October 25, 2025 • 32 mins
The episode offers an extensive history and business overview of Casey's General Stores, detailing its transformation from a modest Iowa gas station into the fifth-largest pizza chain in the United States. Originating in 1968, the company prioritized expansion in underserved rural markets where it became the primary source for prepared meals and a community hub. The episode explains that the pivotal decision to introduce pizza in the mid-1980s led to extraordinary success, with pizza generating substantial revenue and high-profit margins that dwarfed those from fuel sales. Furthermore, the source tracks Casey's strategic growth through public offering, digital innovation, and major acquisitions, such as the 2024 purchase of CEFCO stores, which accelerated its physical expansion into the Sun Belt region and bolstered its retail footprint. Ultimately, the success is attributed to its commitment to in-store prepared food quality and its deep connection to the local communities it serves.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the deep dive. This is where we sift
through well just stacks of information, research data, articles and
really pull out what you need to know. Plus hopefully
those surprising facts that you know stick with you.
Speaker 2 (00:11):
That's the goal.
Speaker 1 (00:12):
And today we're tackling a story about market domination, but
maybe not from where you'd expect. Forget Silicon Valley for
a minute.
Speaker 2 (00:19):
Yeah, this one's rooted firmly in the American Midwest. You
are going deep on Casey's General Stores.
Speaker 1 (00:24):
Right Caseyes. Now, if you're not from the heartland, you
might just picture, I don't know, a typical gas station chain.
Speaker 2 (00:31):
Exactly, but our sources they paint a really different picture.
This seemingly humble company born in Iowa has sort of
quietly become this massive culinary force in the US.
Speaker 1 (00:43):
It's incredible, selling hundreds of millions of pizza slices every
single year.
Speaker 2 (00:48):
It's a huge operation, almost stealthy, like you said.
Speaker 1 (00:51):
So our mission here in this deep dive is to
figure out the strategy behind that. How did a chain
that started, you know, just selling gas and coffee in
small farm towns.
Speaker 2 (01:00):
Yeah, oftent towns nobody else was really serving.
Speaker 1 (01:03):
How did that turn into the fifth largest pizza chain
in the country by the sheer number of kitchens they operate.
Speaker 2 (01:09):
It's more than just a business story, isn't it. It
really is a masterclass in finding and just dominating and
overlook market.
Speaker 1 (01:16):
And the scale today is frankly astonishing. You really need
to adjust your thinking.
Speaker 2 (01:21):
Oh absolutely, forget your local pizza joint. Casey's has over
twenty nine hundred locations.
Speaker 1 (01:25):
Now twenty nine hundred spread across nineteen states, and.
Speaker 2 (01:30):
It's their prepared food, especially the pizza, that truly sets
them apart. That's the engine.
Speaker 1 (01:34):
Get this for volume. Casey sells over one hundred and
five million pizza slices.
Speaker 2 (01:39):
A year, one hundred five million slices plus twenty eight
million whole pies annually.
Speaker 1 (01:45):
It's just massive food service volume, and that pushed their
pizza revenue, just the pizza, to seven hundred million dollars
in fiscal twenty twenty four.
Speaker 2 (01:52):
Seven hundred million from pizza at a convenience store chain.
That's enough to make the big guys, your Dominoes, your
pizza huts really pay at time.
Speaker 1 (02:00):
But here's the kicker, right, They didn't achieve this battling
it out in Chicago or La No.
Speaker 2 (02:05):
Not at all. It was a laser focus on the
towns those giants basically ignored.
Speaker 1 (02:09):
So for you listening, this story is I think a
really powerful lesson. Sometimes the smartest business move is to
bet everything on the places everyone else wrote.
Speaker 2 (02:18):
Off, finding gold where others saw well just fields.
Speaker 1 (02:22):
Okay, So to really get cases, you have to go
back way before the pizza. Back to the founder, Donald Lamberti.
Speaker 2 (02:28):
Right nineteen fifty nine, Lamberti was young in Des Moines.
He leased this pretty rundown service station from his father.
Speaker 1 (02:36):
And back then service stations were mostly what repairs and pumping.
Speaker 2 (02:39):
Gas pretty much. But Lamberti he saw things changing. He
kind of sensed that convenience was becoming.
Speaker 1 (02:46):
Key, so he remodeled it.
Speaker 2 (02:47):
Yeah, he took that old garage and towed it into
an early version of a Mini Mart. Stock essentials, milk,
bread snacks right there next to the gas bumps.
Speaker 1 (02:55):
He was really ahead of the curve on that one
stop shop idea for gas stations.
Speaker 2 (02:59):
Definitely pie up nearing it and that early success that
became the model. But the chain cases itself, that came
a bit later.
Speaker 1 (03:05):
Nineteen sixty eight, Right, that's where the name comes in exactly.
Speaker 2 (03:09):
LAMBERTI had a close friend also his fuel supplier, named
Curve and seafish Casey.
Speaker 1 (03:14):
Casey got it.
Speaker 2 (03:16):
So Casey kIPS him off about this struggling business in Boone, Iowa,
the square deal oil company. LAMBERTI buys it.
Speaker 1 (03:22):
And Boone, Iowa that's key.
Speaker 2 (03:24):
Not a big city, Nope, a small farming community maybe
twelve thousand people. Then LAMBERTI converts its three bay garage
into his next convenience store and he names it.
Speaker 1 (03:34):
Casey's as a tribute to Caseyfish.
Speaker 2 (03:37):
That's the story and that location boon that really defined
their whole strategy from the get.
Speaker 1 (03:42):
Go, focus on the small towns, the rural markets that
bigger companies just weren't interested in.
Speaker 2 (03:47):
Absolutely, and if you look at them today, that strategy
still holds. Something like two thirds of their stores are
in towns with populations under twenty thousand.
Speaker 1 (03:56):
Wow. Still after all that grows still in those towns.
Speaker 2 (04:00):
The initial offering was pretty simple, but crucial, self served gas,
basic groceries, coffee, lottery.
Speaker 1 (04:07):
Tickets, and importantly that neighborly charm the sources mentioned.
Speaker 2 (04:11):
Yeah, that's harder to quantify, but vital. They weren't seen
as some outside corporation moving in. They quickly became the
local spot, the hub.
Speaker 1 (04:17):
And their early growth wasn't explosive, was it more methodical.
Speaker 2 (04:21):
Very steady, very deliberate. By the mid seventies, they had
about one hundred and eighteen locations, but almost all still
in Iowa and nearby small Midwestern.
Speaker 1 (04:30):
Towns and funded.
Speaker 2 (04:31):
How this is interesting, It was all funded internally, based
on their local knowledge, reinvesting the profits, no outside venture capital.
Speaker 1 (04:39):
Early on growing organically using what they knew about their
specific customers.
Speaker 2 (04:44):
Right. But that kind of organic growth can only take
you so far, especially if you want to cross state
lines in a bigger way.
Speaker 1 (04:49):
So by the early eighties they needed more capital.
Speaker 2 (04:52):
They did if they wanted to really expand, they needed
a significant cash injection, and that led to a really pivotal.
Speaker 1 (04:59):
Move, the IPO.
Speaker 2 (05:00):
October nineteen eighty three, they went public, offered seven hundred
thousand shares. That money was basically the rocket fuel for
the next phase of.
Speaker 1 (05:07):
Expansion, pushing into new states, standardizing operations.
Speaker 2 (05:10):
Exactly, but going public also meant facing the uh let's say,
harsh realities of the commodities market, specifically gasoline which.
Speaker 1 (05:19):
Was still their main product by volume, right around sixty
percent of sales.
Speaker 2 (05:22):
Yeah, volume wise, gas was huge, but profit wise not
so much. The margins were shrinking razor thin and getting thinner.
By the mid nineties. Get this, they were only making
about eleven cents profit per gallon.
Speaker 1 (05:36):
Eleven cents on something people buy gallons of.
Speaker 2 (05:40):
It's incredibly low gases, commodity prices, everything you have to
sell an enormous amount just to cover your costs at
eleven cents a gallon.
Speaker 1 (05:48):
So the thing driving most of their sales was bringing
in very little profit. They needed something else to actually
make money.
Speaker 2 (05:55):
Precisely that pressure, those low fuel margins. That was the
real catalyst for what came next. It wasn't some flash
of genius in a boardroom. It was necessity, absolutely innovation,
born from needing to survive and grow. They realized the
high volume, low margin gas had to be subsidized by
higher margin stuff sold inside the store, groceries. Maybe groceries help,
(06:16):
but the real potential was in prepared foods. That strategic pressure,
that need for higher profit margins inside the store, that's
what paid the way for the big one, the pizza.
It forced them to look inward toward the kitchen.
Speaker 1 (06:28):
Okay, so pizza becomes the hero. But it wasn't actually
their first attempt at prepared food, was it.
Speaker 2 (06:34):
Now that's a common misconception. They actually started with homemade
donuts back in nineteen eighty donuts. Okay, Yeah, they started
putting in these small baking setups in some stores, so
they had the equipment kind of. It proved they could
do some in house.
Speaker 1 (06:46):
Baking, but donuts weren't the financial answer they were looking for.
Speaker 2 (06:49):
Apparently, not the real Eureka moment, the one that you
know changed everything for cases. That happened a few years later,
around eighty.
Speaker 1 (06:57):
Four or eighty five, and the story points to a
specific place.
Speaker 2 (07:01):
It does a franchise in Corning, Iowa. And we really
need picture Corning.
Speaker 1 (07:07):
How small are we talking, heini?
Speaker 2 (07:09):
Even now, its population is barely sixteen hundred people, just
a little dot on the map.
Speaker 1 (07:14):
So why did this huge innovation bubble up from such
a small place?
Speaker 2 (07:17):
It boils down to avoid simple as that the town's
only local pizza place shut down.
