Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Tim Stenebek on Bloomberg Radio.
Speaker 2: We've been talking a lot with We talked with the
Speaker 2: CEO of Smuckers earlier, we talked about General Mills. We're
Speaker 2: talking a lot about food and the food space today.
Speaker 3: It's been well in the last few days, right because
Speaker 3: Kellogg's also had a great day after Gold and Sacks
Speaker 3: upgraded them. So there's been some up and down arrow stories,
Speaker 3: but it's a it's a hot issue right now.
Speaker 2: Well, take a look at shares of Casey's General Stores
Speaker 2: up three point four percent today, up two percent in
Speaker 2: yesterday's trade. And we've got the CEO of the president
Speaker 2: and CEO in our studio here, Darren Rebella's is with us.
Speaker 2: They're based in Iowas. Doc is up about six percent
Speaker 2: year to date. Welcome, Welcome, thank you, thank thanks for
Speaker 2: having me here on Bloomberg. Tell us a little bit
Speaker 2: about what you are seeing when it comes to consumers
Speaker 2: and what they're doing, and remind everybody about where you
Speaker 2: guys have your stores.
Speaker 1: Sure, yeah, we're we have twenty five hundred stores focused
Speaker 1: in the Midwest and sixteen Western states. And about half
Speaker 1: of our stores are in rural communities, towns of five
Speaker 1: thousand people or less, and so in those communities we
Speaker 1: play a number of roles. We're the third largest commedian
Speaker 1: store chain in the US, and so we supply basic
Speaker 1: needs and groceries and that sort of thing. We're also
Speaker 1: the fifth largest pizza chain in the US, so we're
Speaker 1: the pizza area. And in about fifteen hundred of our
Speaker 1: stores we have full liquor licenses, so we're also the
Speaker 1: liquor store. So we wear a lot of hats and
Speaker 1: serve a lot of needs in those community.
Speaker 2: Open twenty four hours.
Speaker 1: In some of our stores. Yeah, but as you can imagine,
Speaker 1: in some of those more rural communities, there's not a
Speaker 1: lot happening between midnight and.
Speaker 2: Four in the morning, or there is sometimes.
Speaker 1: We don't want to be involved in.
Speaker 3: So the ticker is I don't think the year to
Speaker 3: date move really tells the story because I look over
Speaker 3: the last five years and you've gone from one hundred
Speaker 3: dollars to two thirty five, so you've drastically outperformed the
Speaker 3: S and P five hundred. Of course, you're Nasdaq listed
Speaker 3: and the taker is c as Y that's right. It's
Speaker 3: it's interesting to be because of you have a rural presence.
Speaker 3: You're a very big company that a lot of people
Speaker 3: on the coasts maybe haven't heard of. Right, So does
Speaker 3: that make it harder to tell your story to shareholders?
Speaker 1: You know, we just have to continue to tell it.
Speaker 1: And you know, we always invite shareholders to come to
Speaker 1: where our store support center is in Ancone, Iowa, and
Speaker 1: we can show them around, and we've done that a
Speaker 1: number of times. But yeah, I mean, people don't run
Speaker 1: into cases in their day to day lives, so we
Speaker 1: have to explain to them. And in certain markets, I'll
Speaker 1: take New York as an example, you wouldn't find anything
Speaker 1: that even resembles the cases here, so when we describe it,
Speaker 1: it takes a little bit of work.
Speaker 3: But yeah, because you said, you have your own kitchens
Speaker 3: in the stores, so they make their pizza dough from scratch,
Speaker 3: and it's not when I think of convenience store, that's
Speaker 3: not what I think of that's right.
Speaker 1: Yeah, So we really kind of consider ourselves in a
Speaker 1: category of one because we have those unique attributes, that
Speaker 1: rural footprint, you know, our grocery, our alcohol and liquor,
Speaker 1: our pizza business. We really are unique in that respect.
Speaker 2: So does it make sense to kind of just continue
Speaker 2: along those lines? Like I said to.
