WESTLAKE, Ohio --TravelCenters of America LLC has converted all but a few its convenience stores to the Minit Mart brand, CEO Thomas O’Brien said during the company’s fourth-quarter earnings call. It is part of a traffic-driving strategy that encompasses gasoline, convenience and foodservice.
“As of March 14, 2016, nearly all of the standalone convenience stores we own as of the end of 2015 and the travel stores at 25 of our travel centers have been updated to include all brand-standard Minit Mart signage and marks and the addition of our private-label coffee and other programs,” he said. “We have also completed our review of gasoline branding at all 204 standalone convenience stores we owned at the end of the year, and as of today, gasoline brand conversions at 83 of these stores and an update of gasoline brand elements at 109 of these stores has been completed.”
The company spent most of 2015, especially the fourth quarter, preparing to integrate and successfully integrating acquisitions, including a total of 170 convenience stores for the year, 123 of which it acquired in the last third of the year.
The company has invested in site improvement, facilities expansion and more.
“I believe that the steps we’re taking to integrate these recently acquired operations … are the right ones, particularly when combined with our three-pronged approach to using brands to drive traffic. That approach includes, first, having the right gasoline brand for that market; second, enhancing consumer awareness and messaging effectiveness of our Minit Mart brand; and third, leveraging our deep experience with multiple quick-service food brands to enhance non-fuel revenues,” he said.
O’Brien said that “proliferating” the Minit Mart brand involves “driving customer awareness of it and ensuring delivery of that brand’s messages--clean, fast and friendly.”
The company’s has reorganized its marketing department, which now includes teams dedicated to each of its brand groups--commercial fuel and maintenance, gasoline, convenience stores and of foodservice, which includes both full service and quick service.
TA's fourth-quarter 2015 activities included the acquisition of 20 standalone convenience stores in three separate transactions for an aggregate purchase price of $52.3 million, as well as $26.9 million of investments to improve recently acquired locations.
As of Dec. 31, 2015, TA had agreed to purchase an additional 24 convenience stores for purchase prices aggregating $32.8 million, and expects to invest an additional $4.7 million to rebrand, and at some locations, expand and improve them. Since Dec. 31, 2015, TA has completed the acquisition of seven of these locations, in Illinois and Missouri, for an aggregate of $13.9 million and has entered new agreements to acquire an additional 16 convenience stores in Wisconsin and Illinois for $23.3 million; TA expects to invest an additional $3.8 million in these 16 locations to rebrand, renovate and or expand them.
M&A
TA’s pace of acquisitions slowed in late 2015 and going into 2016, however.
Addressing the mergers & acquisitions (M&A) market, O’Brien said, “We’ve seen a lot of acquisition candidates both in the convenience-store space and in the standalone restaurant space; but that said, seller expectations of price in the convenience-store acquisition market, particularly in the latter part of 2015, began to exceed our willingness to pay. The combination of higher price expectations and our fairly full plate of integration work to complete has kept us on the sidelines of potential transactions more often than not in recent months, but we’re still active.”
TravelCenters of America reported a net loss of $1.61 million for fourth-quarter 2015, compared to net income of $34.34 million in fourth-quarter 2014. It reported net income of $27.72 million for fourth-quarter 2015, compared to net income of $60.96 million in fourth-quarter 2014.
Revenues for TA's travel center segment for fourth-quarter 2015 decreased by $487.2 million, or 29.2%, compared to fourth-quarter 2014, due to decreases in fuel revenues as a result of lower market prices for fuel despite an increase in fuel sales volume. These decreases were partially offset by increases in nonfuel revenues as a result of sites acquired since the beginning of the fourth-quarter 2014 and a 3.3% increase in nonfuel revenues on a same-site basis.
And revenues for TA's convenience-store segment for the fourth-quarter 2015 increased by $108.3 million, or 261.3%, compared to the fourth-quarter 2015, due to increases in fuel sales volume as a result of sites acquired during 2015, partially offset by decreases in market prices for fuel. Revenues also increased as a result of increased nonfuel revenues primarily due to the sites acquired during 2015.
TravelCenters of America, Westlake, Ohio, operates 253 full-service travel centers in 43 states and Canada, principally under the TA and Petro Stopping Centers travel center brands. The company also operates more than 200 convenience stores, principally under the Minit Mart brand, in 11 states.
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