Speaker 1 (07:23):
So suddenly, in this small town of sixteen hundred people.
Speaker 2 (07:27):
Exactly where do you go Friday night dinner, birthday party,
after the high school football game. The option just disappeared.
Speaker 1 (07:34):
That creates a real local demand, doesn't it a huge one?
Speaker 2 (07:37):
And that's where the store manager in Corning, a guy
named Ron Willams, comes in.
Speaker 1 (07:41):
He saw the opportunity he did.
Speaker 2 (07:43):
And importantly, this wasn't some corporate directive coming down from HQ.
It was Wollam's on the ground, Yeah, reacting to what
his community needed.
Speaker 1 (07:51):
And he looked at the equipment they already had, right.
Speaker 2 (07:53):
The donut kitchen, the ovens, the mixer. They were mostly
sitting idle after the morning donut rush, like twenty hours
a day, doing nothing.
Speaker 1 (08:03):
So he thought, why not pizza?
Speaker 2 (08:05):
Basically Yeah, he started experimenting. Figured, scratch made dough for donuts,
wasn't that different from pizza dough, used the existing gear,
sourced some simple ingredients.
Speaker 1 (08:14):
And what kind of pizza did he make? Was it
anything fancy?
Speaker 2 (08:16):
No, not at all, And that was key. It was
intentionally simple, familiar and affordable, scratch made dough, real mozzarella,
fresh vegetables, standard meats like pepperoni and sausage. And the price. Initially,
sources say it was around five bucks for a large pizza.
Speaker 1 (08:31):
Five dollars for a whole large pizza.
Speaker 2 (08:33):
Yeah, an incredible value, especially for families in a town
that suddenly had no other options. It was an instant hit.
Speaker 1 (08:40):
People must have loved it.
Speaker 2 (08:41):
They did. The word just spread organically, manager to manager,
store to store. People stopping for gas started grabbing a
slice for lunch, family started ordering whole pies for dinner.
Speaker 1 (08:50):
And it took off quickly, amazingly fast.
Speaker 2 (08:53):
Yeah, by the end of that first year, they had
pizza in eighty five Casey's locations.
Speaker 1 (08:58):
Eighty five stores just like that. Wow.
Speaker 2 (09:00):
And then they strategically added pizza by the slice in
nineteen eighty six that perfectly captured the lunch crowd, commuters, truckers,
shift workers.
Speaker 1 (09:08):
Okay, but let's talk quality. We hear scratch made dough,
fresh veggies. But it's still gas station pizza, right, How
good could it actually be?
Speaker 2 (09:18):
That's the million dollar question, isn't it? And I think
the key is understanding what good means in this context.
It's not gourmet, it's not artisanal Neapalitan pizza. It's what
some call every man pizza. It's consistent, it's reliable. It
emphasizes freshness and simplicity over complexity.
Speaker 1 (09:34):
So the scratch made dough is real, daily.
Speaker 2 (09:36):
Absolutely mixed in store every day, simple ingredients, flour, yeast, water, sugar. Crucially,
they never use frozen crusts. That's a big differentiator.
Speaker 1 (09:46):
Okay, that's significant.
Speaker 2 (09:47):
And the toppings sauce from canned tomatoes spandard practice, but
good quality topping sliced right there on site, real monster relities.
Speaker 1 (09:56):
So the value isn't about being fancy, It's about delivering
a fresh, reliable, familiar product, especially in places with no
other options.
Speaker 2 (10:05):
That's exactly it. In so many of these small rural towns,
especially ones off the main highways. The big chains like
Dominoes or Pizza Hut, they just aren't there. The population
density isn't high enough to justify a franchise or a
delivery zone.
Speaker 1 (10:20):
Cases filled that vacuum completely totally.
Speaker 2 (10:23):
Their corporate chef, Andrew Kinty had a great quote, it's
not just food, it's community.
Speaker 1 (10:27):
Fuel, community fuel. I like that.
Speaker 2 (10:30):
It really became central to local life, the place you
went after the game, the place for Sunday lunch after church,
the easy Tuesday night dinner. Cases became the de facto
town pizzeria, and that cultural.
Speaker 1 (10:41):
Role must have translated into serious money, especially compared to
those tiny gas margins.
Speaker 2 (10:45):
Oh, night and day. Remember the eleven cents per gallon
on gas. Yeah, the gross margins on prepared foods, especially pizza,
jumped to over fifty percent immediately.
Speaker 1 (10:56):
Fifty percent compare like what eleven percent on gas.
Speaker 2 (10:59):
It's a staggering difference. That's when you realize that pizza
wasn't just another product they sold. It became the financial
core of the company.
Speaker 1 (11:06):
It generated the cash they needed to keep growing.
Speaker 2 (11:08):
Absolutely, that high margin pizza funded the expansion, buying land,
building bigger stores, pushing into new states. It was the
profit engine that made the whole model sustainable and scalable.
Speaker 1 (11:20):
So pizza's a hit, it's making money, But now they
have an operational challenge, right, you can't run the fifth
biggest pizza operation out of old donut corners exactly.
Speaker 2 (11:29):
The success of the pizza forced a massive infrastructure overhaul.
They couldn't just wing it anymore. The nineteen nineties really
became about standardizing and scaling up that.
Speaker 1 (11:38):
Kitchen model, and the company's growth accelerated dramatically.
Speaker 2 (11:42):
Nineteen ninety six was a huge year. They opened their
one thousandth.
Speaker 1 (11:45):
Store, one thousand stores, mostly still in the Midwest.
Speaker 2 (11:49):
Primarily Yeah, Altoona, Iowa was the site of the one
thousandth and that same year, total company sales crossed one
billion dollars.
Speaker 1 (11:58):
For the first time, a billion dollars. That really proved
the model worked, didn't it. The CEA store plus prepared
food combo.
Speaker 2 (12:04):
It validated the whole strategy. But physically making it happen
in all those stores that took serious investment.
Speaker 1 (12:11):
So what did that actually look like for listeners? How
do you turn a basic gas station into a high
volume pizza kitchen?
Speaker 2 (12:17):
It means spending money. Pizza kitchens became standard, eventually getting
installed in something like ninety two percent of all Casey's locations.
Two and these weren't small kitchens. You need serious prep
space for mixing dough, daily chopping vegetables, storing massive amounts
of cheese. Plus you need the right.
Speaker 1 (12:34):
Ovens, not just a little countertop oven.
Speaker 2 (12:36):
Oh no, they needed large, high throughput conveyor ovens to
handle the volume. To fit all that in the standard
Casey store size had to grow significantly.
Speaker 1 (12:46):
How big are we talking around?
Speaker 2 (12:48):
Three thy six hundred square feet became the norm. That's
a big jump from the original mini marts. Yeah, they
were essentially building a dedicated, industrial grade kitchen inside every
convenience store.
Speaker 1 (12:58):
That's a huge commitment. It signals they were absolutely all
in on food being the future, not just gas.
Speaker 2 (13:03):
No question, but building hundreds of new stores takes time
to grow faster. They also turned to acquisitions.
Speaker 1 (13:10):
Buying up existing chains exactly.
Speaker 2 (13:13):
It helped them rapidly increase their footprint and also test
the waters in slightly different markets. Two key deals happened
in two thousand and six.
Speaker 1 (13:20):
Which ones were those.
Speaker 2 (13:21):
They bought gas end Shop based in Lincoln, Nebraska, and
then they spent sixty three million dollars to acquire the
handymart chain in Cedar Rapids, Iowa that added thirty three stores.
Speaker 1 (13:31):
Were those also in small towns.
Speaker 2 (13:32):
Mostly, but these acquisitions were strategic because they gave cases
more locations in or near slightly larger urban areas. It
let them test if their PISA model could compete where
there was a bit more competition, not just where they
were the only option.
Speaker 1 (13:46):
Okay, so expanding the footprint, but they also needed to
innovate on the menu itself, right beyond just pepperoni.
Speaker 2 (13:52):
Definitely, they realized they couldn't just rely on the basics forever.
They needed signature items, things people would specifically come to
Casey for things that really resonated with their core heartland customer.
Speaker 1 (14:04):
And this leads us to a couple of legends.
Speaker 2 (14:06):
Absolute legends in the Caseys universe. First up, the breakfast pizza.
Speaker 1 (14:11):
Ah, yes, the breakfast pizza. When did that debut?
Speaker 2 (14:15):
Around two thousand and one? And it was pure strategic genius?
Speaker 1 (14:19):
Why genius?
Speaker 2 (14:20):
Because it targeted a completely different time of day, a
different need, the morning commute.
Speaker 1 (14:24):
Right, people stopping for gas on the way to work exactly.
Speaker 2 (14:27):
And what did they create? A base of scrambled eggs, cheese, bacon, sausage,
sometimes hash browns. It was hearty, convenient, and importantly high morgin.
Speaker 1 (14:36):
It basically created a new category, didn't it? Hot, savory
breakfast ready to go from the gas station. It became
an institution in a lot of places.
Speaker 2 (14:43):
Totally cornered that market in rural America. And then came
the other big one, the taco pizza.
Speaker 1 (14:49):
Another classic described that one.
Speaker 2 (14:50):
It's got a refried bean and salsa based instead of
tomato sauce, then seasoned ground beef, lettuce, tomato, taco chicks, cheese, so.
Speaker 1 (14:59):
Tapping into those familiar Midwestern sort of tex Mechs inspired
flavors perfectly.
Speaker 2 (15:04):
It's satisfying, it's different, it's very much a heartland thing.
By mastering these unique, high demand, high margin pizzas, Cases
really cemented their food identity.
Speaker 1 (15:15):
And that led to that big milestone yep.
Speaker 2 (15:18):
By twenty sixteen, all this innovation and expansion paid off.
They officially became the fifth largest pizza seller in the
US by number of locations.
