Dive Brief:
- Arko Corp., parent of GPM Investments, expects to begin building its new food-focused convenience stores during Q1 2025, Chairman, President and CEO Arie Kotler said during the company’s third quarter earnings call on Thursday.
- The rollout will include seven c-stores in the Richmond, Virginia, area, Kotler said. The store layout and non-foodservice merchandise assortment for these locations are set, and Arko is finalizing the foodservice offerings, he added.
- Arko’s new store design is part of the company’s broader “transformation” plan, in which it’s spending less on acquisitions and more on organic growth, site conversions and improvements to its loyalty platform.
Dive Insight:
When Arko revealed plans for its new store design last quarter, Kotler emphasized in the Q2 call that these locations aim to grow traffic, profitability and the company’s value proposition by taking “a significant focus on foodservice.” He said the “challenging macroeconomic environment,” including consumers’ struggles with inflation, led Arko in this direction.
Arko reiterated that message on Thursday, adding that it will begin the permitting process for these food-focused convenience stores next quarter, with construction to begin in early 2025, according to its 10-Q SEC filing. The company added that it eventually aims to expand these food-focused convenience stores across its retail footprint.
“Assuming those seven store pilots will actually be successful … we're going to start to basically add more and more stores,” Kotler said during Thursday’s earnings call.
Kotler added that these locations will feature new branding for its foodservice and non-food offerings, which Arko is still developing. He declined to share further information on the branding when asked by an analyst during the call.
“We are actually working on that, and we will disclose it immediately after we finish the layout,” Kotler said.
Arko’s latest project mirrors what the world’s largest c-store retailer is doing to improve its soft sales in North America. Faced with price-conscious consumers, declining cigarette sales and weaker-than-expected fuel gross profits, 7-Eleven is planning to open over 600 large-format, food-focused convenience stores in North America by the end of 2027.
Elsewhere in its transformation plan, Arko shared its progress on converting company-operated c-stores to dealer sites within its wholesale segment, which it believes will yield greater profitability. To date, Arko has converted about 50 of these locations, and expects to complete another 100 by the end of next quarter, Kotler shared during the earnings call.
