Maverik Purchases Kum & Go

[bryceleinan]

FJ Management / Maverik announce acquisition of Kum & Go…

https://maverik.com/media/press-release ... _group.pdf

It’ll be interesting to see how this acquisition works given Kum & Go’s expansion into Salt Lake, Denver, and announced expansion into Boise... guess this is that adage of "if you cant beat them, buy them."

[Brian Lutz]

I don't think Kum & Go has gotten very far into the Utah market yet. I believe there's only one location (on Bangerter Highway) currently open and a couple more I know of under construction. Even if they had more locations at this point Maverik is so dominant in this market it would take a long time for anyone to catch up. I'm guessing Maverik will keep the SLC Kum 'n Go locations for a bit of distinction, otherwise they'd just be lost in an endless see of Maveriks in this area.

I think that aside from moving them into new territories, I could see this move improving Maverik's made-to-order food offerings. Bonfire has some decent stuff (particularly their breakfast,) but they don't seem like they quite know what to do with it right now.

[storewanderer]

I expect these distant Kum & Gos in Idaho (did any open?) or Utah (at least one opened) to be converted to Maverik.

Colorado is a toss up. Kum & Go has some nice sites along interstates around Denver. Maverik is very weak around Denver. Quik Trip is expanding rapidly in the market. Quik Trip's execution is so much better than Maverik or Kum & Go, and its prices are typically lower, it will be difficult to compete.

Kum & Go has the same issue with its in-store food counters as Maverik. They do not operate consistent hours. They will build a nice new location then never or rarely staff the counter. I was in at least 5 Kum & Gos around Denver/Colorado Springs last year and not one of them had the food counter open. Every visit was early-mid afternoon when you'd expect it to be open.

This assumes Maverik plans to keep the Kum & Go banner. I don't see anything about that one way or the other. I'd keep the banner... but shift everything else to what Maverik does. My view is Maverik runs far higher volume sites than Kum & Go and is a more effective operator.

Kum & Go puts up a lot of new sites that are nice but doesn't maintain them great and their prices are so high that they do not generate enough customer traffic. Kum & Go is also constantly attempting a weak effort at competing with much more competent operators like Quik Trip or Circle K, and getting creamed against them. Maverik on the other hand puts up new sites, also doesn't maintain them very well, but is able to drive volume to the sites via promotions/loyalty programs/having the best convenience store (mix, facility, restroom, fuel island) offer available in most of its markets.

Maverik has done exceptionally well with new sites they've built. They seem to be able to create volume in locations I never thought would get much traffic. Kum & Go has failed to do that. This strong performance of the hundreds of new build Maveriks over the past decade is what is enabling them to buy Kum & Go.

We will see how things go for Maverik as they face more legitimate competition in mass like Quik Trip and even Circle K.

I go to Maverik often in Reno because they are the best option. But if there were a Quik Trip, I'd never set foot in Maverik. If there were a Circle K, I'd split visits and Maverik would need to have a drink promotion to get me in.

[bryceleinan]

I expect these distant Kum & Gos in Idaho (did any open?) or Utah (at least one opened) to be converted to Maverik.

Colorado is a toss up. Kum & Go has some nice sites along interstates around Denver. Maverik is very weak around Denver. Quik Trip is expanding rapidly in the market. Quik Trip's execution is so much better than Maverik or Kum & Go, and its prices are typically lower, it will be difficult to compete.

Kum & Go has the same issue with its in-store food counters as Maverik. They do not operate consistent hours. They will build a nice new location then never or rarely staff the counter. I was in at least 5 Kum & Gos around Denver/Colorado Springs last year and not one of them had the food counter open. Every visit was early-mid afternoon when you'd expect it to be open.

This assumes Maverik plans to keep the Kum & Go banner. I don't see anything about that one way or the other. I'd keep the banner... but shift everything else to what Maverik does. My view is Maverik runs far higher volume sites than Kum & Go and is a more effective operator.

Kum & Go puts up a lot of new sites that are nice but doesn't maintain them great and their prices are so high that they do not generate enough customer traffic. Kum & Go is also constantly attempting a weak effort at competing with much more competent operators like Quik Trip or Circle K, and getting creamed against them. Maverik on the other hand puts up new sites, also doesn't maintain them very well, but is able to drive volume to the sites via promotions/loyalty programs/having the best convenience store (mix, facility, restroom, fuel island) offer available in most of its markets.