Speaker 1 (15:27):
Even beating out some of the dedicated pizza chains in
sheer kitchen count.
Speaker 2 (15:30):
Incredible, right, But that level of success naturally, it attracts
attention that offers exactly. In twenty ten, Alimentation couch Tard
that's the Canadian parent company of Circle K, they came
calling the big offer, a very big offer for the time,
one point nine billion dollars, and Casey said no. They
rejected the bid, and that was a really defining moment
(15:51):
for them. It showed their determination to stay independent, to
stick to their roots.
Speaker 1 (15:54):
But turning down that money also meant they had to
compete head on with global giants like couch starts.
Speaker 2 (16:01):
Right. They couldn't just rely on their existing model forever.
It forced the next big strategic shift, embracing digital.
Speaker 1 (16:07):
You can't just wait for people to walk in the door.
Speaker 2 (16:09):
Anymore, not if you want to compete at that level.
Speaker 1 (16:11):
Yeah.
Speaker 2 (16:12):
So twenty sixteen they launched online ordering across the whole chain,
followed by the mobile app and critically their loyalty program,
Casey's Rewards.
Speaker 1 (16:23):
How important has that loyalty program been?
Speaker 2 (16:25):
Hugely important. It now has something like eight point five
million members. That's a massive customer base they can track
and market to directly. It's key for driving those repeat,
high margin food orders.
Speaker 1 (16:38):
And they even updated the branding around that time.
Speaker 2 (16:41):
Yeah, twenty twenty they did a rebrand. Most noticeably, they
dropped the general stores from a lot of the signage, just.
Speaker 1 (16:47):
Cases signaling they're more than just a general store now.
Speaker 2 (16:51):
So it acknowledges their evolution into a major food destination.
Speaker 1 (16:54):
But important that kept the Rooster weather Van logo.
Speaker 2 (16:57):
It kept the rooster Yeah, which is perfect right, that's
that blend modern convenience, digital savvy, billion dollar scale, but
still holding onto that symbol of their small town farmstead.
Speaker 1 (17:07):
Heritage, modernizing without losing their identity or trying not to anyway,
that's the balancing act. Okay, so they've scaled up, they've digitized,
they've fended off takeovers. Then comes a new CEO in
twenty nineteen, Darren Rebelas, and the strategy seems to shift
gears again.
Speaker 2 (17:22):
Absolutely, the pace changes. It goes from that steady, methodical
growth occasionally boosted by acquisitions, to something much more aggressive
conquest mode, almost.
Speaker 1 (17:33):
Driven primarily by M and A big deals.
Speaker 2 (17:35):
Big deals become the main engine. Rebels came in with
a clear, aggressive vision for expansion. He laid out a
three year plan starting Physical twenty twenty three, aiming to
add three hundred and fifty new stores by the end
of Physical twenty six.
Speaker 1 (17:49):
Three hundred fifty stores in three years.
Speaker 2 (17:50):
That's fast, very fast. Now, they still kept building new
stores from scratch, averaging about eighty new bills a year,
which is strong, but M and A was how they
planned to really hit those numbers and crucially move into
new high growth regions much faster.
Speaker 1 (18:03):
And we started seeing deals that pushed them outside their
traditional Midwestern footprint into the Sunbelt exactly.
Speaker 2 (18:10):
The first really big move in that direction was the
Buchanan Energy deal in twenty twenty one tell us about
that one. That added ninety four stores operating under the
Buckies' name, and critically, it brought Cases into brand new
states for them, like Florida and.
Speaker 1 (18:24):
Virginia, so moving south and east. Was there anything else
strategic about that deal?
Speaker 2 (18:30):
Yes? It also included a wholesale fuel business that was
new for Cases. Diversifying their revenue beyond just the retail
pumps and the in store sales gave them another layer.
Speaker 1 (18:39):
Okay, so BUCkies was the first big jump. Then they
kept adding smaller pieces.
Speaker 2 (18:44):
Yeah, like they were testing the waters, padding the store
count in strategic areas. In twenty twenty three, they bought
twenty two lone Star food stores.
Speaker 1 (18:51):
In Texas, Texas. That sounds important, very and.
Speaker 2 (18:55):
They also picked up eleven Easy Go Go locations from
Love's Travel Stops that year. All our tucking acquisitions helped
push them to twenty six hundred stores by mid twenty twenty.
Speaker 1 (19:04):
Four, Like reconnaissance before the main assault.
Speaker 2 (19:06):
You could definitely see it that way, yeah, because the
main assault was definitely.
Speaker 1 (19:09):
Coming the Mega deal.
Speaker 2 (19:11):
The Mega deal. November twenty twenty four, Caseyes acquires one
hundred and ninety eight stores from Fike soulsale. These operated under.
Speaker 1 (19:17):
The cfk O brand, and the price tag.
Speaker 2 (19:19):
A stunning one point one four five billion dollars.
Speaker 1 (19:22):
Wow, over a billion dollars. That's the biggest deal in
their history by far.
Speaker 2 (19:27):
By a long shot, and it completely signals a shift
in their ambition. They're not just a Midwestern powerhouse anymore.
They're aiming to be a truly national player.
Speaker 1 (19:36):
So this CEFO deal, it vaulted them into how many states.
Speaker 2 (19:41):
Twenty states total. It dramatically changed their map overnight. But
the key isn't just the number of states. It's where
those new stores were concentrated.
Speaker 1 (19:49):
Well, let me guess Texas.
Speaker 2 (19:51):
Bingo, one hundred and forty eight of those one hundred
and ninety eight CEFO stores are in Texas.
Speaker 1 (19:56):
One hundred and forty eight in Texas alone.
Speaker 2 (19:58):
Rebel As himself called excess the strategic crown jewel of
the deal. This isn't about adding another small town in Iowa.
This is a deliberate, very expensive plunge into one of
the biggest, fastest growing, and frankly most competitive retail markets
in the entire country.
Speaker 1 (20:13):
Okay, so they bought the stores, But Casey's isn't just
about stores. It's about the pizza. Did this see efoo
stores have kitchens, that's the crucial challenge.
Speaker 2 (20:20):
Most of them didn't have the kind of kitchen set
up Casey's needs.
Speaker 1 (20:23):
Ah, so buying the stores was just step one, exactly.
Speaker 2 (20:27):
Yeah, The sources highlight this huge integration cost. Casey's estimates
they need to spend another one hundred and forty five
million dollars just to retro fit about eighty five percent
of those newly acquired CEO Go locations.
Speaker 1 (20:38):
One hundred and forty five million dollars on top of
the one point one billion dollar purchase price just for kitchens.
Speaker 2 (20:45):
Just to add the pizza kitchens, the ovens, the preb
space to turn them into proper cases.
Speaker 1 (20:49):
That cost that one hundred and forty five million dollars.
That tells you everything about their priorities, doesn't it.
Speaker 2 (20:54):
It absolutely does. They are willing to spend massively to
ensure they can replicate that high margin prepared bared food
engine in these new huge markets. They're not buying gas
stations that happen to sell food. They're buying potential restaurant
locations that happen to sell gas.
Speaker 1 (21:08):
But isn't there a risk here. Their whole model was
built on lower cost in rural areas, that small town feel.
Can you just export that to Texas? Labour's more expensive
competition is fiercer.
Speaker 2 (21:19):
That is the fundamental question hanging over this whole conquest phase.
Speaker 1 (21:22):
Can they maintain the quality that scratch made dough, the
fresh coppings, the things that supposedly justify the price and
build their reputation. Can they do that at scale in
Dallas or Houston like they did in Boone, Iowa.
Speaker 2 (21:35):
It's incredibly challenging. They need enough centralization for efficiency and
quality control across nearly three thousand stores now, but they
have to keep enough of that local in store prep feel,
the daily dough, the slicing, to maintain the perception of
freshness and authenticity.
Speaker 1 (21:52):
Because if they lose that perception.
Speaker 2 (21:54):
Then they risk losing those amazing fifty seven to fifty
eight percent margins on the food, And if that happens,
the whole one point three billion dollar bet on Cefgo
starts to look very shaky.
Speaker 1 (22:04):
So that one hundred and forty five million dollars isn't
just buying ovens encounters.
Speaker 2 (22:08):
It's an attempt to transplant the company's core identity. It's
very culture into a completely different environment. It's a massive gamble.
Speaker 1 (22:14):
Underscoring again that the food, the pizza specifically, isn't just
part of the business model.
Speaker 2 (22:19):
It is the business model. The convenience store is just
the delivery mechanism.
Speaker 1 (22:22):
Okay, let's drill down again on those financials, because they
really are the secret sauce here. That figure, prepared foods
make up sixty two percent of their gross.
Speaker 2 (22:32):
Profits, sixty two percent of the.
Speaker 1 (22:34):
Profit, even though they only account for about thirty eight
percent of total revenue.
Speaker 2 (22:38):
It's an incredible statistic. It completely flips the traditional c
store model, where you make pennies on gas and hope
to sell a high margin soda or candy bar.
Speaker 1 (22:47):
Here, the high margin item is the main.
Speaker 2 (22:49):
Profit driver exactly, and that key metric is the gross
margin on prepared foods. Fifty seven point eight percent, nearly
fifty eight cents of profit on every dollar of food sold.
Speaker 1 (22:59):
That's huge compared to maybe ten eleven cents on the
dollar for gas.
Speaker 2 (23:04):
It's why the pizza pivot was so essential. That profit
fuels everything else, the expansion, the acquisitions, the dividends to shareholders.
Speaker 1 (23:11):
So why are those food margins so high. Is it
just that they had no competition in those early rural
markets or are they just really good at managing costs.
Speaker 2 (23:18):
It's probably a mix of factors. Certainly, the lack of
competition in many of their core markets historically allowed them
pricing power. Rural labor costs have generally been lower too,
although that advantage shrinks considerably as they move into places
like Texas and.
