- Associated Press - Saturday, March 8, 2014

OMAHA, Neb. (AP) - People driving through rural eastern Nebraska know to scan the horizon for a Casey’s sign if they’re looking for a quick stop involving gas, pizza and a restroom.

The convenience store chain has been successful serving the small-town niche, with nearly 60 percent of its stores in communities of fewer than 5,000 people, towns like Wymore, Hebron, Stanton and Valley.

But recently the red-and-yellow General Store sign with the rooster weather vane has been popping up on more suburban and even urban corners. Casey’s now has 13 locations in the Omaha metro area, with more to come, while its recent acquisition of 24 Stop-N-Go stores brings Casey’s into the heart of the Fargo, N.D., metropolitan area.

The Omaha World-Herald reports (https://bit.ly/1l5D3Ve ) that altogether Casey’s has grown in Nebraska to 125 stores, up from 62 a decade ago, as a result of both acquisitions and new locations. Casey’s has more locations in Nebraska than any other convenience store chain. But other chains, including Cubby’s, Bucky’s and Kum & Go, similarly are adding stores, building bigger stores and expanding food service.

The Ankeny, Iowa-based Casey’s is not giving up its rural roots. Its first store opened in 1968 in Boone, Iowa, carrying 10-cent coffee and a short list of common grocery items.

But it sees growth inroads in Omaha’s suburbs and other more densely populated areas. Expansion into cities has helped drive Casey’s revenue to $7.25 billion in fiscal year 2013 from $4.69 billion four years earlier. More than 16 percent of its stores today are in communities of more than 20,000 people, compared with 11 percent a decade ago.

“We’re trying to get more of a presence in the Omaha metro area,” Casey’s chief financial officer, Bill Walljasper, said. “We’ve found that metro area to be a very good partnership.”

He said the chain is looking at new locations in the metro area but would not say how many or where. Across all 14 states where it has locations, the company plans to build or acquire as many as 105 stores in fiscal 2014, and replace 20 existing locations. A second store in Blair, Neb., is now under construction, and the store at 19900 Virginia Hills Road in Council Bluffs is scheduled for replacement this year.

In the last four years, acquisitions of the Kabredlos, Holiday and U-Stop chains put Casey’s in Bellevue and Omaha and doubled its presence in Council Bluffs to six stores. Casey’s has replaced or remodeled most of those urban and suburban stores with bigger models as it competes with chains like Omaha-based Bucky’s and West Des Moines-based Kum & Go, which also are building more and larger stores in the Omaha area.

The bigger and more modern Casey’s store design emphasizes highly profitable, fast-growing sales of prepared food and fountain drinks, a strategy Casey’s and its competitors are using as industrywide sales of cigarettes fall and growth of lower-margin fuel sales slows. Gasoline brings in 72 percent of Casey’s revenue, but just 22 percent of gross profits, while prepared food and fountain drinks have the highest profit margin.

Take the Casey’s at 9905 Q St., formerly the site of a Kabredlos, the Lincoln chain it acquired in 2010. Casey’s demolished the Q Street store in October 2012, then opened in June 2013 with 16 gas pumps and a nearly 4,500-square-foot convenience store, significantly larger than its average store size of 2,700 square feet.

The store includes a “beer cave” with a digital temperature sign flickering between 37 and 38 degrees. Workers use an in-store kitchen to make doughnuts, fresh bread for its sub sandwich shop, and the brand’s signature pizza - Casey’s says it is the nation’s fifth-largest pizza chain.

“We’re not just a gas station,” manager Carrie Pflaster said. “We’re convenient. We have good quality food, so that brings people in.”

Casey’s expansion is part of a growth trend across the convenience store industry - in terms of both store size and numbers.

The National Association of Convenience Stores counts nearly 1,000 convenience stores in Nebraska, up 2.9 percent since 2009. Casey’s has 495 stores in Iowa, where the total number of stores is more than 1,800, up 3.8 percent in the same time. The numbers shrank in both states after the 2008 recession but have rebounded since 2012.

Nationally there are more convenience stores than drugstores, supermarkets, supercenters and dollar stores combined. The industry is highly fragmented, with more than six in 10 stores nationally owned by a single-store operator. 7-Eleven is the biggest operator, but it has no stores in Nebraska or Iowa.

New stores are also getting bigger nationwide, at an average of 3,590 square feet, 31 percent bigger than the average existing store.

That’s to accommodate food service. In January, QSR magazine warned its quick-serve restaurant subscribers that convenience stores are “eating your lunch,” taking business away from restaurants as the stores increase the quality of their offerings. The magazine cited a Technomic report that found that 26 percent of convenience store customers would have purchased their meal or snack from a fast-food restaurant if they hadn’t bought it in a convenience store.

Nebraska consumers have embraced convenience stores’ food offerings. Omaha-based Cubby’s has remodeled stores it has acquired in Nebraska, Iowa and South Dakota to improve the kitchens.

“We’ve got a lot more fuel-efficient cars on the market today,” Cubby’s President Delone Wilson said. “We feel like our growth is in food. We do a lot of pizza, we do a lot of chicken, we cook a full breakfast in a lot of stores.”

He said that works best in rural stores where there aren’t competing restaurants. Cubby’s is now emulating Casey’s and testing pizza delivery in one of its locations, which Wilson wouldn’t disclose. Wilson said it’s going well and he’s considering adding delivery at other locations.

Bucky’s is also expanding its food service. Manager Brandon Weeks said his store, which opened in November at 138th and Q Streets, is a trial store for expanded fresh food operations throughout the chain. The 4,750-square-foot store is a result of Bucky’s combining and closing two smaller stores it had nearby.

The store Bucky’s plans to open in Benson, over some neighbors’ concerns about its size and environmental impact, would be larger still - almost 8,650 square feet - and have even more food offerings.

The Q Street Bucky’s smells like a bakery, as a kitchen in the back prepares breakfast sandwiches, cheeseburgers, burritos and pork tenderloin sandwiches, among other items. It promises pizza in six minutes or it’s free. Customers also can help themselves to three flavors of oatmeal from a machine, or mix their own milkshakes in a F’Real machine, something several chains, including QuikTrip and Kum & Go, also offer.

“People are looking for that convenience, compared to just an everyday gas station,” Weeks said. “They want the one-stop shop.”

Eric Brun, manager of the Kum & Go that opened in 2012 at 4443 S. 84th St., said his store is one of Kum & Go’s highest-grossing for food sales.

He gave Casey’s credit for being a pioneer with prepared food at convenience stores, starting with its pizza launch in 1984. That hasn’t been as significant a part of Kum & Go’s model, with its base in midsize cities where there are other choices for food.

But Brun said his store, located near an industrial park, is popular among shift workers who don’t have time to sit down for an hourlong lunch. Instead, the workers pop in two or three times a day for breakfast, lunch and coffee breaks.

Walljasper at Casey’s said that a rural location is ideal for food service, with fewer competitors. Pizza delivery especially is not a niche for Casey’s in Omaha, as it is in smaller towns. Just one of Casey’s 13 metro stores, the La Vista location, provides delivery, a service the chain added at 200 of its locations in 2013.

But even in Omaha’s suburbs, he said, a convenience store can still compete with restaurants on quick service and an array of offerings.

“It offers an opportunity for customers, especially in metropolitan areas that are a little more on-the-go than in rural areas, the opportunity to stop in and be the one-stop shop.”


Information from: Omaha World-Herald, https://www.omaha.com

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