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Fred’s to Acquire 865 Rite Aid Drug Stores

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MEMPHIS, Tenn. -- Drug store retailer Fred’s Inc. has announced that it has signed an agreement with Walgreens Boots Alliance Inc. and Rite Aid Corp. to purchase 865 stores and other assets in the eastern and western United States for $950 million in cash.

“With this agreement, we are moving ahead with important work necessary to obtain approval of our acquisition of Rite Aid,” said Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina.

The companies are divesting these stores and entering into the deal with Fred’s to respond to Federal Trade Commission (FTC) concerns in its review of the proposed acquisition of Rite Aid by Walgreens Boots Alliance, announced in October 2015.

The companies expect the closing of the transaction to take several months after Walgreens Boots Alliance completes the acquisition of Rite Aid. It is subject to approval by the FTC as well as customary regulatory approvals and closing conditions. Shareholder approval is not required.

Fred’s said the transaction, if approved, should close during the first half of 2017 and will position Fred’s Pharmacy as the third-largest drugstore chain in the United States and create a new national competitor.

In connection with this transaction, the company has received financing commitments to fund the purchase price, transaction-related costs, ongoing business operations and anticipated capital investments.

“This will be a transformative event for Fred’s Pharmacy that will accelerate our healthcare growth strategy through our acquisition of 865 new stores located in highly attractive markets,” said Michael Bloom, CEO of Memphis, Tenn.-based Fred’s Pharmacy.

“We have been working for several months on integration plans to ensure a seamless transition for Rite Aid customers, patients, team members and supplier partners by leveraging our world-class senior leadership team’s significant expertise in managing major healthcare acquisitions and integrations,” he said. “We assembled this highly experienced team in 2015, implemented upgrades to our infrastructure in 2016, and now, in 2017, we look forward to the continued optimization of our business, fueled by today’s milestone announcement. We believe the purchase of these stores will not only complement recent investments in our team members, processes and technological infrastructure, but also positively impact our business and maximize shareholder value.”

The 865 stores are generally representative of Rite Aid’s pre-divesture store performance, said the company.

Fred’s Pharmacy will continue to employ store and certain field and regional team members related to the operations of the acquired stores. Upon completion of the acquisition, the company will operate the acquired stores and will retain the Rite Aid banner through a 24-month transition.

Deerfield, Ill.-based Walgreens Boots Alliance has more than 13,200 drug stores in 11 countries. Its portfolio includes Walgreens, Duane Reade, Boots and Alliance Healthcare.

Camp Hill, Pa.-based Rite Aid is one of the nation’s leading drug store chains, with nearly 4,600 stores in 31 states and the District of Columbia.

Fred’s Pharmacy and its subsidiaries operate 647 discount general-merchandise stores and three specialty pharmacy-only locations in 15 states in the southeastern United States. Included in the store count are 18 franchised locations.

 


Opinion: As Fuel Exports Ramp Up, Will Prices Follow?

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BOSTON -- As winter arrives in the United States and overall demand declines, refined products have been moving out at a rapid pace. The seasonal rise in exports is fairly normal as refiners resist selling too much fuel in a saturated domestic market, but the trend has been building over time.

According to the Energy Information Administration’s (EIA) Weekly Petroleum Status Report for the week ending Dec. 9, 2016, exports of petroleum products hit a new all-time high, surpassing 5 million barrels per day (bpd), an 85% increase vs. the same period five years ago. This is an eye-popping 317% increase from 10 years ago.

While some may suggest demand is high domestically, 30% of products coming out of refiners are destined for a nondomestic market, painting a far different picture. In fact, the EIA has spent nearly the entire year revising domestic gasoline demand figures downward. The export market is becoming a bigger factor that certainly helps alleviate a buildup of products. But it is also diverting so much material that one can easily provide evidence that such lofty export numbers help support higher gasoline prices by diverting inventories from the United States to other countries.

Such high exports may, in the future, affect gasoline prices in an even larger way. Recall the refinery kinks in California that led to extreme tightness in gasoline supply there. Several groups blamed high exports that continued during outages for pushing California gas prices higher. It is common sense to agree, but the same situation could be a harbinger of what's to come as exports continue to rise, placing gasoline markets in the United States at more risk for pricing volatility.

Perhaps the most susceptible to the wave of exports are U.S. motorists who are paying more for gasoline than if products stayed closer to home. Gas-station owners could also be pinched at the pump as a result of a tighter fuel market as product heads for other markets.

Exports are sure to continue rising in the next few years as U.S. refiners enjoy access to cheap energy to fuel their facilities, keeping costs down, while also seeing less labor disruption than counterparts in Europe and cheaper landlocked Canadian oil. But for now, keep an eye on exports for potential market movements, especially ahead of Reid Vapor Pressure (RVP) specification changes coming this spring that could impact how large discounts for the higher-spec material go.


Patrick DeHaan is senior petroleum analyst for GasBuddy. Reach him atpdehaan@gasbuddy.com.

