published Sunday, December 1st, 2013

Speedway enters Chattanooga area market

  • photo
    A new Speedway convenience store is open on Bonny Oaks Drive near Interstate 75.
    Photo by Angela Lewis.
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Ohio-based Speedway, the nation's fourth-largest operator of company-owned convenience and gasoline stores with nearly 1,500 sites, is driving south into the Chattanooga area as it competes head to head against other industry giants.

Speedway, a division of Marathon Petroleum Corp., last month opened a new store on Bonny Oaks Drive between Interstate 75 and the Volkswagen plant. The company is looking to open at least three other locations in the Chattanooga area.

Jamal Kheiry, Marathon's communications manager, declined to get specific about other sites, but said Speedway is expanding into areas contiguous to its existing operating locations. Speedway already has a handful of stores in the Nashville region.

Kheiry said the company is eying areas "where we have existing logistics infrastructure that enables Speedway to provide a good value to customers."

Don Longo, editor of Convenience Store News, said Speedway usually enters a market with a group of stores for more efficient branding and advertising.

Other locations which Speedway is said to have an interest are Shallowford Road near Hickory Valley Road, South Broad Street near WDEF-TV and in Cleveland, Tenn.

Speedway's interest in the Chattanooga area follows the entry of heavyweights RaceWay and Pilot Flying J into the region earlier. RaceWay has opened at least three new stores in the region. Atlanta-based RaceWay has over 300 stores across 12 states in the Southeast.

Knoxville-based Pilot Flying J, America's largest operator of travel centers and plazas with more than 550 gas stations and truck stops in 47 states, opened a new site off I-75 in Cleveland at Exit 20. That $4 million facility -- a former BP station which Pilot bought -- added other food outlets in the Pilot store. Pilot also has a location in Dalton, Ga.

Longo said Speedway is one of many traditional convenience store chains which are becoming more focused on improving their amenities and offerings.

"For example, Speedway has recently upgraded their hot coffee program with new expresso-based drink offerings," he said. "They've also been growing their prepared foods business."

Kheiry declined to say how much money was invested in the store or the number of employees is holds. But, he said, the new store is open 24 hours a day and has a "Speedy Cafe" where food is freshly prepared.

Speedway parent Marathon is one of the nation's largest petroleum product refiners, marketers and transporters. In third quarter results posted Oct. 31, Marathon reported to shareholders that it's investing in the expansion of the convenience store chain both in Tennessee and Pennsylvania.

"By adding new convenience stores in Pennsylvania and Tennessee, we have increased the number of states in which Speedway has operations from seven to nine," said MPC Chief Executive Officer Gary R. Heminger in a statement. Speedway already is in Ohio, Michigan, Indiana, Illinois, Kentucky, West Virginia and Wisconsin.

During 2012, Speedway sold about 3 billion gallons of transportation fuels and an additional $3.1 billion in merchandise, and the company has about 2.4 million customer transactions daily.

Heminger termed Speedway's third quarter results "excellent," citing an increase in same-store sales along with higher gasoline and distillate gross margins. Speedway's third quarter income from operations was $102 million, compared with $76 million a year ago, according to the company.

Marathon reported that Speedway gas and distillate gross margin per gallon averaged 14.04 cents in the quarter, up from 11 cents a year ago.

George Carter, a California man who stopped at the new Bonny Oaks Drive Speedway as he was passing though Chattanooga, said it has easy access to the interstate and he liked the store's interior.

"The bathrooms were clean and spacious," he said.

Aaron Slack, who works in the area, said the gas prices were "pretty good."

"Our shop is down the road and there's a gas station is down the street," he said. "I wanted to give it a try."

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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