Yesway Sells 24 Million Burritos Annually

Yesway Fuels Growth with 24 Million Burritos Annually

Convenience store chain Yesway is making a significant mark in the food sector, selling an impressive 24 million burritos each year. This figure highlights the growing importance of prepared foods for convenience stores, which are increasingly competing with fast-food restaurants.

Tom Trkla, Chairman, President, and CEO of Yesway, recently discussed the company’s performance and strategy. Ringing the bell for their IPO in 2021 was a memorable moment, though market conditions at the time led them to wait. This delay allowed the company to focus on growth and expansion.

Food Drives Customer Traffic

Trkla noted that convenience stores selling gasoline have navigated challenges posed by higher gas prices. Yesway, however, benefits from its strong geographic locations and positive sales trends. The company is recognized as one of the top three national neighborhood service chains.

The success of its food offerings is a key driver. Yesway sells roughly 41 million food items and other products annually.

Among these, their fried burritos stand out, with 24 million sold each year. This puts them in the same league as larger chains like Cicis, which sells 46 million pizzas annually.

Customer Loyalty and Gas Prices

Customers are increasingly visiting Yesway specifically for its food options. This trend helps make them less sensitive to fluctuations in gasoline prices. Trkla observed that customers are visiting more frequently, sometimes choosing lower-priced items, indicating a shift in purchasing habits.

The company’s strategic locations, often closer to fuel terminals and with lower taxes than areas like California, also provide a competitive edge. This allows them to offer competitive pricing, attracting a steady stream of customers.

Trucker Business Remains Strong

Despite concerns about rising diesel prices, Yesway has seen no negative impact on its trucker business. Texas, where Yesway has a strong presence, continues to show spectacular economic growth. Truckers are valuable customers, spending about 2.7 times more in the store compared to other shoppers.

Yesway has made a concerted effort to attract this important segment. They have built 90 new stores in the last 4 1/2 years, many featuring dedicated diesel islands and lanes for truckers. This focus on infrastructure and service aims to capture more of the lucrative trucking market.

Expansion Plans and Corporate Structure

The company plans to open approximately 131 new stores. These new builds will be located in Oklahoma, New Mexico, Texas, and Arizona. Yesway aims to solidify its dominant position in the South Central and Southwest regions, identifying significant growth opportunities in these states.

Yesway operates as a completely separate entity from its initial private equity platform, Brookwood. While Yesway was born within Brookwood, all employees are now full-time Yesway staff. The company has not engaged in new transactions with Brookwood for about six years, indicating a clear separation of operations.

Market Impact

Yesway’s strong performance, particularly in food sales, demonstrates a successful strategy for convenience stores. By focusing on high-demand, profitable food items like their popular burritos, companies can diversify revenue streams and reduce reliance on fuel margins.

The company’s ability to attract and retain customers, even amidst economic headwinds like rising fuel costs, highlights the appeal of their food offerings and strategic location choices. The significant investment in infrastructure for truckers also points to a targeted approach to capturing specific, high-value customer segments.

What Investors Should Know

Yesway’s recent IPO and subsequent stock performance, including a 7.5% increase on the day of its public debut, signal investor confidence. The company’s clear expansion plans and focus on food sales provide a compelling growth narrative.

For investors, Yesway represents a case study in how convenience stores can evolve beyond simple fuel stops. The emphasis on prepared foods, coupled with strategic market positioning and customer service, offers a path to sustained growth and profitability in a competitive market.

The company is set to open 131 new locations in the coming years, continuing its aggressive expansion strategy.

Source: ’24M burritos’: Yesway CEO describes food’s role in convenience store chain (YouTube)