Dive Brief:
- Alimentation Couche-Tard saw merchandise and service revenues and margins increase in the U.S. this past quarter, primarily driven by growth in its foodservice programs, the convenience retailer noted in its fiscal Q2 earnings report on Tuesday.
- Same-store merchandise revenues grew by 1.2% while merchandise and service gross margins increased by 0.9%, according to the report. Strong execution in foodservice was a major contributor, as “same-store food growth had its best performance in well over a year,” Alex Miller, president and CEO of Couche-Tard, said during the company’s earnings call on Tuesday.
- Miller emphasized that Couche-Tard is “poised for significant growth” in foodservice, and that he’s “never had this much confidence” in the company’s foodservice journey.
Dive Insight:
Miller spent a portion of Tuesday's earnings call reflecting on Couche-Tard’s past food initiatives, noting that the convenience retailer “needed to reset” its processes and programs and hone in on what really resonates with customers.
“We've largely finished that reset and you're seeing it in our results,” Miller said on Tuesday. “You're seeing the growth in both traffic, in sales [and] in margin improvement…. We are executing every period, every quarter, at an improved level, and I think we're in for some really strong growth as we look at the quarters ahead.”
A highlight of that reset was last year’s launch of Couche-Tard’s value meal bundles, which include $3, $4 and $5 options targeted at price-conscious consumers. On Tuesday’s call, Miller credited this program for Couche-Tard’s foodservice success, adding that the company sold over 10 million meal bundles across its global network of Circle K stores, including over 1 million weekly sales in North America for the first time.
Miller said Couche-Tard is “still getting started” with its meal bundles, and that the retailer plans to expand the platform with more variety and innovation in the months ahead.
“We will continue to lay into meal deals,” Miller said on Tuesday’s call. “We think we've really found something here that is really resonating with consumers that are strapped for cash.”
Couche-Tard also saw an increase in hot food sales, driven by menu items launched this fall through a partnership with celebrity chef Guy Fieri, Miller said. Some of those items included a mac n’ cheese burger, a fried chicken waffle sandwich and a Denver omelet. Additionally, Q2 was the first full quarter since closing its acquisition of GetGo Café + Markets — a deal that was primarily driven by food, Miller has said in the past.
