Spotlight on Sheetz
The Sheetz brand of convenience stores and gas stations was started in 1952 by Bob Sheetz and his brother Steve in Altoona, Pennsylvania. By 1983, Sheetz grew to 100 locations, and today there are over 500 locations in six states; Pennsylvania, Maryland, Virginia, West Virginia, Ohio, and North Carolina. It is also one of the fastest growing privately-held convenience store chains in the country. The business remains family-owned and there are no franchisee operators; all locations are company run.
Sheetz redefines the traditional convenience store model by offering customers a wide variety of fresh food items made to order in each store and positioning itself as a convenience restaurant chain where customers can also stop for gas. A Sheetz menu includes items such as burgers, grilled chicken sandwiches, fried chicken, pizza, salads, wraps, and sandwiches as well as donuts and muffins made daily in a Sheetz-owned bakery. Coffee offerings court the Starbucks crowd with stores offering an espresso and smoothie bar.
Sheetz is a private company with no credit rating, but the investment real estate community views the company as a stable, long-term, and low-risk tenant. This is due to its store business model which focuses on selling freshly-prepared food and discount gas combined with 63 years of continued growth and track record of investing in well-located real estate. The company generated over $6.9 billion in revenue in 2014, up from $4.0 billion in 2010, and employs over 16,000 people. According to Forbes, Sheetz is 59th on the list of “America’s Largest Private Companies.”
A notable characteristic of Sheetz stores is that they are nearly twice the size of the typical convenience store, averaging 4,200 square feet. Some stores are over 6,000 square feet adding additional space to provide a greater variety of freshly prepared foods as well as quick service restaurant (QSR) style seating areas. Sheetz is very deliberate with its site selection as it supports the company’s goal of becoming an established long-term resident in each community it serves. In order to accommodate its’ larger than typical store size and abundant number of gas pumps, site sizes range up to 2.5 acres. Most Sheetz locations are on a ground lease with a significant investment by the company in the building and infrastructure. Primary lease terms are typically 15 years with a series of five-year options. Rent increases vary but are generally not realized until after the first 15 years. Recent real estate investor demand for this tenant have compressed cap rates significantly over the past several years and properties are even being sold while a site is under construction.