Good morning, everybody. Thank you for joining us today. I'm Bobby Griffin, cover Retail Hardl ines here at Raymond James, and today we have the pleasure of having Murphy USA here for a presentation. With us from the company, we have Andrew Clyde, President and CFO, or CEO, excuse me, Mindy West, COO, Galagher Jeff, CFO, and Ash Aulds, Senior Manager, Investor Relations. So Andrew, first of all, thank you for the support. You guys have always supported us here at this conference. We really appreciate it, and with that, I'll turn it over to you.
Great. Thanks, Bobby, and we appreciate Raymond James hosting as always. As a custom for us over the last few years, we have introduced our new investor deck at this conference. So we like to think of this a little bit as our investor day, to kind of get out a message tailored for this time, for the next 12 months forward. And so I know we'll have folks listening online as well. So I'm gonna use all of my time to go over this presentation, and then I know we have a separate breakout for questions. We'll skip through, but we have the always present cautionary statement on the forward-looking statements. So who is Murphy USA?
I recognize a lot of people in the room, but hopefully, we've attracted some new interested investors. We are an everyday low price retailer that serves customers that are seeking affordability. We have over 1,700 stores in 23 states. We serve over 2 million customers a day. We have developed an everyday low price flywheel that I will take you through, that is uniquely designed to serve this large, growing segment of consumers and give them more of what they need, and at the same time, a capital allocation strategy that gives you, investors, more of what you're looking for in terms of return. Here's the flywheel, and in our last earnings statement, we introduced this concept of more, and that's really what we've designed this presentation around. So we start with our customers. We're getting more from our customers.
We're getting more from the same customers. We're getting the same from more new customers. We're giving more value to those customers. We're getting more from our existing stores. They're already highly productive and very efficient, but we believe there's more upside, and with the investments we make in our scale, we can do more with less from a cost standpoint. We're getting more from our new stores. We're building new stores. We're rebuilding more stores. They have attractive returns. They're more upside on those returns because of the investments that we're making. What does that mean?
It's translating into more market share for us, and when we take volume from the competitors across the categories, and they face a number of challenges that the marginal retailers face, we're translating that into a need for more fuel margin, just to cover their cost and break even. That translates to more fuel margin for our bottom line. And in turn, what does that do? It generates more free cash flow, that we can in turn invest in price for our customers, invest in capabilities to grow our existing stores and improve them, and then continue to invest in new stores. And then with our 50/50 capital allocation mix, continue to buy back shares at the rate of 1 million shares a year.
So we're gonna go through this flywheel kind of in turn, bit by bit, and explain what do we mean by more, and what does it mean for you at the end of the day? As a retailer, this all starts with our customer. Who is our customer? These are people who are living paycheck to paycheck, who are seeking out affordability. I mean, this chart on the left-hand side shows what the number of people as a percentage of U.S. that are living paycheck to paycheck. That number was in the 50% range just a few years ago. We would argue this is the largest and fastest growing segment of consumers in America, and we're ideally positioned to serve them. We know a heck of a lot about them.
Because of Murphy Drive Rewards, we have over 4 million members, 4 million participants, and we have hundreds of data strands about them that's enabling personalization and new offers and promotions to them. When we do surveys, we get 500,000 respondents. We recently followed up a 2019 survey where we ask our consumers everything about their current vehicle, what they're driving, their interest in alternative powertrains, like EVs. We just updated that and got 500,000 respondents to that. And what did they tell us? Well, they're still driving a 10-year-old car with 120,000 miles. The difference is, that car cost $15,000 in 2019, now it costs them $25,000, and their interest in alternative powertrains is still minute.
When we think about what we're able to do with our loyalty program, it's designed to give value to those customers, and since its inception in 2019, we've delivered over $1 billion in value to those customers. A lot of that is in the tobacco category, where we're uniquely positioned as an everyday low price retailer. So we're getting more from the same customers and the same from more customers. Well, how do we know that? Well, it goes back to our Murphy Drive Rewards loyalty program, and we're updating our loyalty program on the QuickChek side, but let's stick with the Murphy one for now. In 2019, when it was launched, we have retained 65% of those members, which is an incredible statistic if you talk to other retailers about loyalty programs.
If you looked at what they were spending then versus what they're spending now, they're spending over 50% more with us, and a high percentage of them are buying both fuel and tobacco and non-tobacco, meaning they're using our entire store for their needs. What do we know about new members? Well, we can just look at the cohorts who joined us in 2020, 2021, 2022, 2023. Guess what? They're coming five times a week, just like the original consumers. And if you look on the right, the amount of money they're spending with us per month is continuing to grow, and the more they come to our store, the more they buy from us over time. Our efforts since the spin have been to lower our fuel break-even requirements, improve our coverage ratio, and increase the productivity and efficiency of our stores.
