Darren Rebelez: Yes, about 10%, so call it 250 stores. They’re delivering ourselves. And the rest of it is through third parties. So that’s not a labor impact for us. It is a margin impact when we have that delivery. But because that we only pay per delivery, we don’t have a delivery driver at the store, waiting for another delivery order to come in. It’s a far more efficient way for us to do delivery. So that’s probably running for us as well.
Chuck Cerankosky: Okay. And then private label products, where are you at on number of SKUs? And where is your goal on that?
Darren Rebelez: Yes. We’ve got 310 SKUs in the assortment right now, and that’s a result of adding a number of SKUs in the last quarter and then taking some out that just weren’t performing as well as we expected them to. So still, it’s the highest SKU count that we’ve had on private label since we’ve started. There’s still plenty of runway there. The team’s got a pipeline of products that we’ll be introducing over the next several quarters. And then we’re also starting to evaluate different tiers of private label. So think of premium products that would still be a significant value versus national brand, but elevated quality and uniqueness. So still a lot of way to go there.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Kelly Bania with BMO Capital Markets. Your line is now open.
Benjamin Wood: Hi. Good morning. This is Ben Wood on for Kelly. Thank you for taking our questions. So for the past three quarters, you’ve had flat gallons, which seems to be outpacing public peers down low single digit and outpacing the broader industry where you compete in where your commentary seems to be pointing towards down mid-single digit for that period, implying pretty solid market share gains. So first, can you provide any color on what you guys think is driving those market share gains? Is it loyalty or the value proposition inside the store? Or are you investing some fuel margin to get the bargain hunting customer? And then second, just more generally, if the industry and your competitors are losing gallons at a mid-single-digit pace, is that sustainable longer term? Or at some point, are the independents and small chain operators going to have to change strategy to try to drive some more gallons through their stores.
Darren Rebelez: Yes, let me take the first part first. The flat gallon and now we’re driving it. If I step back, our stated strategy, which has not changed since I’ve been here in the 4.5 years I’ve been here, for our fuel team is to drive gross profit dollars in fuel and to maximize gross profit dollars in fuel. That’s going to be a combination of balancing gallon growth and fuel margin. And so we don’t look at a fuel margin number and try to achieve that number in any given quarter. Our goal is to balance those two to maximize gross profit dollars. And so I think this was a great example in this quarter of doing that. We maintained flat gallons. And like you said over the last several quarters, we’ve maintained those flat gallons, and we were north of $0.40 a gallon on margin.
Now if you were to look at the OPIS numbers, and I think this is reflective of what’s going on in the industry right now, OPIS would say that fuel margin in our geography was about $0.48 a gallon. So that was higher than where we were clearly. It also said that gallons were down 5.2% in the quarter, significantly below where we are. To your second question, that is not sustainable for them. It clearly isn’t. But what it is, is it’s a reflection of the challenges that smaller and midsized operators are facing with inflation and in particular, the impact that the tobacco category has on them. If you look at what their mix is, their mix is probably 40% to 50% cigarettes. And so when that category underperforms like it has in the last quarter or two, that’s going to have a material impact on their P&L.
They don’t have a choice. They’re operating in survival mode right now. And so they’re taking that higher margin and willing to sacrifice those gallons to get it. And that’s, in the short term, that can work if you’re trying to survive, in the long term is not sustainable. For us, we’re not in that position. We’re not as exposed to the tobacco category as the others. And we benefit from keeping that traffic in the store because we have high-margin prepared foods to sell people and high-margin private label to sell people that a lot of those others don’t have. So it’s important for us to keep that balance to keep that traffic. And you can see in the EBITDA results where most are going backwards in EBITDA, we had double-digit growth in EBITDA.
So that is not just one metric or the other. It’s a combination of all of these things working together that really makes our algorithm work for us.
Steve Bramlage: Yeah, Ben, maybe I would add one thing there is it just it also continues to drive smaller operators out of the industry in the long run. It’s just more and more difficult for small independent operators to compete not just against us, but just anybody with any reasonable amount of scale and so part of the — we believe part of the long line of consolidation opportunities that exist today in the industry is a function of it’s just getting harder and harder for the smaller operators to do business. And we just don’t see that trend changing anytime in the near term, partially because of all the dynamics we just discussed.
Benjamin Wood: Okay. Great. And then I know, so I know we’re only two quarters in, but with the guidance update, you’re now expecting EBITDA growth within the long-term plan compared to kind of originally pointing us towards flat. And one of the discussion points at your Analyst Day was that your original plan seemed to imply an acceleration in EBITDA growth we calculated to kind of the 12% to 15% range in year two and year three. Have expectations for the cadence changed or is some acceleration in the EBITDA growth and eventually getting above that 8% to 10% long-term plan, still the right way to think about it?
Steve Bramlage: I’ll take a crack at that. I would not divide anything into our updating here midstream in the first year around what we’re saying in the out years of year two and three. We’re committed to an 8% to 10% CAGR over that three-year period of time. The reality is that the year has clearly started off stronger than we anticipated that it would be. And some of that’s clearly fuel margin related, and some of that’s just really good performance across the operations. And so we’ll take a stronger start than we anticipated every day of the week, and we still feel equally good about all of our longer — medium and long-term prospects for driving growth as we did when we had the Investor Day.
Operator: Thank you. Our next question comes from the line of Krisztina Katai with Deutsche Bank. Your line is now open.
Krisztina Katai: Hi. Good morning and thanks for taking the question. So, on private label, which has been very successful for you, I was just curious to get an update on how your joint planning is going for the new calendar year with your national brand partners? Are they noticing or potentially responding to Casey’s taking unit share in grocery? And anything you can share on expectations around pricing starting in January? And if you think that there’s any possibility that maybe prices are going to start to roll back?
Darren Rebelez: Yes, Krisztina, I guess, on joint planning. We are in the process of wrapping that up as we speak. And I think the planning sessions have gone really well so far. We’ve had good success over the last couple of years working with our primary CPG partners and growing their business and ours together. And so we enter into all of these discussions with that spirit, and I think we have some really good plans during the final stages of development working right now. With respect to the private label, it really kind of depends on the category and the manufacturing we’re talking to. Our goal always and we communicate this with our partners is not to steal share from a national brand. It’s to grow the overall category and growing the category both with national branded products as well as private label products.
