Alimentation Couche-Tard Inc. (TSX:ATD)
Canada · Delayed Price · Currency is CAD 81.09
+0.73 (0.91%)
May 1, 2026, 4:00 PM EST
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Investor Day 2021
Jul 14, 2021
Welcome, everyone, to Kushar's Investor Day. I'm Brian Hausch, the company's President and CEO. We're glad you could join us today. We have a strong lineup of presenters from our executive leadership team, and together, we are going to give you an in-depth look at our strategic growth and how we're preparing for the future as convenience and mobility transform. I sincerely hope the borders will continue to open, travel will return to normal, in the future, we can meet in person.
For now, however, I want to start our event by giving the digital floor to our Executive Chairman and Founder, Alain Bouchard. Alain?
Good morning, and welcome to the Animation CoStar Investor Day. I'm so glad you are able to join us to hear about our company's growth journey And to meet the executives in charge of bringing our most important strategic initiatives to life. Let me first say, recognizing the incredibly challenging year that we have all been through, That today, I'm filled with pride and optimism that there is light at the end of the tunnel Of this world pandemic and that Couche Tard is ready for the future, a future where Traffic is back on the road where our business is always innovating and where we continue to make our Customers' lives are a little easier every day. Over these unprecedented months, we remain steadfast 124,000 team members grew stronger and better During these challenging times, as a result, I'm honored and humble to be a part of a team We scored higher than ever before in our annual engagement survey and ranked Among the best in the retail industry, growth is part of our DNA, And we are always looking for the right opportunities to grow our business, whether Organically or through acquisitions, and we have the foresight and confidence to do so.
This past year, we once again kept our customer financial discipline and we made it Clear that we are ready, both financially and operationally, to become the world's preferred Our team will be providing you much more color around our business And the work we are doing as we both stay true to our entrepreneurial culture and embrace the future through Innovation. They will tell you about how we are moving full speed ahead into data analytics and gamification I'm building our 1st frictionless stores, including one already opened in Montreal, A beautiful store that I love to visit. In Scandinavia, we are expanding payment via license plate recognition And proudly growing our role as the world leaders in electric vehicle charging solutions, Laying the groundwork for the future of mobility in North America. Our management team and I I have proudly committed ourselves to becoming a more diverse, inclusive workplace. Together, We are working towards a more equitable organization and a cleaner, safer world by Reducing our energy footprint and pleasing sustainability as a lens to our business, Even recently issuing green bonds that will help us finance sustainable projects across Many parts of our business, all the while, we continue to care for our communities, After founding this company, I'm confident that our size, our winning culture and growth strategy And the structures that we have in place, both at the leadership level and from a governance standpoint, We'll continue to serve us well as we move towards an ever brighter future.
I'm sure that you will hear some very interesting presentations today. So Before moving to Brian, I would like to say a few words about our shares, multi voting shares that will And in December, coming December, so this is nonevent for us. Nothing will change. It's going to be business As usual. So with that, I would like to turn it over to our President and CEO, Brian Hahnach.
Brian, all yours.
Thank you, Elaine. I've been on this journey with Elaine for quite some time. In fact, I spent most of my entire career in convenience of fuel, beginning at 16 in a small store in a little town in Iowa. I then went to work for after college with Amoco, BP and then Bigfoot. I joined the company when Couchard first ventured into the U.
S. And acquired Bigfoot in 2,001 About 7 years ago, I became its CEO. I love this industry for many reasons, including as you'll see the dynamic way it's evolving and adapting to the future. But perhaps I've never been prouder of this company as I've been this past year and for many good reasons. I'm truly proud to report this year, a year clouded by COVID-nineteen, we had record breaking financial results, we stayed focused on our strategic goals and executed and innovated better than ever.
Let me just share some of our highlights from this historic year and the way in which we're building competitive advantages in our business. We had record EBITDA of almost $5,100,000,000 We enhanced our convenience offer with fresh food and data and analytics. We strengthened our fuel brand, supply and trading capabilities. We innovated around payment and delivery capabilities inside our stores and on our forecourts. We established a new growth platform in Asia with the acquisition of Circle K Hong Kong, and our teams were more engaged than ever, enabling us to push forward Our strategy and organic growth plans.
And while we're a company that prides itself on making things easy, Have no doubt this year was not easy as the virus clearly impacted our people, our neighborhoods and our business. From putting up the 1st plexiglass sneeze guards in Poland early in the pandemic to supporting vaccine clinics across Canada. This has been a year filled with fear and first. First, I'm grateful for outstanding teams across the network who at all times put the health and safety of our customers and our teams at the forefront of all of our decision making. Our stores have always been open and offering essential services to our customers, knowing that they've been turning to us when so many other locations were closed.
They came to us for mass, hand sanitizers, milk, beer, snacks and fresh food, and we're proud to have been there for them. Across our global footprint, our store teams are frontline heroes going out to work when others stayed home. I've heard so many amazing stories of care and courage this year From delivering our products by dog sled in Maine to turning our Irish stores into outdoor garden centers. We've also been working hard to be a part of the solution in our communities, Where we work and live, including providing over 1,000,000 free beverages to our first responders and health care workers and over 45,000,000 meals in the U. S.
And Canada. As vaccination rates increase across the globe, I'm optimistic that brighter days are ahead and we'll see more traffic on the road and in our stores and fuel volume starting to return to normal. Our values have guided us through this challenging year as they have since our founding. We stayed true to our mission and our vision. Our mission is simple.
It's to make our customers' lives a little bit easier each and every day. You may have heard me and Elaine recently say that our vision is evolving to become the world's preferred destination for convenience and mobility. We remain positive and committed to our strategy of growing our fuel category in a profitable way, and this has become even clearer when you hear from Louise later today. You'll also hear from Hans Olof about mobility trends that continue to accelerate, and it's more important than ever that on this journey. This is why moving forward, we will update our vision to reflect our desire to win the future mobility customer.
We are a unique global retailer that differentiates itself in the markets in which we operate. Our reach is vast with stores from the shores of California to Russia, including 14,200 stores and 124,000 team members. Our North American platform is strong where we mainly operate convenience stores with transport fuel under the Circle K banner and the Couche Tard banner in Quebec. We have grown from north to south, east to west through acquisitions and organic growth. Our European business is best in class.
We have convenience stores with transport fuel and electric charging stations under the Circle K banner as well as unmanned stations under our INGO banner. Our new Hong Kong business is under our Europe and other regions in our reporting as we flesh out our Asian strategy. Hong Kong is exclusively urban stores, and we're learning a lot about this format. It's leading offline to online solutions and how they're retailing down to the centimeter. Our Asia Pacific journey is just beginning.
But as you can see here in our international footprint, we already have a strong presence with a great franchise network, and we're looking to leverage those relationships through our Circle K Hong Kong platform as we grow in the region. Our growth platform is defined by our core strengths. In some areas, we're an industry leader. In other areas, we have unique strengths compared to the industry. We operate in an attractive channel.
We sell time and convenience. Close to 80% of in store merchandise is consumed within 1 hour of purchase. Through our work in data and analytics, we're learning more and more about our customers' desires and purchase patterns. Our size and scale set us apart in a fragmented industry. As an example, in the United States, 60% of the 150,000 stores are operated by single store operators.
This provides us a strong position for the future with a diversified footprint and financial strength. Our strong culture is partly based on our decentralized model, which drives clear accountability, agility and entrepreneurship. Cost discipline and continuous improvement are also integral parts of our DNA. You'll hear a lot today about organic growth and our plans. We are laser focused on innovation and a differentiated offer to improve the customer journey as well as pushing the growth of our network through new store builds, remodels in our new franchise initiative.
In terms of M and A experience, Acushtar has a long track record of successful integrations and synergy capture. We see that a significant runway remains globally, and we've remained continued to focus on U. S. Consolidation and on Asia. You heard us speak frequently about the company's disciplined approach to capital allocation.
We have strong free cash flow generation to support our CapEx and growth plans. We have disciplined capital allocation that is delivering strong return for our shareholders, and we are delivering over a 15% return on capital employed. There's no doubt retail is evolving and will continue to evolve within the next 5, 10 years and beyond. This is not your father's convenience store industry. The pace of innovation, the changes in behavior brought by the pandemic and the desire for a cleaner planet, we are seeing all these trends transform not only convenience but the retail industries.
To name just a few of
the changes we're paying close attention to and the evolving trends. As I said before, we sell time. Speed is more important than ever for our customers. We all feel this in our lives as do our customers. We need to meet our customers where and when they want, whether it's in our stores for their morning coffee or at home for their late night snacks.
We need to be there for our customers where they want us, when they want us. Localization and personalization are increasingly essential. It's an interesting and yet true dichotomy in what seems to be a more impersonal and digital world, but we're committed to that journey. Sustainability is rewarded. This is especially relevant in our European markets and with our younger customers and employees, and we want to be a part of that solution.
We're uniquely positioned to win in a world where consumer trends are transforming. We've added core capabilities over the last few years. We have a strong customer value and convenience proposition, and we're proactively looking for ways to adapt the customer journey, our offerings and our network to the evolving consumer demands. With our developing data and analytics capabilities, we're becoming even more local on a store by store basis in our pricing and soon to be assortment and promotion activities. We have a dedicated team looking at innovation opportunities for the future, whether it's through development in our own solutions or through key investments in other companies.
You'll hear more about this from Deb Hall of Fame, especially when it comes to payment and delivery capabilities. Our offerings range from truly exceptional sustainable coffee to dispensed beverage, nicotine, alcohol, lottery, Cannabis in Canada and to our biggest priority yet, expanding our fresh food offering globally. And with our scale, we can pilot multiple concepts around the world, Get it right and share with speed and efficiency across our markets. We do this in all parts of our business, supported by our stellar operations team. Have an excellent track record of growth over time and multiple ways of driving our business forward in the future.
Our brand promise and the growth of our brand awareness are essential to our organic growth strategy and to supporting our adaption to the changing customer expectations. You'll see the same slide in Kevin and Louise's presentation, reinforcing how our brand promise unifies our strengths in both convenience and mobility. We began this journey to become a global Circle K brand almost 6 years ago and often say it was one of the best business decisions we've ever taken. This effort is nearing completion in all of our markets with only a few areas of North America remaining. And our global brand identity impacts all of our organic growth pillars.
As you will see in upcoming presentations from Fresh Food Fast, localized pricing and assortment, fuel and mobility, cost optimization, growing our network through new builds and new store designs and innovation with speed to market. Along with organic growth, M and A has always been an essential part of our value creation equation at Couche Tard, and it's also played an instrumental role in supporting our organic growth ambitions and vice versa. We have a long history of success acquisitions and integrations in convenience and fuel retail With having added almost 11,000 stores since 2004, acquisitions bring more than stores. They bring us new talent. They bring us leadership, concepts, Tools, most often, it's a combination of all those.
And yet one thing that remains constant throughout the journey, Our number one objective is to ultimately create value for our shareholders through our customary financial discipline and our decentralized operating model. We have captured exceptional synergies and gained extraordinary talent along the way, some of whom are part of the leadership team and you'll meet today. We'll continue the M and A strategy and approach into the future as part of our Double Again Growth Plan and beyond. As I said, we have a history of a disciplined approach, A clear set of criteria for assessing acquisitions and will continue to do the right thing for our shareholders, our partners and our customers for the long term health of our business. I've often stated that the multiples we've seen recently do not make sense to us, and we've chosen to walk away from some attractive opportunities the last 3 to 4 years.
I want to reassure that our appetite is still there, but the right opportunities at the right valuations haven't presented itself lately. Fortunately, I've been doing this long enough to know that this will swing the other way, and we will be ready. We're going to remain focused on reinforcing growing our core convenience and fuel business through further consolidation of the U. S. Market and growing the dynamic Asian market, using Circle K Hong Kong and its experienced leadership team as our platform for growth.
And as usual, we'll continue to look opportunistically at Opportunities in Canada and in Europe. We also use M and A as a way to accelerate innovation, adding key capabilities to support our strategic objectives, including through investments using our newly formed Circle K Venture Fund, which gives us an early look at innovation from around the world. As I mentioned before, the lines between retail channels have been blurring over the last few years and our customers' needs for convenience is changing, shifting towards more of an omnichannel experience. As we've been studying and thinking about these trends, we formulated the hypothesis that a combination of the inherent competitive advantages we possess in our core business with those of certain other adjacent retail segments could have the potential under the right conditions to better serve our customers, establish a new growth engine for us and, of course, create significant synergies. Up to now, our focus areas have been to understand travel retail, dollar stores, grocery and the QSR space.
As such, we're going to continue to keep a close eye on these segments, and we'll continue to evaluate the potential to better serve our customers. Whether it's through growing convenience, fuel in retail, acquiring innovation or investing in adjacent retail segments, our primary objectives will always remain the same: to create value for our shareholders through a balanced and disciplined approach. This brings me to our people and our culture, which I firmly believe is fundamental to what really drives our shareholder value. It's our secret sauce. In many ways, this has uniquely defined us over the years.
One, we have a strong management team. As I said, much of the talent has been put together through our acquisitions and also through careful succession planning. Governance. Our Board is focused and committed as you've seen in this year's renewed work in ethics and sustainability. Since our founding 41 years ago, our entrepreneurial culture based on empowering local leadership has enabled speed and innovation.
Our sustainability journey has become a lens to the business and increasingly important to our people, our customers and our shareholders. And we're also committed to diversity and inclusion with our management teams responsible for creating pipelines of diverse inclusive teams and leadership working toward a future with equitable pay and representation for everyone. Now talking about people and culture, I now want to turn to Ina Strand, who leads our work with our people and our sustainability. Ina?
Thank you, Brian. I'm excited to share with you today the progress we are making both in our people work as well as our sustainability journey. First, a little background on me. I came to ACT from one of those acquisitions Brian just described as fundamental to our company's growth, The 2013 Statoil Fuel and Retail Purchase. While I now live in Charlotte and proudly lead the people team, My background is engineering in Norway, and I spent most of my career in marketing and operations.
My own story mirrors many in our company of 124,000 team members who bring their different backgrounds and culture to our vast Let me start by giving you a glimpse of the people who make up ACT. From the time Alain started this company 41 years ago. Our culture has been built on common sense values of entrepreneurship, Accountability, teamwork and respect. As we develop that culture, we've also built out our employee value This proposition encompasses the wide variety of opportunities we offer for our people To develop and grow in a global company with tremendous reach. Whether you are a younger team member just joining us as Our goal is to encourage and support every store and office team member So they can reach their full potential, growing with our company and growing the company together.
4 years ago, when we formulated our growth strategy, we proudly selected our people as one of its 5 pillars. We recognize that a strong people foundation is essential to our business. And with that in mind and in order to contribute to value creation and For further growth, we developed our people strategy around the following 4 focus areas. 1st, HireRight is our enabler for the strategy. To address the high competition for talented employees, together with the retail industry facing high turnover rates, We need to secure the right tools to support the staffing of our stores and support offices.
The strength of our people and hence Our ability to execute on the strategy starts with who we hire. We are making good progress here. Over recent years, we have improved the candidate experience and recruiter efficiency through new career portals, chatbots and instant messaging, Strengthen our employer branding across job boards and social media, implemented artificial intelligence based video interviews to determine the best Candidates and enhanced our analytical capabilities to continuously track the talent pipeline. Next, Train to Win. Improved training of our store associates and store managers is one of the most important levers to lift Our operational and financial performance of our stores.
Overall, we see a potential of $50,000,000 in profit contribution from our step up The redesign of our new hire training program with video based training has made it possible to During the last year, we also rolled out an industry leading, Award winning gamified simulation training to all of our stores across Europe, U. S. And Canada. We found out that 85% enjoy this form of training and more than 90% say that this training will increase their customer service skills. When compared to Control Groups' stores, we see a potential sales increase of 1% for the stores when using this formal training.
In the coming months, we will run a global campaign training our store manager in leadership skills, including addressing performance gaps And sales coaching through the same gamified platform. 3rd, engage to stay. We know that engage teams deliver an average of 4% higher year to year sales increases when compared to the lesser engaged teams. To improve retention and make our company culture stronger, we run our annual engagement survey, MyVoice, to collect input from all of our team members. This year, in the midst of the pandemic, we broke our own record with over 90% participation rates and have steadily improved To the 85th percentile within the Gallup Reference Group.