Speaker 1: You, you know you're not here in New York.
Speaker 2: Would you come to the New York metro area?
Speaker 1: Well, the way we focus our development for the moment
Speaker 1: is we have three distribution centers as we supply all
Speaker 1: of our own stores, and so we look initially at
Speaker 1: the effective distribution radius around those and so we know
Speaker 1: we can continue to build a lot of stores in
Speaker 1: that geography. In fact, of our twenty five hundred stores,
Speaker 1: two thousand of them are in only nine of the
Speaker 1: states we operate in, and so we still have plenty
Speaker 1: of white space. So it's not that we would never
Speaker 1: come to in New York, but we would probably do
Speaker 1: something a little more upstate if we were ever to
Speaker 1: get to that point.
Speaker 3: So how have you dealt with inflation? How have your
Speaker 3: consumers been dealing with this? With this inflation?
Speaker 1: You know, I would say, so far, so good. Our
Speaker 1: guests have proven to be pretty resilient. What I tell
Speaker 1: you about the demographics of our guests. Three quarters of
Speaker 1: our folks make fifty thousand dollars a year or more.
Speaker 1: And while I know that doesn't sound like a lot
Speaker 1: in New York. In the states where we operate, that
Speaker 1: goes a long way. In fact, if your rank ordered
Speaker 1: all the states in the US in terms of cost
Speaker 1: of living, the most expensive state we operate in is
Speaker 1: ranked twenty second.
Speaker 2: Interesting do you think about that in terms of where
Speaker 2: you want to open?
Speaker 1: Well, we factor in a lot of things of where
Speaker 1: we want to open the economy, and cost of living
Speaker 1: is definitely one of those that fit into the equation.
Speaker 2: Talk to us a little bit about your new three
Speaker 2: year strategic plan, because I was looking at RBC Capital
Speaker 2: Markets put out a note today saying Casey's General Stores
Speaker 2: tone edits Tuesday investor day was constructive, and they talked
Speaker 2: about that new three year plan realistic and constructive. And
Speaker 2: we did say. The stock was up I think four
Speaker 2: percent or so at its highs today. What is that
Speaker 2: new three year plan?
Speaker 1: Yeah, you know, we've had a long track record of
Speaker 1: success in our company, and the last three or four
Speaker 1: years is really accelerated. But we've done that through a
Speaker 1: couple of ways. Our growth algorithm is pretty simple. We
Speaker 1: get about half of our growth from what we call
Speaker 1: the mothership, the base business, driving same store sales, improving
Speaker 1: the base business, and then the other half is from
Speaker 1: new unit development. And so that three hundred and fifty
Speaker 1: stores really represents a bit of an acceleration, but really
Speaker 1: a continuation of where we've been for the last few years.
Speaker 1: And we'll do that through a combination of organic growth
Speaker 1: and acquisitions. And our industry is highly fragmented. About ninety
Speaker 1: five thousand of the one hundred and fifty thousand commenced
Speaker 1: stores in the US or operate and change at ten
Speaker 1: stores or less. Yeah, and as you can imagine, with
Speaker 1: the inflationary pressures and supply chain issue everything else that
Speaker 1: we've all been dealing with, those smaller operators really struggle.
Speaker 1: So provides a great opportunity for us to acquire and
Speaker 1: operate those stories.
Speaker 2: Help us always supply chains, because I feel like they've
Speaker 2: eased and gotten better. Are they back to where they
Speaker 2: were pre pandemic?
Speaker 1: I would say for the most part, yes, Okay, I
Speaker 1: mean it's gotten significantly better from where it was twelve
Speaker 1: eighteen months ago. There's still some lingering things on certain
Speaker 1: things like tractor trailer trucks have still been delayed. You know,
Speaker 1: some things that require chips have a little bit longer
Speaker 1: lead times, but for the most part, we're about back
Speaker 1: to normal.