Author(s): 
Patrick DeHaan

Buc-ee’s Gets Backup Power

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LAKE JACKSON, Texas -- Buc-ee’s Ltd. has signed a long-term service agreement with Enchanted Rock Ltd. and Texas Microgrid LLC to provide backup power to 10 convenience stores, with the intent to serve all existing and newly built Buc-ee’s locations.

Lake Jackson, Texas-based Buc-ee’s operates 32 locations throughout Texas. Some of its travel centers are nearly 70,000 square feet in size with 120 fueling positions.

Through Enchanted Rock’s proprietary natural-gas powered microgrid design, Texas Microgrid will provide a sufficient amount of electrical reliability to cover the energy needs of an entire Buc-ee’s store when utility power is unavailable.

Enchanted Rock’s reliability microgrid solution “will allow Buc-ee’s to ensure critical service is available to travelers and customers from surrounding communities during weather-related emergencies like those commonly experienced in Texas,” said Jeff Nadalo, Buc-ee’s general counsel.

Enchanted Rock’s On Demand Electric Reliability service allows customers to pay only a small fraction of the installation cost of a standard reliability microgrid system, it said. The structure of the offering shifts the performance risk to the operator and owner of the assets allowing customers to focus their time and capital on their core business.

“We are very happy to join the Buc-ee’s family and help ensure that Buc-ee’s continues to provide the quality of service and products their customers have come to expect and support the surrounding communities they serve during power outages,” said Robert Cauthen III, Enchanted Rock’s COO.

Houston-based Enchanted Rock builds and operates microgrids that help companies manage physical and financial risk associated with electricity. The company is responsible for the design, project management, installation and commissioning of more than 67 megawatts (MW) of customer microgrids in the greater Houston Area and 160 MW of grid reliability distributed generation sites across Texas. Through Texas Microgrid, it is building and operating more than 60 MW of natural gas generation across Texas.

Texas Microgrid, Houston, is a partnership between Basalt Infrastructure Partners, New York, and Enchanted Rock. The company has closed more than 60 MW in new customer deals and continues to expand its gas-fired microgrid portfolio.

CrossAmerica Closes Deal With Institutional Real-Estate Investor

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ALLENTOWN, Pa. -- CrossAmerica Partners LP has completed the previously announced transaction with an unnamed institutional real-estate investor for the sale and leaseback of properties it acquired as part of the State Oil acquisition for net proceeds of approximately $25 million.

CrossAmerica acquired the State Oil assets on Sept. 27 for $41.8 million, which included a total of 56 fee properties and 60 million gallons of annual fuel supply.

In connection with the sale, CrossAmerica entered into a lease agreement with a 6.5% capitalization rate under which it will lease 17 properties in the Chicago market for an initial period of 15 years with an additional 15 years of renewal options. The proceeds from the transaction will be used to reduce debt under the partnership’s revolving credit agreement.

Earlier this month, CrossAmerica announced that it has amended certain key terms of its $550 million revolving credit facility effective Dec. 13.

The amended agreement provides the partnership with additional borrowing flexibility, including increased capacity to execute sale-leaseback transactions of future acquired real property, while also addressing the pending deal between CST Brands Inc. and Alimentation Couche-Tard Inc. CrossAmerica's general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of CST Brands, one of the largest independent retailers of motor fuels and convenience-store merchandise in North America.

In its biggest deal ever, Laval, Quebec-based Couche-Tard Inc. announced in August that it is acquiring San Antonio-based CST Brands for $4.43 billion (U.S.) or approximately $4.28 billion excluding the value of CST Brands’ equity participation in CrossAmerica.

“These amendments will provide CrossAmerica additional flexibility to fund acquisitions with our revolving line of credit and through sale-leaseback transactions similar to the recently announced sale-leaseback of properties acquired through the State Oil acquisition,” said Jeremy Bergeron, president of CrossAmerica. “We continue to focus on disciplined growth and are committed to maintaining a strong balance sheet.”

Allentown, Pa.-based CrossAmerica is a wholesale distributor of motor fuels and owner and lessor of real estate used in the retail distribution of motor fuels. Formed in 2012, CrossAmerica is a distributor of branded and unbranded petroleum for motor vehicles in the United States and distributes fuel to approximately 1,190 locations and owns or leases more than 880 sites. With a geographic footprint covering 29 states, the partnership has well-established relationships with several major oil brands, including Exxon, Mobil, BP, Shell, Chevron, Sunoco, Valero, Gulf, CITGO, Marathon and Phillips 66.

SKUPOS Scores $2.41 Million in Seed Funding

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SAN FRANCISCO -- SKUPOS Inc., a retail distribution software company specializing in the convenience-store industry, announced that it has raised $2.41 million in seed funding.

SKUPOS automates key functions and upholds supply-chain transparency. The integrated solution provides real-time inventory, automated purchasing and operational intelligence to c-store operators and their distributor partners. It is a data-driven, two-sided inventory management system allowing c-stores to automate inventory management and ordering, while providing distributors and brands with real-time inventory levels in their accounts, as well as the ability to quickly generate reorders.

The patent pending technology integrates with a c-store’s existing point-of-sale (POS) system, enabling real-time inventory management accessible from any device.

