1. The Association for Convenience & Fuel Retailing The State of the Industry Convenience & Fuel Retailing in the U.S. Idaho Petroleum Marketers & Convenience Store Association 2015 Annual Convention Henry Armour President & CEO

2. The Association for Convenience & Fuel Retailing Presentation Overview What happening inside our house?! –Sales, gross profit and category trends Is Our Growth Really Going To Come From Foodservice? −What’s going with QSRs? −What can we learn? reFresh – Repositioning our industry’s image −Our image is inhibiting our growth −We’re being targeted with unwarranted and ineffective regulations and legislation −A 10 year plan to do something about that!

3. The Association for Convenience & Fuel Retailing Snapshot20132014 % Change Store Count151,282152,7941.0% Employees (millions)2.2M2.4M9.1% Total Sales (billions)$695.5B$697.5B0.3% Inside Sales$204.0B$214.9B5.3% Fuel Sales$491.5B$482.6B(1.8)% Fuel Gallons242.4B249.6B3.0% Pretax Profit (billions)$7.1B$10.2B43.9% Card Fees (billions)$11.2B$11.4B2.3% Transactions/day (millions)163.0M167.0M2.5% Big Picture Source: Nielsen TDLinx, NACS State of the Industry Survey of 2013 Data & CSX, LLC & U.S. Energy Information Administration

4. The Association for Convenience & Fuel Retailing Store Level Sales (same firms) Per Store/Per MonthJan-Dec 2013Jan-Dec 2014 Total All Sales $560,531$560,4190.0% Fuel Sales $460,803$452,683(1.8)% Fuel Gallons 133,218136,2552.3% Average Selling Price $3.46$3.32(4.0)% In-Store Sales $130,778$137,7625.3% Foodservice Sales $24,494$27,19811.0% Merchandise Sales $106,884$111,1704.0% Mdse less Cigarettes $64,704$68,4255.7% Cigarettes $42,916$43,4371.2% Source: CSX, LLC

5. The Association for Convenience & Fuel Retailing Store Level Gross Profits (same firms) Per Store/Per MonthJan-Dec 2013Jan-Dec 2014 Total Gross Profit $69,807$77,76711.4% Fuel $24,914$30,28121.5% Pool Margin 18.7022.2218.8% Margin less CC Fees 13.3616.8826.4% In-Store $43,043$45,8706.6% Foodservice $14,080$15,64511.1% Merchandise $29,308$30,5734.3% Mdse less Cigarettes $23,293$24,8026.5% Cigarettes $6,248$6,053(3.1)% Source: CSX, LLC

6. The Association for Convenience & Fuel Retailing Regular Unleaded Margins Source: CSX, LLC

7. The Association for Convenience & Fuel Retailing Has Gas Consumption Bottomed Out? Source: Energy Information Agency Barrels per day (thousands) Weekly through December 19, 2014

8. The Association for Convenience & Fuel Retailing In-Store Contribution Cigarettes 12.93% 8.8% for stores selling beer 14.6% for stores selling beer Source: CSX, LLC

9. The Association for Convenience & Fuel Retailing Core Direct Store Operating Expenses Per Store/Per MonthJan-Dec 2013Jan-Dec 2014 Wages & Benefits $21,428$22,7606.2% Card Charges $6,686$6,8382.3% Rent $4,668$4,9716.5% Utilities $2,964$3,1656.8% Repairs & Maintenance $2,854$3,1329.7% Supplies $1,213$1,2956.7% Total DSOE $41,105$43,3495.5% Source: CSX, LLC

10. The Association for Convenience & Fuel Retailing NACS Regions

11. The Association for Convenience & Fuel Retailing 5 C ENTRAL 3 M IDWEST 4 S OUTH C ENTRAL Regional Trends in Fuel Consumption Trailing 36 Mos. through Jan 2015, Dec 2011 = 100 6 W EST USA 2 S OUTHEAST Source: EIA Prime Supplier Sales Volumes 1 N ORTHEAST

12. The Association for Convenience & Fuel Retailing Sales By Region Same Firms (Jan-Dec 2014 Change YOY) Per Store/Per MonthNE (1)SE (2)MW (3)SC (4)CE (5)WE (6) Total All Sales (0.2)%0.2%0.1%1.4%(1.2)%(0.3)% Fuel Sales (2.0)%(0.4)%(1.1)%0.2%(4.2)%(1.4)% Fuel Gallons 1.9%3.8%2.9%4.7%(0.2)%1.5% Avg. Selling Price (3.9)%(4.1)%(3.8)%(4.3)%(4.0)%(2.9)% In-Store Sales 3.4%4.2% 6.3%5.1%5.5% Foodservice Sales 9.0%12.7%7.1%8.5%10.4%3.4% Merchandise Sales 1.6%2.9%3.9%5.9%3.9%5.5% Mdse less Cigarettes 3.3%3.5%6.4%7.6%6.2%8.7% Cigarettes (2.4)%1.7%1.2%2.7%0.5%1.6% Source: CSX, LLC

