Kroger announces $2.15B deal to unload its convenience store business

Kroger gas sign

Theo Thimou | February 5th, 2018

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Kroger has announced the sale of its convenience store business for $2.15 billion to U.K. convenience store operator EG Group.

Kroger’s C-store business changes hands

Kroger currently operates 762 convenience stores across 18 states. Sixty-six of those stores are franchised.

The convenience stores operate under a variety of names — Turkey Hill Minit Markets, Loaf ”˜N Jug, KwikShop, Tom Thumb and QuickStop — and collectively employ 11,000 associates.

“As part of our regular review of assets, it has become clear that our strong convenience store business unit will better meet its full potential outside of our business,” Mike Schlotman, Kroger’s executive vice president and chief financial officer, said in a press release.

EG Group, which operates more than 2,600 convenience stores in England and throughout Europe, will retain the established names of the Kroger C-stores when it takes them over.

Not included as part of the deal are Kroger’s supermarket fuel centers and its Turkey Hill-branded stores.

Both Kroger and EG expect the deal to close in a matter of weeks. That’s in part because EG has no U.S. presence to raise red flags for anti-trust regulators.

But as part of the deal, EG will now establish its North American headquarters in Cincinnati — which also happens to be the home of Kroger!

Kroger first signaled its intent to explore a sale of its C-store business in October 2017.

That the grocery giant would consider such a move at all should come as no surprise. With new competitors like Amazon and Lidl encroaching on Kroger’s traditional space, the convenience stores likely became more of a distraction than an opportunity for the struggling grocer.

“The C-store business is a hard business. You need to be laser-focused on it,” money expert Clark Howard says.

Clark also notes that grocery stores and convenience stores tend to work at cross-purposes, which may have been another factor in Kroger wanting to cut them loose.

With a convenience store, you just stop in for one or two things. But with a grocery store, the grocer relies on you coming in, seeing impulse buys and buying things you didn’t intend to in the first place.