Training managers on how they can improve feedback, Recognition, communications and visibility to career opportunities has shown to have a strong impact on our overall team satisfaction and engagement. Finally, digitize HR. For our employees working directly in our company operated stores, Our shared services and global functions, we have implemented Workday, one of the leading digital HR systems, as a way to make our people management easier. Through this common unified solution, we have been able to simplify reporting, upgrade our HR analytics And share best practices across our global teams. Also by using best in class people technology platform, we secure compliance to data privacy and GDPR across our geographies.
We're also able to rationalize system and operational costs And allow continuous improvement of functionality across all of our divisions. We've also employed digital solutions for automatic scheduling And mobile communication for store associates. Bringing these together, we see improvement in employee engagement and reduction in administration costs. Today, we're facing a challenging labor shortage in some of our markets, especially in the U. S, as you will hear from Alex later.
All of the new capabilities that I just mentioned have prepared us to better handle this situation. We are utilizing tools and systems, which are Serving the new generation of workers well and having been built to respond to the record low unemployment levels before the pandemic. Our HR journey is an example of how our scale and digital strategy help us become more efficient and competitive As we hire and train the right workforce. I now want to turn to sustainability and the role of our people in that journey, Especially during this historic year when the pandemic permeated all our work and made it increasingly As Brian noted, over the last 18 months, we put the safety and health of our people and customers at the forefront of all of our decision making. We worked hard to educate our team members about not letting their COVID guard down and believing in the promise of the vaccines.
We provided extensive communications and support, especially for our store team members on the front line of the crisis. This year, we also witnessed increased passions around racial injustice, especially in the U. S, Our largest market. Here, we did not shy away from difficult discussions. Instead, we challenged ourselves to listen, learn and engage in meaningful action.
We have courageous conversations across the network, surveyed and gained understanding of our diverse team members And ask all leadership to create pipelines to more diverse and inclusive teams. Recently, as a commitment to our people, We made diversity and inclusion part of our sustainability work with the ambition of equitable representation opportunities and pay. Before I go deeper into the sustainability work, I want to first give you a sense of the journey of Ben Am, showing a short film Featuring our very own Kushtaq au.
When Kushtaq opened its first store in Laval, it was a different time, Our first flight, the start of an adventure to bring fast and friendly service to customers across the globe. The Couche Tard family grew welcoming new stores, Now, decades later, we are one of the world leaders in convenience and fuel. On that journey, We found the world around us going through profound change. And we recognize our part to play in the challenges facing the communities we serve. We know our reach allows us a unique opportunity to make an impact on all our futures.
We have embarked on a new journey, A flight of discovery and change to find ways to make our business and our communities more sustainable. Beginning close to home, Looking to our 9,000,000 daily customers, 124,000 team members and our partners, we discovered where we could make a difference. We realized that sustainability cannot be an idea within our business. It must inspire everything we do. That sustainability must be the lens through which we view every aspect of our business.
With renewed focus and clarity, These changes are taking strong route,
As you can see, we're moving forward on our sustainability journey And are proud of our progress so far. Our decision in 2019 to elevate sustainability to a business lens led to important developments. First, sustainability became owned and integrated into all parts of the business. As you will hear in upcoming presentations from my colleagues, This work is now integral to efforts across the organization as a vital lens to how we view our business and how we will make a difference in the years ahead. 2nd, as we progressed, we also brought more clarity to this work by further aligning it with industry best practices.
This can be seen in our new ESG Sustainability Framework. The framework consists of 3 overarching pillars: Planet, people and prosperity, mapped to the UN Global Goals, highlighting our contribution towards global sustainable development. Let me explain how each of these pillars is linked to our journey. As a convenience and fuel retailer, we recognize our in contributing to a more sustainable future by using our reach for the greater good of our planet. First, we recognize Our responsibility in our fuel and mobility part of the business.
Fossil fuel continues to be a necessity in most of our customers' lives, But we are committed to contributing to future solutions regarding cleaner alternatives and reduced emissions And to support our customers and communities along this transition. We do this by expanding our offer of renewable fuels, Exploring new sustainable fuel options and work to reduce the emissions from our own supply chain. In 2020, the renewable fuel share in our fuel Globally was 9.3%. In addition, we are a leader in the world in electric vehicle charging solutions, And we are very proud of our pioneering work here. My colleagues, Luis and Hans Ola, will go into more detail of our fuel and EV sustainability work.
Packaging and waste. We also know that we play a significant role in waste reduction, and we are Here in our own work, we have expanded the use of refill vessels for all dispensed beverages by offering discounts on refills. Thanks to our efforts on refill initiatives, we removed 36,000,000 single use cups from the global waste stream in fiscal 'twenty one. In January of this year, we reached an important milestone by becoming the 1st global convenience retailer globally To make a commitment to serving our customers with 100% sustainably sourced or certified coffee in all of our stores. In energy, we are committed to reducing our environmental footprint and use resources more efficiently.
This year, we continue to achieve energy reductions across our business units through energy upgrades and reduced the energy by 2.2%. We are also exploring renewable produced electricity by participating in solar gardens in certain business units To learn how this can contribute to decreasing our CO2 emissions from our operations. I have already spoken about our work in the people pillar. We are committed to a workplace where team members feel safe, respected and able to develop their full potential. We're making efforts to ensure a safe and inclusive working environment for all of our employees, and we're proud to have a diverse entry level workforce.
We know we have important work to do to make the management level as diverse, but we believe our culture of inclusivity, where 88% of people Feel they can be themselves at work will support acceleration of this new focus area. Keeping our people safe is Critical to their well-being and our operations, our target is to reduce our robberies and recordable injuries by half. And with 20% reduction in year 1, we are well underway. For the first time, we have put our learnings into a global HSE strategy and 1 global robbery prevention program, our latest engagement survey shows 81% of our people feel safe at work During these challenging times, we are committed to be a positive influence on our sustainability journey, Contributing to the prosperity of all of our stakeholders along the way. Essential to our Prosperity pillar is being part of the solution in the communities where we work and live.
In the spring of 2020, we made a pledge to provide one meal for every fuel transaction in the U. S. And Canada. Through our partnership with Feeding America and Food Banks Canada, we contributed nearly 45,000,000 meals. We also supported youth at risk through local charity campaigns.
Finally, I want to spend a little more time on some important governance elements. Our sustainability matrix helps assess the materiality and risks Associated with different ESG issues by evaluating the importance for stakeholders and the importance for our business. As an organization, we've always strongly believed that attacking a few important opportunities first brings us faster forward than trying to do it all at once. The responsibility of assessing the performance of our sustainability strategy and the integration into our business strategy falls On the executive leadership team in joint ownership. We appointed executive sponsors for each priority, And as I said, you will see how these initiatives are integrated in other presentations.
Executive compensation and the link to shareholder value The last 5 years, our long term incentive program has included an ESG component on employee engagement for all eligible participants. And as we have advanced our sustainability Responsible executives, including Brian and myself, have for the last years had relevant ESG metrics In the individual component of the annual bonus program. We are closely monitoring the conversational metrics as the sustainability area matures, Bringing me over to the topic of reporting standards. We developed the content of our reporting in alignment with the Global Reporting Initiative, GRI, And the Sustainability Accounting Standards Board, SaaSBI. We welcome standardization as well as the recent G7 meeting indicating that the task I also wanted to mention that continued disclosure We recently updated and improved corporate website is fundamental to our work as we want it to be transparent to all stakeholders.
Last but not least, we recently extended our commitment to sustainability to the financing of our operations via the issuance of our green bonds, Which you will hear more about from Claude. By this, we aim to finance a low carbon and sustainable future by $350,000,000 in new or existing environmentally friendly projects and community initiatives in 6 categories. This funding undeniably shows our commitment to sustainability. We are not only talking about it. We have substantial dollars behind it, which must be used to execute our work.
No doubt, Part of being ready for a sustainable future lies in innovation such as the hard work we've done this year on frictionless capabilities. That is where my colleague, Deb Hall of Faye, takes over our growth story.
Thank you, Ina. Hello, everyone. Great to be with you today. I'm Deb Paula Fay, Circle K's Chief Technology Officer. I was drawn to a career in technology because technology is always at the tip of the spear, driving positive change.
Starting as a coder and following an IT track out of college at Motorola helped shape my focus on driving business performance through technology. 15 years at McDonald's gave me a wonderful opportunity to help redefine the customer experience and business operations Through digital and technology, there are a lot of parallels between McDonald's and Circle K, the least of which is our scale. Here, we have the advantage of scale in a highly fragmented industry. We can apply focus And resources in ways our competitors simply cannot. We are investing $245,000,000 this year To make us ready for the future, it is an increase of over 150% compared to 3 years ago.
I truly believe we are uniquely positioned to grow and disrupt what convenience or what making it easy means to our customers and our employees. We have been busy on the digital front. Building on an incredibly talented and seasoned group of industry technology professionals, We've globalized the technology team and attracted talent from within the industry and beyond. Our mantra is to simplify to make it easy, Easier for our customers and our employees. To standardize, to go faster at scale and to digitize to disrupt.
The iceberg can be a helpful analogy to illustrate our technology strategy. Our focus on simplifying and standardizing Has allowed us to make progress on everything below the waterline. Areas such as cybersecurity, modernized store networks, Retail edge computing, cloud and eliminating complexity in our tech stack are a few of the keys to our success on this front. This has allowed us to establish a strong foundation for our growth ambitions. Right at the waterline is the key to our business agility.
It is an architecture solution that allows us to more seamlessly and quickly connect the elements below the waterline, the back end, if you will, To digital experiences, we call this our next gen retail platform and it is really where the magic happens. This is how we are able to quickly test And scale new experiences. Above the waterline, this is what we can all see. For our employees, it's the gamified training on tablets that Yna just mentioned. And it is also digital engagement, task management, smart scheduling and more, all done through solutions like automatic ordering, Smart Safes, Workday, Work Jam and ServiceNow.
Technology is being leveraged in our stores to make our work easier and hopefully a little more fun And to help us continue our very strong track record of extremely efficient operations and well run stores. For our customers, it's all about delivering on our mission to make their lives just a little bit easier every day. We have momentum And are building agility to move on trends. So let me talk a little bit about how we are doing just that. We've established a pipeline that fuels our digital plans and narrows our focus on the ideas which we're bringing to market.
These ideas are focused on improving 3 areas of our business. 1st, modernizing and digitizing our customer experience in store and at the pump. 2nd, delivering on the new post pandemic notion of convenience, whether they're physically at our stores or not. And third, tackling the most pressing operations challenges in ways that allow our store employees to spend more time engaging with our valued customers. We have many sources of inspiration and opportunity that I'm going to walk you through.
First, we've established a corporate venture fund, Circle K Ventures. We are partnering with Bain to jumpstart the journey with structure and greater exposure. Our intention is innovation and transformation by identifying new digital capabilities. With over $100,000,000 over 5 years, we are well positioned to attract High quality startups and take some smart bets on relevant and strategic opportunities. We launched this fund last year and made Two exciting investments so far.
First, we invested in digital lottery with the Jackpocket. Jackpocket is a leading digital lottery player. And second, we invested in Pennsa, an out of stock planogram compliance and recommendation platform. These are the type of investments that have a sweet spot of strategic fit with real financial upside as we look to differentiate and make our operations even more efficient. We are constantly scanning hundreds of concepts and typically have 8 to 10 potential investments under review Across a variety of maturity levels.
In addition to our venture fund, we're keeping a pulse on ever evolving market trends and the opportunities and the threats We see channels blurring as the last mile is reimagined with the rise of delivery aggregators and dark stores and kitchens. We see distributed production and micro fulfillment powered by robots and more self fulfillment possible through things like smart ovens and 3 d printers, All creating new ways to deliver on anytime, anywhere expectations. We also see new forms of payment, Robotics is labor of the future and real estate evolution influencing business models. And of course, Sustainability, Equity and Inclusion increasingly influences how solutions emerge. Symbiotic to market trends are tech trends.
They evolve and feed each other. The pace of change and disruption has accelerated to an unprecedented level, and we are constantly looking for new ways to Lastly, as customers, we are all constantly evolving. We are keenly aware of our Circle K customer segment needs and constantly looking to improve each journey. We know people are living an always on lifestyle. Digital has changed the way we live, the way we work and the way we play.
Market and tech evolution are creating Exciting new ways to redefine a Circle K experience, making it more personal, faster, easier and enjoyable Given the pace of change and the plethora of opportunity, we can't afford to chase shiny objects. We make investments in technology with the same rigor and discipline as any other capital investment to ensure we are maximizing shareholder value. We review opportunities and promote the ones that have the best ability to differentiate, have strategic fit and of course financial upside. We test, we learn, We fail and move on quickly or we scale with speed. With these priorities in mind, we are continuously This provides a snapshot of the activity in our pipeline from the most nascent use cases To those that are mature and contributing business value.
You will hear about a number of these throughout our presentation today and I'll provide some color To the 4 picked out here for you now. 1st, full frictionless shopping. Time starved customers are looking for us to take out of the shopping and payment experience. They want it fast, easy and efficient. We've been leaning into a continuum of frictionless shopping and payment experiences From full just walkout experiences to next gen self checkout.
We are enabling a full frictionless Just walk out experience in 7 existing pilot stores in Arizona. The key focus is to use pewter vision technology to enable a better customer experience without letting the technology dictate our store layout or how we do more merchandising. We are exploring network effects by enabling the experience in multiple stores in the same region. Retrofitting existing stores with a Camera only solution requires less capital investment than a full remake of a store. We also launched a frictionless store in January In the McGill Retail Innovation Lab in Montreal.
The lab is a joint effort together with the university where we can explore new customer and employee experiences. We will use the lab to understand customer behavior and develop operational excellence for our team members. We expect Full frictionless can dramatically improve the customer experience while we reallocate labor. The lab and our live pilots are helping us look at upfront costs, Monthly costs, customer adoption, sales uplift and labor impact. We're also getting rich insights on how People shop in our stores to inform things like merchandising, out of stock, planogram compliance and more.
We're also working on a next Jen self checkout solution. The solution utilizes computer vision to automatically identify price and total items placed on the counter. We currently have 300 units in 2 50 stores across the U. S, with 5 more in Sweden and 1 in the McGill lab. We'll expand to closer to 400 units this summer.
We're encouraged that our customer transaction time is nearly twice This is fast as a traditional point of sale transaction. This helps us provide a superior customer experience while reducing lines and the need for employees to spend time Checking out customers, meaning we save time or reallocate labor. Our estimated reduction is north of 20 hours per week per store. It's a win for our customers and our operations. Our pay by plate solution provides a more seamless payment experience That allows for faster fueling.
It utilizes license plate recognition technology so that all you need to do is pull up, pump the fuel and go. No selecting grades or need to pull out your wallet or your phone. We have 2 65 stores live in Sweden, which is more than 90% of the stores in that market. We're targeting for full coverage at the end of the summer. Our early results show that this is saving time and customers like the experience.
It's evidenced by a net promoter score of 65, higher than our initial target of 40 and an app rating of 4.7 out of 5. We are happy to learn that new customers account for more than 10% of the registered customers, also beating our business case right out
of the gate.
Additionally, pay by plate share of transactions is steadily increasing and currently is above 2% beating our milestone target and we're on track to get to Our aim is to steadily increase transactions and get to over 20% in 3 years. The pay by plate solution will not only solve current customer pain points, but also lead to new incremental fillings. We are aiming for an ROI target of greater than 20% Our intentions are to scale the solution across Europe to another 1,000 plus stores And we're evaluating when we're going to bring it to North America. And finally, delivery. We are providing curbside, Pickup in store and on demand home delivery services through our own solutions and external partners.
We're live in about 3,000 stores globally in 9 business units across Europe, Canada and the U. S. How are we doing this? We have our own Circle K Click and Collect pilots in the U. S.
And Europe, and we're finding an average net promoter score of about 50 to be encouraging. We're going to continue to refine. For our delivery service, we're leveraging last mile delivery aggregators. We are in partnership with DoorDash in favor and the results, Well, we learned that we were able to pivot quickly during the pandemic and we continue to learn about what works for our customers. We see that order ahead digital transactions have 1.5 to 2 times higher basket sizes.
And where available, There is good demand for products that are really important to our mix. Age restricted products can account for 45% to 75% of the basket. Overall, the benefits we see are threefold. 1, extending Circle K brand awareness to millions of platform users 2, Driving incremental volume and 3, gaining insights and learnings. We will work with aggregators and continue to find the right formula for our customers And for us, one that considers customer acquisition costs and customer data and relationship ownership.
