San Antonio-Based CST Brands Considering Buyout

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New-look Corner Stores will have a larger selection of fresh produce and other traditional grocery items. Photo by Edmond Ortiz.

New-look Corner Stores will have a larger selection of fresh produce and other traditional grocery items. Photo by Edmond Ortiz.

San Antonio-based CST Brands, parent company of the Corner Store Market chain, has faced a rocky road since February. The company’s credit rating was at risk and shareholders pressured the board to change leadership positions.

Two independent directors were appointed to the company and the board agreed to look at “strategic alternatives,” including the possible sale of the chain.

CST spun off from Valero Energy Corp. in 2013 and took on significant debt before the recent gas prices slump, totaling $1.02 billion at the end of 2015.

The rebranded Corner Store marquee sign at 19417 Babcock Road carries the retailer's new logo. Photo by Edmond Ortiz.

The rebranded Corner Store marquee sign at 19417 Babcock Road carries the retailer's new logo. Photo by Edmond Ortiz.

In May, the company agreed to sell its 79 Wyoming and California Corner Store locations to 7-Eleven for $408 million.

That announcement has buoyed the company, along with talk that 7-Eleven’s parent company, Japan's Seven & i Holdings Co Ltd, Canada's Alimentation Couche-Tard Inc, and other bidders have placed offers to buy CST, according to a Reuters report on June 3.

CST Communications Director Lisa Koenig said that the company was not commenting on the possibility of a sale. Seven & i Holdings and Couche-Tard could not be reached for comment.

CST operates 1,219 stores in the U.S. and Canada that sell standard convenience store products such as packaged food, beverages, general merchandise and automotive products, but the chain also offers freshly-prepared food and produce such as bananas, fruit cups, and salads.

This approach to healthier food in convenience stores, while not a new concept to San Antonio, could address one of the city’s main food-related issues: food deserts.

The USDA defines a food desert as "a low-income census tract where a substantial number or share of residents has low access to a supermarket or large grocery store.” This measure does not include small grocery stores or convenience stores.

More than 40 census tracts in San Antonio fit this criteria for lacking a large grocery store or supermarket within a one mile radius in urban areas.

Leslie Provence, Food Policy Council of San Antonio vice president, said that food deserts occur when a number of urban and commercial factors combine to create a void in large grocery and supermarket coverage.

“It’s poverty, or low wages, and retail patterns where groceries are moving to more affluent neighborhoods and closing down (stores) in poor neighborhoods,” Provence told the Rivard Report in a phone interview on Tuesday.

In addition to Corner Store Markets, a few local San Antonio businesses like Urban Farm Stand, Molina's San Antonio Country Store, Koch Ranch and Blue Star Provisions provide fresh and healthier alternatives to processed foods in a convenience store setting, however, the practice of carrying fresh produce and salads is not exactly common.

“I think there are a few (convenience stores) that focus on nutrition, but there’s great potential there, because they’re everywhere,” Provence said.

Green signs and friendly messages welcome visitors to a rebranded Corner Store at 19417 Babcock Road.  Photo by Edmond Ortiz.

Green signs and friendly messages welcome visitors to a rebranded Corner Store at 19417 Babcock Road. Photo by Edmond Ortiz.

An acquisition of CST by a large company such as 7-Eleven, which has approximately 8,600 stores in the U.S. and Canada, or Couche-Tard, which has 7,979 stores in North America, would be a major increase in any company’s convenience store footprint, especially since CST is already making strides with its fresh food options.

Jeff Lenard, National Association of Convenience Stores (NACS) spokesman, said that the industry has seen double-digit growth of produce sales in recent years.

“Convenience stores are evolving the fastest from where they were to where they are going with respect to healthy options,” Lenard said. “It was unusual a decade ago to see produce at a convenience store, and today it is unusual to find one without produce, whether it's bananas at the register or something much more advanced.”

With declining cigarette and tobacco sales and drops in oil prices, Lenard added, expanding food options at stores "is good business, and it's something that’s good for the community as well."

A purchase of CST by a large company could mean more Corner Store Market-style stores that grow to include fresh food selections beyond just fruit.

“Convenience stores can give access to those who don’t have access to a car during the day,” Lenard said. “They can fill-in between grocery visits for things like bread, milk, and now more produce."

 

https://rivardreport.wildapricot.org

 

*Top image: New-look Corner Stores will have a larger selection of fresh produce and other traditional grocery items. Photo by Edmond Ortiz.

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