Dive Brief:

• Murphy USA has begun piloting a new design for its 2,800-square-foot locations with a focus on improving traffic flow, queue areas and food and drink sales, President and CEO R. Andrew Clyde said during the company’s Q2 earnings call on Thursday.  
• The convenience retailer’s CEO also noted it uses its QuickChek brand as “the perfect test-and-learn environment,” where the company can experiment with features and marketing programs, then introduce some of those ideas to Murphy locations.
• The company is also boosting its digital efforts, including using machine learning to take better advantage of its data, along with making updates to its loyalty programs.

Dive Insight:

The retrofits of the company’s 2,800-square-foot stores, which are at the larger end of its store fleet, are based on data the company gathered from QuickChek, according to Clyde. Murphy USA acquired the 157-store chain in 2021.

“Selling space is optimized, allowing for easier traffic flow,” he said. “Queuing lanes have been added that promote impulse sales and reduce congestion around the register, while at the same time we improved lighting and signage.”

The changes come together to support sales of grab-and-go and grab-and-reheat foods, along with self-serve drinks at Murphy, Clyde said. Overall, food sales at the chain were up 6% in Q2 across both banners.

The updated store design is being piloted in only three regions right now, but a wider rollout should be able to ramp up fairly quickly. Clyde noted that a recent retrofit in the Dallas-Fort Worth area took about a week to complete. 

Murphy is also looking to roll out a “store of tomorrow” concept for the 2,800-square-foot stores in 2024, though Clyde didn’t provide any further details on that format. 

“We've done the work to identify what needs to change, how it needs to be positioned, the items that need to be in there,” Clyde said. 

Clyde also noted in the call that QuickChek benefited in the quarter from building new stores in smart locations.

“Some of our new QuickChek stores are already in the top five of the best QuickChek stores in the network,” he said. 

Beyond new designs, Murphy USA is also incorporating sales data from QuickChek. 

“As an example, we saw strong sales from a limited-time made-to-order watermelon smoothie at QuickChek,” Clyde said. “Which was subsequently reimagined and introduced as a limited time offer Sour-Patch-Kids-branded and frozen slushie product at Murphy USA stores.” 

Quickchek has similarly tested out promotional pricing and deals, such as a two-for-$5 breakfast sandwich deal which was successful enough that the company tried several other such promotions at Murphy. 

On the digital front, the company is planning to update both loyalty programs, “enhancing the Murphy Drive Rewards and kind of redesigning the QuickChek loyalty program,” Clyde said. 

He added that because the business, including transaction date, is increasingly digitized, Murphy is testing machine learning software to optimize promotions and other deals. The program is “still in the early stages,” but since the company has built the foundation, it will be able to slowly extend the test to more categories and products.

Other notes from the call include:

• Murphy expects to continue expanding its limited time offers, and has seen success working with national brands to create innovative products. In addition to the Sour Patch Kids slushie, the company has previously worked with both the Prime and Red Bull beverage brands.
• QuickChek is making further updates to its menu after a summer revamp. The new changes should result in several new signature sandwiches being introduced in the second half of the year.
• Murphy USA did not rule out looking at another acquisition, but pointed out that there aren’t many other brands that fit its everyday low price model. “Those that share that mindset are some of the best-run private retailers ... and I don't think they're selling anytime soon,” Clyde said.

Murphy USA operates more than 1,700 stores in 27 states, including 1,566 Murphy USA and Murphy Express locations and 159 QuickCheks. Murphy USA stores are typically located near a Walmart store, while Murphy Express stores are standalone sites.