13. The Association for Convenience & Fuel Retailing GP$ By Region Same Firms (Jan-Dec 2014 Change YOY) Per Store/Per MonthNE (1)SE (2)MW (3)SC (4)CE (5)WE (6) Total Gross Profit 10.1% 6.7%13.5%8.1%15.0% Fuel 23.0%21.7%13.2%26.4%13.3%20.6% Pool Margin 20.6%17.2%10.0%20.7%13.6%18.8% Margin less CC Fees 28.8%24.5%14.6%30.9%19.3%24.6% In-Store 4.4%3.9%3.0%7.2%6.18%8.2% Foodservice 8.1%13.9%9.6%7.0%8.2%15.2% Merchandise 1.8%1.5%1.2%7.0%5.1%6.5% Mdse Cigarettes 2.9%4.0%3.6%10.1%7.0%9.0% Cigarettes (3.3)%(8.5)%(5.2)%(2.5)%(1.9)%(4.1)% Source: CSX, LLC

14. The Association for Convenience & Fuel Retailing Two Stories To Tell Candy & Fresh Fruit Why the explosive growth in candy during the recession. Why? And why is fresh fruit sales simultaneously increasing? Coffee Why did McDonalds capture Starbuck’s customers during the recession instead of us?

15. The Association for Convenience & Fuel Retailing Takeaways Record profits! – Continuing strong growth in store profitability – Fuel margins were the kicker in 2014 What’s driving the industry? – Immediate Refreshment – Immediate “Refueling” – The last one standing in Cigs – And an industry under transformation! Watch out! – Wage pressure – Outrageous cost of payment continue – Cost control is vital

16. The Association for Convenience & Fuel Retailing Is Our Growth Really Going To Be From Foodservice? (2013/2015 Major QSR Sales) Per Store/Per MonthPreviousCurrentChange McDonalds (U.S Same Store) 3.3%(0.2)%(3.5)Pts McDonalds (U.S. Franchised) 4%1%(3.0)Pts Burger King (N. America Same Store Growth) 3.5%(0.9)%(4.4)Pts Burger King (N. America Total Sales Growth) 3.0%(0.9)%(3.9)Pts Wendy’s (N. America Same Store Company Owned) 1.6%1.9%0.3Pts Wendy’s (N. America Same Store Franchised) 1.6%1.7%0.1Pts Taco Bell5.0%5.5%0.5 Pts KFC5.0%1.0%(4.0)Pts Pizza Hut5.0%1.5%(3.5)Pts Source: NACS Research

17. The Association for Convenience & Fuel Retailing Burger IPOs in 2014 Habit Burger 100 locations in 4 states (HABT) IPO closed Nov 25, 2014. Raised $92.4m at $18/share. Trading at $29.85, 65.8% increase. Shake Shack 63 global locations (SHAK) Filed for IPO Dec 29, 2014 Seeking $100m $82m in sales, 2013

18. The Association for Convenience & Fuel Retailing Food Trucks…Convenient Food!

19. The Association for Convenience & Fuel Retailing Learnings From QSR QSR Sales Dynamics – Short brand life cycles – Constant menu (brand?) innovation is vital – Be convenient and Fun! We have a broad “Competitive Set” – The consumer doesn’t think about “channels”

20. The Association for Convenience & Fuel Retailing reFresh(ing) Our Industry’s Image!

21. The Association for Convenience & Fuel Retailing We Have to Change the Dialogue!!! Purveyors of death Addictors to gambling Enablers of drunk driving Contributors to obesity Dead end jobs Dirty stores Crime ridden facilities One View of Our Industry

22. The Association for Convenience & Fuel Retailing A Contrary View of Our Industry We create opportunities – 2.4 million jobs – First jobs, teaching responsibilities – First businesses We are responsible retailers – 3X more ID verifications than TSA We contribute to our communities – 4X more youth sports teams – $175 billion in taxes – 152,794 stores in every community We provide Choice – Healthy options & indulgent delights 167 million transactions/day!!!

23. The Association for Convenience & Fuel Retailing reFresh! The Model – Pricing Gouging – 10 year commitment, targeting specific audiences Telling our story (or others will) – Industry “story-telling” advocacy – P/R Toolkit to activate and hone our members’ voices – The venues (Zoning, In-Store) – Don’t run from who we are; Emphasize “Choice” The targeted “Ears” – “Officials” – Senior editors of mass media The “Voices” – NACS – State associations – YOU!

24. The Association for Convenience & Fuel Retailing Early Work

25. The Association for Convenience & Fuel Retailing Early Work – Telling Our Story! It was a great event. The Congressman had fun engaging with customers and learning about our business and our industry. For customers to come in and see cameras and the member of Congress, it gives our operation a heightened view within the community.“ Lynn Rasmussen, Regional Director - Maverik​ Congressman Joe Wilson (SC) Congressman John Barrow (GA)

26. The Association for Convenience & Fuel Retailing Early Work – Telling Our Story! Senator Mike Enzi (WY)Congressman Mike Coffman (CO)

27. The Association for Convenience & Fuel Retailing NACS Contact Information Hank Armour President & Chief Executive Officer +1.703.518.4282 harmour@nacsonline.com www.nacsonline.com