We continue to evaluate partnership opportunities across a variety of business, operations and assortment models. We know that delivery provides an opportunity to attract more customers, drive up basket size and leverage our strong assortment and capabilities around age These are just some of the solutions we're putting into play to future proof ourselves and disrupt within our industry. We're excited about our digital progress that will evolve our business. I'd now like to hand it over to Kevin Lewis, our CMO and my
Hello, everyone. My name is Kevin Lewis. I'm our Chief Marketing Officer here at Couche Tard. This month marks my 4 year anniversary with the company. I can do with a pretty interesting remit.
My job is within our decentralized organization to stitch together our business units to make sure we benefit from scale, our global capabilities And the ability to massively improve and transform our brand and our customer offer. It's been a remarkable journey. I'm a reform management consultant by the way. What I'd like to share with you today is how we've brought that to life, myself and my teams all over the world to make this happen. Let me start with Living MacKay, our core brand.
Brian has already shared with you this slide. Really, we occupy a unique position. The combination of convenience on one side and fuel on the other, that intersection is proving incredibly powerful. And I'll walk through with you our offer, our food, our data and analytics journey, but I want to start with our brand. Traditionally C Stores, and I imagine many of you, have thought of us as a place where folks with names on their shirts, what we call our hardworking hero, Really come to learn to relax, to stock up.
What we've learned about our customers actually is much broader than that. That hardworking hero has, by the way, a working sister. We call her a working wonder woman. Many of the same things that he looks for, she looks for, But with the unique spin on the offer, a unique spin on some of the needs and occasions. By the way, that hardworking Hoiro has a bit of a richer brother, May not have his name on his shirt, but uses his car because he's a real estate agent, an IT professional, someone who consistently is on the road, Our core customer goes beyond simply that our working hero.
Lastly, if you look and I'm guessing most of the people on this Zoom call today, Fast Track family, folks just like us who are trying to figure out how to get time back. Our promise to all of them, why we exist as a company It's to essentially build time machines, right? Kind of like Doc Brown's, DeLorean, the phone booth and Bill and Ted's. Our job is to figure out how we give them time back, how we make their lives a little bit easier. Now, On the brand side, there has been a huge unlock this year for us.
If you look on the left side of this chart, the traditional approach. What we'd have normally seen is a Circle K in the backcourt and a fuel partner brand on the front. What we found, however, Is that done pretty well for a lot of time, but when we ask a really simple question, if we had to call somebody to say, Where would you get picked up? You know what they say, most of the time not Circle K. In fact, less than a quarter of the time Can our customers when we're in that traditional approach, say, hey, I'm at Circle K.
That doesn't work for us. It doesn't help our offer, it doesn't help our brand promise. And no matter how much we shout at the top of our lungs about Circle K, they don't even recognize where they are, doesn't allow us to communicate effectively with our customers. You'll hear from Louise Warner later on today about what we're doing, but the go forward approach is really different. Our forecourt and our backcourt will be Circle K Fundamentally transforming the way we can communicate and the ability to control our own destiny and offer.
It's a huge unlock for us. What that allows is really three things. I'm really proud and excited of what the team has done. We now have the ability to have much more consistent execution You can see some of the examples here from all over the world. Equally importantly, we can celebrate our brand, celebrate the K.
You'll see us on Our own packaging, our proprietary products, our advertising becomes uplifting, allows us to give our customers a boost And it's exactly tied into those four segments that I've talked about. Lastly, we can connect with our consumers in new ways. In Europe, that means expanding our Extra Club, our loyalty program, And soon there'll be more news about this eventually and hopefully pretty soon around this. Our U. S.
Loyalty program will expand, some new pilots coming out in the next few months. As I said, part of my role, my team's role is to build connective tissue across the globe. How do we make sure we benefit from our scale, our capabilities, our knowledge in ways that we couldn't historically? I'm incredibly proud of our decentralized culture. It is without question a source of strength for us.
How do we make sure that we get the benefits of who we are, our presence and our size? Let me give you some examples. Traffic for any retailer is the lifeblood. And I'll just show you a few things here, COVID and post that have come to life. 1, you may have seen this already Is our Sip and Save promotion running here in the United States?
For $5.90 a month, consumer gets unlimited beverages, 1 per day, Whether it's coffee, tea, Polar Pup, any of our dispensed beverages, this is an opportunity for us. And by the way, we've been sitting on this for a while, it wasn't a great idea to roll in COVID, to say, hey, how do we take our insights and turn them into real traffic opportunities? In the middle, especially during COVID, what we have the ability to do is take an insight And move it around the world. In this case, it was the need to be much more connected to more communities. The 40,000,000 meals we gave away for Feeding America during COVID It was a U.
S. Program. We're doing a similar thing in Canada, the Food Banks of Canada. It became Le Petit Merci in French speaking Canada, different program And little thank yous in Europe, same insight brought around the world, very similar results and real impact on our communities. Lastly, starting in Canada, now moving into Europe, the ability to work with companies like Marvel or others to produce some pretty interesting promotions And POP allows us to benefit from not only our ideation, but the relationships that we've built.
Maybe this is most obvious and most compelling in our gamification efforts. You've heard Ina talk about gamification with regard to our employees. This is what happens when we take that similar idea and bring it to our consumers. Way back before we had acquired our Hong Kong franchisee, You know what they had? This remarkable ability to interact with their consumers in some casual gaming ways.
Our European team took that on and said, hey, we can do this too. The idea started in Hong Kong and went to Europe. From Europe, our Canadian team said, We can do one better than that and immediately started taking that idea. The Roche Pos Dieu for example, Rock Paper Prizes Came out of Canada and our U. S.
Team followed suit. What we now have is a global capability to execute these, each time understanding redemption rates, usage, What are the games that are working? What are some of the innovations that we play? Our global scale and the way we've organized our teams allows that to circumnavigate the globe, Each time getting better and learning more powerfully. Next, Lyft.
This may not be something all of you are familiar with and the picture doesn't do brilliant justice. Lyft is a pretty interesting technology. It's a customer facing screen on one hand and associate facing screen on the other. Based on what is at this point scanned or who you are, it suggestively sells another item. Might be, hey, you see you have a Gatorade in the basket, would Could be our tobacco club, which runs on these rails, could be a series of other promotions, including Sip and Save.
What this allows us to do is simultaneously talk to our consumers and have our associates prompt. To give you a sense of the impact here, most think about a grocer. You wouldn't go up to the grocer, check out and say, Oh, I forgot my orange juice. Please charge me for it and I'll go back, just doesn't happen. In our world, that's a pretty normal behavior.
A result of that unique behavior plus our Proprietary technology here says 1 in 7 of our transactions now goes out the door with an upsell. On top of that, we're monetizing that $20,000,000 of incremental revenue, not from the trade spend buckets, but from the brand buckets that now allow us to flow in. Started in the U. S, we've now expanded to every possible store, continue to expand into Canada and moves into Europe this year. Another example of how when we take an insight in a technology, we can bring into the world and leverage our scale and capabilities.
Finally, there's a bunch of other things I wish we had more time to talk about because I'm super proud of the team, whether it's our Car Wash subscription, The introduction of KFreeze, which Hans Olof will talk about in some greater detail, or a proprietary brand, which is Control brand, our own brand and some co brand, Here shown the Arizona co brand iced tea, we now are able to take those same products, suppliers, insights and bring them across the globe in meaningful ways. It's a huge way of adding value and I'm really proud of what the team has been able to do. Now, no doubt by now you've heard we are on a data journey. By the way, it's not like we woke up and realized the data was important. I think all of us understand or beginning to understand the power of our first party Combined with the stuff we can get in other places to begin to assort our stores, talk to our consumers and improve our business.
Pretty early stages here, and I'll be very open. This is not an overnight problem to solve. We're in the process of building out the foundation And expanding our capabilities over time, I'm really intrigued by our journey. Hopefully, you'll hear you after you've heard some of this already, you will be too. But to be clear, there is a long way to go to make sure we continue to benefit from this and scale at an enterprise level.
I will, however, give you a glimpse into 2 really powerful Let me be clear on the size of the prize, just to kick this off. It's not often you get an opportunity to talk about $500,000,000 of incremental profitability, but we think that's on the table here. There are really 4.5 paths that we're talking about. Our localized pricing capability, which is the ability at a store or cluster level to dynamically price our products, Our assortment capabilities, what goes in which store when our promotional capabilities, what do we charge and how do we design effective promotions And our layout capabilities, what should go where in the store, at what point in time. And lastly, a foundation of data Analytics that will power all of this, not just the merchandising side, which I'm talking about here, but whether it's labor or stores location, whether it's HR Or any number of other areas, we believe this is the lifeblood for next generation of capability.
Let me double click on localized pricing, one that I'm super proud of and quite honestly, it's been a pretty heavy lift. Maybe the best way to think about that is by looking At the map here is a way to start. This is an example, I believe in the Phoenix market of how we price a candy bar. The colors represent different places that we are pricing that product differently, anywhere from $1.19 to 1 $0.59. Now most folks would have historically either price zones, right?
You'd see exactly different geographic areas with different prices. Often and more often, you'd see one price in an entire market. What we've now done taking our first party data, which is our knowledge of transactions, of demands, calculating elasticities, combined with thousands of other things, not just demographic variables, weather, traffic patterns, Highway or non highway, we can now mathematically predict what the optimal price for this product should be. We've done this around the world, started in Sweden, Brought it to our Grand Canyon business unit and by the end of this year, almost the entirety of our Circle K network will be using these underlying capabilities and tools. I'll share with you some of the results and I'm really excited and proud this is the first step in our journey.
We look at 4 things. We look at units, we look at sales, we look at margin, We look at market share. And if you look at both of these pilots, we're really proud of the results we're getting. You'll see consistently margin growth, Pretty consistent revenue growth, obviously with a trade off sometimes in terms of units. What's important to understand though is this isn't a price raising exercise.
Almost half of the time, the prices stay the same or even go down. We're focused on the total profitability dollars in the building as a result of this. It's dynamically managed, sometimes monthly, sometimes quarterly, in some cases weekly, but this is now a capability we put in place across our businesses to make this happen. On the assortment side, a little early, but I'll share with you where we're headed. Three part process really about what we're doing today and where we're headed.
Today is some really basic stuff. How do we make sure that product that is underperforming leaves that we make space for stuff that works? How do we make sure that stuff that sells really well in some business units gets into the other places where it's not selling? And how do we begin to create tools, processes, capabilities that allow us to do this repeatably and predictably. Over time, this gets a lot fancier, to be clear.
How do we optimize SKU facings? How do we think about what actually will go where in a store? How do we do the overall assortment, not just with our own channel, But across all of the different channels of retail that are potentially saleable in our stores, this is not a one and done. This is ongoing capability And an ongoing team will continue to do this. Now, food.
I think probably right now you may be hungry. In a normal world, we would be together and you would be able to see this in real life. I'm going to do my best to try and bring this to life as any way that I can. We'll show you a little movie. But Fresh Food Fast is, as Brian has said in the past, the single largest most complex initiative we've taken on in Couillard's history.
I'll tell you for me personally, by far it is equally that in my career. This is an opportunity for us to make a material change in our food program, not just in ours, but in the way convenience stores deliver food around the globe. If you look at traditionally how our channel has made food, they've taken on a restaurant model, Stainless steel in the backroom, bunch of labor, everything is almost hand done, custom made. It gives you a product that is usually pretty tasty, but at high labor cost, real issues around food safety, incredibly capital intensive. And the biggest challenge we have is, well, what happens if I want to introduce a new menu item?
I have to retrain all of my staff. I have to make sure I have the right equipment. It is a model of the past. We have a different idea. That idea was inspired by our acquisition at Holiday, Certainly improved by our core capabilities in Europe, but we've looked at a bunch of other really successful food models.
We've rolled out 1500 of these stores, and let me explain how it's different. If you think about this, what it really is, is an app store With a bunch of apps which are our food, let me explain. We've standardized the underlying hardware platform, the presentation, the food, the cooking, And marketing, and whether we put in a chicken breakfast sandwich or breakfast biscuit, a taco in Texas For a Colace, the underlying processes, tools, systems, training are unchanged. That same capability that I talked about for localized pricing and assortment, we can now do in our food, massively diversifying the offer Without increasing cost or complexity in the business, it's really unique. Think about once you've got an app store, right, or a piece of hardware, All of your apps come in, you don't have to buy a new phone, no different here.
It's an entirely different way of approaching the food business and something we're hugely proud of. Now one thing for me to say it, I wish you could see it in person. Next best thing, it's going to be a little video. So why don't I show you one?
This is Fresh Food Fast, our Circle K way of serving tasty, fresh food on the go. Our approach to food is different. It's unique. At Circle K, we deliver great quality food to our customers on the move. Fresh, food, fast.
Traditionally convenient stores and QSRs The Circle K approach is much different. We have leveraged learnings and best practices not only across our own network, but Also from QSR's grocery and other retail operations to create our new fresh food fast concept that can be adapted
I love coming to Circle K because it's Fast, it's fresh, it's convenient. My kids love the pizza. Being a working mom, I'm always on the go, and I love being able to come in and get fast, Fresh and they have healthy options. I love the ham and cheese sandwich because I mean it's delicious, like it's fresh, the bread is nice and Toast, seed, and cheese, and milk tea, you got to try it.
Our teams have been able to be more efficient And their day to day work schedule with the new processes we have in place in the kitchen. Our motto is make it easy so they can take it easy. So we want to make sure we do that.
Delicious food for our customers is at the heart of our program. Our chefs use
Whatever you want to eat, we've got it. Whether it's cheese, whether it's guacamole, whether it's sandwiches, pizza, biscuits,
Hopefully, that gives you a little glimpse of what we're doing on the food side. I hope that many of you are able to experience this, taste the products, they're terrific, But don't take my word for it, although I hope you do. What I'd really encourage you to do is talk to our customers because we do a lot. If you look when we started at this, St. Louis was our test market.
We use Net Promoter Score, NPS is a pretty good proxy for how our consumers feel. What we saw is over a 20 point improvement in our NPS once we introduced food. Not only did the food get high to NPS scores, But the entire site, the way our consumers perceived us went up. No surprise back to fuel and convenience coming together that we want to be that destination by improving our food offer, our entire store experience went up. Our latest tracking study gives numbers that candidly are so high, I almost don't I share them with you, not to undermine our own research, but to say we've got something special here, we've been 84 in the last one.
If you really notice and if you're an MPS geek like I am, low number of detractors, very high number of promoters would suggest we are really on to something here. And now as we introduce tacos, as we introduce new breakfast sandwiches, as our hamburger program, our chicken program come to life, as well as our wonderful pizzas, We begin to get the localization that this thing is built for. Now consumer acceptance is nice. I understand that I'm talking primarily to Community, so I'm going to show you some numbers. Let's start with revenue.
Red lines represent our current Business going forward. So this is our fresh food fast business. Orange in this case is our closest benchmark, which is what we think is the best in class, our holiday stores. FY 'twenty one, we did about $200 incrementally per day. Holiday is up there near $500, just a little below during COVID.
Our plans over the next few years and these are end of year numbers for those of you who are building your models are to get just shy of 300 the first next year And just shy of 400 the year subsequently, again, you can see the holiday benchmark. I'd say, look, we'd love to get to our holidays. They have decades of experience in food. We're going to be a little more realistic knowing that it takes 6 to 12 months to really create that food culture in a store. And what you see here is obviously an average of How quickly the stores have opened over the course of the year, these are end of year numbers.
In terms of our overall store count, last year we did a little over 1500 stores. I never expect in the middle of COVID that we deploy something, but our remarkable operations team has managed to pull that off. And Alex will talk a little more about that journey in a little bit. This year we'll open over 2,500 more, putting us right around the 4,000 mark, hopefully a little over by the time this fiscal year is over. Next year, we'll add at least another 1,000, putting us well over the 5,000.
And remember, this is excluding the existing food stores, for example, in Europe. This is just our fresh food fast concept. We think we've got something really special here. Now this is part of the equation. This is top line.
