NACS SOI TRENDS - Dick Meyer Concerns

• 41 of 145 chains (28%) = pre-tax loss

• 50 of 145 chains (35%) = < 2.0 cents/gallon from break even
  
     So 63% of reporting chains are < 2 CPG from net loss

• HVRs hurting c-stores some areas - lower gallons/CPG

• Native Americans - killing NY/other retailers; license to steal

• Cigarettes - escalating prices driving total consumption down

• Money cost - higher prime, ripple impact of shake outs in process

• Stores' Labor - quality/quantity issues, minimum wage hike cost

Many similar dynamics are in play this year as in 1999, and most can be singularly significant for a given site/region. Companies must continuously look at their business on a store-by-store basis, while staying lean and smart on an aggregate basis. They must see where they're going in terms of overall market position and per-store/total profitability!

The Industry's average pre-tax profit per store remains an unacceptable return on most companies' investment. In short, you can't afford to average! Successful c-store chains must be marketing driven, have passionate management, a well-founded and uncompromising strategic direction, and accountability and responsiveness throughout the organization

FEEDBACK WELCOME

M&A's research will remain relevant so long as retailers and suppliers continue to take the time to provide their individual feedback on our interpretations. Any and all affirmations of our findings or other opinions may be forwarded by email at dmeyer@dickmeyer.com. Good luck!