Darren Rebelez, CEO of Casey’s General Stores, joined TheStreet to discuss price hikes in response to inflation.
Transcript:
CONWAY GITTENS: I wanted to talk to you about that value proposition because, you know, we focus a lot on the consumer end of inflation. But as a company that’s involved in prepared food, you’re getting squeezed from your suppliers, right. So at what point, like, give me some insight, at what point do you make the decision when you’re getting squeezed that you’re going to raise the price on your items and by how much? Walk me through the process.
DARREN REBELEZ: Yeah, you know, we look at a couple of different things, but what we try to do, especially on the prepared food side, because a lot of the cost components are commodity driven. And so commodities are cyclical. Sometimes they go up, sometimes they go down. So we take an approach of trying to price through the cycle, which means to a certain extent we need to pass on some cost to the consumer, but we try not to just pass all of that because we know that curve is going to inflect back down and the margin would expand a little bit. So we try to maintain that really competitive and relevant value for the guest over that complete cycle. And we’ve done that over the last couple of years. And now as we’ve seen commodity pressures come off that gap between us and the national competitors that we compete with every day in food has widened and now we’re starting to see those guests come back to us and it’s working.
CONWAY GITTENS: I specifically want to hear how you handle pizza because we had a lot of people tell us when prices go high, you trade down. But if you’re providing pizza, those you don’t trade down from dough, you don’t trade down from tomato sauce, you don’t trade down from pepperoni and you don’t trade down from cheese. So how do you navigate a world when those prices are going higher?
DARREN REBELEZ: Well, you know, those prices do go higher, but, you know, it’s relative to other dining out occasions. So if you think about, you know, our value proposition, you can buy a whole specialty pizza for around 20 bucks. Now, I defy you to go to another restaurant of any sort right now and be able to feed two, three people for $20 or less. You just can’t do it right now. And so it’s not just within the pizza space that we compete. It’s with other types of eating out occasions. And the people say, well, I can avoid a sit down restaurant. I can bring pizza home. That’s great. And I can afford it and I can feed my family, then that’s a better value proposition for them.
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