SpartanNash exec on growth after Markham Enterprises buy: ‘We’re going to be relentless’

Growth has come in a hurry for SpartanNash. A few weeks after announcing it was acquiring Fresh Encounter Inc., a chain of 49 supermarkets in Ohio, Indiana, and Kentucky, the Byron Center, Mich.-based food-solutions company made a deal for Markham Enterprises’ three convenience stores and fuel centers in Michigan in late October.

During SpartanNash’s third quarter earnings report on Thursday, President and CEO Tony Sarsam said the Markham deal was a case of good timing, and he emphasized that the convenience store/fuel center market is where SpartanNash sees great growth opportunity.

“Looking ahead, we are continuing to evaluate M&A opportunities based on our disciplined M&A framework,” said Sarsam during the earnings call. “We find that the stability [of fuel centers] for shoppers fueling up is actually something that’s really attractive. So we think that’s a place where as we’re looking for opportunities to change and grow our footprint we’ll have an eye towards those types of things.”

Supermarket News Senior Editor Bill Wilson talked about the Markham Enterprises acquisition with SpartanNash Senior Vice President and Chief Strategy and Information Officer Masiar Tayebi, who said this kind of growth has been years in the making, and there are no signs of slowing down.

Bill Wilson: Talk about this Markham Enterprises acquisition and what SpartanNash really likes about it.

Masiar Tayebi: In terms of the dimensions, we look at strategic fit. We’re a Michigan-based company. A lot of our grocery stores, a lot of our grocery retail presence, including the existing C-stores we have, they’re in the Michigan area. And so getting more density in the regions we operate makes a ton of strategic sense. So there was a strategic fit on that level. And then the other thing we look at is standalone attractiveness. Is the business a strong business? And when we met the team there, they blew us away. And they’re operating a great business. And so it was a really healthy, strong, viable business that fit right into the region in which we operate and the things we do as a food solutions company.

BW: During the earnings call today it was said the convenience store, fuel center area is just very attractive. What do you think makes that area so attractive for acquisitions?

MT: Convenience is attractive because we’re seeing more growth in that space than other spaces of grocery retail. And so that’s something that really draws us in as we’re trying to overdrive growth within the company and create maximum shareholder value. The growth trajectory of C-store is one that’s really attractive. Also, the profitability profile, those things relative to other operations of business segments have a really attractive profitability profile.

BW: You mentioned that the goal is you really want to concentrate in Michigan. Is there any chance that you might step outside of Michigan for acquisitions?

MT: As we look outside [Michigan], we also have distribution centers across the country. We have grocery retail stores outside of Michigan as well, throughout the Midwest. We absolutely are looking at spaces in places outside of Michigan. And when we talk about M&A more broadly, we are looking everywhere across the country. And that’s one of the things that I definitely wanted to convey is that we are very, very much acquisitive and we’re looking for opportunities and we kind of view the best is yet to come in that space.

BW: So why the aggressiveness of expanding over the last few months?

MT: It’s something we have fundamentally believed is part of our strategic vision as a company. We’ve been looking at a lot of things and they have to pass a certain threshold, a certain hurdle in terms of shareholder value creation. And we weren’t seeing those opportunities as much a year ago as we are in 2024. But our expectation is we’ll continue to see those opportunities and we’re going to kind of relentlessly execute against them, but we won’t say yes to everything.

BW: So with Markham Enterprises and the three locations there, is there a lot of transition that's going to be involved in this? Is it going to be seamless?

MT: Our No. 1 consideration around all of this is business continuity. We’re not going to do a lot to transition or cause any foreign businesses disruption. So it’s going to be more of the same in the short run. There’s not going to be a bunch of rapid changes whatsoever. If anything, it’s going to be the opposite. The Markham you see after closing [the sale] is going to be the same organization you see today. And over time, we’re going to layer in value adds that create a better experience and allow them to tap into all of our capabilities as a Fortune 400 company.

BW: So do you see branding or the name changing at all in the long term there?

MT: I don’t know if it will. The community really resonates with it, so we’re going to likely continue to look at it. And to be totally honest, if things are really operating well and the community connects with it, we’re not going to try and break that. So things could always change later down the line, but there are no immediate plans to do so.

BW: I’m assuming there's more acquisitions in the pipeline for SpartanNash?

MT: There's absolutely more in the pipeline. We’re a people first organization, so we want to be merging with great people first and organizations that have great people. And secondarily, we want to be merging with organizations that are very, very focused on serving their communities and having that positive impact on the community. So we’re going to be relentless. I kid you not, we are going to go really, really hard in the paint on new opportunities that create value for our shareholders that meet our kind of success criteria.