Profitability wise, equally interesting. And what's important as you think about your models is most folks will tell you that gross margin is where to focus. We believe profitability is where By taking labor and instead of putting it below the line, which makes your margin look artificially inflated, margin moves to a different part. So I'd really encourage you to focus on EBITDA here. What you'll see is this year timing otherwise large number of stores will be a bit of positive EBITDA across the stores that we'll open.
If you fast forward, we're looking at a business hopefully over $300,000,000 of incremental EBITDA, and you can see the rollout here, Right, revenue scales dramatically. What I'm particularly proud of is if you look in that bottom right corner, 20.1, By the way, I wish I had reverse engineered together. It's actually the real number. We think 1 in 5 of our sales dollars, excluding nicotine, is going to come from food over this time period. That's a really important metric for us because it shows our ability to change our offer, not just evolve it, but fundamentally transform.
And that really picks up on what we're doing. Okay. Again, holiday is the benchmark and ours remarkable job gives us an incredible platform to learn. Now, this isn't just a North America phenomenon. The learnings we've had around upstreaming, the opportunities we've seen in centralized production, The creation of a grab and go category, which seems so foreign in many of these other countries, we're now bringing to life as well.
So in our European markets starting in Denmark, there's a new grab and go section. We've consolidated our buying in some key categories across our business units And we're introducing what would have traditionally been handmade in store at high labor and high spoilage as prepackaged items, Fresh and delivered from commissaries, very similar to what we've done in the U. S. Into our European network. It's a transformative opportunity Alongside of this incredible food culture that our European business has built, I am incredibly proud Of what our team has accomplished over these past 4 years and the history even ahead of time.
Hope you have a sense of where we're headed, What we're doing and more importantly, the transformation that comes to life as we begin to hold hands across our business units. It is my absolute pleasure to introduce Louise Warner. I've had just one of the most delightful people to join the team in a long time, close partner in many of these things in our fuel journey. So Louise, please take it away.
Thanks, Kevin. I'm here today to tell you a bit about fuels. And first, I'll introduce myself. My name is Louise Warner, and I'm the Senior Vice President of Global Fuels. As you may be able to tell, I'm not from Canada or the U.
S. And I've just joined from a company called Caltex Australia, which some of you may have heard about. And I've spent the last 22 years working across the fuels industry from end to end. First, I'm going to talk about our outlook for fuels And then I'm going to tell you about why Circle K is going to win in fuels. So first to the industry outlook.
One thing that we don't often talk about with the industry outlook is the growing customer demand for transport energy. We have seen a lot of discussion about efficiency of vehicles improving over time, and that's certainly a trend. But we actually see that well and truly offset by demand for passenger miles and in particular people wanting to use individual Vehicles for themselves. And what we see from that is an ongoing trend of growth of transport energy. When we look at that in terms of the fleet, we see EVs, the most talked about trend, is certainly growing across the globe.
This has been led in China and then Europe. But at the same time, the car park itself continues to expand. Today, we have around 1,400,000,000 to 1,500,000,000 vehicles on the road, and we expect that to grow up to about 2,000,000,000 vehicles by 2,030. So a total car park fleet, which EVs will play a role. When we look to what's going to drive the trend towards adoption of EVs, We expect that availability of vehicles will be the determining factor.
And so we can watch the manufacturers of vehicles globally Bring new vehicles to market and see that in context of this wider car park growth. In some markets, we may see other issues like Infrastructure build and raw materials being a limit, and so they're important things for us to be watching as we trend demand for Either vehicles or traditional fuels over time. So let's have a look at oil or traditional fuels by their own right. We see the trend towards EVs having the most impact in light vehicles, although we see people considering alternate vehicle types Across all sectors and particularly as other technologies emerge, things like hydrogen or rather fuels. But probably one of the most understated trends that are happening today is the trend towards use of drop in biofuels, which is happening across all geographies.
Overall, we see each type of market globally as changing in terms of oil demand, Some markets growing stronger than others and other becoming more mature. In the more mature markets, We do also see those remaining fragmented, including the markets we operate in. And so we see also consolidation opportunities Consistent with mature markets in the future given our existing market share in those situations. Now if we move to the U. S.
Market, clearly, the world's most important oil market, fossil fuels market It's 20% of today's oil demand, and it's also a very important market for Circle K. We see EV adoption or transition
to other technologies in the U.
S. Is Our transition to other technologies in the U. S. Is happening slowly. We think that the demand for transport energy is at maturity.
And we also believe that given individual preference in this country that there will be a high demand per catheter in a global context. We see traditional fuels or oil based fuels playing a key role for decades given this preference. And we also see Many refiners and other participants looking to use drop in fuels as an alternative for change in vehicle type. If I go a little bit closer to today's time period, if we think about oil trends or demand trends over time, We can also zoom into the post COVID era. So like anyone, it's very difficult to predict what's going to happen As we see economies emerge after COVID, however, it's worth examining some of the trends that we're seeing today.
Firstly, markets with high rates of vaccination are recovering and are recovering back towards the demand that we saw in calendar We're also seeing slightly unusual behaviors by customers in terms of the historical adoption things like public transport versus this ongoing preference after COVID to drive an individual vehicle. So that will tend to have a benefit to a retail driven company like ourselves. We also see teleworking having an Ongoing softening impact, but we think that return to office agendas will reduce this impact over time. And there's outlooks that show that this will have a minor impact as we go forward. So enough about oil markets.
What I'd like to move on to now is why we're going to win a Circle K in fuel. Today, we have a large global network. And over the time that the business is operated, We've built a scalable world class business and probably one of Circle K's most best kept secrets. We operate in 11 countries for fuel and supply an enormous amount of fuel every day. We also participate up the supply chain, driving millions of miles each day in our own trucks.
And so this is the base, the platform that we will grow from. I'd like to just take a moment to Think a bit about the role we play in the fuels value chain. At Circle K, we start with our retail customers. This is the origin of our business. It's what our founders believed in and our reason for being to this very day.
However, our customers often want more from us than just execution on the retail forecourt. So at times, we participate in the bulk fuel market where this makes And now over time, we've seen an increased opportunity to deliver more value from the So what is special about Circle K Fuel? And why do we believe that this is the right platform for us to grow from? Firstly, let's start with the customer Where you'll see us start almost every discussion. So today, we have true convenience for our fuel customers And really, we don't think about them as fuel customers or other types of customers.
We want to bring true convenience to our customers. And that means providing market leading fuel alongside of other mobility products and our expanding convenience offer that you've heard from my Colleagues are about today. However, we also believe we can play a role in the supply chain and we're just at the start of our journey here. So we have significant scale that we've built over time and I'll talk to you a little bit more about the opportunities we have there. But we certainly have a cost focused culture right from day 1 and that ability to be cost efficient in a commodity business Is a key advantage of ours.
We also believe our operating model is a foundation for our success. Our decision to operate on our sites and where we choose to in our supply chain gives us full control of the decisions we make And also our flexible decentralized model with global functions allows us to combine the benefits of both of those things. And then as we look across the globe and as we see transition and change happening, whether that's day to day with COVID Or anything else we're doing, we see this ability to transfer our knowledge quickly across multiple geographies. You would have heard earlier from Kevin and Brian about the value of our brand, and we see that as a key unlock for fuel. So why do we think it's an unlock?
Well, hopefully, it's obvious for you why that would make sense for our customers. When we do research on our customers, We actually see our customers having a preference for a consistent offer across the forecourt and the backcourt and having a recognizable network. So people to look up To see the Canopy, to see the Circle K and understand we have a broad network there, including drawing all types of customers to our sites Like B2B or fleets. The other benefit of the unlock is to take control of our supply chain And Bill, greater flexibility in the sourcing alternatives that we have to drive gross profit as well as that the scale and the choices we're making in sourcing, We just have the cost efficiency of running a big logistics business, including our own fleet. And one of the ones that we don't talk a lot about, But by running our own business end to end, we are able to simplify our systems and processes.
Then if we move to operating model, This control then allows us to see more data in a more consistent way and drive value out of all parts of our supply chain, And we'll talk a little bit more about that today. And then as I talked about before, we see increased opportunities to leverage our global footprint, Particularly as we see things like technology and digital changing or technology and fuels changing, Testing something in one market and then scaling it rapidly is a real strength for us. So first, let's talk about the Circle K rebrand. We've talked a lot about this. And by 2025, We expect to have around 80% of our network and 5,000 sites operating in the U.
S. Under the Circle K brand. With most of the activity rebrand activity happening in the next 2 years. We're confident to make this change because we've done it before. Today, in Europe, all of our sites are Circle K and that came about through changes that have happened over years, but most notably the changes from this Legacy Statoil brand that we acquired.
When we look to the case study I'm showing you right now, We can see the benefits of bringing together legacy brands, some of the most powerful legacy brands in the world, Statoil and Shell, And rebranding them to Circle K in the right way, not just any rebrand, but one that focuses on our customers and what we had to offer at the same time. So we've taken those lessons and applied them to our rebrand activities all over the place, but most notably today in the U. S. We would also note that each market will be different. The circumstances are different.
Our brand recognition is different. Our customers have different choices to make and so making sure we adopt those lessons learned in a flexible way is going to be key to our success. We talked a little bit already about the unlock in our supply chain from rebranding. So we made this choice to go to Circle K Brand because we had this time and place opportunity where long term contracts with oil majors and Finers were ending. And so we made the decision to rebrand Circle K both because it gave us benefits for our customer recognition and our offer, But also to give us more flexibility in our supply chain, whether that's to diversify our supply or aggregate our supply or just do different things from time to time, That flexibility has had value for us, and we've had a proven track record of extracting that value in precedent situations in North America and Europe.
We also think that having the reduced commitments will allow us to extend further up the supply chain where it makes sense. And so when we made this decision, we also said, okay, what's the right way to execute this in our supply chains? One option was to build capability and change the way we worked internally, but we also thought partnering was a good alternative. And we made a decision to partner with Musket, the trading arm of Luvs. We picked Musket as our Partner because we think that they are the right partner for us.
They're culturally aligned. Both organizations are customer focused, worried about the people coming to our sites, Not running the rest of our supply chain. And both organizations are conservative and have a low appetite for financial risk. We also look to our product portfolios. Circle K having a highly gasoline dominated Product portfolio and loves having a more diesel focused product portfolio and bringing those together, In our view, complements each other.
And we also saw in the Musket team a set of skills in dynamic Sourcing and risk management that would complement our history with Circle K Fuel. So we're working closely with the Muscat team And we're looking to drive extra value, whether that's broader or deeper relationships with other suppliers with more dynamic sourcing. We believe that this is an opportunity to drive more value from our supply chain. But this is not the only supply chain opportunity we have. When we look across all of our geographies, all of our products and all parts of our supply chain, we see plenty of opportunities to Change the way that we do things and source or run our logistics in a different way.
That might be looking at how we source and trade biofuels. It might be the work that we're doing currently in our own transport fleet, taking back control of more trucking ourselves To drive reliability and also cost efficiency. And there's plenty more things That we can look at today in our scale supply chain. And collectively, we believe that this will allow us to deliver on our 2025 ambition Of building an extra $200,000,000 to $300,000,000 of EBITDA out of our supply chain savings above FY 'twenty base. Now if we go and move forward to retail fuel margin and why we believe our operating model allows us Firstly, if we look at our history, we've got a track record of outperformance.
Over the period of time since FY 'fourteen Where we really started our network growth, our site count has grown by 50%, but actually we've driven An increase of around 150 percent of gross profit improvement. Lots of discussion in the industry has centered around costs. And we certainly believe that there's headwinds coming at all participants in industry on cost. Commercial property Is growing index, so if you just index it against the base, we see property prices increase. But most notably, this year, We see labor cost as a key inflationary problem for the industry.
But we also believe that we can I outperformed this due to our scale and cost discipline and also in particular in the U? S. Market where we see Significant numbers, around 65% by some estimates, of small site operators still prevailing in the industry. So if we look at what's happened in recent times, including during COVID, the biggest disturbance in fuel markets that we've seen probably ever, We see market participants remaining rational through all of these periods, and we expect that to continue as we see volumes recover in all markets. So our view is that FY 2020 or 2019 calendar year provides a reasonable base to take A base of what margins could look like in the future.
We would also expect to see the same characteristics of on unit margins Where if we see periods where volumes decline, that unit margins will compensate for those periods. We also still expect to see margins varying from period to period. This is the trend that I've seen for my entire career and for anyone that's watched this industry, We'll see margins vary from period to period, but we believe that there's strong structural support for margins. And so We also believe that gross margins will continue to rise to absorb the cost of doing business for an industry participant, But with a company like ourselves able to outperform. So you might ask why do we think that we can outperform.
And it probably comes back to a number of the things we've already talked about. First of all, our scale. And scale, not only in terms of the supply chain benefits I've talked through, but also the underlying systems and processes and overheads that we have, This cost conscious culture that we have across our company. We're also working hard in our network and product optimization, and you'll hear about that from Daryl. So we are making sure that we've got the right sites in the right locations for our customers where the growth is and also making sure that we put the right products In the right places as well to outperform against the industry.
We're also using pricing optimization, building sophistication over time, Using the data that we have available from our own operations but also widely out in the market as data and analytics becomes more Powerful to drive better pricing optimization as well. And certainly, if we see the growth of the network happening, We're able to use these benefits across more sites, whether that's adding one MTI or making a big acquisition. And so we'll see that opportunity expand if we take on more network. And this allows us then To work towards our 2025 ambition, which is to deliver another $100,000,000 to $150,000,000 over our FY 'twenty base Through these fuel pricing and product offer optimization opportunities. Before I hand over to Han Solo, I want to tell you a bit about what we're doing In parallel, we're building our EV business.
So we have our unique platform. We have this customer focused business And that allows us to transform our supply chain unencumbered by an upstream business To offer our customers different practical solutions for the low carbon future, Whether it's with offsets, whether it's dropping low carbon fuels or whether it's taking responsibility for our own supply chain, We believe we have a key role to be part of the energy transition and we're playing our role across all parts. And to hear more about that story, let's hear from Hensel Olof right now who will give you an update on EVs.
Let's talk about electric vehicles or EVs. Even though we, as Luis said, will see fuel stay Or even grow in many markets, the electrification of cars is no longer a question of if, but more of how fast. We see a number of new car manufacturers emerging and we see traditional OEMs placing a significant amount of capital into their EV transformation. Barriers for customer adoption are fewer and fewer and feedback from OEMs is that customer That once have bought an EV are not moving back to diesel or gasoline later. The battery cost is falling fast, And most agree that production cost parity between traditional combustion engine and EVs will happen within 1 to 3 years.
As we have seen a strong position with our great locations, Also for those who need to charge, Circle K will take part in the infrastructure investments happening And continue to win the customers also in the future. As the only global fuel retailer being present in Norway, One of the countries in the world with fastest EV adoption, we have a unique opportunity to build early capabilities, test And develop profitable and scalable offers for EV drivers and learn where and how to play in the space In the different markets, we have so far been successful in doing this in Norway, and we are ready To scale our learnings and capabilities into other European markets and to North America. Compared with diesel and gasoline drivers, EV owners have several alternatives to charge their car. Between 55% to 75% of EV charging will happen at home. It is the lowest cost And solution already exists to manage time of charging when electricity cost is lowest.
20% to 35% of charging will typically happen at your destination, at work, at hotels or at parking garages. Destination charging will be handled with a combination of Level 2 chargers similar to what people have at home And Level 3 chargers like the ones you can find at Circle K locations in Norway. 10% to 20% of charging will happen in transit. Good locations along transit roads, easy access, Fast chargers, queue handling and good amenities will be important for the consumers. There is still some uncertainty on how the future charging behavior will be and therefore relatively wide percentage spread.
People in the beginner cities may have less access to home charging. Battery capacity will impact how long you can drive before charging, While a larger uptake of business drivers will require more speed charging in transit or at their workplaces. As EV markets emerge, we will learn more about this development. In Norway, One third of the Circle K full service network has a charging offer. 209 of the chargers are our own, And then we have 363 partner chargers from Tesla, Ionity and MIR located at our stores.
This partnership infrastructure reduces risk and investment in early stage of EV adoption and can or will be In sourced at end of contract, in line with our strategy. For fiscal year 'twenty two, we plan to establish Further 170 new Circle K chargers in Norway and are also ramping up number of chargers at our network in Sweden We plan for 40 to 50 chargers and in Denmark, we will plan for 30 to 40 chargers. It is important for us that our customer continue Consider us as the best stop along the road and that they are aware of charging offer. A recent survey From April shows that we are the most recognized charging destination in Norway, and we have the ambition to take Same position in other markets. In Norway, we have built a profitable model where we leverage our existing strengths And capabilities.