The conversion of manual processes to automation has enabled distributors to save money and increase efficiencies throughout the order capture process, the company said.

The company said it is accepting beta customers, both convenience stores and distributors. The funds will be used to continue product development.

Dynamo Fund led the round with Toba Capital. The company also received investment in one previous round, the first in July 2016 from industry angel investors and technology veterans in San Francisco.

The company said more than 200 stores have implemented the software.

Jake Bolling, co-founder of SKUPOS, said he believes the “convenience-store industry is the cornerstone of the American retail economy, but has lacked a platform that is agnostic both to the retailer, as well as distributor. Custom, in-house solutions negate scalability across multiple retailers and distributors, creating inefficiencies. We’re harnessing the data that has been locked up throughout the industry for decades, providing value to both sides of the market through a single platform.”

Bolling founded the San Francisco-based company in April 2016 with Michael Glassman and Linh Nguyen. It launched in early fall 2016.

First Coast Energy Divests 13 C-Store Sites

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JACKSONVILLE, Fla. -- First Coast Energy LLP will retain gasoline distribution rights to 13 convenience stores it sold to Northeast Petro Holdings in December.

First Coast, which operates 35 Daily’s convenience stores, sold the 13 sites to the Aventura, Fla.-based retailer as part of an effort to reorganize some of its investments, as reported in a McLane/CSP Daily News Flash.

"[We sold] 13 sites total, but none of them were Daily’s branded locations," spokesperson Andrea Kane told CSP Daily News. "We maintain a long-term supply of fuel to the sites, [but we] won't own the sites anymore."

“This is the business model of reinvesting money in other areas,” Kane told the Financial News & Daily Record.

Northeast Petro Holdings is led by Sergio Delmico, who also is manager of MNV Energy LLC, according to a report in the Financial News & Daily Record. MNV Energy owns and operates 24 other c-stores in Florida.

First Coast Energy LLP, Jacksonville, Fla., owns and operates 83 c-stores and gas stations, and distributes Shell gasoline to additional dealer sites in Florida and southeast Georgia.

Author(s): 
Steve Holtz

Premium Iced Tea Meets Functional Beverages

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CHICAGO -- As the trend of beverage crossovers continues, premium iced tea is now getting the enhanced-beverage treatment and is likely to hit the ready-to-drink (RTD) world in the near future.

Chicago's Argo Tea introduced three new varieties in its retail shops, called Calm, Detox and Energy, each one specifically with added natural caffeine, removed caffeine or other enhanced ingredients to give the consumer an enhanced beverage experience, according to founder and CEO Arsen Avakian.

"We see an opportunity to carve out a piece of the energy-drink market," Avakian told CSP Daily News. "Why drink something from a can and full of chemicals when you can have something natural?"

The in-house rollout comes just as Argo has introduced three new packaged iced teas—Sencha, First Flush Darjeeling and Armenian Mint—to its Garden Direct line in its iconic glass bottles, but Avakian offered no timeline for when the enhanced teas might come to RTD.

"The way our process works is we introduce new flavors in our retail shops and the most popular ones are put through the RTD process," he said. "It's our own test lab. So we could see one or all three of these functional teas come to store shelves depending on how customers react to them."

Argo also will reintroduce its Teappuccino line of milk-based tea drinks in new packaging in 2017.

Other beverage categories that have crossed over into the RTD world in recent years include carbonated soft drinks (CSDs) and energy drinks, beer and CSDs, and energy drinks and coffee drinks, among others.

Author(s): 
Steve Holtz

Oregon C-Store Offers Employees Unusual Benefit

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CRESWELL, Ore. -- Bill Spencer, owner of a Union 76 convenience store in Creswell, Ore., offers his employees a special incentive: For every hour they work, employees can put $1 of their pay into a savings account.

Employees can use the money any way they want, but for each dollar of the savings they spend on educational expenses, such as college tuition or books, Spencer gives them 50 cents, according to The Register-Guard.

“If they spend $600 from the savings account on a $1,000 college bill, we will put in $300,” Spencer told the newspaper. “We see it as one of the things that encourages them to further their education.”

Spencer intentionally hires young people; of the Creswell’s station’s 22 employees, 19 are younger than 25 years old. He said many are eager for part-time work and are receptive to his training, which emphasizes customer service.

Spencer began the savings program in the mid-1990s, after learning that his Eugene-based gasoline supplier, The Jerry Brown Co., provided a similar benefit. Since then, a total of 188 employees have put a portion of their pay into a savings account, Spencer told The Register-Guard. Of those, 89—almost half—went on to college and took advantage of Spencer’s offer to pay for some of their related costs.

Spencer said he has contributed a total of $57,574 to current and former employees for education.

“After a while, I got to realize that I had hired doctors, lawyers and teachers before they became that,” Spencer told the newspaper. “Then our customers got used to the fact that we basically had 16- to 25-year-olds working. And they realized that there’s a lot of good kids in this town, just like there is anywhere.”

Spencer starts workers at the state minimum wage of $9.75 an hour. Later, they can get performance-based pay raises, according to The Register-Guard report. He said he typically gives $100 or $200 bonuses in December and March to employees who are doing a good job.