Maverik has done exceptionally well with new sites they've built. They seem to be able to create volume in locations I never thought would get much traffic. Kum & Go has failed to do that. This strong performance of the hundreds of new build Maveriks over the past decade is what is enabling them to buy Kum & Go.

We will see how things go for Maverik as they face more legitimate competition in mass like Quik Trip and even Circle K.

I go to Maverik often in Reno because they are the best option. But if there were a Quik Trip, I'd never set foot in Maverik. If there were a Circle K, I'd split visits and Maverik would need to have a drink promotion to get me in.

FJ Management also received a nice infusion of cash from Warren Buffett/Berkshire Hathaway, as they bought their 20% share of Pilot Flying J in preparation of the purchase of the remainder of PFJ.

[storewanderer]

FJ Management also received a nice infusion of cash from Warren Buffett/Berkshire Hathaway, as they bought their 20% share of Pilot Flying J in preparation of the purchase of the remainder of PFJ.

I get the feeling Maverik is in things for the long haul. It is interesting they chose this path instead of continuing to just build new stores.

Normally I am not big on fewer choices but Kum & Go was a high priced c-store and did not really have a competitive offer. They had some nice/newer stores so they are a step above 7-Eleven for sure but that is about all I can say positive about them. Their pricing is really awful.

I wonder what this means for Maverik's California expansion also.

I just hope they don't turn around and sell the whole thing to 7-Eleven in a couple years... I'd be okay if they sold it all to Circle K...

[bayford]

Maverik is completely retiring the Kum & Go brand by 2025
https://www.cspdailynews.com/mergers-ac ... m-go-brand

[storewanderer]

Maverik is completely retiring the Kum & Go brand by 2025
https://www.cspdailynews.com/mergers-ac ... m-go-brand

That is a little fast in my opinion... I would have watched how the conversions in CO/ID/WY/UT go first. ID/UT won't be an issue, Kum & Go stupidly tried to go attack Maverik in its strongholds and Maverik turned around and made Kum & Go truly and literally Kum & Go from UT/ID.

CO/WY Kum & Go has a longer history of operating in those markets. Maverik has few locations around metro Denver and I'm not sure how they are doing with those few locations. They probably do okay, and their locations are a lot nicer/larger than even the newest Kum & Go units. The WY units are many old 80's 7-Eleven units and not in great condition. But Maverik is known in WY so this may not be an issue there. The CO Kum & Go units are mostly new less than 15 year old builds but some aren't necessarily in the best locations. With Quik Trip going into Denver they are going to have some serious challenges in that market.

The rest of Kum & Go I think I'd hold off on rebranding to Maverik until seeing how the rebranding goes in CO/WY and also take a serious look at the station network and decide what to do with older/smaller locations. It may be worth keeping the brand on smaller/outdated locations until they can be replaced.

With all of that said I've never particularly liked Kum & Go. They try, but their pricing was always on the high side and execution has been lackluster. They have some kind of a loyalty program but I never signed up for it. Given the choice between Maverik and Kum & Go, I'd pick Maverik every time. But given Quik Trip is in so many Kum & Go markets I'd pick Quik Trip over both of these brands every time.

I wonder if Maverik doing organic expansion into the Kum & Go markets would have been a better approach...

I do think Maverik will compete very effectively against Casey's. They have nothing to worry about there.

Kum & Go was a little strange. Their former CEO was quoted as saying a goal was to completely cut the company off from using fossil fuels. A little odd thing for a gas retailer to say. Perhaps those disaster stores with no gas in places like Downtown Denver that completely failed were an initiative to meet that goal, and they lost a lot of money on such stupid ideas. The Maverik leadership does not talk like that.

[Bakeragr]

I think that the heir of the Krause family that owned K&G is a bit detached from reality. The gas stations got in the way of his spending money on Italian soccer teams and vineyards. My guess is he doesn't really relate to the average Iowan.