Speaker 1 (23:31):
Florida, right, that's changing.
Speaker 2 (23:33):
They also seem to have really optimized their supply chain
for a relatively small number of core high volume ingredients flour, yeast, sugar, can, tomatoes, mozzarella, cheese.
Speaker 1 (23:46):
They buy massive amounts of cheese not they forty million
pounds of cheese a year.
Speaker 2 (23:50):
That's apparently around one hundred million dollars just on cheese.
Buying at that scale gives you leverage.
Speaker 1 (23:56):
And then there's the product mix itself, things like the
breakfast pizza.
Speaker 2 (24:00):
Yeah, think about the ingredients of breakfast pizza, eggs, cheese,
maybe some sausage or bacon bits, hash browns. These are
relatively inexpensive, high volume commodities. It's engineered for profitability.
Speaker 1 (24:11):
Okay, so cost control, scale, smart product mix, but people
have to actually want to buy it. Let's go back
to the pizza's appeal. What keeps people coming back in
such huge numbers.
Speaker 2 (24:21):
Consistency is huge. That chewy tavern style crust made from
dough mixed fresh daily, that's a promise.
Speaker 1 (24:28):
They keep the no frozen crusts thing.
Speaker 2 (24:30):
That's a big part of their quality story. And then
the perception of generous toppings, real cheese. It meets a
very clear consumer expectation for what pizza should be satisfying familiar,
good value even if it's not gourmet.
Speaker 1 (24:46):
And they don't just rest on their laurels. They keep
introducing new things, right.
Speaker 2 (24:49):
They know they need to keep the menu fresh, catered
to trends, so in twenty twenty three they added a
thin crust.
Speaker 1 (24:55):
Option, okay, appealing to a different preference.
Speaker 2 (24:58):
You've got to cauliflower crust now too, the gluten conscious crowd.
And they do a lot of limited time offerings ltos,
like what things like a Jlapanio popper pizza or a
BBQ brisket pizza. These ltos create buzz, get people talking,
maybe drive an extra visit.
Speaker 1 (25:14):
And probably use ingredients that can source strategically for a
short time.
Speaker 2 (25:18):
Exactly smart menu management keeps things interesting without complicating the
core operation too much.
Speaker 1 (25:23):
And how do they market all this? Especially keeping those
eight point five million rewards members coming back.
Speaker 2 (25:28):
They've gotten pretty sophisticated digitally. Apparently about thirty percent of
their digital sales are now driven by personalized.
Speaker 1 (25:35):
Offers, meaning they track what you buy.
Speaker 2 (25:37):
Yeah, they use platforms like Salesforce to analyze your purchase history,
when you buy coffee, what kind of pizza you ordered
last time, how often you visit. Then the app pushes
you target deals.
Speaker 1 (25:48):
Hey, haven't seen you in a while, Here's two dollars
off your next large pizza.
Speaker 2 (25:52):
Something like that. It's about driving frequency and locking in
that loyalty.
Speaker 1 (25:56):
And they still lean heavily on the community connection, right,
that neighborly charm idea.
Speaker 2 (26:02):
Definitely, that's a crucial part of their brand, especially in
the legacy markets. They make a point of giving.
Speaker 1 (26:07):
Back, like the donations.
Speaker 2 (26:08):
Yeah, they donated fifteen million dollars between twenty nineteen and
twenty twenty two through various programs. They have initiatives like
cash for Classrooms that directly support local schools.
Speaker 1 (26:18):
People notice that it builds goodwill, makes them feel like
the local choice even if they're a huge corporation.
Speaker 2 (26:24):
Right, and they tie promotions into it too, like for
their fortieth pizza anniversary in twenty twenty five, they offered
forty cent slices if you use the code birthday in
the app.
Speaker 1 (26:34):
Smart combines the digital engagement with celebrating their history exactly.
Speaker 2 (26:39):
It reinforces that feeling of being part of the community.
Speaker 1 (26:42):
Okay, but that community feeling gets harder to maintain as
they get bigger and move into these packed markets. They're
not the only game in town anymore. Who are the
main competitors now?
Speaker 2 (26:52):
The competitive landscape is definitely getting more complex for them.
You've got different layers.
Speaker 1 (26:56):
First, the other big pizza players.
Speaker 2 (26:58):
Sure, Domino's Pizza, Little Caesars. They're all competing for those
same casual meal dollars, But often Casey's isn't located right
next door to them. Their main battleground was historically where
those guys weren't.
Speaker 1 (27:11):
So the bigger threat comes from other sea stores that
are also getting better at food.
Speaker 2 (27:16):
That's where it's really heating up. Think about chains like
Quick Trip or Kum and Go. They're strong regional players
improving their food offers.
Speaker 1 (27:23):
But do they have that same destination pizza identity as Casey's.
Speaker 2 (27:28):
Not quite to the same degree perhaps, But the one
that's a really direct threat, especially in their eastern flank
now is.
Speaker 1 (27:34):
Wuawa ah Wahwah, the East Coast powerhouse known for their
hogies and coffee.
Speaker 2 (27:40):
And now pizza. Wawa launched a chain wide pizza program
in twenty twenty three, and Wawa knows food service. They
have a huge loyal following, great logistics and deep pockets.
Speaker 1 (27:52):
So if Wawa pushes west, that's a direct challenge to
Casey's core strength, a major challenge.
Speaker 2 (27:57):
Wawah competes on quality and customization prepared foods, just like
Caseyes tries to. That could be a real battle.
Speaker 1 (28:04):
And then there's another competitor, maybe less obvious.
Speaker 2 (28:06):
Yeah, the stealth rival Hunt Brothers Pizza.
Speaker 1 (28:09):
Right, you see their signs everywhere in rural areas everywhere.
Speaker 2 (28:12):
They operate in over ten thousand locations, mostly licensing deals
with smaller independent gas stations and stores, often in the
exact same small towns Casey's targets.
Speaker 1 (28:21):
How does Hunt Brothers compare?
Speaker 2 (28:23):
Generally seen as maybe a step down in quality from
Casey's right, less premium, maybe more basic ingredients, but they
are ubiquitous and often cheaper.
Speaker 1 (28:31):
So Casey's has to constantly justify its slightly higher price
point against the convenience and availability of Hunt Brothers.
Speaker 2 (28:38):
Exactly that daily scratch made dough, the fresh slice toppings.
That's Casey's defense. They have to maintain that quality perception
to win against the sheer volume and lower price of
Hunt Brothers. It's convenience versus quality within the convenience channel.
Speaker 1 (28:54):
So the secret sauce, it's complex. It's the market. They
chose the product, they perfected, the margins they'dhe achieved, loyalty
they built, and now fending off serious competition on multiple fronts.
Speaker 2 (29:05):
That sums it up pretty well. They took convenience, added
surprisingly decent pizza, found a market nobody else wanted, and
leveraged that into massive profits to fuel their expansion. Now
the question is can they sustain it everywhere? Hashtag tag outro.
Speaker 1 (29:18):
All right, let's try to wrap our heads around this
incredible story Casey's General Stores. It really feels like it
comes down to what two main things.
Speaker 2 (29:26):
I think. So first, that absolutely unwavering focus from day
one on those rural, often overlooked markets. They understood that
customer base like nobody else.
Speaker 1 (29:34):
And second, layering on top of that geographic strategy, this
incredibly successful high margin prepared foods operation with pizza right
at the center.
Speaker 2 (29:42):
That combination was lethal, high margins funding growth into areas
where competition was low.
Speaker 1 (29:49):
So looking ahead now, say October twenty twenty five, where
the sources leave off, Casey's seems to be at this
really interesting crossroads.
Speaker 2 (29:57):
Definitely, they're trying to consolidate their strength and their core
markets while also pushing hard into these huge new territories,
especially Texas after that massive CEFO deal.
Speaker 1 (30:07):
It's consolidation and conquest at the same time.
Speaker 2 (30:10):
Yeah, and their future plans seem to follow that playbook.
Sources talk about expanding their chicken wing offerings, another high
margin food item, more ltos to keep the menu exciting.
Speaker 1 (30:20):
And leveraging all that customer data they're collecting.
Speaker 2 (30:22):
Big time using their retail media arm Casey's access to
sell targeted advertising based on those eight point five million
loyalty members buying habits. That's another revenue stream.
Speaker 1 (30:32):
And the financial market seem to be buying into the
strategy for now.
Speaker 2 (30:36):
Yes, analysts are forecasting pretty healthy growth ten to twelve
percent EBIDO growth, the stocks trading at a high multiple
round thirty five times earnings, so there's a lot.
Speaker 1 (30:44):
Of confidence baked in that they can successfully transplant that
high margin pizza model into the sun Belt.
Speaker 2 (30:50):
Which really brings us back to the core tension, doesn't it.
And maybe the final thought for you, the listener to
chew on, go for it. Casey's initial magic, It's secret
Sauce was being that indispensable neighbor's store, the local place,
filling a real need, offering surprisingly good fresh food in
a small town. That authenticity, that scratch made quality. That's
(31:12):
what fueled their rise. Now they're plunging into these hyper
competitive markets like Texas and Florida, spending over one hundred
million just on kitchen retrofits for the CEFCO stores. The
scale is just different. So the question is can they
actually maintain that small town feel, that commitment to quality,
the culture that made them special when they're operating at
this massive scale under intense competitive pressure and driven by
(31:36):
these billion dollar M and.
Speaker 1 (31:38):
A deals, Or does the sheer size and financial pressure
of this conquest phase inevitably force them to standardize more
and maybe cut corners and ultimately change the very identity
that got them here is.
Speaker 2 (31:48):
The original secret sauce compatible with national domination. Can the
heartland ethos survive the sun belt sprawl?
