Raley's sells Aisle1

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lake52
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Raley's sells Aisle1

Post by lake52 » December 5th, 2018, 5:14 pm

https://www.raleys.com/news/raleys-ente ... -business/

Raley's has sold Aisle1 (their gas & convenience store chain) to Anabi Oil to fuel "significant growth and expansion."

Although the terms of the sale weren't disclosed, these stores were pretty much all new builds with pretty nice convenience stores and a car wash. I would think they sold in the 20-30 million dollar range. For a 3.24 billion dollar company, that seems like chump change so I wonder what having this money will allow them to do. They have been talking about expanding into the Pacific Northwest for a while, but this doesn't seem like nearly enough to do anything major.

As for the customer it doesn't seem like Raley's loses much with this as the gas station chain wasn't all that large and Anabi Oil will continue to operate them as Aisle1 with the fuel promotions they did offer. What is interesting about this deal is that they are discussing rolling out fuel rewards at all Anabi owned locations which would be a huge improvement.

The deal also mentions that Anabi will work to expand into other areas of the Raley's footprint for both new and current stores. It seems like this is Raley's letting a company that does gas well do their gas, so they can focus on continuing to do groceries well. Seems like a good partnership.

storewanderer
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Re: Raley's sells Aisle1

Post by storewanderer » December 5th, 2018, 6:15 pm

I am not clear if they lease the stations or own the stations. I think it is more that they simply do not want to operate fuel stations going forward. The fuel stations probably broke even at best on their P&L. As many other grocers have found, the fuel station business just doesn't seem to make money. Raley's built first class fuel station sites in most of these cases (except Sunset in Rocklin which was an old 76/Circle K with the tiny store in the middle of the pumps) with car wash facilities, etc.

Raley's also was not a great fit for c-stores due to not selling cigarettes.

Kroger has done well with fuel stations by building very low cost simple sites with gas pumps and a little pre-fab payment booth in the middle that sells candy, cigarettes, ice, and a few snacks/auto supplies. Plastic trash cans with a window wash unit and a simple canopy and sign. These Kroger fuel sites would not meet most oil company branding requirements but they are great high volume unbranded stations.

Raley's overbuilt its stations with decent sized c-stores, much nicer than average fuel canopies/c-store buildings, nice car wash facilities, booths in the pump island for employees, nicer than average windshield washing units, etc. The needed ROI and ongoing operating costs on these stations that were too nice probably caused them to be a drain on operations. These are first quality sites and will likely make great branded fuel stations should Anabi go that route (Shell or Mobil).

Anabi has been losing locations due to the Tesoro/Marathon "merger." Anabi was a Tesoro multi site operator and due to that merger, many of those stations have been getting taken back by Tesoro/Marathon to become corporate operated sites again and will likely ultimately be Speedway sites. Anabi's sites are typically branded Shell, Arco, or Mobil. You can see Anabi's locations here, http://anabioil.com/html.html but some of these have been taken back by Tesoro/Marathon (you can cross reference abc.ca.gov address search for that; the ones that show up as operated by Western Refining Retail have been taken back by Tesoro/Marathon and Anabi's sites have a number of legal names but the officer listing tells the story).

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Re: Raley's sells Aisle1

Post by storewanderer » December 8th, 2018, 9:03 pm

I went into one of these Raleys Aisle1 c-stores today. Nothing much to report but I was a little surprised when I paid for a drink. They use the Raleys cash register equipment but they are set up as a different "store number." The chip readers in the Aisle1 Store were covered up and to pay you had to swipe or tap your card/phone. Raleys main stores have been taking chip cards now for quite a while and I am surprised they did not upgrade in the fuel station too given they use the same exact registers and that all fraud costs fall on the merchant if they are not taking chip cards. Also interesting they upgraded them to accept tap but not chip. Maybe that costs less. Maybe the transactions are so few that go through there that the upgrade costs more than just eating whatever fraud there is (probably not much in the location I visited).

This doesn't even touch on the significant cost that is ahead to get the fuel pumps accepting chip cards. Raleys pumps are all newer and they should be able to just do simple upgrades but even those simple upgrades cost thousands of dollars per gas pump.

They probably decided the fuel business just wasn't worth it.

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