A "sloching" giant
The news on Wednesday that Couche-Tard, the country’s largest convenience store operator, is hopping over to Europe with the purchase of a Scandinavian gas chain, reminded me that, except for these large acquisitions now and then, Couche-Tard really sails under the radar.
But make no mistake: Couche-Tarde is a giant in the food industry and may become even larger.
Okay, okay, I know. A big chunk of Couche-Tard’s business is in gasoline sales and as an operator of gas bars and convenience shops, its in-store business is certainly propped up by enormous volumes in cigarettes, pop and chips.
Then there is Couche-Tard’s signature drink in Quebec: Sloche, a frozen beverage for the skateboard set famous for its bizarre flavours (Tropical Cheddar anyone?) and sometimes controversial marketing campaigns (if you are squeamish, don’t click here.)
But those little food sales add up: In Canadian Grocer’s 2012 Who’s Who directory, which is based on figures from CIBC World Markets, Couche-Tard is the 9th largest food retailer in Canada, with $1.15 billion in food sales last year. That’s a lot of chips and Sloches.
In fact, Couche-Tard sells more food that Shoppers Drug Mart, North West Company and H.Y. Louie, and more than Target will sell in Canada too (at least in the discounter’s first few years north of the 49th parallel).
Couche-Tarde doesn’t just like selling food. It loves it and sees fresh food in particular as a key part of its growth strategy.
That makes sense. People are eating on the run more, and usually that means snacking rather than eating a full sit-down meal. Meanwhile consumers are looking for healthier foods. A convenience operator that can offer both is in a good position.
From a balance-sheet perspective, fresh food has lately been among Couche-Tard’s top sales and profit generators, with margins in the 18 per cent range, according to a statement by CEO Alain Bouchard late last year.
Overall, Couche-Tard aims to make fresh food, or foodservice (sales of sandwiches, coffee, frozen drinks and such), 15 per cent of its in-store sales and 25 per cent of profits. To help do that, last year it hired Joe Chiovera, a 7-11 executive, to lead its foodservice business.
A lot of the focus on foodservice seems to be in the U.S. now. But, as I said, Couche-Tard is no slouch (or should I say Sloche) in Canada.
Also, Couche-Tard is a terrific operator. It is one of the few Canadian retailers to make a go of it in the U.S., where it owns the Circle K convenience chain. It also licenses Circle K in Mexico, Japan, Indonesia and China.
Something to think about, perhaps, as Couche-Tard’s food strategy evolves.