Many players are investing in a charging network and our market share based on number of our own And partner chargers at our stores is 16%. Good location have proven to be important And utilization of chargers is critical for the profitability. We experienced that the utilization of chargers at Circle K store It's 1.4 times market average. With our strong brand and network and a fully liberalized and Well functional electricity market in Scandinavia, we want to pilot how we can build a profitable model in a bigger part of the electrical customer journey At home and workplace, we have so far sold 4,700 home charger, Which position us as the 3rd biggest supplier of home chargers in Norway, and we have contracted more than 1500 business customers For Home Charters, we want to explore different position like subscription models, digital solutions to help customer Use electricity when it's cheapest and even act as a utility selling electricity for all your home consumption. Can each product or service be profitable in itself?
And how will they support us being more attractive In transit at our stores. Let's focus on the transit part of the customer journey and take a look At 2 of the main pilot stores, charging is a key part of Red Circle K Bamble, a new store opened last summer quickly became one of the top three performers in Norway. It was the 1st store in the world that signed bottom up With the belief that electricity will be the major energy carrier sold through the store during its lifetime. An important part of the EV learning is that we see 40% conversion from forecourt to in store, Significantly more than the 16% for traditional diesel and gasoline customers in Norway. The EV customer spends between 15 to 30 minutes at the store, and we see opportunity to give them a good In store experience with a great food and beverage offer, a relaxing seating area, free WiFi and a good toilet capacity.
With this strong in store offer, we will become a preferred EV charging destination. Key design elements for this new store are large charge park with 40 chargers, latest generation in store concept, Large overnight truck parking facilities financed by National Road Authorities. This store was voted by NEX as the most important store of the industry in 2020 and has truly Managed to become a great destination for our customers. As you also can see from the graph, it has been a fast uptake of EV customers to the store. And even though we can't make conclusion out of 1 store, this store will have a payback time of 3.5 years If it continue to perform like it has done the 1st 12 months.
Another store made for the future is Konksberg Putten won over outside Oslo opened in May this year. It is the first of its kind On several levels, first, EV charge park under the canopy moved in front of the station And where traditional fuel pumps now are moved to the side of the station. It also offers both truck diesel and car wash, Extended shop size, 2 floors with large seating areas for customers. In addition, We have added energy management system, being a pilot for energy storage and smart energy management. We have installed 72 polar panels and a big battery with the main purpose to act as a middleman Between the station and the grid, the battery is charged with cheap electricity when demand is low And then used to power the chargers when demand and price are higher.
The goal of the pilot Is to reduce its investment needs in expensive grid infrastructure, increase profitability By reducing electricity cost through remove peak from need of effect from the grid, Use as a rig for developing business models related to energy storage and energy management solutions. Ending Smartness and Energy Management solution is expected to both reduce cost and provide additional opportunities In the future, we are now into our 3rd year of operating with electricity mobility. We have learned a lot both about the customers And what it takes to become a relevant player within the e mobility and energy management space. Key learnings from Norway are how EV changed the dynamics of the market, what we must deliver to provide a good Customer experience. EV customer are more likely to go inside the store and have more time to buy, It and the rest at our locations where we have a strong business to business market, there is opportunity to also gain fuel market share by providing good EV solutions.
Now we will use that experience and define How to win not only in Norway, but across our markets. We believe some of these learnings to be universal, But are humble to differences between markets and will as we do in all areas of our business adjust accordingly To become local winners, we are currently building a local North American organization Supporting our business units with EV capabilities. This organization is in process of establishing a platform For owning and operating our own chargers, as we are doing in Europe, and we will deploy these on our site network in the U. And Canadian pilot markets. Secondly, we are assessing our stores, existing and our pipeline of yet to be built, Figuring out which ones are best fit for operating an EV charging offer.
Thirdly, We will be working with partners to take part in the transportation electrification as we are extending existing partnership from Europe And are also evaluating new ones. In addition to that, we will cooperate on the regional level With selected utilities, we already have an existing working relationship in some markets and are piloting new in others. This year we will build the foundation for our journey in North America, learn the market dynamics and use these learnings to continue To deliver products and services to our millions of customers every day, whether they need liquefied fuels, Welcome from us in Circle K Europe. We have a market leading position in Scandinavia, Ireland and the Baltics and a smaller market share position in Poland and Russia. Our network consists of 2,790 Stores where of 1731 are full service all branded Circle K, 7 41 Automates and 244 Truck Automatives dedicated for heavy transportation.
74% of our stores are company operated and in Denmark and Sweden, we are present with 443 Ingo branded automats amongst the consumer perceived as the leading low price brand. Our focus It's an easy experience, and we are receiving best class customer feedback across the most important value levers for the consumers. The strong brand tracker scores are confirmed by our Talk to Us customer feedback. We send a survey to our loyalty customer within 24 hours after their store visit. And last year, we received feedback from more than 300,000 customers.
The scores has improved from 58.6 percent in 2018 to last year, 71% of the customers gives us a score Of 5 on a scale from 1 to 5 in regard to their overall satisfaction. Cost efficiency, strong brand and network in addition to customer satisfaction Has supported our European EBIT improvement of 27% from 2018 to 2021. Let's take a look at how we will continue to build our business for future customer needs And continue to strengthen the EBIT contribution from Europe. Let's start with visiting our European forecourt. Asking our customers what's most important for them when selecting a fuel brand is easy access, Easy to pay, easy to navigate, clean and tidy forecourt and pumps and as number 6, Price is coming up.
We have addressed all these elements in our fuel journey, but here I will give you three examples. Visible forecourt navigation is installed at 6 60 hour stores, Making it easier for our customer getting in and out, finding right product and also parking space for in store visits. At the end of this year, we will have 1100 stores with this solution. Our easy payment, Vimil was the 1st global fuel retailer to launch a nationwide solution for pay by plate At all our 280 Swedish full service stores. We won the next European Convenience Retail Technology Award For this solution, the customer are giving us an NPS score of 70, and we are now preparing for launch in more countries.
On pricing, we have a strong loyalty program in Europe named Circle K Extra with more than 4,100,000 active users, Representing 50% of all B2C fuel transactions, our loyalty concept is important As we get access to customer data, making us able to drive both basket and frequency Through personalized communication and by rewarding the behavior and loyalty to our brand. Our extra customer is currently rewarded with traditional discount on fuel, but we are testing a tire based solution in Denmark With strong results. If these results continue, we plan for further rollout this fall. Now let's move into one of our stores and see what they plan there. In Europe, food and beverage prepared in the store It's 23% of our merch sales and it's growing.
To further support growth and profitability, We have developed our new store concept to better facilitate the food journey, our brand and private label products and in general Improve sales across categories. The customer feedback on our new look and feel is excellent With an NPS score of 84 at our pilot stores in Lithuania. We're still piloting, but our current plan Is to upgrade 400 to 500 stores with a new look and feel within the coming year. Let's take a closer look at some of the improvements Driving sales growth and improved customer experience. Fresh product experience is important, But as part of our global food strategy, we're piloting to move more of the production from the store And into a central kitchen.
This will both reduce labor cost and with improved concept elements support speed And ease for the consumers. Ongoing pilot in Denmark show promising results and decision for further rollout across Europe Coffee is one of our strongest traffic drivers where we have a leading position in many of our markets. On average, we sell 96 cups per day per store across Europe or in total 50,000,000 cups Per year in Europe, we are now transforming our coffee concept from simply great coffee To circle K Coffee, supporting our own overall private brand strategy. We have seen promising number and in our pilot Supporting this change. In addition to look and feel, we are also improving our self-service coffee machines With 260 new machines during FY 2021 and we plan for further 350 in FY 2022.
2 years ago, we launched Froster, a Coca Cola branded frozen slush product with great success, Averaging 50 units per store per day. As with coffee, we have decided to change from froster, Introducing our own private label brand, KFreeze. We will continue adding more stores with offer, Moving from current 4 12 stores to 650 at end of this fiscal year. Q Line is another successful concept, both supporting bigger basket and improving in store customer experience. Per now, we have 190 stores with queue lines, and we will continue to implement ending at 500 stores At end of this year in Europe, LeafScreens, a digital upselling tool, has been hugely successful in U.
S. And we plan to start test in Europe or in Ireland at end of this year. I'm optimistic we will see same success as in U. S. Later, when we combine Lyft with our loyalty system, supported with data and analytics, I see further potential Driving sales lift through this solution.
Europe has a high share of non cash And in our Scandinavian business, 88% of all transaction is through cards. Preparing for a transformation from card to mobile payment and more digital interaction with our customer It's done through several different initiatives. Today, our B2C customers can pay for fuel And Carwash with their mobile phone in Scandinavia, Baltics and Poland. Our B2B customers can look forward To the same opportunity being launched during this fiscal year, mobile payment solution are also an enabler for digital interaction Like the pay by plate solution in Sweden. Click and Collect has been successfully launched in Norway We're off 40% of pizza sales similar to 68,500 pizzas is sold Through the click and collect solution, home delivery is offered in Baltics and Poland, and we have so far a growing monthly sale Of $240,000 In June, we started piloting a self checkout solution As Deb described earlier, so far between 15% to 20% of the customer use the solution With an average checkout time of 20 seconds, much faster than a normal checkout and with great customer feedback.
Given these days are successful as it looks so far, we will plan to further rollout across our business store later. Not only the customer experience is supported by digitalized and mobile solution. As Ina described, our store employees are trained through their mobile application with gamify training. The solution has been in Europe for 2 years and our employees gives great feedback To the solution and close to 100% of them have done the training within the given time. We see the training increase the basket with up To 2%, we get a better and more qualified customer meeting and it reduced turnover of employees as they feel more confident And well trained in the job.
Let's move outside to our car wash. In Europe, we have car wash At 11 36 stores and we sell Car Wash for $154,000,000 annually. We have a leading position, but we see further potential as we estimate 50% of the car owners still wash their car at home. We are now implementing mobile payment at car washes and later this year we are introducing a car wash subscription model. This to better address the heavy user, B2B and the price sensitive customers.
The program is piloted in Denmark With strong customer feedback and we plan to roll out in Denmark during fall and thereafter move the solution to the other countries. In Europe, 51% of our fuel sale is to business customers. These customers visit us more frequent, have bigger basket and we say see higher fuel growth. Our B2B business has also proven to be more resilient during COVID as seen on these statistics. Lowest total cost of mobility is our promise to our business customers.
Competitive fuel prices are important, but our customer look at their total cost on their select suppliers. Having the best network is an important part of our offer And so is making it easy for customer to administrate the cards and their drivers. So far customer use digital self-service for 64% of their card management activities. The digital customer interface is under continuous development and that one of our most important initiative It's the replacement of our existing card transaction platform. First phase is being successfully implemented And with a new and modern standardized solution in all markets, we'll be able to deliver new And better offers across our European business with more speed and at a lower cost.
As part of our culture and global strategy, we have a relentless focus on reducing cost. Labor is our highest cost and with one standardized labor model supporting full transparency Enabling us to benchmark, we have seen significant improvements with labor efficiency, and we are now Serving 15,000,000 more customers than in FY 'eighteen with the same amount of hours that we used in FY 'eighteen. We have targeted to reduce back office and administrative task at store with 50% within 2023. So far, we have reached 20% and we have strong initiative to reach the next 30% through automation, Better tools and by moving task from the store and into our excellent shared service in Rigoa. This equals to an average reduction of 29 hours per store a week or 700,000 hours CLE Other initiatives to prepare food in a more of an efficient way, securing just in time production And in stock availability for PUD in parallel with reducing food waste from FY 'eighteen to FY 'twenty one Similar to US2.5 million dollars across Europe.
We are implementing a loss prevention tool saving us for US1.2 and many other small or bigger local and central cost initiatives Targeting a further cost reduction for Europe of $15,500,000 for FY 'twenty two. Whatever we do on cost, we always have operational excellence and the customer meeting in mind. We will continue to focus our EBIT growth journey with Cost improvements and lean operation position ourselves on EVs also using This solution for fuel consolidation, improve our digital customer interface and get better ownership of customer data, Develop our store offer, look and feel in line with future customer needs and last but not least,
Thank you, Hans Olof. Good morning or afternoon wherever you're at. I'd like to introduce myself. I'm the Executive Vice President of Development and Construction, and I've been in this C store business for my entire career. I'm here today to discuss our North America and network and real estate development.
As you can see from the slides, we have 7,100 stores in the And we're in 47 states. We have 2,100 stores in Canada. So we our strength of our network is very strong in North America. This allows us to have great purchasing power. I want to reemphasize as I go through this Deck and talk to you about our development is that we're very disciplined in our approach to how we decide where to invest and where to divest.
With this many stores, our consistency and our speed and execution for both our co op and what I'll later talk about is our full franchise stores, It enables us to do that very well. And just for another point of reference, 85% of our stores in North America are company operated stores. First, I'll talk about our new store build strategy. We have 3 types. We call 1 new to industry, NTIs is what I'll refer to, then we have our raze and rebuilds, And then we have our new urban sites that we are developing.
One would ask, what's our rationale for building these new investments? It continues to improve our network. It leads to continued growth for top tier locations. We want to be in the top quartile In our convenience business, it strengthens our brand presence and awareness. It supports our goal to We either be number 1 or number 2 in many markets.
We are concentrating on markets where we anticipate Population growth, it also supports our plan for EV. These sites are big enough so that when we have our And we know how North America is moving towards EV that we are able to accommodate those customers with these new stores. We continue to support our plan to increase high speed diesel locations. We expect that 70% of our spend to be in the NTIs and 30% on raze and rebuilds. It creates an opportunity to move into our urban markets and I'll touch a little bit more on that here in a second.
The return on capital employed meets our Double Again strategy of greater than 15%. Let's talk about our growth with our new store builds. 2 years ago, we built 77 locations. Last year, even in the midst COVID, we were able to open 76 new stores. Our plan for these traditional stores is to continue to grow 125 in fiscal year 2022, 144 in fiscal year 2023 and 167 in fiscal year 2024.
As you can see from the slide as well, our urban sites, we opened 7 last year. Our plans are to open 75 this year, 125 the following year and 150 the year after that. Extensive research has been completed on where to build sites. 2 years ago, we had a team that went through and we determined where is the best place to build these new sites and the reasons for that. So That is where we've been building and selecting where we build these new sites.
This year, we are going back and look at our document as well, Looking at where we were planning to build sites to make sure that nothing has changed that would cause us to change direction on where we should build. The key elements of a good site have been determined and documented. And our research there has provided great results in these new stores, which I'll talk about here Shortly. We also looked at what kind of site should we build. So we looked at all of our sites.
We looked at all of our acquisitions. We looked at the Heritage Circle K and we came up with the Holiday store interior remodel, which we think Is the best. And then with that, we've added learnings from Circle K and other acquisitions. Currently, we have a team that is looking At the urban site offer, we think that there will at least be 3 different types offer depending upon the demographics of each one of those Our new store build performance Since 2018, as you can see on the slide, we've built 2 0 5 of those stores. The builds have exceeded our target 15% return on capital employed, and the new sites in both U.
S. And Canada have exceeded average Circle K performance. Let me touch on those just here briefly. The EBITDA for these stores in the U. S.
Is 69% higher. The fuel volume is 67% higher and this is higher than our average unit that we have today. Our merchandise sales are 41% higher And our merch margin basis is has improved 100 basis points. In Canada, very similar results with that. Our merchandise and fuel volume when we compare it to Knacks, it is in the top tier locations with these new stores.
We continue to look for ways to lower our cost in building these new locations. They cost between $5,000,000 $9,000,000 We've centralized our real estate and construction teams and processes. This has enabled us to lower our cost. In fiscal year 2021, as I mentioned, we opened 7 urban sites and they are doing very well. Results are really too early to determine because of COVID, but we think that they'll continue to do very well.
Remodels. So, we have 4 different type remodel plans defined by level cost. The rationale for the remodel investment is that it will continue to build our brand with a common look and product offer Very similar to what our NTIs and Raisin Rebuilds look like. It continues to upgrade the network of stores. We can add our profitability programs in those locations as we remodel those.