Spencer has operated the Creswell c-store since 1974. He is also part owner of a tire store and auto-repair shop in Oregon.


Final Chapter for the Guess Corporation?

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CHARLOTTE, N.C. -- An ex-convict who attempted to build a c-store empire this year landed back in jail after admitting to violating the terms of his release.

Jerry DeMario Guess was arrested on Oct. 21, a week after CSP Daily News published an in-depth look into his Guess Corp., which said in July it would build or acquire 1,000 c-stores within a year and sought retail operating partners“to own up to 40% of a GP Express” c-store location.

Guess admitted in court Dec. 13 that he had violated a term of his Nov. 6, 2015, release from prison, according to court records. Specifically, he “violated the condition of supervision that states, ‘The defendant shall be prohibited from engaging in any occupation, business or profession requiring the handling of monetary instruments,’ ” documents say.

“His supervised release was revoked on Dec. 13, but a judgment has not been filed yet so there is no indication … how long he must serve,” a source at the U.S. Department of Justice told CSP Daily News.

Documents show Guess had written corporate checks for as much as $35,000 beginning Nov. 30, 2015. The last check on file was written Aug. 10, 2016, around the same time employees of the Guess Corp. began complaining that they were not being paid.

Guess and his corporation allegedly did business in retailing, diamonds, lumber, yachts, beverages and any number of other industries; however, CSP Daily News found no evidence of any product ever being produced or changing hands.

Guess had spent 51 months in prison and was ordered to pay restitution of more than $2.3 million after being indicted in 2010 and pleading guilty to wire fraud and tax charges in October 2011.

So far, there’s no evidence that Guess did, in fact, defraud anyone in the c-store industry.

Author(s): 
Steve Holtz

Marathon to Conduct Review of Speedway

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FINDLAY, Ohio --Marathon Petroleum Corp. announced today that a special committee of the board will conduct a “full and thorough” review of its Speedway LLC convenience-store chain, with the assistance of an independent financial adviser, to ensure that it is delivering optimum value to shareholders over the long term.

The review “will include a tax-free separation of Speedway to MPC shareholders and other strategic and financial alternatives,” the company said.

Shareholder Elliott Management Corp. is pushing Marathon Petroleum to spin off Speedway. Marathon Petroleum president and CEO Gary Heminger has said he disagrees with Elliott Management’s conclusions and has expressed that the company continues to value an integrated supply chain.

Marathon Petroleum said it expects to provide an update on the review by mid-2017.

Findlay, Ohio-based Marathon Petroleum is the nation's third-largest refiner. Marathon-branded gasoline is sold through approximately 5,400 independently owned retail outlets across 19 states. In addition, Enon, Ohio-based Speedway LLC, an MPC subsidiary, owns and operates approximately 2,770 convenience stores in 22 states.

Watch for details in CSP Daily News.

Delek U.S. to Acquire Remaining Shares of Alon USA

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BRENTWOOD, Tenn., and DALLAS --Delek U.S. Holdings Inc. and Alon USA Energy Inc. today announced a definitive agreement under which Delek U.S. will acquire all of the outstanding shares of Alon common stock that Delek U.S. does not already own in an all-stock transaction valued at $464 million.

Delek U.S. currently owns approximately 47% of the outstanding common stock of Alon USA.

The boards of both companies approved the transaction unanimously.

The combined company will have a broad platform consisting of refining, logistics, retail and wholesale marketing, as well as renewables and asphalt operations.

In August 2016, Brentwood, Tenn.-based Delek U.S. entered into a deal to sell 100% equity interest in its network of approximately 350 convenience stores under the Mapco Express, Mapco Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart names to Compania de Petroleos de Chile SA (COPEC) for $535 million.

Dallas-based Alon is the largest 7-Eleven licensee in the United States, operating about 300 convenience stores in Texas and New Mexico.

Delek U.S. is a diversified downstream energy company with assets in petroleum refining and logistics. The refining segment consists of refineries operated in Tyler, Texas, and El Dorado, Ark. Delek U.S. and its affiliates also own approximately 62% (including the 2% general partner interest) of Delek Logistics Partners LP, a growth-oriented master limited partnership (MLP) focused on owning and operating midstream energy infrastructure assets.

Alon USA is an independent refiner and marketer of petroleum products, operating primarily in the south central, southwestern and western regions of the United States. Alon owns 100% of the general partner and 81.6% of the limited partner interests in Alon USA Partners LP, which owns a crude-oil refinery in Big Spring, Texas, and an integrated wholesale marketing business. Also, Alon directly owns a crude-oil refinery in Krotz Springs, La.

Watch for details in CSP Daily News.

Warren Rogers Simplifies PCI Compliance

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MIDDLETOWN, R.I. -- Warren Rogers, a provider of precision fuel monitoring to convenience stores and other fuel retailers, recently announced the availability of its PCI-compliant, cloud-based fuel monitoring system.

The system has built-in, multilayered and redundant security measures and helps expedite payment-card-industry (PCI) acceptance from corporate compliance and information technology (IT) departments.