Speaker 1 (31:57):
Can that financial engine which demands efficient in standardization coexist
with the small town's scratch made culture that built it.
That really is the billion dollar question.
Speaker 2 (32:06):
Isn't it authenticity versus aggregation? That's the tightrope they're walking.
Speaker 1 (32:11):
Fascinating stuff. Thanks for joining us on the deep dive.
Speaker 2 (32:13):
See you next time.
Welcome to the deep dive. This is where we sift
through well just stacks of information, research data, articles and
really pull out what you need to know. Plus hopefully
those surprising facts that you know stick with you.
Speaker 2 (00:11):
That's the goal.
Speaker 1 (00:12):
And today we're tackling a story about market domination, but
maybe not from where you'd expect. Forget Silicon Valley for
a minute.
Speaker 2 (00:19):
Yeah, this one's rooted firmly in the American Midwest. You
are going deep on Casey's General Stores.
Speaker 1 (00:24):
Right Caseyes. Now, if you're not from the heartland, you
might just picture, I don't know, a typical gas station chain.
Speaker 2 (00:31):
Exactly, but our sources they paint a really different picture.
This seemingly humble company born in Iowa has sort of
quietly become this massive culinary force in the US.
Speaker 1 (00:43):
It's incredible, selling hundreds of millions of pizza slices every
single year.
Speaker 2 (00:48):
It's a huge operation, almost stealthy, like you said.
Speaker 1 (00:51):
So our mission here in this deep dive is to
figure out the strategy behind that. How did a chain
that started, you know, just selling gas and coffee in
small farm towns.
Speaker 2 (01:00):
Yeah, oftent towns nobody else was really serving.
Speaker 1 (01:03):
How did that turn into the fifth largest pizza chain
in the country by the sheer number of kitchens they operate.
Speaker 2 (01:09):
It's more than just a business story, isn't it. It
really is a masterclass in finding and just dominating and
overlook market.
Speaker 1 (01:16):
And the scale today is frankly astonishing. You really need
to adjust your thinking.
Speaker 2 (01:21):
Oh absolutely, forget your local pizza joint. Casey's has over
twenty nine hundred locations.
Speaker 1 (01:25):
Now twenty nine hundred spread across nineteen states, and.
Speaker 2 (01:30):
It's their prepared food, especially the pizza, that truly sets
them apart. That's the engine.
Speaker 1 (01:34):
Get this for volume. Casey sells over one hundred and
five million pizza slices.
Speaker 2 (01:39):
A year, one hundred five million slices plus twenty eight
million whole pies annually.
Speaker 1 (01:45):
It's just massive food service volume, and that pushed their
pizza revenue, just the pizza, to seven hundred million dollars
in fiscal twenty twenty four.
Speaker 2 (01:52):
Seven hundred million from pizza at a convenience store chain.
That's enough to make the big guys, your Dominoes, your
pizza huts really pay at time.
Speaker 1 (02:00):
But here's the kicker, right, They didn't achieve this battling
it out in Chicago or La No.
Speaker 2 (02:05):
Not at all. It was a laser focus on the
towns those giants basically ignored.
Speaker 1 (02:09):
So for you listening, this story is I think a
really powerful lesson. Sometimes the smartest business move is to
bet everything on the places everyone else wrote.
Speaker 2 (02:18):
Off, finding gold where others saw well just fields.
Speaker 1 (02:22):
Okay, So to really get cases, you have to go
back way before the pizza. Back to the founder, Donald Lamberti.
Speaker 2 (02:28):
Right nineteen fifty nine, Lamberti was young in Des Moines.
He leased this pretty rundown service station from his father.
Speaker 1 (02:36):
And back then service stations were mostly what repairs and pumping.
Speaker 2 (02:39):
Gas pretty much. But Lamberti he saw things changing. He
kind of sensed that convenience was becoming.
Speaker 1 (02:46):
Key, so he remodeled it.
Speaker 2 (02:47):
Yeah, he took that old garage and towed it into
an early version of a Mini Mart. Stock essentials, milk,
bread snacks right there next to the gas bumps.
Speaker 1 (02:55):
He was really ahead of the curve on that one
stop shop idea for gas stations.
Speaker 2 (02:59):
Definitely pie up nearing it and that early success that
became the model. But the chain cases itself, that came
a bit later.
Speaker 1 (03:05):
Nineteen sixty eight, Right, that's where the name comes in exactly.
Speaker 2 (03:09):
LAMBERTI had a close friend also his fuel supplier, named
Curve and seafish Casey.
Speaker 1 (03:14):
Casey got it.
Speaker 2 (03:16):
So Casey kIPS him off about this struggling business in Boone, Iowa,
the square deal oil company. LAMBERTI buys it.
Speaker 1 (03:22):
And Boone, Iowa that's key.
Speaker 2 (03:24):
Not a big city, Nope, a small farming community maybe
twelve thousand people. Then LAMBERTI converts its three bay garage
into his next convenience store and he names it.
Speaker 1 (03:34):
Casey's as a tribute to Caseyfish.
Speaker 2 (03:37):
That's the story and that location boon that really defined
their whole strategy from the get.
Speaker 1 (03:42):
Go, focus on the small towns, the rural markets that
bigger companies just weren't interested in.
Speaker 2 (03:47):
Absolutely, and if you look at them today, that strategy
still holds. Something like two thirds of their stores are
in towns with populations under twenty thousand.
Speaker 1 (03:56):
Wow. Still after all that grows still in those towns.
Speaker 2 (04:00):
The initial offering was pretty simple, but crucial, self served gas,
basic groceries, coffee, lottery.
Speaker 1 (04:07):
Tickets, and importantly that neighborly charm the sources mentioned.
Speaker 2 (04:11):
Yeah, that's harder to quantify, but vital. They weren't seen
as some outside corporation moving in. They quickly became the
local spot, the hub.
Speaker 1 (04:17):
And their early growth wasn't explosive, was it more methodical.
Speaker 2 (04:21):
Very steady, very deliberate. By the mid seventies, they had
about one hundred and eighteen locations, but almost all still
in Iowa and nearby small Midwestern.
Speaker 1 (04:30):
Towns and funded.
Speaker 2 (04:31):
How this is interesting, It was all funded internally, based
on their local knowledge, reinvesting the profits, no outside venture capital.
Speaker 1 (04:39):
Early on growing organically using what they knew about their
specific customers.
Speaker 2 (04:44):
Right. But that kind of organic growth can only take
you so far, especially if you want to cross state
lines in a bigger way.
Speaker 1 (04:49):
So by the early eighties they needed more capital.
Speaker 2 (04:52):
They did if they wanted to really expand, they needed
a significant cash injection, and that led to a really pivotal.
Speaker 1 (04:59):
Move, the IPO.
Speaker 2 (05:00):
October nineteen eighty three, they went public, offered seven hundred
thousand shares. That money was basically the rocket fuel for
the next phase of.
Speaker 1 (05:07):
Expansion, pushing into new states, standardizing operations.
Speaker 2 (05:10):
Exactly, but going public also meant facing the uh let's say,
harsh realities of the commodities market, specifically gasoline which.
Speaker 1 (05:19):
Was still their main product by volume, right around sixty
percent of sales.
Speaker 2 (05:22):
Yeah, volume wise, gas was huge, but profit wise not
so much. The margins were shrinking razor thin and getting thinner.
By the mid nineties. Get this, they were only making
about eleven cents profit per gallon.
Speaker 1 (05:36):
Eleven cents on something people buy gallons of.
Speaker 2 (05:40):
It's incredibly low gases, commodity prices, everything you have to
sell an enormous amount just to cover your costs at
eleven cents a gallon.
Speaker 1 (05:48):
So the thing driving most of their sales was bringing
in very little profit. They needed something else to actually
make money.
Speaker 2 (05:55):
Precisely that pressure, those low fuel margins. That was the
real catalyst for what came next. It wasn't some flash
of genius in a boardroom. It was necessity, absolutely innovation,
born from needing to survive and grow. They realized the
high volume, low margin gas had to be subsidized by
higher margin stuff sold inside the store, groceries. Maybe groceries help,
(06:16):
but the real potential was in prepared foods. That strategic pressure,
that need for higher profit margins inside the store, that's
what paid the way for the big one, the pizza.
It forced them to look inward toward the kitchen.
Speaker 1 (06:28):
Okay, so pizza becomes the hero. But it wasn't actually
their first attempt at prepared food, was it.
Speaker 2 (06:34):
Now that's a common misconception. They actually started with homemade
donuts back in nineteen eighty donuts. Okay, Yeah, they started
putting in these small baking setups in some stores, so
they had the equipment kind of. It proved they could
do some in house.
Speaker 1 (06:46):
Baking, but donuts weren't the financial answer they were looking for.
Speaker 2 (06:49):
Apparently, not the real Eureka moment, the one that you
know changed everything for cases. That happened a few years later,
around eighty.
Speaker 1 (06:57):
Four or eighty five, and the story points to a
specific place.
Speaker 2 (07:01):
It does a franchise in Corning, Iowa. And we really
need picture Corning.
Speaker 1 (07:07):
How small are we talking, heini?
Speaker 2 (07:09):
Even now, its population is barely sixteen hundred people, just
a little dot on the map.
Speaker 1 (07:14):
So why did this huge innovation bubble up from such
a small place?
Speaker 2 (07:17):
It boils down to avoid simple as that the town's
only local pizza place shut down.
Speaker 1 (07:23):
So suddenly, in this small town of sixteen hundred people.
Speaker 2 (07:27):
Exactly where do you go Friday night dinner, birthday party,
after the high school football game. The option just disappeared.
Speaker 1 (07:34):
That creates a real local demand, doesn't it a huge one?
Speaker 2 (07:37):
And that's where the store manager in Corning, a guy
named Ron Willams, comes in.