We take the learnings From our NTI builds and incorporate those in those remodels, the remodels will support our food initiatives. And we all know how important bathrooms are for our industry. So we are able to modernize our bathrooms as we complete these remodels. Our return on capital employed expectation is about 25%, so high standard for Return on capital employed. I'm going to touch a little bit and show you a film on our new Horizon Refresh program.
Currently, we are testing that. It's about a $30,000 I would say, makeover into a store. This mirrors what our NTIs look like and currently we are testing that program. We plan to do 200 of these locations in this next fiscal year.
Hello, and welcome to our new Circle K Horizon store concept located here in Charlotte, North Carolina. Come on inside and let us show you around. You will notice as we enter this new Horizon store that it really pops with vibrant colors, mimicking our Circle K logo. This is a major Our entire food theaters have been revamped over the last couple of months. You could see the new graphics, the new imaging.
We have a fresh bakery case, we have pizza, huge variety of sandwiches, empanadas, egg rolls, and of course, the ever famous grill items that We also incorporated into this new program some healthier for you options, things like salads, yogurt, Cheese, fruit cups, really resonating with the consumers that are looking for that healthier option.
We have this new 3 d imaging that sits
Red colors, you can see our new cup schematics and of course our coffee is ground fresh, every single cup through our coffee on demand machines. This is the best coffee that you can get. So with this new concept, we've added additional cooler doors. We've also added this new graphic imaging, which is 3 d above The cooler sets and it really does make the area pop. Notice the new subway tile that we have.
And as you enter, 32 degrees are Cooler and we've got great graphics in here. So we've really elevated the experience here in the Horizon remodels. You can see we have the orange
Next, I'll touch on our new franchise model background. We have 115 current North America franchise locations. These are mainly located in the Holiday market area. We learned about this program from the Holiday acquisition and we started this new franchise program last year. Our plans for growth is 15% last year, 24% this year, $50,000,000 the following year and $80,000,000 the following year after that.
We're hoping that within 5 years that this is $100,000,000 business to us. The new franchise model mirrors our NTIs. The forecourt and store are branded Circle K And if it has a car wash, it will be branded Circle K as well. It's the larger footprint store that I mentioned, very similar NTIs. It scales our modern NTI locations at a faster pace.
The merchandise sales and fuel volumes are very comparable to our NTIs and the franchisees add our brand presence and complement this NTI program With low capital and high returns, high standards are required from the franchisee and the franchisee really gets a nice And lastly, I'd like to talk about our sustainability efforts for all of the Network development that we're doing, we're here to support our efforts and we have good plans to incorporate all those into our remodels, Our franchise stores and our NTIs in urban store locations. So with that, I'd like to introduce Alex Miller to
Hello, I'm Alex Miller. I've worked for Couche Tard for 9.5 years. I spent my first 6 months working in our stores and then established a central North American fuel team. Roughly 5 years ago, we broadened that to what now is our global fuel team. While running fuel, I oversaw 4 of our U.
S. Operating business units. In 2019, I left operations to run real estate, while continuing to lead global fuels. In March of this year, I took over North American operations while handing off fuel to Louise and real estate to Darryl. I'm excited to have the chance to speak with you about our operating activities and how we are executing all the various initiatives you have heard from my colleagues.
Like my colleagues, I want to start by briefly touching on the pandemic, certainly never a period of greater challenge or more pronounced opportunity to lead. You've seen our record financial results, and I could not be more proud of our store teams during this period. I want to give you a little more color around the impact of the pandemic On our operations in North America, we rapidly deployed protective equipment and routines. We kept our stores open to serve our communities With less than 20 stores closed in North America at any period, illness rates within our stores were well below societal average as the graph on the left shows. You have heard about our exceptional high engagement scores globally this year.
And in North America, we made large improvements across our teams and divisions With the highest results we have ever achieved, we care about this as a clear correlation that engaged teams deliver stronger sales By 4% than teams that are not engaged. Operations first. You heard from Hans Olof about our operations in Europe, and now I want to focus on the U. S. And Canada.
Prioritizing our people and customers, This is not new for us at Couche Tard, but at the core of our 41 year history and is the culture our founders established. Over 90% of our employees work in our stores. For those of us that don't, our jobs are to support them, make it easy for our customers and to ensure We are present physically in our stores. This is a recognition that our brand does not come alive on a PowerPoint slide, but in our stores. This is why we don't have big headquarters or extravagant offices.
This is empowering people to take action and ensuring they understand it is okay to make mistakes, Just not to make the same mistakes twice. This is about acting with humility and recognizing that a large percentage of the best ideas and solution Now I would like to talk further on our people, The current U. S. Labor market and our strong track record of controlling cost, which is not by chance. First, the current labor market, which is the most challenging of my career.
We believe there are structural factors as well as specific pandemic related factors that have created this situation. On the structural side, We have unprecedented job availability along with the rise of the gig economy, providing flexible alternatives resulting in depressed interest in entry level jobs. The pandemic is still having a large impact due to significant stimulus in many states, continued childcare responsibilities And fear of the virus all combining to reduce the labor pool. So what has been the impact on our business? The current situation remains challenged, but is improving.
As this chart shows, from January to April, our candidate flow or the number of individuals applying to work for us Dropped by more than half to the lowest level we have experienced. However, we have seen strong improvement over the past 6 weeks And appears we are on a trajectory to get back to January or more normal levels over the next month or 2. In real terms, this has resulted in reduced operating hours at less than 25% of our stores at its worst point. Today, that number is less than 10% of our stores and continues to improve week on week. Let's now dig deeper into our initiatives around people, which Ina introduced you to earlier in the day.
People are always a core priority, but within this environment, it is even more critical we are recruiting the right people, moving them through the hiring process as fast as possible And training them properly and at pace. In addition to our employer brand campaigns and new global career pages, let me highlight a few specific items. As part of our response to this situation, we put together a menu of incentive options to deploy. This is an example of where our decentralized operating model shines as what we were experiencing differed materially from state to state and even from market to market within states. We collected all the various ideas from our business units as well as our central HR group, created a menu for our operating vice presidents to choose from And then empowered them to take the actions needed by market.
We are actively tracking the results of these various initiatives to track applicant flow and retention With the view we will ultimately utilize the best performing ideas. I am most excited about our merit based incentives, Where we reward our employees for execution at the store level and establish stickiness to our employer brand. This has enabled us to respond at the appropriate level by micro market and manage costs while doing so. Next, we recently put in place a new assessment tool that predicts if an applicant is likely to be a good fit Or not. When we piloted the tool, we saw clearly that turnover levels were much higher for candidates that were predicted to be poor fits.
It cost us on average $1500 per new hire, so getting this right is of significant value. We have now rolled this tool out across our entire network. Next, in excellent interviews, the number one reason stated for leaving us was not feeling properly trained to do the job. You heard Ina talk on gamification and bringing content alive in a fun way as well as an extreme focus on relevance of all training performed. Further, we have seen the success of Uber and Lyft and the desire for workers to have flexibility.
We have multiple pilots going on that enable this flexibility And allows individuals to perform specific tasks they sign up for. Initial results have been very promising at attracting applicants and filling the Last, at the store level, we look like the communities we operate in. Above store, this falls off. We are bringing visibility to this, putting in specific recruitment and development practices and setting clear targets to change this. Let me now pivot to additional specificity on managing cost and how we are offsetting significant wage pressure.
Every minute of labor in North America cost us $70,000 We have a standard labor model that is deployed across our North American network. This model generates hours based on time studies to perform every task that must be undertaken at our stores and is routinely updated. As part of this model, we identified in excess of 60 hours of administration time our store employees spend each week. We are aggressively looking to eliminate these hours through technology innovation you heard Deb speak to, automation and simplification. Our goal this year is to eliminate 1 third of these hours, and you see this on the slide several initiatives that make up this 20 hour reduction.
80% of this goal is already completed or within rollout. These reductions not only enable us to control cost, But also allow our employees to spend an ever increasing amount of their time worked serving our customers, which of course is our highest priority. We'll now turn to our customers and our focus areas in how we are executing initiatives. You heard Kevin discuss at length our new fresh food fast offer. Our job in operations is to physically implement and then execute the program.
Every piece of this implementation and execution is focused on maximum efficiency. In the overwhelming majority of our stores, We place the ovens directly next to our checkout area and ensure the product is placed for sale as close as possible to our ovens, as you see in the picture on this slide. This enables the customer to see the food being prepared and the fewest steps for our employees. The tools to ensure food is always safe, employees are trained properly that we are producing the correct amount of food to maximize sales, while minimizing waste are digital, take advantage of AI and again are designed for maximum efficiency. The end state result is that the additional labor hours needed to execute this program is between 3:5 hours per day.
Let's now turn to beverages. The number one reason customers choose to stop at one of our stores is because they are thirsty and want a beverage. We made strong gains in market share across the beverage categories during our most recent fiscal year and wanted to share some of our initiatives. Pace of innovation in the beverage space continues to accelerate, both with the creation of new products as well as package sizes. Leveraging our scale and deep relationships with our vendor partners enables us to capture new products first and get them across our network at scale.
Further, it allows us the opportunity to be the sole launch engine of specific new products as well as create unique to Circle K flavors. The hot and cold dispense categories were some of the most challenged during the pandemic and are categories of traditional strength for us. With the pandemic fading and traffic picking up, we elected to launch an innovative beverage subscription program to both drive traffic and to bring focus back on these core categories. Initial results of this program are encouraging and we see sign ups ramping up. Last, we have proprietary technology with our lift screens that you have heard discussed earlier.
During my entire career in our industry, players have tried to get cashiers to actively suggest to sell without a great deal of success. Lyft enables this to happen while making it fun for our store employees as they are always offering a good deal and or products with strong correlation driven by data analytics. We create competition at the store, market and business unit level, and our conversion levels continue to grow. Lyft has proven to be a strong driver of basket growth for us over the past couple of years. Now let's turn to age restricted products.
Consumers of age restricted products primarily look to the convenience channel as this chart highlights. We have been responsibly selling these products for decades and continue to take market share. In the traditional age restricted categories, Similar to beverages, innovation or new products in the various categories continues to ramp up. We see a new emerging category in this space, cannabis and we'll share some of our thinking and activities. The U.
S. Is easily the largest cannabis market in the world. Today, approximately 20% of the total market is legal. As this chart highlights, Cannabis is anticipated to grow to a similar size to nicotine by the end of this decade and is already material today. This slide highlights the current state of cannabis across the U.
S. By state. While cannabis is currently illegal federally, active discussion continues within the U. S. Congress.
Now let's move to our activities in these categories and start with nicotine and first cigarettes. Cigarette use is declining and we expect will continue to decline. Increased taxation and regulatory initiatives such as floor pricing and or menthol bans, Which already exist in some geographies, we believe will continue. We have been consolidating and taking market share within cigarettes for many years And our focus is to continue to do this as this category continues to decline. However, nicotine as a total category, As the previous chart highlighted, continues to grow.
Other tobacco products, moist tobacco, non combustibles, vapes, white nicotine products It's where innovation or new products is happening at pace and where we have been focused on being first to market. Over the past 24 months, We have upgraded our backbars across our U. S. Network, adding additional space to make room for additional other tobacco products as is shown on the picture on the left. This past year, our total gross profit from other tobacco was very close to our total gross profit in cigarettes, And we expect other tobacco to become the majority of profits within the nicotine space in the near future.
Let's now turn to the alcohol category, where we continued to add space through cooler doors and beer caves, as you see one pictured here. We were early to hard seltzers and have benefited materially as these products have experienced explosive growth. Similar to seltzers, We remain laser focused on innovation and new products and package sizes to be early within the growth stage. We are expanding our wine offering and hard alcohol offering Across geographies where we are able to sell these products. Last for this slide is lottery.
Lottery is our 4th largest category and a leading reason customers come to visit our stores. Roughly 75% of the category is scratch tickets, We have been actively working with the various states to add lottery vending machines. These machines drive higher sales, reduce wait times in our stores And leads to lower labor needs. We signed an initial agreement with Jackpocket in November of this past year. Again, Jackpocket is an app based electronic courier service that allows customers to purchase state based lottery tickets at home or out in their communities.
Currently, Jackpocket covers approximately 27% of our U. S. Stores. We expect this to grow to 43% by the end of this year. We are excited about the potential of this relationship.
Last for Age Restricted, what are we doing in cannabis? Our current strategy with cannabis is to lead in Canada and prepare the U. S. In Canada, we currently have ownership of just over 22% of Fire and Flower with a clear path to majority control. Currently Fire and Flower is operating 81 stores and has a well advanced strong digital platform.
Further, we have 2 Tweed stores in Ontario operated by licensees. Going forward, we envision a mixed operating model of corporate and licensee run locations. In addition, we envision both standalone cannabis stores, In addition, we envision both standalone cannabis stores as well as co located stores attached to our existing convenience fuel locations. We have 2 co located stores currently where total four wall traffic, fuel volume, sales And EBITDA is up significantly since adding cannabis. We have a strong pipeline in Canada and will open many new stores over the next 12 to 18 months.
Now pivoting to the U. S. We are participating through NACS with regulators to shape the framework for the cannabis industry. In addition, we have a current piece of strategy work underway that we will conclude in the next couple of months to define our participation strategy and associated timing. Let's now turn to fuel and bringing Circle K fuel to life.
We know that greater than 70% of our consumers associate the brand of the site with the branding that is on the canopy. So while already a Circle K convenience store, this is a big deal regarding bringing awareness of our brand when we switch to Circle K Fuel. We also know that some of the oil company brands we are taking down have strong card and loyalty platforms and brand loyalty specifically related to premium gasoline. Our job in operations is to bring our brand to life and ensure we are keeping our current customers as we make this change. We do this through a before, during and after program that we basically poached off of our European colleagues.
We start 60 days before the actual physical change and continue focus activities 60 days post. You see examples of these Activities within the pictures on this slide. Let me highlight a couple of these. First, the move to Circle K Fuel with our scale opens up a huge opportunity for us with fleet or business to business customers. We are highly active in educating and enrolling customers onto this platform.
2nd, we ensure customers know our fuel is guaranteed and we stand behind its performance, while highlighting our premium fuel Has higher levels of additive than required by regulation to keep their vehicle performing at optimum levels. Going to finish with queue lines. We started piloting queue lines more than 18 months ago. Feedback from our customers was extremely positive as the chart at the bottom of the slide highlight. Customers like the organization, speed and easily identifiable The items we placed in these two lines achieved significant sales growth, and most Importantly, we realize overall sales and margin growth when we install these queue lines.
We have developed a turnkey solution Where all elements, shelving, coolers, ice tubs are completed in one overnight shift with all product placed and ready for the next morning. We are ramping up our activity and deployment and plan to have a minimum of 3,600 of these queue lines in place by the end of this fiscal year. At scale, this initiative will provide meaningful P and L impacts. So to summarize, I really appreciate the opportunity to speak with you about our North American operations. We are focused on our people and our customers And ensuring the culture that has served us well for decades remains deeply embedded.
The labor market has been very challenging, but we believe we have the tools to respond While controlling cost, we are excited about the many initiatives we have in the pipeline to drive organic growth. We believe the cannabis category within age restricted is exciting opportunity and a natural extension as we have been responsibly managing these categories for decades. Converting to Circle K Fuel is a game changer for our brand and our relevance with consumers, and we are well on the journey of showing we can deliver these brand benefits While adding to the bottom line. I will now hand it over to Claude to talk about our global financial incentives. Thank you.
Good morning and afternoon, everyone. Thank you, Alex. A lot of great projects in the North American operations, a lot of challenges with COVID in the background, but all the good To deliver a strong performance. Let me introduce myself. I'm Claude Tessier, CFO of the company.
I have the joy of leading the global finance and legal teams. I joined the company almost 6 years ago. My background is 30 years of retail experience with 3 major retailer, a global warehouse club operator and 2 major I'm pleased today to introduce you to the cost optimization project, look back at the past performance, Discuss capital allocation and how we position ourselves in the market and also review all the strategic initiative and their contributions to organic growth. Let's start with the cost optimization project. As much as we have performed well historically on cost containment, We felt when putting our strategy in place, we could generate significant value by creating a platform to optimize our cost base.