Integral to the system is the Warren Rogers on-site processor (OSP), a network appliance that is installed at each fuel retailer’s location. The OSP collects fuel data from a variety of on-site peripherals. The raw data is securely transmitted in real time to Warren Rogers’ highly scalable and redundant cloud infrastructure. Once that is received, Warren Rogers performs statistical analysis and generates comprehensive reports that can be distributed to a variety of endpoint systems. All phases of the Warren Rogers data collection processes, including the collection, storage and transmission of sensitive customer information, meet and exceed current compliance regulations enforced by the PCI Security Standards Council.

The Warren Rogers OSP, which has an outgoing connection only, requires a single encrypted channel to perform data transmission. As a result, there are no holes in the retailer’s firewall that would require burdensome oversight by their IT staff, the company said. In addition, Warren Rogers does not require customer virtual private network (VPN) access to perform fuel and security compliance maintenance. Instead, it uses a proprietary management system to perform all maintenance operations, reducing customer IT overhead.

Warren Rogers assures clients that the data collected and transmitted only contains the minimum amount of corporate information that is needed for data processing operations and does not contain customer cardholder data.

“Our clients are concerned with protecting their customer’s credit-card information and satisfying strict payment card industry standards,” said Bill Jones, president and CEO of Warren Rogers. “In some notable instances, security breaches have been tied to a third party having access to a company’s virtual private network. When a third party has access to the VPN, it can leave a retailer vulnerable to hacks and malware. Providing such access to the VPN makes compliance and IT staff uneasy, and we’ve found that a growing number of larger corporations are beginning to lock down vendor applications requiring VPN access.”

Warren Rogers has invested in cryptography with multiple layers of security and redundancies built in and has taken the VPN completely out of the equation. “This enables our customers to gain quicker approvals from their IT and compliance departments,” he said. “An acceptance process that used to take nearly nine months can now take a few weeks. Our customers also like that our system is simple to install, integrate and scale.”

The system also reduces IT administrative time and overhead costs. “Since the system, including the OSP, is entirely managed by our team, this removes the burden for maintenance from IT staff,” said Jones. “No manual software upgrades to the OSP are required. And since it’s is cloud-based, it’s essentially a plug-and-play solution that’s designed to meet compliance standards now and well into the future.”

Founded in 1979 by Dr. Warren Rogers, Warren Rogers Associates pioneered the development of Statistical Inventory Reconciliation Analysis (SIRA) as a means of monitoring underground fuel tanks and associated lines. SIRA was certified in accordance with U.S. Environmental Protection Agency (EPA) requirements and has been used by petroleum marketers for more than 25 years to provide UST (underground storage tank) leak detection compliance. Warren Rogers also invented Continual Inventory Reconciliation Analysis (CIRA) for fuel management, the company said.

Middletown, R.I.-based Warren Rogers specializes in statistical analysis and precision fuel system diagnostics for the retail petroleum industry and develops innovative ways to identify and combat fuel loss. Warren Rogers holds U.S., European and Canadian patents for these applications. Most recently, the company received a patent for its equipment and methodology that can detect and alert customers to a line leak or fuel theft while a pressurized piping system is in flow.

Speedway Spinoff Moves Closer to Reality

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FINDLAY, Ohio -- Marathon Petroleum Corp.’s (MPC) Speedway convenience-store chain will get a “full and thorough” review to ensure that it is delivering optimum value to shareholders over the long term and to consider whether it should be spun off from the refiner.

As reported in a McLane/CSP Daily News Flash, MPC has announced that a special committee of the board will conduct a review of Speedway, the third-largest convenience-store chain in North America, with the assistance of an independent financial adviser.

The review “will include a tax-free separation of Speedway to MPC shareholders and other strategic and financial alternatives,” the company said. It expects to provide an update on the review by mid-2017.

With this review, MPC will "show to the market how we see the value of Speedway, inside the company or not," president and CEO Gary Heminger during a Jan. 3 conference call. The review will be "robust," he said.

Shareholder Elliott Management Corp. has been pushing Marathon Petroleum to spin off the retail network. Heminger has said that he disagrees with Elliott Management’s conclusions and has expressed previously that the company continues to value an integrated supply chain.

New York-based Elliott manages funds that collectively own about 4% of MPC common stock, reportedly making it one of the refiner-marketer’s largest shareholders. In a November 2016 letter to Heminger and the MPC board, Quentin Koffey, portfolio manager for Elliott Management, argued that MPC is “severely undervalued” and should consider two specific moves to unlock up to $19 billion in additional shareholder value:

  • Drop down all MLP-qualifying assets to MPLX and consider spinning off Speedway; or
  • Separate Marathon into three separate, stand-alone businesses: retail, refining and midstream operations.

Downplaying the role of Elliott Management in driving the announcement, Heminger said, “We are a management team with a long track record of taking aggressive actions to create value. … Driving long-term value for our shareholders has always been and remains our top priority, and we outlined several significant value-enhancing initiatives recently which continue that track record. We have been working diligently over the last several months on each of them. This work has positioned us to announce a significant update to our plan.”

