Holiday: Another Big Catch For The Hungry Owl

Right after finalizing the acquisition of the 2,000 CST convenience stores in the United States, Couche-Tard is already announcing a new agreement to acquire the 500 convenience stores and franchises of Minnesota-based Holiday.

The timing of this acquisition unfortunately makes it less important than it is in reality, because 500 convenience stores after several thousands looks like not too much.

A closer look however shows that Holiday is far from trivial: it is an admirable model of product category integration – among others the petroleum sector – as well as a master of discount marketing in addition to being a true institution, indeed the first genuine branded network of convenience stores to have ever been set up in the United States and worldwide.

In fact, Holiday has almost a century of existence, having been founded in 1928, more than fifty years before Alain Bouchard opened his first store in Laval!

Aside from the fact that it has limited its network growth to only 6 stores per year over 90 years, totalling 522 stores in 10 states, everything looks great for the small rocket chain.

• Holiday generates sales that are twice the industry average for both food and gasoline;

• The stores are a model of vertical integration: franchisees must purchase at least 95 percent of their fuel from Erickson Petroleum, a business subsidiary that owns approximately 25 percent of its activities in Holiday (which is part of the deal with Couche -Tard);

• The Holiday brand is very strong and highly recognized within the local market;

• Holiday generated sales of $ 2.6 billion in 2016 and employs 6,000 people.

At a press conference, Couche-Tard made the point that Holiday is one of the “strongest, well-run” convenience store companies in the northern United States”, noting that Holiday’s 200 stores dominate the Twin Cities market, where the company has a market share of about 30 percent (source: Star Tribune).

Founded by Arthur and Alfred Erickson, the company that evolved into Holiday has deep roots. The family started out in 1928 with a general store in Centuria, Wis. Its first gas station opened in 1939 in Lindstrom, Minn., according to the St. Louis Park Historical Society. By the end of World War II, the family had invested in the Northwestern Refining Co. in St. Paul Park, and Elmer Erickson coined the store name of “Super America,” which became the gasoline stations of the refinery, according to the historical society. In 1970, the family sold its refinery and all of its Super America stores, but some family members continued to operate gas stations under the Holiday brand, which was started in 1964 (source: Star Tribune).

As is the case with most family businesses, succession is a crucial issue in the future direction of the business and according to the Star Tribune, very few members of the Erickson family are active in the company. The sale of this local jewel is emotionally charged for the family, franchisees and the Minneapolis business community, but all recognize the buyer’s credentials and appreciate its decentralized business philosophy. Couche-Tard has notably pledged to maintain the Bloomington head office in operation. But in terms of keeping the Holiday brand or replacing it with Circle K, Couche-Tard says it needs more time to evaluate the situation. It would be a surprise though and a first if it decided not to integrate everything into its national Circle K brand.