Diesel fuels 38% of Yesway's pump sales as chain plots 130 new stores

Diesel drives 38% of fuel sales across Yesway's convenience-store network, CEO Tom Trkla said at the Goldman Sachs Global Consumer and Retail Conference last month. The mix rises to 40% or more at newly built stores.

"We actually have one of the highest percentages of diesel to total fuel of any c-store chain that's not Loves or Pilot," Trkla said during the conference.

Why does diesel carry such a large share at Yesway?

Yesway's footprint sits across rural West Texas and New Mexico. Treasurer and CFO Ericka Ayles described those markets as carrying "quite a bit of truck traffic." The retailer built high-flow diesel lanes at most stores to capture professional drivers.

"We're doing it because it makes more money," Trkla said. "Our geography makes sense for it. We've made a conscious effort to basically own the land, buy land next door, put in high-flow diesel lanes to take advantage of that opportunity."

Trucking companies pass higher diesel costs to shippers, Ayles said, a buffer gasoline retailers lack. "That [passed-along cost] is diffused out through the economy, versus that direct relationship with the end consumer on the gasoline side," she said. "We're seeing that certainly as a tailwind for us in particular in this environment."

How does the diesel focus lift inside-store sales?

The pump strategy pulls truckers inside, where they spend heavily. Members of Yesway's loyalty program who are professional drivers spend three times as much on food and merchandise as basic-tier members, Ayles said. The retailer, which went public earlier this year, leans on its Allsup's burrito brand to keep those drivers coming back.

"We're already known as a value shop," Trkla said. "We also believe that that has a correlation in terms of our inside sales."

The comparison: professional-driver loyalty members outspend basic-tier members 3-to-1 on food and merchandise inside the store.

What is the retailer doing to speed up the pump experience?

Yesway times how long customers take to complete a fuel transaction, then fixes slow pumps before complaints arrive. "It seems very simple and rudimentary, but I can tell you it's incredibly impactful, the speed of that transaction," Ayles said.

The chain also tapped Gravitate earlier this year to automate fuel inventory and logistics decisions. Ayles said the partnership improves transparency across the supply chain.

Where will the next 130 stores go?

Yesway plans 130 new stores over the next five years across Texas, New Mexico, Oklahoma and Arizona. The first Arizona location opened recently, Ayles said.

"We like a dense portfolio," Trkla said. "It's much easier to supply fuel, to supply merch."

The rural, diesel-led playbook that built the existing footprint will guide the buildout, with new stores running at least 40% diesel from opening day. Ayles flagged diesel as a margin tailwind in this environment.