In a statement, Heminger also said, “We believe MPC is undervalued in the public markets and have been working diligently to execute the initiatives we announced in late October.”

In the same press statement, Koffey, speaking for Elliott Management, said, “We are pleased with the additional decisive actions MPC announced today that will accelerate value creation for all shareholders. We appreciate the open and candid dialogue we have had with the management team, and expect these additional actions to be important elements of the value realization MPC continues to drive for its shareholders.”

On the call, Heminger said, “We are pleased that Elliott Management has expressed its support for our plan, and look forward to constructive engagement with all of our shareholders.”

MPC also has announced plans to significantly accelerate its dropdown of assets with an estimated $1.4 billion of master limited partnership (MLP)-eligible annual earnings before interest, taxes, depreciation and amortization (EBITDA) to MPLX LP, a midstream MLP, to be completed as soon as practicable in 2017, subject to requisite approvals and regulatory clearances, including tax.

And the company has announced that it has completed its initial evaluation of strategic alternatives for its MPLX general partner (GP) interests, including incentive distribution rights (IDRs), indicating that it expects to exchange its economic interests in the GP for newly issued MPLX common units along with completing the dropdowns. The company said it expects to announce the details following receipt of the requisite approvals and tax clearance for all dropdowns.

Findlay, Ohio-based Marathon Petroleum is the nation’s third-largest refiner. Marathon-branded gasoline is sold through approximately 5,400 independently owned retail outlets across 19 states. In addition, Enon, Ohio-based Speedway LLC, an MPC subsidiary, owns and operates approximately 2,770 convenience stores in 22 states.

MPC owns the general partner of MPLX LP. MPC’s fully integrated system provides operational flexibility to move crude oil, natural gas liquids, feedstocks and petroleum-related products through the company’s distribution network and midstream service businesses in the Midwest, Northeast, East Coast, Southeast and Gulf Coast regions.

Author(s): 
Greg Lindenberg

Retail Data Security Services Provider Expands Team

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BALLWIN, Mo. -- Omega ATC, a provider of managed security services, has announced that Peter Guidi has joined the company as vice president of sales to further develop its portfolio of regional and national accounts.

Guidi comes with experience in the convenience-store and petroleum markets, focusing on business development with third-party channel partners: debit networks, transaction processors, point-of-sale (POS) vendors, loyalty providers and major oil retailers.

“The launch of Omega’s in-store Appliance and the centralized Security Operations Center enables the company to help retail chains to rapidly implement and maintain data security,” said Shekar Swamy, president of Omega ATC. “The wealth of experience and industry knowledge that Peter brings has made him a key addition to the Omega family. His ability to achieve stellar growth to deliver value to our customers in his position of leadership is exciting.”

For more than 25 years, Omega has been helping U.S. retail chains implement centrally managed retail systems and data security services. OmegaSecure, a private cloud, hosted data-security solution, is designed for convenience stores, petroleum marketers, quick-service restaurants (QSRs) and specialty retailers. As a PCI certified managed security services provider, Omega provides a comprehensive set of services including the Omega Appliance to monitor in-store data security, and the Omega Compliance Dashboard for tracking compliance status.

Ballwin, Mo.-based Omega maintains partnerships with industry groups, POS vendors, back-office vendors, major oil companies, acquiring banks, card processing companies and consulting firms. Omega is a participating organization in the PCI Council and actively participates in the National Retail Federation (NRF), National Association of Convenience Stores (NACS), Conexxus and Society of Independent Gasoline Marketers of America (SIGMA).

Chevron Launches ExtraMile Extras Rewards Program

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SAN RAMON, Calif. --Chevron Products Co., a division of Chevron USA Inc., has launched its ExtraMile Extras Rewards program to more than 700 ExtraMile convenience stores throughout California, Oregon and Washington.

“We’re thrilled to be able to offer even more ways for customers to reap the benefits and product offerings of ExtraMile,” said Brant Fish, vice president of Americas Products West, Chevron Products Co. “The ExtraMile Extras Rewards program will help us continue building relationships with our most valuable customers, giving them a great reason to keep coming back.”

To get started on the ExtraMile Extras Rewards program, a customer enters a phone number on the ExtraMile Extras tablet near the cash register at a participating ExtraMile store and makes a qualifying purchase.

Each time a member makes a qualifying purchase he or she earns 1 Shield. After earning five Shields, the customer gets a free Extra, such as a free coffee, snack or fountain drink.

A member must complete account registration through the ExtraMile mobile app or ExtraMileExtras.com to redeem earned Extras. Once a member completes registering, he or she can track Shields and Extras through the app or website. The program alerts the member by email or by text message when he or she is close to earning a free Extra. Shields expire 60 days and Extras expire 30 days after the customer earns them.

A qualifying purchase includes any convenience-store item, excluding lottery tickets, tobacco, alcohol, motor fuel, services, car washes, propane, restaurant-prepared food, phone/prepaid wireless cards, gift cards and charitable donations.

San Ramon, Calif.-based Chevron has more than 755 company-owned and franchised locations throughout California, Oregon and Washington.