We started with the vision of reducing our cost base by $350,000,000 by 2023. With an addressable cost base of $5,600,000,000 We looked at the biggest cost driver across the organization and identified more than 150 Potential areas of cost reduction are opportunity to use our scale and reduce our cost base. We entered into a comprehensive cost reduction program and decided to tackle many areas of our business model by using the following levers: Business process optimization, mostly driven by the reengineering of our processes with a focus put on store processes. The operational excellence program is driving significant value by reducing admin hours at store level like you've seen in Alex Miller presentation. We also want to focus on good not for resale spending and put scale at work.
We targeted categories like repair and maintenance, We discovered that the decentralized business model had left some low hanging fruits. Most of them were to scale some BU's activities in the area We were looking into and renegotiate contracts with the strength of the group. Some example of the work done in saving generated, We unveiled 450 areas of opportunity, 150 projects prioritized to deliver saving, And we already completed 82 of them. Example of projects, reducing vendors in construction from 163 to 23, Enabling us to reduce costs significantly in store construction, some reduction in same reduction in maintenance moving from 7.52 vendors to 100 Scaling some marketing supplies and material also and also scale vendor relationship in marketing. Overall, one of the top initiative of the strategy and will deliver a range of €350,000,000 to €400,000,000 of savings by 2023, outpacing our initial estimates and goals.
As we speak, we are well into the first half of the program, and we are looking forward to generate as much in the second half of the program to get to the $400,000,000 range. Let's now review our historical performance. Since 2011, we have delivered strong and consistent results with close to 10% of compounded average growth in merch and service sales and gross profit. This came with a strong commitment in age restricted products, development of coffee and cold dispense categories, On the go offer targeted at our core customer. We also had 11.8% CAGR growth in fuel volume sold With a strong brand strategy, a good strategy in procurement of fuel and adapting pricing strategy for fuel products That led to more than 21.2 percent CAGR growth of fuel gross profit dollars.
We are able to achieve the gross profit growth with a Sound cost discipline that enabled us to keep our cost base growing lower than inflation on a comparable basis. We achieved this by using our ability to share best practice with our business units throughout the network, using our decentralized business model, operating with cost efficient systems and finally, benefiting from the cost optimization program. As you can see, the long lasting equation has been in the works for more than 10 years. The equation of Strong revenue and gross profit generation combined with outstanding operational skills and a strong cost discipline has been able to deliver a long streak of great performance by generating 21% CAGR of EBITDA growth since year 2000. Impressive to see the starting point at $100,000,000 in the year 2000 and the road to the $5,000,000,000 of EBITDA that we achieved this year.
With our financial discipline, we continue to drive strong free cash flow. Compared to our peers, we can use scale and geographical to reduce cost of fund and taxes resulting in increased cash flow from flow conversion. This has allowed us to convert over 45% of EBITDA to free cash flow since 2011. This free cash flow, Depending on the cycle, we'll be either allocated to acquisition or debt repayment. In fiscal year 2021, free cash flow reached 2,300,000,000 after a COVID year where CapEx were reduced to 1,000,000,000 when construction, maintenance And deployment of activities were slightly decreased due to the different market restriction caused by COVID.
Next fiscal year, we will increase net capital spending to a range of €1,600,000,000 to €1,800,000,000 to We achieved a 35% to 40% EBITDA allocation to CapEx after a lower year in fiscal year 2021. This capital will be targeted towards new store development and deployment of our Fresh Food Fast program and digital initiatives supporting the strategy. Being disciplined is not only a question of cost containment. It's also a sound strategy to deliver shareholder value. Since 2018, the beginning of our Double Again strategy, we realized an EBITDA growth of 19.3%, generating $2,100,000,000 of incremental EBITDA.
Helped this year by the share repurchase of $33,000,000 for 1,100,000,000 EPS improved at a CAGR rate of 18.3% during the same period. Furthermore, cumulative free cash flow during the same period amounted to €6,200,000,000 and we managed to grow the return on capital employed from 10.7% to 15.9%, all this Adjusted for IFRS 16. The improved return on capital employed is caused by the combination of diligent capital allocation And expected return on capital expenditures, return on capital projects typically generates between 50% 25% return. Saint Emens where potential returns on the acquired assets allowed us to create shareholder value With the synergies after 3 years and finally strong organic growth coupled with a strong focus on managing the working capital. Let's focus now on what was said in 2018.
When we launched our strategy to double again, We said that we would double our EBITDA moving from a model where acquisition historically were contributing 70% of the growth and 30% was coming from organic growth to a more balanced model at fifty-fifty. Secondly, we would improve return on capital employed to bring it over 15%, reduce adjusted leverage below 2.25 times And spend CapEx at a rate of 35% to 40% of EBITDA. What have we delivered? We achieved from fiscal 2018 to fiscal 2021, a CAGR growth of 18.9%, well in line with our goal of doubling EBITDA. Return on capital employed was very good at the end of this year and stood at 15.9%.
The adjusted leverage ratio target is also well in line With a strong balance sheet, the adjusted leverage ratio at the end of fiscal year 'twenty one stood at 1.32 times. With our commitment to investment grade rating of BBB, the balance sheet capacity sits well over €10,000,000,000 And give us ample flexibility to be active in the M and A field and also use opportunistically our share buyback strategy. Finally, the 5 year average of CapEx to EBITDA ratio is at 32%, lower than our original objective. This is a result of the reduction of CapEx in fiscal year 2021 caused by COVID. Increasing CapEx level next year to €1,600,000,000 to €1,800,000,000 will allow us to maintain the ratio around 35% to 40% over the 5 year timeline of our strategy.
Let's now discuss capital allocation. We are disciplined in allocating capital internally. We are allocating between 35% 40% of capital to capital expenditure with the mix of approximately 35% On network development with new to industry stores and relocations, 30% on commercial programs like fresh food fast, Development of our Car Wash network, cold and hot dispense also 25% also on stay in business capital, including IT Rebranding and remodels and finally, 10% on the emerging businesses and innovations. This 35% to 40% put back into the business, these leaves after taking care of interest And taxes approximately 45 percent to free cash flow. We are also committed to continue to regularly grow our dividend And we will use excess free cash flow to reimburse debt if the adjusted leverage ratio exceeds the target leverage Of 2.25 times.
We will use the remaining free cash flow for M and A and repurchase shares opportunistic. Last year, free cash flow were at $2,200,000,000 allowing us to continue to meet our financial obligation on our debt, But also to use it to increase the dividend by 25% and repurchase US1.1 billion dollars of our shares. We also, like Ina mentioned earlier, issued this year our first green bonds. Through a €1,000,000,000 debt issuance, We have allocated €315,000,000 with our Green Bond status, a successful outcome and process for the first of its kind in the convenience store industry. The proceeds of the bond will be targeted at the acceleration of our mobility journey through electrification and reduction of energy consumption throughout the network.
As Brian said earlier, M and A will continue to be an important part of our value creation equation. We were pleased to this year to integrate in our group 350 new stores through M and A, But we are mostly proud to have completed our first acquisition in Asia, creating with a strong management team of Convenience Retail Asia, The platform for future growth in Asia. We're excited to have them with us, and they already started to share best practices with the broader group Like Kevin Lewis talked to you about earlier today. Our team's expertise to integrate and deliver the synergies associated with the transaction I've been proven multiple times with 65 deals made since 2004 and the integration of more than 10,000 stores. The ability of our team to access synergy during the acquisition process and then integrate the activity into our operations Always putting culture and processes at the forefront have created value historically.
We have with our major acquisition as well as smaller ones been able to generate 44% of the acquired EBITDA in synergy during those years. Always meeting or often overachieving our estimates and also our principal source of synergies are driven by our scale and low cost base to operate stores with synergies in areas like fuel procurement and pricing, Merchandising and procurement and finally, overhead expenses. This combined with our low cost of fund and geographical diversification Position us to deliver superior returns on acquisition and maintain the strong return on capital of the company. We intend to continue to do so in the near future. You've seen in today's presentation, we're working on multiple initiatives.
Some are well advanced, other are starting. But overall, we are pleased with the level of progress made so far. Let's review them, starting with Fresh Food Fast. The Fresh Food Fast initiatives is ramping up with An objective of close to 6,000 stores in fiscal 'twenty three in North America. We currently have 1500 stores completed And at the end of fiscal 2021, we will be deploying 3,000 more stores this year and complete the rollout in the following year.
The expected benefit for Fresh Food Fast are in the range of €60,000,000 to €80,000,000 for fiscal year 'twenty three And a 5 year ambition of €150,000,000 to €300,000,000 of EBITDA. Next is local pricing and promotions. This very successful program will bring us a range of improvement for merchandise gross profit of €150,000,000 to 2 €10,000,000 at the end of fiscal 2023, €210,000,000 to €330,000,000 at our 5 year ambition. 9 of the 28 BUs are deployed and the goal is to have majority of the BUs deployed by the end of fiscal 2022. Merchandise assortment will also contribute to improve margins with a range of €30,000,000 to €40,000,000 at the end of fiscal 2023 And €90,000,000 to €170,000,000 at the end of the program.
Fuel, we heard from Louise talking about all the fuel initiative, Many initiatives on the procurement side and also on the selling side of fuel. The combination of initiative will be generating Between €100,000,000 to €200,000,000 until the end of fiscal 2023 with a 5 year ambition of between €300,000,000 €400,000,000 Cost optimization, you've seen the program, we just talked about it and we're well advanced, half of the program is complete, Reaching close to €200,000,000 of savings at the end of fiscal 2021, we expect another €200,000,000 will be realized in the next 2 years To bring the total benefits of at the end of fiscal 'twenty three at the range of €350,000,000 to €400,000,000 The 5 year ambition is to bring the program to a total of €450,000,000 of savings. Finally, network development. The expected range of benefits is between €320,000,000 €500,000,000 This objective will be achieved with new stores expanding in high foot traffic area And urban locations and the remodel program for the North American and European stores. The total of our targeted initiative is €1,000,000,000 to 1 €4,000,000,000 for the end of fiscal 2023 and between €1,400,000,000 2,100,000,000 for our 5 year ambition.
We are considering that these initiatives are going to contribute over and above our current typical growth rate. In addition, we are still working on other initiatives. Overall, in our strategy, if you remember, we had 25 identified initiatives and we quantified for you 7 of the most important. Other initiatives that you will that you heard today We'll contribute significantly. Example, Circle K Franchise Model Initiative, Restricted Age Products Initiative on nicotine, alcohol, lottery and cannabis strategy that Alex exposed to us.
There will be benefits coming from our Investment in digital and other emerging businesses and cost saving initiatives and benefits from a lot of the HR initiatives Namely, gaming gamified training, better hiring practices and on and on. Finally, We also need to consider current market trend, top line inflation, wage pressure, fuel margins volatility and also Normal economic growth coming out of COVID and recreation of fuel volumes to extrapolate EBITDA into the future. In conclusion, we're confident that we will be hitting our Double Against strategy goal by doubling EBITDA in fiscal year 2023. Considering all the organic growth initiatives in flight today, the management team behind them and the early result of our initiatives, We are confident to deliver strong organic growth in the future, and we will be delivering on our goals of doubling our EBITDA. From the original position We stated for to account for IFRS 16 of €3,300,000,000 of EBITDA, we need to achieve €6,300,000,000 of EBITDA in fiscal 'twenty three, including our IFRS 16.
We originally stated A reversal of the 70% M and A mix to 30% organic growth to a M and A to organic growth mix of fifty-fifty. Today, we think that with the level of activity in organic growth, we will be able to deliver a 60% organic growth mix To get to the €6,300,000,000 made of €1,200,000,000 of M and A and €1,800,000,000 of organic growth on top of the €3,300,000,000 of 20 18. Let's do a little exercise to validate that this is consistent with what we shared with you today. Assuming a starting point of €3,900,000,000 in Fiscal year 2019, before any COVID impact, growing EBITDA CAGR by 2.5% with no major initiative Would put us at €4,300,000,000 in fiscal 2023. We need to factor in on top of this figure all the initiatives that we have showed to you Totaling €1,000,000,000 to €1,400,000,000 The range would be €5,300,000,000 to €5,700,000,000 of EBITDA, topping our estimate of €5,100,000,000 Alternatively, we need also to factor in the capital that we have spent to support the business, Assuming that we are returning 20% on 66% of our capital, not taking into consideration stay in business capital, We will potentially spend close to €6,500,000,000 of capital during the 5 years of this strategy.
This would add €900,000,000 of profit on top of the 2.5% base of organic growth to get to €5,200,000,000 in line with our estimates. We also get a lot of questions around fuel margin and what is our estimate of organic contribution to fuel margin. Starting with the premise that fuel margins slowly adjust in the market to cover the inflation, We have demonstrated this trend in the past while looking at historical data. We could take our same methodology and apply it to fuel. If we use 2019 fuel margins at 24.75% with the same inflation rate of 2.5%, This would bring the CPG before initiatives at a minimum of $0.27 And adding on top $0.02 to $0.03 per gallon for initiative, we would expect fuel margins to be in the range of $0.28 to 0 point 3 $0.30 In the next 2 years for ACT, understanding that variation in market volume as we've seen during COVID could affect the outcome.
We feel optimistic about our ability to continue our strong performance. And furthermore, to continue to be a leader in our industry, We're well positioned to do so and to deliver strong organic growth with our geographical diversification, our exposure to the future of mobility, Our ability to leverage our scale and technology and invest in breakthrough innovations, our strong skills On operation and marketing and the leverage that we've created and our strong financial position and availability to low cost of funds. And Finally, our sound and disciplined M and A skills fueled by our low cost base and ability to deliver synergies. All this Made within a strong culture, these strengths will help us to continue to outperform our peers in delivering strong EBITDA growth And free cash flow conversion as well as maximizing our return on capital. On this, thank you very much.
We will take a short break and be back with a Q and A session.
Welcome Welcome back, everyone. I'm Matsou Deshneaux, VP, Finance and Executive Advisor. I'm pleased to be with you today, and I hope you enjoyed Thank you for the next 30 minutes or so, we'll be addressing the questions you submitted earlier, most of them, but not all. And to do so, we've assembled most of the executive team here in Charlotte today in North Carolina, and we also have Ina and Han Solav In Norway, in a studio in Norway. So without further ado, we'll roll with the question.
And the first question For you, Brian, it comes from Irene Nattel at RBC. Could you outline how you think about key factors behind M and A? What kind of financial metrics and returns do you look for? And is hurdle rate higher for adjacent segments?
Irene, thanks for the question. I think we've been pretty true to our formula over the years. 1st and foremost, we're looking at our core We have a lot of synergies, both hard and soft in our core business. Geography wise, we love to build scale. We love to build market We love to build brand awareness to where we are.
If it's a new geography, I'd like to be 1 or 2 share or have a clear path So 1 or 2 share in that market. So those are important, and I think they yield again soft benefits with the consumers, Yield hard benefits in terms of cost synergies. United States is a great platform for us. We've got tremendous synergies here. As you look at our past transactions, 30%, 40%, 50% of EBITDA has been achieved on a number of our files.
And so I would say that's our priority. As I said in the presentation earlier, we'll be opportunistic around Europe and Canada. We've got good networks there and happy to build on them if we have the right opportunity at the right return. And then finally, we did touch on Asia. Asia is a broad term for the most mature markets in the world to developing markets, which are very much in their infancy.
So We have 5 or 6 countries that we think fit the profile of what we want to build off of, and we're very pleased to close on the Hong Kong transaction this year. Not only gives us a nice footprint in Hong Kong, but it gives us the management team, tools and capabilities to do more in the region. I want to touch on just adjacent spaces, because I know that's been on people's minds as well. When I think about that, We talked about channel blurring a lot. And really that's accelerated during COVID with home delivery, click and collect, curbside.
If you go into a dollar store or you go into a drug store, you go into one of our stores, that front end start to look awfully alike. We're trying to Meet the customer where they want, when they want. So as we think about adjacent retail, it's where we think we can bring An experience to the customer in 2 different channels, let's call them channels, I guess, that bring value to more than 1 plus 1 would equal more than 2. We're able to meet them at different needs dates in their life and bring value, making their lives easier. Today, I think we are and hopefully, you heard today that You're working a lot on the customer journey, whether that be data and analytics, whether that be our operations excellence, whether that be Our innovation and technology, and we think that has brought applications across retail.
And if we find opportunities where we think we can bring those to bear and create synergies both at a high level with the customer standpoint, customer side, but also in our traditional cost and our which is part of our DNA, and I think we're open to looking at them.
That's great, Brian. Thanks. Thank you. Staying with you and in M and A, Karen Short from Barclays is asking if the If the political environment were to become more favorable in France, would you consider reengaging with CapEx?
