3 Big Numbers is a weekly column that looks at a few key details from around the c-store industry.
When Alimentation Couche-Tard reported its fiscal fourth quarter earnings on Thursday, observers were listening for any status updates on the company’s bid for Seven & i Holdings, the parent of 7-Eleven and the largest convenience retailer in the world.
The news on that front was lackluster, though it seems we might at least get a timeline before long. However, President and CEO Alex Miller also took some time during the company’s latest earnings call to break down the growth in Couche-Tard’s Fresh Food, Fast program, which has now been added to nearly 6,200 stores globally.
In this week’s “3 Big Numbers,” we look at what Couche-Tard’s earnings tell us about its foodservice ambitions.
33.9%
Couche-Tard’s U.S. service and merchandise gross margin in Q4.
Couche-Tard reported U.S. service and merchandise gross margins of 33.9% for the fourth quarter. That’s not bad, but why start here for a column about foodservice?
Because it could have been worse if not for growth in Couche-Tard’s fresh food sales.
While the earnings report didn’t break out exact contributions, it noted that “improved food execution was offset by higher spoilage on tobacco products.”
Although they didn’t share specifics about food’s contribution to the bottom line, Couche-Tard clearly is optimistic about the program.
“We are early innings, but I am extraordinarily pleased about the direction” of the food program, Miller said during the call.
35%
The increase in meal deals sold in the U.S. quarter over quarter.
As part of expanding its Fresh Food, Fast program, Couche-Tard has also been making sure the program is affordable for price-conscious consumers. One major pillar of that plan is meal deals.
Circle K unveiled an array of specials last year — $3 for either a roller grill hot dog or Taquito with a 2-ounce bag of Frito-Lay chips and a Pepsi; $4 for a sausage, egg and cheese breakfast sandwich with a hash brown and either a Monster energy drink or coffee; and $5 for two slices of pizza and a 20-ounce Pepsi.
How has it been going?
In its fiscal fourth quarter, the company sold more than 500,000 of these meals per week in the U.S. That’s an increase of 35% over the previous quarter, Miller said during Thursday’s earnings call. That result is all the more remarkable when you consider that Couche-Tard’s U.S. same-store sales were actually down slightly on the quarter.
800,000
The approximate number of weekly meal deals sold in North America so far in Q1.
Half a million meal deals sold per week represents strong growth for Couche-Tard in this key area. But can the company keep that momentum up?
So far, so good.
While we obviously don’t have the full first-quarter results just yet, Miller said that North American stores have seen around 800,000 meal deal sales per week so far in the new quarter.
It’s hard to say if growth in the U.S. is continuing, since that figure includes both Canadian and U.S. stores. But at the very least, it shows that demand continues to be strong for these value offerings.