Ford Integrates ExxonMobil’s Speedpass

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DEARBORN, Mich., and IRVING, Texas -- Ford Motor Co. is the first automaker to integrate Exxon Mobil Corp.’s Speedpass+ app to allow customers to pay for gasoline from inside the vehicle.

Speedpass+ users can access the app from their Ford Sync 3 touchscreen or by voice commands to authorize payment while automatically earning Plenti loyalty points at Exxon and Mobil stations.

“ExxonMobil’s use of mobile technology that makes life more convenient for their customers can be easily integrated into Ford vehicles,” said Dave Hatton, Ford global manager, mobile applications and emergency services. “With Sync AppLink, the Speedpass+ experience becomes a more seamless part of our customers’ journey.”

Using GPS, the vehicle recognizes that it is at a participating Exxon or Mobil gas station, making it easy for the driver to enter the pump number and automatically pay for gas.

To pay for fuel using voice commands, the customer:

  • Says “Pay for fuel” or “Express pay.”
  • Indicates which pump number to authorize by saying the number; for instance, “1” or “Pump 1.”
  • Confirms fuel authorization and begins fueling.

The customer can also use the app to search for and navigate to approximately 9,400 participating Exxon and Mobil retail locations. Using the Ford Sync 3 touchscreen, the car automatically shows a list of nearby stations, along with directions, when a customer’s fuel gauge drops below a specified fuel level.

Dearborn, Mich.-based Ford is a global automotive and mobility company.

Irving, Texas-based ExxonMobil is the largest publicly traded international oil and gas company.

 

 

McDonald’s Launches New McCafe Concept

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OAK BROOK, Ill. -- In an effort to revitalize its McCafe brand, which launched eight years ago, McDonald’s is introducing McBarista.

The Oak Brook, Ill.-based fast-food chain plans to spend tens of millions of dollars in restaurant remodeling and millions more in marketing to roll out the new McCafe concept starting in the first quarter, according to Crain’s Chicago Business.

The nationwide update will include $12,000 espresso machines, sweets such as “muffin toppers” and coffeecakes, seasonal coffee flavors, and sustainably sourced beans.

The new espresso machines produce coffee that’s richer and deeper in flavor, as well as more consistent, franchisees who have tested the equipment told Crain’s. The machines can also make more types of drinks and are simple to operate, with touchscreens that walk workers through each step.

While the initial McCafe concept boosted sales at each McDonald’s location by $100,000 or more in its first year, sales stagnated after the company shifted its marketing budget to other products, Crain’s reported.

“[McCafe] does too well to just get rid of it, but it doesn’t do well enough to be very excited about it,” Nick Karavites, a Chicago-based franchisee who owns and operates 18 McDonald's restaurants, told the news source.

One of Karavites’ restaurants is among the first of the next-generation sites with McBarista. While not entirely attributable to the coffee program overhaul, sales at that location have outpaced his others since it was installed last fall, he said.

The new pastries, which are smaller, have fewer calories and cost less than McDonald’s current line of desserts, are also performing well. While still part of a test, pastry sales have helped boost the amount of the average check and serve as the perfect snack for afternoon customers looking for a cup of coffee and a treat, Karavites told Crain’s.

McBarista is part of McDonald's “experience of the future,” which includes top-to-bottom store overhauls and the installation of self-order kiosks and digital menu boards. The McBarista rollout could take much of 2017 to complete.

Oak Brook, Ill.-based McDonald’s has more than 14,000 restaurants in the United States. It generates $4 billion a year from McCafe, about 16% of total sales.

Author(s): 
Kristina Peters

3 Ways to Ignite Roller-Grill Sales

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Brought to you by Van’s Kitchen.

There’s a money-maker in your convenience store that just might be over-looked and under-appreciated: the roller grill. But this dependable c-store staple is due for a makeover.

Just 34% of shoppers who eye roller-grill items actually end up buying something, according to VideoMining data compiled with surveillance video and sales data.

And yet there’s tremendous opportunity at the roller grill: 54% of millennials say they’re likely to visit a c-store for prepared foods if roller-grill items are available, versus 42% of total consumers, according to Technomic data. Plus, a whopping 81% of consumers who buy something from the roller grill go on to purchase other items.

So, how can you make the most of the roller grill? By diversifying roller-grill offerings, keeping an eye on customization and stocking healthier items, the roller grill will be rolling out profits.

Diversify Roller-Grill Menu Items

Traditional hot dogs and sausages remain popular, but consumers—especially younger ones—are receptive to new offerings. In fact, some 45% of millennials say they’re willing to try an item or condiment featuring a new or interesting flavor at a c-store prepared-foods area, according to Technomic data.

Load up the roller grill with unexpected items such as egg rolls, tamales, chicken-filled waffle rolls, taquitos and more. Such items also make buy-one-get-one or other bundle deals.

No matter what you serve, though, make sure the area around the grill is clean, well-lit and well-stocked.

