Alok Patel: All right, this is Alok on for Mark. My first question is on quarter-to-date trends, any notable changes in foot traffic given the macro conditions and resumption of student loan payments? And then if you can kind of frame the answer around whether you’re offering more, we’re seeing higher demand for private label? And if so, which categories?
Arie Kotler: Yeah, so I’ll start maybe with the second question related to basically, we’re where we focus and what we see. So as I mentioned earlier, the majority or a large portion of our sales actually happened in the core categories. So in those core categories, for example, we see an increase in particular categories, for example, candy. Candy, this quarter, was almost 4.8%, more than basically prior year quarter. Beer, for example, it’s another strong category 2.8%. Salty snacks 4.1%, above prior year quarter. So I think what we see over here is that this is coming back to the members that I mentioned earlier, those loyal members, taking advantage, of basically of the offering and the value that we have inside the stores.
And because of that, I think we see an increase in those categories in particular. Regarding your question, regarding to traffic and trends, so I think the inflation impact now, it’s actually eating all customers. I mean, there is no question about that. And I think this is the reason why we need to be very, very competitive and make sure that we have the right offering inside stores including not only the core categories, including the rights offering when it comes to food service. People have less dollars to spend and because of that they’re going to, I believe, visit more the convenience store. And I think they’re going to look for things that are very, very valuable for them. And this is where we need to spend our time and money. And I think our team is doing a terrific job.
We saw that in Q3. But again, I can touch something in particular, when it comes to basically two trends. The only thing I say is that the core categories trend is up almost quarter- after-quarter. And we say that quarter-after-quarter for the past, basically three years.
Alok Patel: Got it. So as a quick follow-up, within the core destination categories, which categories are the drivers, sales growth for the balance of the year and into 2024? And then if you can kind of discuss the drivers supporting the great strengths that you’ve realized in those categories, that would be great. And it’d be awesome if you can also provide the year-over-year numbers for packaged beverages.
Arie Kotler: Yeah, so I’ll start with the six categories. Okay, the six — you broke up a little bit, so but I’m going to try to — I hope I hear the right question. So I started with the six categories. The six categories are really alternative snacks was up 1.6% this quarter, Candy was up 4.8% beer was up 2.8% pack bev was up 1.5% this quarter, packaged sweet snacks was up 2.2%. And we end with salty snacks it’s around 4.1%. And if you remember, we are cycling a very, very strong Q3 2022. But those are really the core categories. And if you really looking at those two categories, not only that they continue to perform very well for us and aligned with our strategy, over the last three years, if you really looking on, the contribution from these categories expended approximately 570 basis points, total merchandise contribution from these categories, which is approximately 17% compounded annual growth rate.
So I think that’s basically what we see from those six categories that for the past three years.
Alok Patel: Got it. Thanks. I’ll pass it on.
Arie Kotler: Appreciate that. Thank you.
Operator: Our next question is from Karru Martinson with Jefferies. Please proceed.
Karru Martinson: Good morning. This is kind of a big picture question. Why is the fuel demand down when we look at the overall industry, and ultimately more people are going to work more days in the office? What’s driving the broader category?
Arie Kotler: If I had the right answer, I will probably give you the answer. But again, we are relying on OPUS data, we are relying on OPUS data. And as you can see OPUS data shows a decline in volume nationwide of approximately 3.49%. That’s one thing. The second thing is I want to remind everybody our footprint, it’s rural footprint. We have a lot of stores, I think 40% I think I mentioned that a couple quarters ago, 40% of our stores are in town that is basically less than 20,000 people. And when you operate in some of those rural town, people are not driving probably like in some other areas. We don’t say our stores are not located on major highways, for example. So I think that’s one of the reasons that you basically see that.
And that’s consistent by the way with other competitors in the market, in the basically the market, that we basically do business. So it’s — I think it’s worth noting that other public companies, everybody’s similar metrics, by the way in those markets. So…
Karru Martinson: So okay, when you talk about seeing sustainable strong, margins on fuel, are we still looking at in this stable environment being able to maintain kind of over $0.40 per gallon?
Arie Kotler: It’s a good question. Again I don’t have a crystal ball what’s going to happen with if we can keep the $0.40. I think the one thing I can say, we are today the sixth largest operator in the country, and we are competing with some of the large chain and we are competing with a lot of basically the small chain, and the mom and pop. As you can basically appreciate, 70% of the industry, almost 100,000, 98,000 convenience stores, gas stations, are chain with 50 stores or less, 50% of that it’s Mom and Pop and I think every one of those guys are facing — basically facing higher expenses, insurance, electricity, higher fixed expenses that they have prior [ph], And I think because of that, we believe that structurally higher margin will remain in place over here. But again, that’s just my assumption based on being in the business for so many years.
Karru Martinson: And then what are we seeing on the inflationary front when it comes to inside the stores on merchandising? Are you still seeing pressure there? And kind of where are you on your pricing?
Arie Kotler: Well, I think the results speak for themselves. That’s the reason I mentioned, if you’re looking on sales, excluding cigarettes, I think that we see the results over here. And I think at the end of the day, it’s very, very important for us to provide value to our customers. This is very, very important for us. And I think as long as we continue to provide value to our customers, I think they’re going to continue to come. And that’s the reason loyalty is a very, very important component when it comes to it.
Karru Martinson: Thank you very much. Appreciate it.
Operator: Thank you. [Operator Instructions] Our next question is from William Reiter with Bank of America. Please proceed.