Speaker 1 (07:41):
He saw the opportunity he did.
Speaker 2 (07:43):
And importantly, this wasn't some corporate directive coming down from HQ.
It was Wollam's on the ground, Yeah, reacting to what
his community needed.
Speaker 1 (07:51):
And he looked at the equipment they already had, right.
Speaker 2 (07:53):
The donut kitchen, the ovens, the mixer. They were mostly
sitting idle after the morning donut rush, like twenty hours
a day, doing nothing.
Speaker 1 (08:03):
So he thought, why not pizza?
Speaker 2 (08:05):
Basically Yeah, he started experimenting. Figured, scratch made dough for donuts,
wasn't that different from pizza dough, used the existing gear,
sourced some simple ingredients.
Speaker 1 (08:14):
And what kind of pizza did he make? Was it
anything fancy?
Speaker 2 (08:16):
No, not at all, And that was key. It was
intentionally simple, familiar and affordable, scratch made dough, real mozzarella,
fresh vegetables, standard meats like pepperoni and sausage. And the price. Initially,
sources say it was around five bucks for a large pizza.
Speaker 1 (08:31):
Five dollars for a whole large pizza.
Speaker 2 (08:33):
Yeah, an incredible value, especially for families in a town
that suddenly had no other options. It was an instant hit.
Speaker 1 (08:40):
People must have loved it.
Speaker 2 (08:41):
They did. The word just spread organically, manager to manager,
store to store. People stopping for gas started grabbing a
slice for lunch, family started ordering whole pies for dinner.
Speaker 1 (08:50):
And it took off quickly, amazingly fast.
Speaker 2 (08:53):
Yeah, by the end of that first year, they had
pizza in eighty five Casey's locations.
Speaker 1 (08:58):
Eighty five stores just like that. Wow.
Speaker 2 (09:00):
And then they strategically added pizza by the slice in
nineteen eighty six that perfectly captured the lunch crowd, commuters, truckers,
shift workers.
Speaker 1 (09:08):
Okay, but let's talk quality. We hear scratch made dough,
fresh veggies. But it's still gas station pizza, right, How
good could it actually be?
Speaker 2 (09:18):
That's the million dollar question, isn't it? And I think
the key is understanding what good means in this context.
It's not gourmet, it's not artisanal Neapalitan pizza. It's what
some call every man pizza. It's consistent, it's reliable. It
emphasizes freshness and simplicity over complexity.
Speaker 1 (09:34):
So the scratch made dough is real, daily.
Speaker 2 (09:36):
Absolutely mixed in store every day, simple ingredients, flour, yeast, water, sugar. Crucially,
they never use frozen crusts. That's a big differentiator.
Speaker 1 (09:46):
Okay, that's significant.
Speaker 2 (09:47):
And the toppings sauce from canned tomatoes spandard practice, but
good quality topping sliced right there on site, real monster relities.
Speaker 1 (09:56):
So the value isn't about being fancy, It's about delivering
a fresh, reliable, familiar product, especially in places with no
other options.
Speaker 2 (10:05):
That's exactly it. In so many of these small rural towns,
especially ones off the main highways. The big chains like
Dominoes or Pizza Hut, they just aren't there. The population
density isn't high enough to justify a franchise or a
delivery zone.
Speaker 1 (10:20):
Cases filled that vacuum completely totally.
Speaker 2 (10:23):
Their corporate chef, Andrew Kinty had a great quote, it's
not just food, it's community.
Speaker 1 (10:27):
Fuel, community fuel. I like that.
Speaker 2 (10:30):
It really became central to local life, the place you
went after the game, the place for Sunday lunch after church,
the easy Tuesday night dinner. Cases became the de facto
town pizzeria, and that cultural.
Speaker 1 (10:41):
Role must have translated into serious money, especially compared to
those tiny gas margins.
Speaker 2 (10:45):
Oh, night and day. Remember the eleven cents per gallon
on gas. Yeah, the gross margins on prepared foods, especially pizza,
jumped to over fifty percent immediately.
Speaker 1 (10:56):
Fifty percent compare like what eleven percent on gas.
Speaker 2 (10:59):
It's a staggering difference. That's when you realize that pizza
wasn't just another product they sold. It became the financial
core of the company.
Speaker 1 (11:06):
It generated the cash they needed to keep growing.
Speaker 2 (11:08):
Absolutely, that high margin pizza funded the expansion, buying land,
building bigger stores, pushing into new states. It was the
profit engine that made the whole model sustainable and scalable.
Speaker 1 (11:20):
So pizza's a hit, it's making money, But now they
have an operational challenge, right, you can't run the fifth
biggest pizza operation out of old donut corners exactly.
Speaker 2 (11:29):
The success of the pizza forced a massive infrastructure overhaul.
They couldn't just wing it anymore. The nineteen nineties really
became about standardizing and scaling up that.
Speaker 1 (11:38):
Kitchen model, and the company's growth accelerated dramatically.
Speaker 2 (11:42):
Nineteen ninety six was a huge year. They opened their
one thousandth.
Speaker 1 (11:45):
Store, one thousand stores, mostly still in the Midwest.
Speaker 2 (11:49):
Primarily Yeah, Altoona, Iowa was the site of the one
thousandth and that same year, total company sales crossed one
billion dollars.
Speaker 1 (11:58):
For the first time, a billion dollars. That really proved
the model worked, didn't it. The CEA store plus prepared
food combo.
Speaker 2 (12:04):
It validated the whole strategy. But physically making it happen
in all those stores that took serious investment.
Speaker 1 (12:11):
So what did that actually look like for listeners? How
do you turn a basic gas station into a high
volume pizza kitchen?
Speaker 2 (12:17):
It means spending money. Pizza kitchens became standard, eventually getting
installed in something like ninety two percent of all Casey's locations.
Two and these weren't small kitchens. You need serious prep
space for mixing dough, daily chopping vegetables, storing massive amounts
of cheese. Plus you need the right.
Speaker 1 (12:34):
Ovens, not just a little countertop oven.
Speaker 2 (12:36):
Oh no, they needed large, high throughput conveyor ovens to
handle the volume. To fit all that in the standard
Casey store size had to grow significantly.
Speaker 1 (12:46):
How big are we talking around?
Speaker 2 (12:48):
Three thy six hundred square feet became the norm. That's
a big jump from the original mini marts. Yeah, they
were essentially building a dedicated, industrial grade kitchen inside every
convenience store.
Speaker 1 (12:58):
That's a huge commitment. It signals they were absolutely all
in on food being the future, not just gas.
Speaker 2 (13:03):
No question, but building hundreds of new stores takes time
to grow faster. They also turned to acquisitions.
Speaker 1 (13:10):
Buying up existing chains exactly.
Speaker 2 (13:13):
It helped them rapidly increase their footprint and also test
the waters in slightly different markets. Two key deals happened
in two thousand and six.
Speaker 1 (13:20):
Which ones were those.
Speaker 2 (13:21):
They bought gas end Shop based in Lincoln, Nebraska, and
then they spent sixty three million dollars to acquire the
handymart chain in Cedar Rapids, Iowa that added thirty three stores.
Speaker 1 (13:31):
Were those also in small towns.
Speaker 2 (13:32):
Mostly, but these acquisitions were strategic because they gave cases
more locations in or near slightly larger urban areas. It
let them test if their PISA model could compete where
there was a bit more competition, not just where they
were the only option.
Speaker 1 (13:46):
Okay, so expanding the footprint, but they also needed to
innovate on the menu itself, right beyond just pepperoni.
Speaker 2 (13:52):
Definitely, they realized they couldn't just rely on the basics forever.
They needed signature items, things people would specifically come to
Casey for things that really resonated with their core heartland customer.
Speaker 1 (14:04):
And this leads us to a couple of legends.
Speaker 2 (14:06):
Absolute legends in the Caseys universe. First up, the breakfast pizza.
Speaker 1 (14:11):
Ah, yes, the breakfast pizza. When did that debut?
Speaker 2 (14:15):
Around two thousand and one? And it was pure strategic genius?
Speaker 1 (14:19):
Why genius?
Speaker 2 (14:20):
Because it targeted a completely different time of day, a
different need, the morning commute.
Speaker 1 (14:24):
Right, people stopping for gas on the way to work exactly.
Speaker 2 (14:27):
And what did they create? A base of scrambled eggs, cheese, bacon, sausage,
sometimes hash browns. It was hearty, convenient, and importantly high morgin.
Speaker 1 (14:36):
It basically created a new category, didn't it? Hot, savory
breakfast ready to go from the gas station. It became
an institution in a lot of places.
Speaker 2 (14:43):
Totally cornered that market in rural America. And then came
the other big one, the taco pizza.
Speaker 1 (14:49):
Another classic described that one.
Speaker 2 (14:50):
It's got a refried bean and salsa based instead of
tomato sauce, then seasoned ground beef, lettuce, tomato, taco chicks, cheese, so.
Speaker 1 (14:59):
Tapping into those familiar Midwestern sort of tex Mechs inspired
flavors perfectly.
Speaker 2 (15:04):
It's satisfying, it's different, it's very much a heartland thing.
By mastering these unique, high demand, high margin pizzas, Cases
really cemented their food identity.
Speaker 1 (15:15):
And that led to that big milestone yep.
Speaker 2 (15:18):
By twenty sixteen, all this innovation and expansion paid off.
They officially became the fifth largest pizza seller in the
US by number of locations.
Speaker 1 (15:27):
Even beating out some of the dedicated pizza chains in
sheer kitchen count.
Speaker 2 (15:30):
Incredible, right, But that level of success naturally, it attracts
attention that offers exactly. In twenty ten, Alimentation couch Tard
that's the Canadian parent company of Circle K, they came
calling the big offer, a very big offer for the time,
one point nine billion dollars, and Casey said no. They
rejected the bid, and that was a really defining moment
(15:51):
for them. It showed their determination to stay independent, to
stick to their roots.
