Speedway steadily grows into national brand
Posted November 9, 2018 3:31 p.m. EST
DAYTON, Ohio -- Speedway was already one of the nation's largest company-owned convenience store chains just a few years ago, with about 1,500 stores spread across nine states, mostly in the Midwest.
But Marathon, Speedway's parent company based in Findlay, Ohio, made two separate acquisitions in just a few years that made the Enon, Ohio-based convenience store chain into a national brand.
Marathon spent $2.8 billion in 2015 to acquire Hess, an East Coast retail chain with approximately 1,200 locations. That deal alone expanded Speedway's footprint from nine states to more than 20.
The company's acquisition of Andeavor will now give Speedway a presence from coast to coast. Combined, Marathon's acquisition of the Hess and then Andeavor were valued at more than $26 billion. Since 2014, Speedway's presence shot up from 1,500 stores to about 3,900 locations spread across the U.S.
Now local and state officials are working to provide incentives that will entice Speedway to retain its corporate headquarters just outside Enon for the foreseeable future, potentially creating as many as 200 new jobs. Company officials said a final decision is expected in the coming weeks, and declined to provide additional comment for this story.
Experts said the the expansion will provide several benefits as Speedway increasingly competes with rivals that include not just other convenience stores, but grocery chains, dollar stores and fast food restaurants.
Other chains including 7-Eleven Inc. and Alimentation Couche-Tard. Inc., known for its Circle K brand, have also been acquiring stores, said Todd Hale, a former senior vice president of consumer and shopper insights for Nielsen. Hale is also principal at his own consulting firm, Todd Hale, LLC.
With more than 8,300 store locations, 7-Eleven closed on a $3.3 billion purchase of 1,030 stores in 17 states from Sunoco in January this year. Adding stores is one way of boosting revenue as more competition has made it challenging to increase sales in existing stores, he said.
"It's all about achieving growth," Hale said.
Marathon's acquisition of Andeavor could have a significant impact in Clark County, where the company's headquarters sits just outside the village of Enon.
The Clark County commissioners recently approved a 100-percent, 15-year tax abatement, allowing Speedway to potentially expand its corporate headquarters and create as many as 200 new jobs. The new positions would be full-time corporate and office support jobs created over the next three to four years to provide support for many of the news stores acquired from Andeavor.
The Springfield News-Sun recently reported Marathon has already started converting about 200 SuperAmerica stores previously owned by Andeavor. Company officials have not said how long that process is expected to take.
Local officials have said the incentives, along with potential help from the state, are important to ensure Clark County remains the most competitive location for Speedway's corporate headquarters. An enterprise zone agreement request filed by the company shows Speedway is also considering two undisclosed sites outside of Ohio for its expansion.
Officials from the Chamber of Greater Springfield also declined to comment for this story until Speedway announces its decision.
Statewide, Speedway employs about 1,090 full-time workers, excluding retail store and field support employees, according to documents provided to the county as part of the enterprise zone request. Speedway's existing payroll is listed at just shy of $73 million annually.
Retaining Speedway's corporate headquarters in Enon is the most logical scenario, but local officials don't want to take the company's presence here for granted, said Rick Lohnes, a Clark County commissioner. Springfield has faced economic challenges over the past decade, but Lohnes pointed to recent decisions from companies like Silfex and Trope as a sign that businesses are starting to take a more positive view of the county's future.
Along with hundreds of new jobs, city officials are also moving forward with a new housing development on 37 acres of property south of the Tuttle Road Walmart. The project is the first major housing development of its kind since the 1990s, according to city officials.
"We think we see some things beginning to happen because of companies like Speedway, Topre and Silfex," Lohnes said.
Having Speedway's corporate headquarters situated in Enon gives a signal to other firms that Clark County is a viable location for a large company, Lohnes said. As Speedway has steadily grown from a regional brand to a national chain, it's presence here is even more beneficial, he said. The challenge now, Lohnes said, is gradually shifting to make sure Speedway and other companies have the qualified workforce they need to run their business.
"As the jobs start showing up, now we're having to look for people to put in those jobs," Lohnes said.
Because Speedway is outside Enon's corporate limits, the village doesn't receive the benefits of Speedway's tax revenue, said Tim Howard, Enon's mayor. But the company is one of Enon's largest water customers, and many of the company's employees live and shop in the area, he said. The company also regularly contributes to local charities and has donated to provide equipment for the village's police department in the past, for example, he said.
"I hope they would remain at their present location," Howard said. "We have such a good relationship with them and we just hope they would stay where they're at."
Benefits of growth
The convenience store business is still mostly made up of small chains and single-store owners, but there has been a trend toward consolidation for the past several years, Hale said. Marathon's Speedway brand is considered among the largest chains, but even the majority of brands in the second and third tiers have grown since 2007, he said.
A presentation for investors this summer showed Marathon's latest acquisition will allow the company to become more efficient by leveraging several support functions like purchasing and distribution spread across a greater number of stores.
Anthony Kenney, Speedway's president, told local Rotary Club members last spring that the chain is shifting to focus more on fresh foods and grocery products and devoting more resources to boosting technology to remain competitive. That's a big change on an industry that has relied on gas and cigarette sales for decades.
Marathon's acquisition of Andeavor will also allow Speedway to expand its Speedy Rewards loyalty program, which averaged about 6 million active members in 2017, according to information from the company.
Companies like Speedway have historically made a significant portion of their revenue from gasoline and cigarette sales, Hale said. But many convenience chains increasingly see their business rely on finding ways to get customers inside the store, for products like snacks and groceries.
"Speedway is competing against fast food chains," Hale said. "It's not just about gas sales anymore, it's about the products inside the stores."
Story Filed By Cox Newspapers
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