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While Americans continue to suffer from inflation at the individual level, businesses are also feeling its effects. But the decision to impose additional costs on the consumer is not an easy decision at all. Darren Rebelles, CEO of Casey’s General Stores, joined TheStreet to explain how he knows when it’s time to raise prices at his stores.
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Full video transcript below:
Conway Gates: I wanted to talk to you about this value proposition because, you know, we focus a lot on the consumer end of inflation. But as a convenience food company, you’re under pressure from suppliers, right? So, at what point, for example, give me some ideas, at what point do you make the decision when you feel pressured that you’re going to raise the price of your items and by how much? Walk me through the process.
Darren Rebels: Yeah, you know, we’re looking at a few different things, but what we’re trying to do is, especially on the prepared food side, because a lot of the cost components are commodity-based. Therefore commodities are cyclical. Sometimes they go up, sometimes they go down. So we take an approach of trying to price through the cycle, which to some extent means we need to pass some of the cost on to the consumer, but we try not to pass all of that on because we know that curve will flip back down and the margin will expand a little bit. So we try to keep that value competitive and relevant to the guest over that full cycle. We have done this over the past two years. And now that we’re seeing the commodity pressures emerging from that gap between us and the national competitors we compete with every day in food, we’re now starting to see those guests coming back to us and it’s working.
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Conway Gates: I specifically want to hear how you’re dealing with pizza because we’ve had a lot of people tell us that when prices go up, you trade low. But if you’re serving pizza, don’t replace it with dough, don’t replace it with tomato sauce, don’t replace it with pepperoni, and don’t replace it with cheese. So how do you navigate a world when these prices are rising?
Darren Rebels: Well, you know, those prices do go up, but, you know, it’s related to other dining out occasions. So, if you think about our value proposition, you can buy an entire specialty pizza for about $20. Now, I defy you to go to another restaurant of any kind right now and be able to feed two or three people for $20 or less. You can’t do that now. So we don’t just compete in the pizza business. It is with other types of dining out occasions. And people say, well, I can avoid sitting in a restaurant. I can bring pizza home. That’s great. And I can afford it and I can feed my family, so it’s a better value proposition for them.
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