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| Pizza and our other popular hot foods accounted for 65% of prepared food & fountain sales. In fiscal 2007, we sold nearly 8.5 million made-from-scratch pizzas andmore fountain drinks than ever before. We expanded our to-go-cup offerings to include pizza bites, systematically rotated product to meet seasonal demands and keep customer interest high, made some price adjustments, and heightened prepared food & fountain’s visibility inside our stores. Fountain sales—and ultimately total inside sales—benefited substantially from the dual cola program introduced at the end of fiscal 2006. We attracted customers who wanted a Pepsi, Dr. Pepper, or Mountain Dew. They bought the drink and often a slice of pizza or chicken tenders to go with it. Our sales growth is proving that if these customers try our prepared food once, they’ll be back for more. As a result of adding new fountain products, we no longer benefited from our previous exclusivity arrangement with Coca-Cola. This raised the cost of goods |
sold and was the primary reason we fell short of our 63.4% margin goal at 62%. It was a small price to pay for the significant gains made in sales and gross profit. Bacon credits our POS technology for improving the management of Casey’s kitchens: “Tracking daily sales counts tells us what to stock our kitchens with and lets us know the inventory that should be on hand every hour of every day. We use the same information to set work schedules.” Right now, we’re learning to apply the data to help store managers cut stales by proactively adjusting their daily kitchen plans in response to weather or other local conditions that affect sales. Certainly we’re relying on POS data to help us manage the recently acquired stores that are in transition to the Casey’s system, especially where we’ve added kitchens. Integrating our proprietary prepared food program with the menus of fast-food restaurants already under contract at some of the HandiMart locations will require new data and new applications. |
We’ve targeted an 8.4% same-store sales increase in fiscal 2008 because we’re again expecting some leveling in the rate of growth we’ve achieved during the past several years. Assuming we meet our sales mark, a 62% margin will produce the outstanding gross profit improvement we’ve come to expect from this category. As we did last year, we’ll work for continuous improvement in all three of our business categories. The more complex our operations become, the harder—and more exciting—it is to achieve consistent gains. We’ll execute for success because we’re Casey’s, a convenience store and a whole lot more. |