Home for the Holidays
November 18, 2020
|
Fuel Services,
Addressing Covid 19
- Keywords:
- convenience stores
November 18, 2020
|
Fuel Services,
Addressing Covid 19
"Gratitude is a currency that we can mint for ourselves, and spend without fear of bankruptcy."—Fred De Witt Van Amburgh
Every year my in-laws have a Thanksgiving tradition that I’ve learned to look forward to. Before we eat, we all write down one thing we are thankful for that year, put it in a bowl, then try to guess who said what.
Unfortunately, Thanksgiving and the holiday season will look different this year. Instead of the usual family traditions—football game, turkey trot—this holiday season will be filled with video calls, social distancing and smaller family gatherings. While our family traditions may be different, it’s more important than ever to reflect on what we are all thankful for. Since I won’t be able to tell my extended family in person, I’ll use this platform to share what I’m thankful for with all of you.
Essential Workers & PPE
I’ll start my list with the essential workers and personal protective equipment that helped us get through this pandemic. C-store workers continue to put themselves on the front lines every day to help serve their customers and ensure their businesses survive. The PPE (masks, gloves, cleaning equipment, etc.) helped protect consumers and workers in uncertain times.
While there are extra costs associated with cleaning and providing employees safety equipment, these investments appear to be paying dividends. According to a GasBuddy Study,1 clean stores drove 21% more business than their below-average competitors. So not only are the stores safer, they’re driving more volume as well.
Low Oil Prices
This seems to be a weird thing to be thankful for. But on the surface, low oil prices greatly benefited our clients over the past year. Oil prices have had a wild ride this year due to both demand and supply shocks.
Demand issues came in early March when OPEC+ failed to make a deal about production cuts. Saudi Arabia subsequently slashed prices and increased production, causing prices to crash 24% on March 9. This timing was crucial for gas and convenience retailers as fuel margins at the pump skyrocketed. Operators could have a couple of weeks of full volume at increased margins before COVID-19 fully hit the U.S., which aided improvements in balance sheet liquidity.
Then came the full demand destruction from traffic reductions as stay-at-home orders were put in place across the country. On April 20, oil prices turned negative for the first time in U.S. history. While lower oil prices impacted multinational oil companies and exploration and production firms, retailers benefited as their margins expanded. In some cases, higher margins made up for any volume losses. The industry proved to be resilient even in the most uncertain of times.
Active M&A Market
While most markets shut down during the pandemic, M&A activity for the C-store market kept on rolling. Deals of all sizes continued to be in play, ranging from single-site operators to headline grabbers such as 7-Eleven’s purchase of Speedway2, and Refuel’s acquisition of Cruizers.3 This proves the market sees value in this essential industry, and capital is still being deployed to help fuel growth. As we’ve discussed previously, consolidation is an ongoing trend, one that we believe will carry into 2021.
Family and Health
The most important things I’m thankful for are my family and good health, both of which have allowed me to create some happy memories in these uncertain times. Each day, I’m also thankful to be in the position I’m in—helping our clients. Before you sit down for Thanksgiving dinner, take a good look around and think about what you’re thankful for this year and those who’ve helped you along the way. Enjoy your holiday season, and we look forward to connecting with you soon.
1 GasBuddy 
Read more
"Gratitude is a currency that we can mint for ourselves, and spend without fear of bankruptcy."—Fred De Witt Van Amburgh
Every year my in-laws have a Thanksgiving tradition that I’ve learned to look forward to. Before we eat, we all write down one thing we are thankful for that year, put it in a bowl, then try to guess who said what.
Unfortunately, Thanksgiving and the holiday season will look different this year. Instead of the usual family traditions—football game, turkey trot—this holiday season will be filled with video calls, social distancing and smaller family gatherings. While our family traditions may be different, it’s more important than ever to reflect on what we are all thankful for. Since I won’t be able to tell my extended family in person, I’ll use this platform to share what I’m thankful for with all of you.
Essential Workers & PPE
I’ll start my list with the essential workers and personal protective equipment that helped us get through this pandemic. C-store workers continue to put themselves on the front lines every day to help serve their customers and ensure their businesses survive. The PPE (masks, gloves, cleaning equipment, etc.) helped protect consumers and workers in uncertain times.
While there are extra costs associated with cleaning and providing employees safety equipment, these investments appear to be paying dividends. According to a GasBuddy Study,1 clean stores drove 21% more business than their below-average competitors. So not only are the stores safer, they’re driving more volume as well.
Low Oil Prices
This seems to be a weird thing to be thankful for. But on the surface, low oil prices greatly benefited our clients over the past year. Oil prices have had a wild ride this year due to both demand and supply shocks.
Demand issues came in early March when OPEC+ failed to make a deal about production cuts. Saudi Arabia subsequently slashed prices and increased production, causing prices to crash 24% on March 9. This timing was crucial for gas and convenience retailers as fuel margins at the pump skyrocketed. Operators could have a couple of weeks of full volume at increased margins before COVID-19 fully hit the U.S., which aided improvements in balance sheet liquidity.
Then came the full demand destruction from traffic reductions as stay-at-home orders were put in place across the country. On April 20, oil prices turned negative for the first time in U.S. history. While lower oil prices impacted multinational oil companies and exploration and production firms, retailers benefited as their margins expanded. In some cases, higher margins made up for any volume losses. The industry proved to be resilient even in the most uncertain of times.
Active M&A Market
While most markets shut down during the pandemic, M&A activity for the C-store market kept on rolling. Deals of all sizes continued to be in play, ranging from single-site operators to headline grabbers such as 7-Eleven’s purchase of Speedway2, and Refuel’s acquisition of Cruizers.3 This proves the market sees value in this essential industry, and capital is still being deployed to help fuel growth. As we’ve discussed previously, consolidation is an ongoing trend, one that we believe will carry into 2021.
Family and Health
The most important things I’m thankful for are my family and good health, both of which have allowed me to create some happy memories in these uncertain times. Each day, I’m also thankful to be in the position I’m in—helping our clients. Before you sit down for Thanksgiving dinner, take a good look around and think about what you’re thankful for this year and those who’ve helped you along the way. Enjoy your holiday season, and we look forward to connecting with you soon.
1 GasBuddy
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