Dive Brief:
- Arko Corp.’s transformation plan, in which it’s converting hundreds of company-operated c-stores to wholesale locations, is beginning to pay off, leadership said during Arko’s fourth-quarter earnings call this week.
- Those benefits have mainly appeared in Arko’s store operating expenses, which dropped nearly 16% during Q4 and over 13% for the full fiscal year, according to Arko’s earnings report. To date, Arko has converted 409 locations, with 256 of those done in fiscal 2025.
- Arko said its years-long dealerization project is expected to conclude by the end of 2026. Once complete, this will likely drop Arko’s company-operated c-store count to below 1,000 for the first time in nearly a decade.
Dive Insight:
Arko announced the dealerization program in May 2024 as a way to reduce expenses. Though analysts began to question the strategy last summer when financial gains hadn’t yet materialized, company leadership maintained that the conversions would help Arko realize a cumulative annualized operating income benefit of over $20 million.
Experts have said that dealerizing c-stores is challenging and time consuming, and requires determining rents and maintenance responsibilities, as well as transferring alcohol and tobacco licenses from the company to the dealer. The operating company also needs to transition support teams and store-level employees to the dealer, which can create additional complexities.
Nearly two years into the plan, the payoffs appear to be materializing for Arko.
During Arko’s earnings call Wednesday, President and CEO Arie Kotler said its dealerization strategy is “delivering exactly what we said it would.” That includes reducing fixed costs and maintenance spending, improving cash flow and creating a more focused and regionally concentrated retail base.
“The operating leverage is real — the cost improvements are showing up,” Kotler said during the call. “We are now seeing tangible benefits from stores converted in the last 12 months.”
Kotler added that Arko still has another 120 sites either under letter of intent, under contract or already converted since the end of 2025. If all of those conversions happen, Arko’s company-operated c-store count will dip below 1,000 for the first time since 2018, when it surpassed the milestone with its acquisition of the 273-location E-Z Mart chain.
Beyond the operating expense savings, the dealerization strategy also delivered over $5 million in additional operating income during Q4 before general and administrative savings, Kotler added.
“Bottom line: Dealerization has sharpened our focus, improved execution, and it's now flowing through to financial performance,” Kotler said.