Speaker 1 (15:54):
But turning down that money also meant they had to
compete head on with global giants like couch starts.
Speaker 2 (16:01):
Right. They couldn't just rely on their existing model forever.
It forced the next big strategic shift, embracing digital.
Speaker 1 (16:07):
You can't just wait for people to walk in the door.
Speaker 2 (16:09):
Anymore, not if you want to compete at that level.
Speaker 1 (16:11):
Yeah.
Speaker 2 (16:12):
So twenty sixteen they launched online ordering across the whole chain,
followed by the mobile app and critically their loyalty program,
Casey's Rewards.
Speaker 1 (16:23):
How important has that loyalty program been?
Speaker 2 (16:25):
Hugely important. It now has something like eight point five
million members. That's a massive customer base they can track
and market to directly. It's key for driving those repeat,
high margin food orders.
Speaker 1 (16:38):
And they even updated the branding around that time.
Speaker 2 (16:41):
Yeah, twenty twenty they did a rebrand. Most noticeably, they
dropped the general stores from a lot of the signage, just.
Speaker 1 (16:47):
Cases signaling they're more than just a general store now.
Speaker 2 (16:51):
So it acknowledges their evolution into a major food destination.
Speaker 1 (16:54):
But important that kept the Rooster weather Van logo.
Speaker 2 (16:57):
It kept the rooster Yeah, which is perfect right, that's
that blend modern convenience, digital savvy, billion dollar scale, but
still holding onto that symbol of their small town farmstead.
Speaker 1 (17:07):
Heritage, modernizing without losing their identity or trying not to anyway,
that's the balancing act. Okay, so they've scaled up, they've digitized,
they've fended off takeovers. Then comes a new CEO in
twenty nineteen, Darren Rebelas, and the strategy seems to shift
gears again.
Speaker 2 (17:22):
Absolutely, the pace changes. It goes from that steady, methodical
growth occasionally boosted by acquisitions, to something much more aggressive
conquest mode, almost.
Speaker 1 (17:33):
Driven primarily by M and A big deals.
Speaker 2 (17:35):
Big deals become the main engine. Rebels came in with
a clear, aggressive vision for expansion. He laid out a
three year plan starting Physical twenty twenty three, aiming to
add three hundred and fifty new stores by the end
of Physical twenty six.
Speaker 1 (17:49):
Three hundred fifty stores in three years.
Speaker 2 (17:50):
That's fast, very fast. Now, they still kept building new
stores from scratch, averaging about eighty new bills a year,
which is strong, but M and A was how they
planned to really hit those numbers and crucially move into
new high growth regions much faster.
Speaker 1 (18:03):
And we started seeing deals that pushed them outside their
traditional Midwestern footprint into the Sunbelt exactly.
Speaker 2 (18:10):
The first really big move in that direction was the
Buchanan Energy deal in twenty twenty one tell us about
that one. That added ninety four stores operating under the
Buckies' name, and critically, it brought Cases into brand new
states for them, like Florida and.
Speaker 1 (18:24):
Virginia, so moving south and east. Was there anything else
strategic about that deal?
Speaker 2 (18:30):
Yes? It also included a wholesale fuel business that was
new for Cases. Diversifying their revenue beyond just the retail
pumps and the in store sales gave them another layer.
Speaker 1 (18:39):
Okay, so BUCkies was the first big jump. Then they
kept adding smaller pieces.
Speaker 2 (18:44):
Yeah, like they were testing the waters, padding the store
count in strategic areas. In twenty twenty three, they bought
twenty two lone Star food stores.
Speaker 1 (18:51):
In Texas, Texas. That sounds important, very and.
Speaker 2 (18:55):
They also picked up eleven Easy Go Go locations from
Love's Travel Stops that year. All our tucking acquisitions helped
push them to twenty six hundred stores by mid twenty twenty.
Speaker 1 (19:04):
Four, Like reconnaissance before the main assault.
Speaker 2 (19:06):
You could definitely see it that way, yeah, because the
main assault was definitely.
Speaker 1 (19:09):
Coming the Mega deal.
Speaker 2 (19:11):
The Mega deal. November twenty twenty four, Caseyes acquires one
hundred and ninety eight stores from Fike soulsale. These operated under.
Speaker 1 (19:17):
The cfk O brand, and the price tag.
Speaker 2 (19:19):
A stunning one point one four five billion dollars.
Speaker 1 (19:22):
Wow, over a billion dollars. That's the biggest deal in
their history by far.
Speaker 2 (19:27):
By a long shot, and it completely signals a shift
in their ambition. They're not just a Midwestern powerhouse anymore.
They're aiming to be a truly national player.
Speaker 1 (19:36):
So this CEFO deal, it vaulted them into how many states.
Speaker 2 (19:41):
Twenty states total. It dramatically changed their map overnight. But
the key isn't just the number of states. It's where
those new stores were concentrated.
Speaker 1 (19:49):
Well, let me guess Texas.
Speaker 2 (19:51):
Bingo, one hundred and forty eight of those one hundred
and ninety eight CEFO stores are in Texas.
Speaker 1 (19:56):
One hundred and forty eight in Texas alone.
Speaker 2 (19:58):
Rebel As himself called excess the strategic crown jewel of
the deal. This isn't about adding another small town in Iowa.
This is a deliberate, very expensive plunge into one of
the biggest, fastest growing, and frankly most competitive retail markets
in the entire country.
Speaker 1 (20:13):
Okay, so they bought the stores, But Casey's isn't just
about stores. It's about the pizza. Did this see efoo
stores have kitchens, that's the crucial challenge.
Speaker 2 (20:20):
Most of them didn't have the kind of kitchen set
up Casey's needs.
Speaker 1 (20:23):
Ah, so buying the stores was just step one, exactly.
Speaker 2 (20:27):
Yeah, The sources highlight this huge integration cost. Casey's estimates
they need to spend another one hundred and forty five
million dollars just to retro fit about eighty five percent
of those newly acquired CEO Go locations.
Speaker 1 (20:38):
One hundred and forty five million dollars on top of
the one point one billion dollar purchase price just for kitchens.
Speaker 2 (20:45):
Just to add the pizza kitchens, the ovens, the preb
space to turn them into proper cases.
Speaker 1 (20:49):
That cost that one hundred and forty five million dollars.
That tells you everything about their priorities, doesn't it.
Speaker 2 (20:54):
It absolutely does. They are willing to spend massively to
ensure they can replicate that high margin prepared bared food
engine in these new huge markets. They're not buying gas
stations that happen to sell food. They're buying potential restaurant
locations that happen to sell gas.
Speaker 1 (21:08):
But isn't there a risk here. Their whole model was
built on lower cost in rural areas, that small town feel.
Can you just export that to Texas? Labour's more expensive
competition is fiercer.
Speaker 2 (21:19):
That is the fundamental question hanging over this whole conquest phase.
Speaker 1 (21:22):
Can they maintain the quality that scratch made dough, the
fresh coppings, the things that supposedly justify the price and
build their reputation. Can they do that at scale in
Dallas or Houston like they did in Boone, Iowa.
Speaker 2 (21:35):
It's incredibly challenging. They need enough centralization for efficiency and
quality control across nearly three thousand stores now, but they
have to keep enough of that local in store prep feel,
the daily dough, the slicing, to maintain the perception of
freshness and authenticity.
Speaker 1 (21:52):
Because if they lose that perception.
Speaker 2 (21:54):
Then they risk losing those amazing fifty seven to fifty
eight percent margins on the food, And if that happens,
the whole one point three billion dollar bet on Cefgo
starts to look very shaky.
Speaker 1 (22:04):
So that one hundred and forty five million dollars isn't
just buying ovens encounters.
Speaker 2 (22:08):
It's an attempt to transplant the company's core identity. It's
very culture into a completely different environment. It's a massive gamble.
Speaker 1 (22:14):
Underscoring again that the food, the pizza specifically, isn't just
part of the business model.
Speaker 2 (22:19):
It is the business model. The convenience store is just
the delivery mechanism.
Speaker 1 (22:22):
Okay, let's drill down again on those financials, because they
really are the secret sauce here. That figure, prepared foods
make up sixty two percent of their gross.
Speaker 2 (22:32):
Profits, sixty two percent of the.
Speaker 1 (22:34):
Profit, even though they only account for about thirty eight
percent of total revenue.
Speaker 2 (22:38):
It's an incredible statistic. It completely flips the traditional c
store model, where you make pennies on gas and hope
to sell a high margin soda or candy bar.
Speaker 1 (22:47):
Here, the high margin item is the main.
Speaker 2 (22:49):
Profit driver exactly, and that key metric is the gross
margin on prepared foods. Fifty seven point eight percent, nearly
fifty eight cents of profit on every dollar of food sold.
Speaker 1 (22:59):
That's huge compared to maybe ten eleven cents on the
dollar for gas.
Speaker 2 (23:04):
It's why the pizza pivot was so essential. That profit
fuels everything else, the expansion, the acquisitions, the dividends to shareholders.
Speaker 1 (23:11):
So why are those food margins so high. Is it
just that they had no competition in those early rural
markets or are they just really good at managing costs.
Speaker 2 (23:18):
It's probably a mix of factors. Certainly, the lack of
competition in many of their core markets historically allowed them
pricing power. Rural labor costs have generally been lower too,
although that advantage shrinks considerably as they move into places
like Texas and.
Speaker 1 (23:31):
Florida, right, that's changing.
Speaker 2 (23:33):
They also seem to have really optimized their supply chain
for a relatively small number of core high volume ingredients flour, yeast, sugar, can, tomatoes, mozzarella, cheese.
Speaker 1 (23:46):
They buy massive amounts of cheese not they forty million
pounds of cheese a year.
