Doc is up about six percent year to date. Welcome, Welcome, thank you, thank thanks for having me here on Bloomberg. Tell us a little bit about what you are seeing when it comes to consumers and what they're doing, and remind everybody about where you guys have your stores.
Sure, yeah, we're we have twenty five hundred stores focused in the Midwest and sixteen Western states. And about half of our stores are in rural communities, towns of five thousand people or less, and so in those communities we play a number of roles. We're the third largest commedian store chain in the US, and so we supply basic needs and groceries and that sort of thing. We're also the fifth largest pizza chain in the US, so we're the pizza area. And in about fifteen hundred of our stores we have full liquor licenses, so we're also the liquor store. So we wear a lot of hats and serve a lot of needs in those community.
Open twenty four hours.
In some of our stores. Yeah, but as you can imagine, in some of those more rural communities, there's not a lot happening between midnight and.
Four in the morning, or there is sometimes.
We don't want to be involved in.
So the ticker is I don't think the year to date move really tells the story because I look over the last five years and you've gone from one hundred dollars to two thirty five, so you've drastically outperformed the S and P five hundred. Of course, you're Nasdaq listed and the taker is c as Y that's right. It's it's interesting to be because of you have a rural presence. You're a very big company that a lot of people on the coasts maybe haven't heard of. Right, So does that make it harder to tell your story to shareholders?
You know, we just have to continue to tell it. And you know, we always invite shareholders to come to where our store support center is in Ancone, Iowa, and we can show them around, and we've done that a number of times. But yeah, I mean, people don't run into cases in their day to day lives, so we have to explain to them. And in certain markets, I'll take New York as an example, you wouldn't find anything that even resembles the cases here, so when we describe it, it takes a little bit of work.
But yeah, because you said, you have your own kitchens in the stores, so they make their pizza dough from scratch, and it's not when I think of convenience store, that's not what I think of that's right.
Yeah, So we really kind of consider ourselves in a category of one because we have those unique attributes, that rural footprint, you know, our grocery, our alcohol and liquor, our pizza business. We really are unique in that respect.
So does it make sense to kind of just continue along those lines? Like I said to.
You, you know you're not here in New York.
Would you come to the New York metro area?
Well, the way we focus our development for the moment is we have three distribution centers as we supply all of our own stores, and so we look initially at the effective distribution radius around those and so we know we can continue to build a lot of stores in that geography. In fact, of our twenty five hundred stores, two thousand of them are in only nine of the states we operate in, and so we still have plenty of white space. So it's not that we would never come to in New York, but we would probably do something a little more upstate if we were ever to get to that point.
So how have you dealt with inflation? How have your consumers been dealing with this? With this inflation?
You know, I would say, so far, so good. Our guests have proven to be pretty resilient. What I tell you about the demographics of our guests. Three quarters of our folks make fifty thousand dollars a year or more. And while I know that doesn't sound like a lot in New York. In the states where we operate, that goes a long way. In fact, if your rank ordered all the states in the US in terms of cost of living, the most expensive state we operate in is ranked twenty second.
Interesting do you think about that in terms of where you want to open?
Well, we factor in a lot of things of where we want to open the economy, and cost of living is definitely one of those that fit into the equation.
Talk to us a little bit about your new three year strategic plan, because I was looking at RBC Capital Markets put out a note today saying Casey's General Stores tone edits Tuesday investor day was constructive, and they talked about that new three year plan realistic and constructive. And we did say. The stock was up I think four percent or so at its highs today. What is that new three year plan?
Yeah, you know, we've had a long track record of success in our company, and the last three or four years is really accelerated. But we've done that through a couple of ways. Our growth algorithm is pretty simple. We get about half of our growth from what we call the mothership, the base business, driving same store sales, improving the base business, and then the other half is from new unit development. And so that three hundred and fifty stores really represents a bit of an acceleration, but really a continuation of where we've been for the last few years. And we'll do that through a combination of organic growth and acquisitions. And our industry is highly fragmented. About ninety five thousand of the one hundred and fifty thousand commenced stores in the US or operate and change at ten stores or less. Yeah, and as you can imagine, with the inflationary pressures and supply chain issue everything else that we've all been dealing with, those smaller operators really struggle. So provides a great opportunity for us to acquire and operate those stories.
Help us always supply chains, because I feel like they've eased and gotten better. Are they back to where they were pre pandemic?
I would say for the most part, yes, Okay, I mean it's gotten significantly better from where it was twelve eighteen months ago. There's still some lingering things on certain things like tractor trailer trucks have still been delayed. You know, some things that require chips have a little bit longer lead times, but for the most part, we're about back to normal.
Just trying to understand, you know, as inflation has certainly settled back in the past twelve months, but we still have a ways to go, and you still hear about inflationary pressures. I mean, I feel like I'm still paying a lot for a lot of stuff, and I'm trying to understand kind of whether you guys are seeing these pressures as well. Is wages also a decent pressure right now?
Still for you you know, that's moderated. You know, we after you know, the peak of COVID, we saw a real acceleration in wages that is somewhat moderated a bit. But you know, what we've really been focused on is is employee engagement in retaining the team members that we have. And so if you looked at our results over the last year, we actually had a reduction in same store labor hours and it was really driven by the fact that we reduced our turnover, so we had twenty percent reduction in overtime, twenty percent reduction and training hours and really focused on making the job in the store easier so we relieve some of that pressure and so we don't have to throw money at people. We want to take care of them. We paid people fairly but also making their job easier close along one.
So the culture is extremely important to you.
Absolutely, and so they get benefits and everything. Yes, yeah, yes, Sam in our control room wants to know if you're going to run for political office.
We've all taken a poll and decided that we would vote for you.
Yeah. Well, there's probably fewer things I'd want to do less in office.
I could understand that I was an infantry guy in the Army, so I've done some pretty nasty things.
I'd rather do that than run.
For Talk to us about the pizza, because we hear it has a bit of a cult following. We already talked about the fact that it's handmade pizza. Is it's here in New York. It's important, you.
Know, Yeah, it's well, it's it's iconic and we've been doing it since the eighties, so we've got a long track record. What what what I think is really cool One is that we make it from scratch and we use really quality and green so one hundred percent whole milk, mozzarella cheese. Now you you kind of think well, doesn't everybody do that? But no, most people don't. None of the large chains do. They use low fat mozzerrea because it's cheaper. We don't do that. We we put extra cheese on the pizza. So it's not a thing to get to order extra cheese on your pizza from a Casey's because you don't need it. But what really sets us apart is our breakfast pizza. And it's not pizza for breakfast, it's breakfast pizza. And so we have people coming into our stores every day.
What's that a breakfast pizza.
Oh, it's bacon and eggs, bacon, eggs, sausage, cheese, and then more cheese.
In fact, in the fall we had a lot of fun our pizza turned. Our breakfast pizza turned twenty one years old, and so our culinary team was doing some research what can we do and they found the beer cheese is on trend.
I knew it.
So they created a beer cheese sauce to put on the breakfast pizza. But then they leveled it up because when we do these things, we want to tie into the culture and so bush Light beer is a huge thing. We sell more bush Light beer than any retailer in the country.
Darn Rebel is always a pleasure. Appreciate it. CEO at Casey's General Stores
