A Fuel Chain Bets on Food, EVs as It Ponders Post-Gasoline Era

A Fuel Chain Bets on Food, EVs as It Ponders Post-Gasoline Era

One of Canada’s largest gasoline station owners is targeting purchases of small food chains in the U.S. to supply its convenience stores as the rise of electric vehicles dims the outlook for future fuel sales.  

Parkland Corp., fresh off buying Canadian food supplier M&M Food Market for C$322 million ($255 million), is looking for food brands to offer its own burgers, chicken, tacos and baked goods at its stores, Chief Executive Officer Bob Espey said in an interview. Eventually, many of its retail sites may not even sell fuel.

“We are looking for smaller chains, smaller businesses that we can take,” he said. “We continue to see good value in the market place, particularly in the U.S., where the market is so very fragmented, to buy local independents and bolt them onto our platform and generate good returns for shareholders.”

A Fuel Chain Bets on Food, EVs as It Ponders Post-Gasoline Era

Parkland is pushing into the food business as the phaseout of gasoline-burning vehicles in the coming decades could kill many small neighborhood gas station. The transition, Espey said, would open up opportunities for larger retail centers on major highways where drivers can grab a bite while waiting for vehicles to charge.

“As gasoline demand starts to tail off, we can supplement that,” Espey said. “We already have proven sites with proven traffic patterns, so a lot of it is just redeveloping and adding to our existing sites.”

In Canada, gasoline demand in 2025 could be about 7% below the 2019 level, according to Bloomberg Intelligence.

Investors haven’t been enthused about Parkland’s recent performance. While analysts have 14 buys, one hold and no sells on the stock, according to data compiled by Bloomberg, the shares’ 14% slide in the year ended Friday lagged the 18% gain in Canada’s benchmark stock index. A gauge of energy-related companies zoomed 51% in the same period.

Espey said the decline in the gasoline market hasn’t begun yet, with strong demand for fuels in the markets where Parkland operates, especially in the U.S. Midcontinent. 

The Calgary-based retail and commercial fuel seller and refiner operating in Canada, the U.S. and the Caribbean has been on an acquisition spree. It has increased the number of company-owned convenience sites in the U.S. to about 200 from 20 in four years. 

Last year, Parkland purchased Husky filling stations in Canada from Cenovus Energy Inc. as well as U.S.-based companies Lynch Oil and Conrad & Bischoff Inc. Last month’s M&M purchase gave the company more than 300 standalone franchise and corporate-owned stores and 2,000 M&M Express locations. 

A Fuel Chain Bets on Food, EVs as It Ponders Post-Gasoline Era

The M&M deal “is a great example of the push into retail and diversifying into food in our convenience sites,” Espey said. 

Last year, Parkland announced it was rolling out EV fast-charging stations at 25 existing retail sites in British Columbia, most with convenience stores, restaurants and wi-fi. The Canadian province has the highest penetration of electric cars in Canada, Espey said. 

The rapid growth has come with increased debt. In an investor call after the M&M deal, Goldman Sachs analyst Carly Davenport noted that Parkland’s stock has underperformed the S&P/TSX Energy Index and asked if the market is signaling the need to slow merger and acquisition activity, and instead focus on cutting debt. 

Espey argues the company will reach an inflection point where all the revenue from new businesses will help Parkland deleverage quickly, using cash to grow.

“We have been acquisitive and we leaned into the balance sheet, certainly over the short term,” he said. But “our business cash flows are incredibly strong and will continue to get stronger as we grow.”

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