Speaker 2: Just trying to understand, you know, as inflation has certainly
Speaker 2: settled back in the past twelve months, but we still
Speaker 2: have a ways to go, and you still hear about
Speaker 2: inflationary pressures. I mean, I feel like I'm still paying
Speaker 2: a lot for a lot of stuff, and I'm trying
Speaker 2: to understand kind of whether you guys are seeing these
Speaker 2: pressures as well. Is wages also a decent pressure right now?
Speaker 1: Still for you you know, that's moderated. You know, we
Speaker 1: after you know, the peak of COVID, we saw a
Speaker 1: real acceleration in wages that is somewhat moderated a bit.
Speaker 1: But you know, what we've really been focused on is
Speaker 1: is employee engagement in retaining the team members that we have.
Speaker 1: And so if you looked at our results over the
Speaker 1: last year, we actually had a reduction in same store
Speaker 1: labor hours and it was really driven by the fact
Speaker 1: that we reduced our turnover, so we had twenty percent
Speaker 1: reduction in overtime, twenty percent reduction and training hours and
Speaker 1: really focused on making the job in the store easier
Speaker 1: so we relieve some of that pressure and so we
Speaker 1: don't have to throw money at people. We want to
Speaker 1: take care of them. We paid people fairly but also
Speaker 1: making their job easier close along one.
Speaker 3: So the culture is extremely important to you.
Speaker 2: Absolutely, and so they get benefits and everything. Yes, yeah, yes,
Speaker 2: Sam in our control room wants to know if you're
Speaker 2: going to run for political office.
Speaker 3: We've all taken a poll and decided that we would
Speaker 3: vote for you.
Speaker 1: Yeah. Well, there's probably fewer things I'd want to do
Speaker 1: less in office.
Speaker 3: I could understand that I was an infantry guy in
Speaker 3: the Army, so I've done some pretty nasty things.
Speaker 1: I'd rather do that than run.
Speaker 3: For Talk to us about the pizza, because we hear
Speaker 3: it has a bit of a cult following. We already
Speaker 3: talked about the fact that it's handmade pizza. Is it's
Speaker 3: here in New York. It's important, you.
Speaker 1: Know, Yeah, it's well, it's it's iconic and we've been
Speaker 1: doing it since the eighties, so we've got a long
Speaker 1: track record. What what what I think is really cool
Speaker 1: One is that we make it from scratch and we
Speaker 1: use really quality and green so one hundred percent whole milk,
Speaker 1: mozzarella cheese. Now you you kind of think well, doesn't
Speaker 1: everybody do that? But no, most people don't. None of
Speaker 1: the large chains do. They use low fat mozzerrea because
Speaker 1: it's cheaper. We don't do that. We we put extra
Speaker 1: cheese on the pizza. So it's not a thing to
Speaker 1: get to order extra cheese on your pizza from a
Speaker 1: Casey's because you don't need it. But what really sets
Speaker 1: us apart is our breakfast pizza. And it's not pizza
Speaker 1: for breakfast, it's breakfast pizza. And so we have people
Speaker 1: coming into our stores every day.
Speaker 2: What's that a breakfast pizza.
Speaker 3: Oh, it's bacon and eggs, bacon, eggs, sausage, cheese, and
Speaker 3: then more cheese.
Speaker 1: In fact, in the fall we had a lot of
Speaker 1: fun our pizza turned. Our breakfast pizza turned twenty one
Speaker 1: years old, and so our culinary team was doing some
Speaker 1: research what can we do and they found the beer
Speaker 1: cheese is on trend.
Speaker 2: I knew it.
Speaker 1: So they created a beer cheese sauce to put on
Speaker 1: the breakfast pizza. But then they leveled it up because
Speaker 1: when we do these things, we want to tie into
Speaker 1: the culture and so bush Light beer is a huge thing.
Speaker 1: We sell more bush Light beer than any retailer in
Speaker 1: the country.
Speaker 2: Darn Rebel is always a pleasure. Appreciate it. CEO at
Speaker 2: Casey's General Stores