I'd say, 1st and foremost, I've been very proud over my 21 years that we've focused on doing the right thing for our shareholders. I certainly regret during that process we took a few people by surprise when that news leaked. Looking at Carrefour itself, we thought it prevented some unique opportunities. A large network of over 8,000 convenience stores in the network, presence in several fast growing markets and opportunities to consolidate in some of those fragmented markets. And then finally, I think it had an attractive valuation relative to the peers and in the context of the opportunities and synergies that, that file had.
Today, I don't think we see that existing. As we look closely at grocery Throughout North America and Europe, I'm not sure that exists in the channel today. So we've probably turned our focus elsewhere. And then finally, we did announce when we parted ways Couche Tard, in terms of bottom line benefits.
Thank you, Brian. So Claude, still on M and A, a Question coming from Bonnie Herzog at Goldman Sachs. She's asking how willing are you to make an acquisition Outside of your core, to evolve your business faster. And what are the pros and cons of doing this?
Well, We're very excited about the opportunity to do so. So we're excited about the launch of our Circle K Venture Fund That that I referred to in the presentation, so $100,000,000 that we're going to invest on the next 5 years. So It's going to be targeted into specific area that's going to help us in our journey, our customer journey. So we're going to focus on The store, store processes, look at the inventory, how we can control better with using the new technologies. We're going to also look at the customer journey, the customer interaction in our store, how we can go a bit more frictionless.
And we're going to look also at Products, with Kevin also and his team, look at all the development that could be applicable to our business in the product area. Finally, we're going to look also at the EV opportunity that we have also in the same venture, sorry. So yes, so doing so, we're going to look at this with the same discipline that we have when we're looking at M and A. And we're hopefully We're going to take some bets, and we're going to do develop also partnerships with some of our investments in there.
Thank you, Claude. So shifting gear a bit towards our food offer, Kevin. Our next question comes from Karen Short at Barclays. And she's asking, when you look across the C store competitive set in the U. S, how would you rank your fresh food fast offering versus your peers?
And what do you think you need to do to continue to improve on this offering? Great.
So Karen, thank you for the question. I wish actually we were together. It's nice to see my colleagues from around the world, Yna and Hans Olaf virtually, of course. But I really wish you had the opportunity To taste along with us some of the food comes out at the other end of the day. And I'd really encourage you whether it's the new tacos in Texas, my favorite, the brunch burger Or the Turkey Flatbread, the products are really remarkable.
For me, it's obviously, the products are important. But if you think about how we're differentiated, we're really
after that occasion, which is channel independent.
It isn't just about After that occasion, which is channel independent, it isn't just about C store, it's about QSRs, it's about grocers, it's about all of the different places that people can get food. We believe our offer is compelling for a lot of reasons. It's quick and easy. It is remarkably diverse in the products that we can sell and do sell around the world. And it tastes great.
If you also think just operationally how we're different. We've talked about low labor. It's never a great thing to think about untouched by human hands. But if you think about what we've learned about in COVID, the ability to have these made in a very different way than a distributed environment where you've got tens of thousands of people having to relearn these And part of our business, if you think about the variety of store sizes, formats, traffic volumes, preferences that you'll see not only in our existing portfolio, but In the portfolio of the future, this process, this platform, as I talked about in App Store, is able to accommodate a wider variety of those dynamics Then you would see in a traditional either QSR, C store or other environment. So please try the products, tell me what you think.
The operational model behind it is Now you've asked what are we doing differently. We're going to be advertising and talking to consumers more. We're going to be continuing to build our food culture, Whether it's additional products, additional categories or a combination of both, we now have the ability to populate this with a whole series of things that we know our consumers are going to love. And so far, the data have shown us exactly what they've done.
Great, Kevin. So sticking with you and food, you've been sharing quite Clear revenues and EBITDA ambitions today. So Chris Lee at Desjardins would like to know what are the key assumptions on morning daypart returning to normal And consumer purchasing behavior post pandemic.
Chris, thank you. I don't normally celebrate being behind in the category, We kind of have a unique opportunity. We haven't across the world, particularly in North America, been the place that our consumers have Stopped in the morning for that breakfast daypart or by the way, call it breakfast daypart, equally they're filling up for their lunch occasion in the morning hours as well. What's really nice is traffic comes back and specifically as we see vaccine vaccination rates increase, we do see the traffic come back as you've heard from a lot of my colleagues already today. They're going to be surprised and delighted with an entirely new offer.
We see that folks are coming in and saying, wow, I didn't realize you had sandwiches, didn't understand that there was these new breakfast I didn't realize that I could get lunch at the same time I'm in for breakfast because I know I'm going to actually have a longer day. So for us, the ability to compete across All of these occasions is pretty unique. And as we roll out not only the 1500 stores that are there now, but to the incremental 2,500 we have, Morning daypart is going to continue to be important, but again, that's a combination of breakfast and lunch that we'll see. And I'm really excited with the consumer response that has been As we measure our net promoter score or just our own food journey to see what's going on. Of course, as we get out of COVID, we'll see what happens, but first indications are really positive for
Thank you, Kevin. So shifting our attention to fuel a bit, starting with you, Brian. Peter Sklar from BMO would like to you To discuss the potential changes you may see in our U. S. Fuel market as a result of the Biden Energy Plan.
Is this a threat or an important thing for Coosta?
My initial reaction is anytime the government gets involved in free markets, it creates opportunities for smart and nimble companies. So I'm an optimist, so I think there will be opportunities. But
I think we're focused on
the customer, whether that's in the United States or it's in Norway or any of our other markets. The transitions are going to occur at different paces, and we're going to do what's right to make sure that we're part of the solution for our mobility customers. And we're seeing, as Hans Olof shared, that's important to have both solutions viable for our customers. So I'm okay with it. I think the government is playing their role.
It will create opportunities for us, and we'll do the right thing. It's a massive industry, and I liken it a little bit to Cigarette business, I've been getting out of that for the 35 years I've been in the industry, and we continue to do very well in that. We've aggregated Demand from weaker players, other channels, and so I
think we're going to do both
for you. We're going to work on providing the best experience we can to enable us to take share from a very massive market globally, at the same time be a part of the transition as people adopt new technologies.
Thank you, Brian. And Louise, several of our investors and analysts have been asking on you to elaborate on the shift in performance When we rebrand fuel to Circle K, both from a volume and margin perspective, what proportion of stores can accommodate that? And what are the risks as you moderate your importance with Global Fuel Brands?
Yes. Thanks for the question. So maybe just to recap on what our U. S. Brand rollout looks like.
So we're around 3,000 sites now, and we'll be rolling out the Circle K brand Pretty much everywhere where we don't have a long term contract in place. We have about 800 sites this year and then around 900 or So that gets us to about 80% of our network in the U. S. By FY 'twenty five. So we're really optimistic about being Circle K Fuel, but we really do think about that across our whole business, as Kevin and Brian Talked about earlier, being able to identify to our customers what Circle K stands for on the forecourt and in the store By our most notable assets, which is the Canopy, the mid sign, it invites our customers in to experience The full Circle K offer and consistent across our network.
It doesn't come without risk. And as Alex talked about earlier, We need to reassure our customers that the quality fuels that they're used to buying from Circle K maybe under another banner are going to be the same and probably better under the And so getting our store teams working hard and using the lessons learned from Europe, which is fully rebranded to Circle K, It's a key part of our initiatives. Then in terms of performance, we see different areas perform in different ways, The unlock it gives us across our end to end supply chain, we believe is beneficial, and I outlined our ambition for that total end to end prize
I think it's fair to say it's a very short ROI, very short payback and lays a foundation for a lot of other things, including B2B and other things in the future. Yes, that's right. Good.
Yes, talking about B2B, Luis. Yes, next question from Chris Lee at Desjardins is asking why is the U. S. B2B fuel market attractive? How meaningful is the opportunity longer term for Cushtard?
And is M and A part of the growth strategy in B2B?
Yes, no thanks. As Hanzolov and both Alex talked about earlier, B2B is an important part of our business. B2B in Europe has been a key strength of ours and having that direct close relationship Has been important to retain customers, but also build a closer relationship with those key high frequency use customers, Not just for fuel, but also into our wider offer. Today, we don't have that direct relationship on our And so one of the really big opportunities we have with the rebrand effort is to build that direct Circle K to B2B customer relationship And get to know those customers better and closer. And then through that effort, we're able to bring more frequent visits to our sites And also claim more of that, huge market across the U.
S. B2B customers are very different, from different locations, types of vehicles, Fuel types that they want. And so for us, the key opportunity is building direct relationships, Getting the offer right for them, getting our network right for them and then being able to recognize that network all the way across the U. S. Using the experience we had from Europe.
Thank you, Luis. Deb, several a lot of our investors and analysts Would like to know more about our curbside pickup and delivery initiatives. And more specifically, they're asking how are the tests going With your curbside and when do you plan to expand beyond Arizona? Will you ever build a first party delivery solution?
Thanks, Matthew, and thank you all for the question. So today, delivery curbside is not a material part of our transactions, but We all know that COVID has changed the way that we shop. So, there's definitely something here that's going to stick going forward. And with 3,000 stores, as I mentioned earlier today, already using some form of delivery or curbside, we're well beyond a test in Arizona. Now we are using a combination of our own tech.
We did build something. We spun it up in just actually a couple of weeks at the start of COVID. And we have built some tech. We also are partnering with aggregators. At the end of the day, we know it's worth it because as I mentioned earlier, Basket size is bigger and it really plays to our strength of age restricted products.
So we want to lean in on this, but we need to do it in a smart way. So we're considering How do we best go to market and partnering with aggregators has some open questions for us. Who is going to pay for the customer acquisition? Who is going to own the customer data and that customer relationship? And owning the customer relationship is really important for us.
So more to figure out Fair, but well on our way on this journey of delivery and curbside at Circle K.
Thank you, Deb. So we'll take a trip to Oslo, Norway, With the next question being for Hans Olav from Irene Nattel at RBC. And Hans Olav, Irene would like to know what has And to your aggregate fuel demand and gross profit dollars in Norway as EV penetration has grown. What can we learn or extrapolate from that experience?
Thank you, Arin. Just to start with Norway have continued to deliver record high results also the last 2, 3 years. And what we have seen over the last 2, 3 years is that it has been a huge decline between 2% to 5 A bit more in the B2C market, but that has been upheld by the B2B market. We have also seen that the players in the market have behaved relatively rationale. So The decline in volume has been upheld with slightly higher fuel margins.
It's important also to mention then that Norway is One of the business units in our company that have the highest fuel margin, so it's difficult to predict the future, But we expect that we will see some of the same behaviors in most markets. I think just to add to that also, there is a lot of learnings from Norway to extrapolate, but we have started this journey Driven by high subsidies and taxation, and we have started the journey where we had cars with Golf with our LEAF with 1 150 to 200 kilometers reach and 50 kilowatt charging. Now we see cars coming into the market with 500, 600 kilometers reach and 200 to 300 kilowatt charging capability. So this is an early stage And there is a lot of learning to have also going forward.
Thank you, Hansel Haff. And maybe as a follow-up from Peter Sklar from BMO. Based on what you're seeing in your pallet stores in Norway, As fossil fuel sales decline with vehicle electrification, have you been able to determine if the increase in electric charging revenues and
this case, in the investment in EV in our stores, we haven't been fully capable of replacing the fuel margins, But that's also the reason why we are looking into a wider part of the customer journey within EVs. Home chargers, workplaces, Utilities, which we also have started to test selling electricity at home, smart charging at home, And there is also opportunity in the future to look more into the pricing models for EVs, which is relatively From the store, from the forecourt and into the store, we currently have more or less the same offer as we had 2 or 3 years ago, But there is also opportunity here to gain more sales for the consumer as we have them for a longer time into the store. So there is a lot of Opportunity to explore here to make sure that we continue to have as good margins and income levels as we have had on a normal fuel customer.
Thank you, Hansel Aft. So same topic, but coming back here in North America, Brian. John Royal from JPMorgan Is asking what is the current your current expected timeline of the penetration of EVs in the U. S. And in Canada Reaching near the levels you are currently seeing in Scandinavia, what will the penetration rates look like at the end of this
Okay. Thanks, John. So I'll reference 2,030, so end of the decade. The data we see, IEA data, I would show demand is actually relatively flat and most of the improvements or I guess decline slight decline that we would see based on government data would be largely from fleet efficiency. In North America, we've got 2 competing effects.
We've got more efficient engines And then we got bigger vehicles. So net net, the next 7 years, not a big effect. And then as Louise reminds me, The size of the car park population in North America is massive. The average age has just hit an all time high with an average 12 years. And so when you think about the time it takes to churn that fleet, it's going to be a while.
So we anticipate decade being relatively flat and then starting some attrition beyond that, and we'll follow that closely. I think to add on what Hans Olof said, I we've learned a lot about what sites are good EV sites and which ones aren't. We know rural is not a great candidate for charging. That's largely going to be at home. Our network, we tend to skew suburban highway, not so much urban.
So we think we've got a higher than average percentage of our sites that will fit the EV model, and we're going to invest appropriately to follow the customer.
Thank you, Brian. So our last question For the day is for you, Kevin, and touches on loyalty and comes from Mark Petrie at CIBC. So Hansel has shared some interesting commentary about loyalty adoption in Europe. Earlier, you alluded to some upcoming changes in North America. Could you please discuss how loyalty fits into your North American platform and how this fits into your plans on data driven merchandising?
Great. Thanks, and thanks for the question. Look, I'm really excited about what Hansel Oppa shared. The work in Denmark is pretty transformative And if you look at how Scott Oil and an early start in the loyalty space, we have millions of customers on that platform today. If you look across our portfolio, Sip and Save beverage subscription program, our Tobacco Club, the Extra Club, our Easy Pay program.
What you'll notice is we've been testing, piloting a series of experiential initiatives across the world. When everyone talks about a loyalty program, Traditionally, what that's meant in our space is a bit of a buying club. We'll give you points, you get a discount. What we believe are brand promises about making people's lives easier. It's really hard to deliver on that brand promise if your loyalty program is only about discounts and deals.
While that's certainly going to be a component of what we do, Our view is experience matters a lot more. What we are in the process of doing is figuring out how across everything from pay by plate, which Deb so effectively talked about, Different payment options, the ability to personalize our experiences much more fundamentally. We think those are the real fundaments of the program we're going to take forward. Quinex, we struggle with language. I don't like calling it a loyalty club.
I personally call it a fan club, because what we want to have people recognize is isn't about paying for your business. It's about providing you an experience that is so fundamentally better, saves you time, makes your life easier, that that's the reason you'll continue to come to us And actively bypass other places on the way. We have this wonderful opportunity globally, and my team is organized globally in order to use Our geographic diversity and capabilities to figure out what the right answer is. We have 4 different pilots going on in Europe right now, Hans Olof alluded to some of them. In the U.
S, we're taking all of those benefits, including some of the legacy programs we have active in a few of our BUs today And wrapping that together and what you'll see very soon is the underlying ability for us to deliver not only discounts and deals, Of course, but these differential ease experiences in a wrapper, again, I'll call it fan club, That powers to your second part of this question, this data journey. The way we get better as a company is recognizing that consumer and transactional data It's really the fuel, it's an asset for us to be able to do any number of things. Deb and I are two sides of the same coin. The line between tech and marketing is not there anymore. The fan club, the loyalty program that we described is the ability for us to make sure that the give get is right and be able to personalize the experiences around the globe.
And You'll see more over time. Hopefully, you've signed up for Sip and Save if you're in the U. S. And you begin to see what an experience really feels like. But I'm very pleased to be able to share my news
Thank you, Kevin, and thank you, everyone that submitted questions. Unfortunately, it's above the time we had today to answer those questions, but Claude and the IR team will gladly follow-up with you offline As needed. So before we end the event, I'd like to turn it back to Brian for some closing comments.
Thanks, Matthew. Thanks, everyone, for joining us today. Hopefully, you appreciate that, one, I've got a great team. I genuinely think we've got a great company With a great culture, we're focused on delivering value for shareholders. We're focused on our strategy.
I feel good about the progress we're having. I think we feel good about the competitive advantages that we're systematically creating versus a very fragmented industry, And we feel good about our ability to win in the future. So with that, thanks again for everyone for joining us today.
Thank you. Thank
you,