Growing up in the Midwest, I had a few treats as a kid.
Going to the Dairy Queen down the street for ice cream during the hot summer months in Kansas or eating dinner at the area Coney Island restaurant (known for its, you might’ve guessed, hot dogs).
But one treat stood above others … going to my local QuikTrip for a large drink after a baseball game.
QuikTrip was (and still is) the predominant convenience store in my hometown and in other towns across the Midwest.
Pulling the large Styrofoam cup from its holder and filling the cup with crushed ice and my favorite soda or slushie was a privilege I still enjoy today when I visit.
There was just something about a fountain drink from QuikTrip that tasted better.
Simple pleasures in a simpler time.
But there’s an urban legend about QuikTrip and one of its major rivals that would never happen in today’s business world.
The Art of the (Handshake) Deal
In the mid-1950s, Tulsa, Oklahoma native Burt Holmes was traveling to Dallas.
During that trip, Holmes noticed a string of 7-Eleven convenience stores that were packed at every stop.
Holmes got the idea to open a chain of small grocery stores together with a former junior high classmate, Chester Cadieux. He called those stores QuikTrip.
By 1971, Holmes and Cadieux bought Wichita-based Shopeze and expanded QuikTrip to 120 stores across Oklahoma and Kansas.
QuikTrip’s rapid rise was happening everywhere except in Oklahoma City, the crown jewel of the Kansas-Oklahoma market.
I asked my wife about this since she worked for 7-Eleven in Wichita in her younger years to buy a car. She told me about a gentleman’s agreement between Cadieux and Bill Brown, the founder of 7-Eleven in Oklahoma. The two agreed that Cadieux would stay out of Oklahoma City so long as Brown stayed out of Tulsa (where QuikTrip is headquartered).
Legend has it that Cadieux agreed to the deal because Brown had given him business advice and was considered Cadieux’s mentor.
Mind you, these kinds of gentlemen’s agreements … made with a handshake… were more common practice back then. You took a man at his word — no extensive legal team needed.
That all changed in 2005 when Japanese-based Seven & I Holdings Co. (OTC: SNVDY) made 7-Eleven a wholly-owned subsidiary.
But even after the purchase, 7-Eleven stayed out of Tulsa, and QuikTrip remained out of Oklahoma City … until this year.
In February 2024, QuikTrip finally broke into the Oklahoma City market with the opening of its first store in Moore — a suburb of the state capitol.
Now, QuikTrip’s main competitor is the target of a possible acquisition.
From Canada to Japan…
Last month, news broke that Canadian-based Alimentation Couche-Tard Inc. (OTC: ANCTF) had contacted 7-Eleven’s owners, Seven & I Holdings, about an offer of acquisition.
While you might not know the name of Couche-Tard, you’re likely familiar with the convenience store chain it operates … Circle K. It owns and operates nearly 14,000 stores worldwide.
Coincidently, you won’t find a Circle K in Kansas or Oklahoma.
News of the offer sent Seven & I shares soaring on the Japanese Nikkei exchange on Monday.
Shares of Seven & I Holding climbed 23% in one day … erasing most of its previous losses and inching it just 2% off its 52-week high.
Any potential deal will be a tough sell to Seven & I. Even if Couche-Tard wanted to acquire just the North American assets, that would be 75% of Seven & I’s total sales.
But it speaks to a larger trend in the convenience store industry … mergers, acquisitions and expansions:
- Seven & I added both Speedway and Sunoco gasoline station networks.
- Couche-Tard bought more than 2,000 gas stations in Europe from TotalEnergies SE.
- QuikTrip is reportedly developing a travel center in Florida — its first location in the Sunshine State.
- Pennsylvania-based Wawa has announced plans to open its first stores in Georgia, Alabama, Kentucky, Ohio and Indiana. It recently opened its first store in North Carolina.
- Texas-based Buc-ee’s is planning massive expansion, including here in Florida.
I’ll close with this fun fact: More than 2,100 new convenience stores were opened in the U.S. from 2022 to 2023.
It seems like there is a lot of runway left for convenience store chains that expand smartly — not too fast and not lagging behind.
It’s definitely a trend I’m keeping my eye on.
Until next time…
Safe trading,
Matt Clark, CMSA®
Chief Research Analyst, Money & Markets