Speaker 2 (23:50):
That's apparently around one hundred million dollars just on cheese.
Buying at that scale gives you leverage.
Speaker 1 (23:56):
And then there's the product mix itself, things like the
breakfast pizza.
Speaker 2 (24:00):
Yeah, think about the ingredients of breakfast pizza, eggs, cheese,
maybe some sausage or bacon bits, hash browns. These are
relatively inexpensive, high volume commodities. It's engineered for profitability.
Speaker 1 (24:11):
Okay, so cost control, scale, smart product mix, but people
have to actually want to buy it. Let's go back
to the pizza's appeal. What keeps people coming back in
such huge numbers.
Speaker 2 (24:21):
Consistency is huge. That chewy tavern style crust made from
dough mixed fresh daily, that's a promise.
Speaker 1 (24:28):
They keep the no frozen crusts thing.
Speaker 2 (24:30):
That's a big part of their quality story. And then
the perception of generous toppings, real cheese. It meets a
very clear consumer expectation for what pizza should be satisfying familiar,
good value even if it's not gourmet.
Speaker 1 (24:46):
And they don't just rest on their laurels. They keep
introducing new things, right.
Speaker 2 (24:49):
They know they need to keep the menu fresh, catered
to trends, so in twenty twenty three they added a
thin crust.
Speaker 1 (24:55):
Option, okay, appealing to a different preference.
Speaker 2 (24:58):
You've got to cauliflower crust now too, the gluten conscious crowd.
And they do a lot of limited time offerings ltos,
like what things like a Jlapanio popper pizza or a
BBQ brisket pizza. These ltos create buzz, get people talking,
maybe drive an extra visit.
Speaker 1 (25:14):
And probably use ingredients that can source strategically for a
short time.
Speaker 2 (25:18):
Exactly smart menu management keeps things interesting without complicating the
core operation too much.
Speaker 1 (25:23):
And how do they market all this? Especially keeping those
eight point five million rewards members coming back.
Speaker 2 (25:28):
They've gotten pretty sophisticated digitally. Apparently about thirty percent of
their digital sales are now driven by personalized.
Speaker 1 (25:35):
Offers, meaning they track what you buy.
Speaker 2 (25:37):
Yeah, they use platforms like Salesforce to analyze your purchase history,
when you buy coffee, what kind of pizza you ordered
last time, how often you visit. Then the app pushes
you target deals.
Speaker 1 (25:48):
Hey, haven't seen you in a while, Here's two dollars
off your next large pizza.
Speaker 2 (25:52):
Something like that. It's about driving frequency and locking in
that loyalty.
Speaker 1 (25:56):
And they still lean heavily on the community connection, right,
that neighborly charm idea.
Speaker 2 (26:02):
Definitely, that's a crucial part of their brand, especially in
the legacy markets. They make a point of giving.
Speaker 1 (26:07):
Back, like the donations.
Speaker 2 (26:08):
Yeah, they donated fifteen million dollars between twenty nineteen and
twenty twenty two through various programs. They have initiatives like
cash for Classrooms that directly support local schools.
Speaker 1 (26:18):
People notice that it builds goodwill, makes them feel like
the local choice even if they're a huge corporation.
Speaker 2 (26:24):
Right, and they tie promotions into it too, like for
their fortieth pizza anniversary in twenty twenty five, they offered
forty cent slices if you use the code birthday in
the app.
Speaker 1 (26:34):
Smart combines the digital engagement with celebrating their history exactly.
Speaker 2 (26:39):
It reinforces that feeling of being part of the community.
Speaker 1 (26:42):
Okay, but that community feeling gets harder to maintain as
they get bigger and move into these packed markets. They're
not the only game in town anymore. Who are the
main competitors now?
Speaker 2 (26:52):
The competitive landscape is definitely getting more complex for them.
You've got different layers.
Speaker 1 (26:56):
First, the other big pizza players.
Speaker 2 (26:58):
Sure, Domino's Pizza, Little Caesars. They're all competing for those
same casual meal dollars, But often Casey's isn't located right
next door to them. Their main battleground was historically where
those guys weren't.
Speaker 1 (27:11):
So the bigger threat comes from other sea stores that
are also getting better at food.
Speaker 2 (27:16):
That's where it's really heating up. Think about chains like
Quick Trip or Kum and Go. They're strong regional players
improving their food offers.
Speaker 1 (27:23):
But do they have that same destination pizza identity as Casey's.
Speaker 2 (27:28):
Not quite to the same degree perhaps, But the one
that's a really direct threat, especially in their eastern flank
now is.
Speaker 1 (27:34):
Wuawa ah Wahwah, the East Coast powerhouse known for their
hogies and coffee.
Speaker 2 (27:40):
And now pizza. Wawa launched a chain wide pizza program
in twenty twenty three, and Wawa knows food service. They
have a huge loyal following, great logistics and deep pockets.
Speaker 1 (27:52):
So if Wawa pushes west, that's a direct challenge to
Casey's core strength, a major challenge.
Speaker 2 (27:57):
Wawah competes on quality and customization prepared foods, just like
Caseyes tries to. That could be a real battle.
Speaker 1 (28:04):
And then there's another competitor, maybe less obvious.
Speaker 2 (28:06):
Yeah, the stealth rival Hunt Brothers Pizza.
Speaker 1 (28:09):
Right, you see their signs everywhere in rural areas everywhere.
Speaker 2 (28:12):
They operate in over ten thousand locations, mostly licensing deals
with smaller independent gas stations and stores, often in the
exact same small towns Casey's targets.
Speaker 1 (28:21):
How does Hunt Brothers compare?
Speaker 2 (28:23):
Generally seen as maybe a step down in quality from
Casey's right, less premium, maybe more basic ingredients, but they
are ubiquitous and often cheaper.
Speaker 1 (28:31):
So Casey's has to constantly justify its slightly higher price
point against the convenience and availability of Hunt Brothers.
Speaker 2 (28:38):
Exactly that daily scratch made dough, the fresh slice toppings.
That's Casey's defense. They have to maintain that quality perception
to win against the sheer volume and lower price of
Hunt Brothers. It's convenience versus quality within the convenience channel.
Speaker 1 (28:54):
So the secret sauce, it's complex. It's the market. They
chose the product, they perfected, the margins they'dhe achieved, loyalty
they built, and now fending off serious competition on multiple fronts.
Speaker 2 (29:05):
That sums it up pretty well. They took convenience, added
surprisingly decent pizza, found a market nobody else wanted, and
leveraged that into massive profits to fuel their expansion. Now
the question is can they sustain it everywhere? Hashtag tag outro.
Speaker 1 (29:18):
All right, let's try to wrap our heads around this
incredible story Casey's General Stores. It really feels like it
comes down to what two main things.
Speaker 2 (29:26):
I think. So first, that absolutely unwavering focus from day
one on those rural, often overlooked markets. They understood that
customer base like nobody else.
Speaker 1 (29:34):
And second, layering on top of that geographic strategy, this
incredibly successful high margin prepared foods operation with pizza right
at the center.
Speaker 2 (29:42):
That combination was lethal, high margins funding growth into areas
where competition was low.
Speaker 1 (29:49):
So looking ahead now, say October twenty twenty five, where
the sources leave off, Casey's seems to be at this
really interesting crossroads.
Speaker 2 (29:57):
Definitely, they're trying to consolidate their strength and their core
markets while also pushing hard into these huge new territories,
especially Texas after that massive CEFO deal.
Speaker 1 (30:07):
It's consolidation and conquest at the same time.
Speaker 2 (30:10):
Yeah, and their future plans seem to follow that playbook.
Sources talk about expanding their chicken wing offerings, another high
margin food item, more ltos to keep the menu exciting.
Speaker 1 (30:20):
And leveraging all that customer data they're collecting.
Speaker 2 (30:22):
Big time using their retail media arm Casey's access to
sell targeted advertising based on those eight point five million
loyalty members buying habits. That's another revenue stream.
Speaker 1 (30:32):
And the financial market seem to be buying into the
strategy for now.
Speaker 2 (30:36):
Yes, analysts are forecasting pretty healthy growth ten to twelve
percent EBIDO growth, the stocks trading at a high multiple
round thirty five times earnings, so there's a lot.
Speaker 1 (30:44):
Of confidence baked in that they can successfully transplant that
high margin pizza model into the sun Belt.
Speaker 2 (30:50):
Which really brings us back to the core tension, doesn't it.
And maybe the final thought for you, the listener to
chew on, go for it. Casey's initial magic, It's secret
Sauce was being that indispensable neighbor's store, the local place,
filling a real need, offering surprisingly good fresh food in
a small town. That authenticity, that scratch made quality. That's
(31:12):
what fueled their rise. Now they're plunging into these hyper
competitive markets like Texas and Florida, spending over one hundred
million just on kitchen retrofits for the CEFCO stores. The
scale is just different. So the question is can they
actually maintain that small town feel, that commitment to quality,
the culture that made them special when they're operating at
this massive scale under intense competitive pressure and driven by
(31:36):
these billion dollar M and.
Speaker 1 (31:38):
A deals, Or does the sheer size and financial pressure
of this conquest phase inevitably force them to standardize more
and maybe cut corners and ultimately change the very identity
that got them here is.
Speaker 2 (31:48):
The original secret sauce compatible with national domination. Can the
heartland ethos survive the sun belt sprawl?
Speaker 1 (31:57):
Can that financial engine which demands efficient in standardization coexist
with the small town's scratch made culture that built it.
That really is the billion dollar question.
Speaker 2 (32:06):
Isn't it authenticity versus aggregation? That's the tightrope they're walking.
Speaker 1 (32:11):
Fascinating stuff. Thanks for joining us on the deep dive.
Speaker 2 (32:13):
See you next time.
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