The Kum & Go stores here in Missouri were originally mostly Git n Gos (from OK) and a chain called Cody's, all surrounding Springfield in SW MO. They're not impressive. Even the stores they've torn down and rebuilt, they're not clean and really don't have anything unique to offer. The first new build a few years ago at first had draft beer taps for growler fills, but they quickly realized they didn't have the employees willing to put the effort into keeping that clean and maintained. I wanted to take advantage of it and didn't even make it by one in time before they discontinued it. Kind of like the other thread talking about all of the Fry's Marketplace features that go away after opening, I think K&G did a bunch of splashy things on their new store format and then quickly cut them out.
When I am in Springfield, I would much rather stop at a Rapid Robert's (local Conoco chain), the new Buc-ee's or a Casey's. They actually clean their stores and keep them stocked.

[Brian Lutz]

As far as I know Kum & Go did manage to open a handful of locations in the Salt Lake Area prior to the merger (Google Maps shows 4 of them in the Salt Lake Valley) but I suspect those would be relatively easy to convert to Maverik, and only one (on Bangerter Highway) is next to an existing Maverik.

I guess my biggest question would be how well the Maverik brand would work in the Midwest since they seem to tie a lot of their identity and store decor to the Intermountain West area they originate from. I suppose it could work on the Plains with some modification, but seems like it would feel out of place somewhere like Missouri or Nebraska, and wouldn't expect them to come much further east than that any time soon. I also think they've operated in a lot of areas where their biggest competitor is 7-Eleven with a fleet of badly aging stores, and they're going to find that stronger operators like QuikTrip and Casey's are going to be much harder to distinguish themselves against.

[storewanderer]

As far as I know Kum & Go did manage to open a handful of locations in the Salt Lake Area prior to the merger (Google Maps shows 4 of them in the Salt Lake Valley) but I suspect those would be relatively easy to convert to Maverik, and only one (on Bangerter Highway) is next to an existing Maverik.

I guess my biggest question would be how well the Maverik brand would work in the Midwest since they seem to tie a lot of their identity and store decor to the Intermountain West area they originate from. I suppose it could work on the Plains with some modification, but seems like it would feel out of place somewhere like Missouri or Nebraska, and wouldn't expect them to come much further east than that any time soon. I also think they've operated in a lot of areas where their biggest competitor is 7-Eleven with a fleet of badly aging stores, and they're going to find that stronger operators like QuikTrip and Casey's are going to be much harder to distinguish themselves against.

It doesn't look like any of the Idaho K&G units opened and it isn't clear if any construction occurred. For some reason I thought they got one Idaho unit open.

I think Maverik will compete strongly against Casey's, but Casey's may be more consistent on prepared food (pizza/bakery) quality than Maverik. Quik Trip is going to completely roll over Maverik; it will not be pretty or funny. The only thing is Quik Trip generally stays away from rural/small town locations and also needs large lot size sites. Casey's competes with Quik Trip in many markets and has carved a niche for itself with small town sites and taking somewhat smaller/outdated stations in larger cities that are on sites much too small for a Quik Trip. K&G competes with Quik Trip in many markets and while their store format tries to compete with Quik Trip it isn't terribly effective and their locations seem to have low customer traffic when competing against Quik Trip (maybe this is the model Maverik will fall into, which won't be good for Maverik) and often aren't in the best locations.

I expect Maverik will work to get stronger promotions into the K&G stores to draw in traffic (such as $1 fountain drinks and such) and it will be interesting to see if Maverik takes some of K&G's prepared food programs for its own operation as K&G has some more extensive mix of items but execution has been so lackluster/inconsistent/not always open (Maverik has the same issue though). I also think K&G Stores have a much larger number of SKUs on their aisles than the typical Maverik which is very heavily SKU rationalized to the highest moving items so it will be interesting to see how that is handled.

This group running Maverik seems to want to have a national c-store chain so we will see what happens. They had one before, sort of, with Flying J, granted they were mostly truck stops... A large acquisition like K&G changes the dynamic here. Maverik has had a successful organic expansion into many markets. But now this acquisition and dealing with the K&G culture and the other baggage/issues surrounding K&G's operations/locations add an element that Maverik has not previously dealt with. I also am not aware of Flying J doing any major acquisitions like this in the past. So we will see what happens. I am surprised if it is actually true they plan to have K&G 100% rebranded to Maverik by 2025. That timeline seems much too fast and I would advise them to slow down and take this one market at a time and look closely at what works and what doesn't.