Add Customization to the Roller-Grill Station

Roller-grill items are well-suited to DIY condiments, dips and sauces. An impressive 65% of c-store foodservice consumers say they are more likely to purchase prepared foods at c-stores that offer made-to-order food when they can fully customize the items. Offer Asian-inspired sauces such as spicy mustard and sweet-and-sour sauce for roller-grill egg rolls. Stock the bar with local hot sauces for taquitos and breakfast roll-ups. For traditional encased meats, keep a clean and fresh assortment of chopped onions, hot peppers, relish and pickles.

To build excitement, consider running LTOs on special roller-grill items, with corresponding condiments to match.

Put Healthier Items Into the Rotation

More than half of consumers (53%) say they’d visit c-stores for prepared foods if healthier items were available. “Healthier” doesn’t simply mean low-calorie or low-fat. Many consumers perceive fresh foods, as well as those made with “clean” and “natural” ingredients to be healthy as well. Van’s Kitchen roller-grill egg rolls, for example, are made with white meat chicken and lean pork.

Diversify. Customize. Add freshness. Follow these tips to breathe new life into the trusty roller grill. Van’s Kitchen’s line of roller grill-ready egg rolls can help your c-store diversify its offerings with healthy, craveable choices that will re-invigorate your foodservice line-up, engage customers and boost sales.

Rich's Debuts Protein Snacks

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​BUFFALO, N.Y. -- Responding to the ongoing consumer demand for healthier snacks, Rich's Foodservice has launched a new line of protein energy bars and cookies for convenience stores.

The Better-for-You Protein Energy Bars and Cookies are delivered in dough pieces to be baked fresh in stores. Ingredients include vanilla, nuts, quinoa, flaxseed and blueberries.

The new offerings meet consumers’ growing desire for healthy options. According to Technomic, 89% of operators say health and wellness will influence their future purchase decisions.

“We’re delighted to offer c-stores this delicious snack that combines consumers’ desires for fresh baked goods and healthier options,” said Cheri F. Marchionda, director of sales—convenience for Rich Products Corp. “Operators can purchase the dough for Better-for-You Protein Energy Bars and Cookies and bake them in-store, producing a mouthwatering aroma that will entice shoppers.”

The protein energy bars are available in three flavors: blueberry cinnamon cashew, chocolate chunk cherry almond and dark chocolate peanut butter. Each bar has 200 calories or fewer, has zero trans fat, is low in cholesterol and has 9 to 10 grams of protein per bar. Each dough bar is 1.95 or 1.90 ounces, with 105 per case.

The Better-for-You Cookies are available in two flavors: oatmeal dark chocolate chunk raisin cranberry and quinoa flaxseed chocolate chunk pecan. Each cookie is 100 calories or fewer, with zero trans fat and low cholesterol. The cookies are available in 0.85-ounce dough pieces, with 192 per case.

Rich’s, based in Buffalo, N.Y., is offering retailers a variety of POS and merchandising support, including counter cards, pumptoppers, danglers, window clings and table tents. 

6 Ways to Capture Millennials

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Brought to you by Tyson Convenience.

Millennials are flavor explorers. They like to experiment with bold tastes, globally inspired ingredients and flavor-packed condiments. They relish the chance to try new varieties of favorite products. They are up for an adventure.

Even better, millennials are already big consumers of convenience store foods and beverages. So why not get an even bigger share of this generation’s dollars with targeted menu items? You just might be able to steal some market share from quick serves.

Here are some tips for driving millennial convenience store traffic with high-flavor food options.

Go Global

The most-craveable convenience store food programs, as rated by consumers, feature ethnic dishes and bold flavors and are inspired by the cuisines of Mexico, Italy, Asia and more.

In fact, some 45% of millennials say they are willing to try an item or a condiment featuring a new or interesting flavor at a convenience store prepared-foods area, according to Technomic’s recent Flavor Consumer Trend Report. And 42% of millennials are likely to purchase Asian-style foods from convenience stores at least occasionally as a snack, according to Technomic data.

Add Flavor to Classic Favorites

Think about menuing traditional favorites with bold flavors, such as barbecue sauce-topped pizzas or Sriracha-infused sausages or wings with sweet-heat sauces. Offer flavor-packed items of varying sizes, from grab-and-go snacks to full-meal bundles or shareable options.

Implement Smart Marketing

Build excitement with seasonal and limited-time offerings of these bold-flavored dishes. Or, offer bundle deals that highlight featured items. Millennials are thought to be frequent convenience store customers because they’re looking for good deals.

Your efforts will likely be rewarded: Nearly half (46%) of millennials say they’re willing to spend more on a meal that features new or unique flavors, Technomic found.

Play Up Customization

This generation also gravitates to customizable dishes. So, consider upgrading your convenience store condiment bar to include hot sauces, salsas and an assortment of Asian dipping sauces with sweet and spicy flavors. Feature fresh toppings for handhelds as well. Be sure the area is kept clean, well-lit and easily accessible for customization.

Don’t Forget Quality

Millennials also seek out foods that are perceived to be fresh and high quality. Choose well-known brands and offer a mix of indulgent and better-for-you items with transparent ingredient lists.

Be Snack Savvy

This is the grab-and-go generation, so plan food offerings accordingly. Think about ethnic street foods like tacos or burritos and other smaller-portion items that are portable and feature unexpected flavor combinations.

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