So if you take our Murphy stores and our QuickChek stores and measure them versus the top, second, third, fourth quartiles, our stores are just more efficient and more productive than the industry average. And you say, "Well, that's great, but is there more to come?" And the answer is yes. So if you look in that middle column there, that is the Murphy and QuickChek network by quartile. And if you said, "What if I could take the bottom quartile of the bottom quartile and just move it to the third quartile? What if I took the bottom quartile of the third quartile and moved it to the third quartile, the same for the second quartile and the top quartile?" There's $75 million of value there just from bottoms-up optimization at the store.
And if you took those stores and set up from the bottom quartile to the third to the average, there's over $150 million in value. And here's the thing: since our spin, we have been focused on large, big, campaign-like initiatives, like moving from McLane to Core-Mark, our initial store labor model, Murphy Drive Rewards, other big initiatives like that, that are top-down, that touch all the stores. And what we haven't done as much of is this bottoms-up, store-by-store, cost category by cost category benchmarking. In the recent organizational announcement that we made, elevating Mindy West to Chief Operating Officer, bringing in Galagher Jeff as CFO, they are uniquely positioned to drive this next layer of optimization across our business.
But that doesn't mean we're not gonna stop focusing on the big campaigns, and we've talked about the most recent initiatives, especially digital transformation in our in-store experience, where I'll speak a little bit more, too. So it's an and to, to get more productivity out of the existing business. We've talked a lot about digital transformation on some of the, earnings calls. What does this involve? What does it look like? With all of the information we have about our, customers in the loyalty program, we're now in a position to take the data that we've digitized and create digital offerings, right? Leveraging machine learning and advanced technologies.
The personalization trials that we've run are generating significant uplift because we know how one group of people wants to be promoted to versus another group, and when you break down these customers into different DNA segments, you can really tailor to their needs and what they're looking for. Demand and labor planning. One of the things we do a great job of at QuickChek is sell made-to-order food. We also have made-to-stock food in our warmers and salads and sandwiches. I know when I joined, we're doing the due diligence, the demand planning was a, you know, a sheet of paper in the back kitchen with a pencil, and people were keeping track of how many items were in the warmers and how many items were sold and how many items wasted.
You know, there were some heuristics that went into it, but it was pretty simple. We now have a super advanced demand forecast that takes into account multiple demand forecasting, ensemble methods, weather patterns, holidays, other events, et cetera, and we found that we can actually predict demand very, very well for those items. And what it has done is improved the sales, and the bottom line profitability. And, yes, shrink is up a little bit, but these are high-margin, 50%-60% margin items. So by selling a lot more, we're generating a lot more net profitability. Following that is our labor planning, and so when you've got that level of insight into your demand forecasting, you can further optimize your labor planning, and it's the single biggest cost for a convenience store chain.
So we started that work at QuickChek, and then that labor planning will advance already existing tool that we have on the Murphy side. Suggested sale. You know, again, when we were doing the due diligence, it didn't matter if you were there at 7:00 A.M. or 2:00 P.M., it was trying to upsell you to chili cheese fries. It's not what I'm looking for at 7:00 A.M. Right now, we know a lot about our customers, the day parts, what other people like when they buy that same item. It's the same Amazon-like algorithms. Our suggested selling has more than doubled at those stores. These are all in the early pilot stages, but we believe we're gonna have a 20% return on the capitalized G&A and G&A expense that went into that.
When you compare those type of investments to new store returns, they're highly attractive. Our in-store experience campaign was really focused on our 2,800 sq ft stores at Murphy. We went out and talked to 10,000 consumers. We got insights on our brand, the QuickChek brand, competitors' brands, on 100 emotional, functional, technical specs, and we found our brand spiked in a number of areas, but there are a lot of areas for improvement, right? In terms of making items easier to find, the freshness of some of our programs... the lack of relevance for some of our programs, like our roller grills, et cetera. And so what we've done is we've redesigned our 2,800 stores through 9 pilots. We're gonna roll out at least 50 this year that make it easier for our customers to find what they want.
We've added significant productive selling space, better line of sight, that also improves safety and shrink, and it's already accelerating our already strong returns. So again, high return type initiatives, very tangible, high impact, returns. We're talking about our stores. We're getting more from our new stores and our rebuilt stores, and if you think about between now and 2028, we're gonna improve and increase our selling space by over 38%. How do we do that? We continue to rebuild our small kiosks into 1,400 sq ft stores. We're gonna build more 2,800 sq ft stores. And on the QuickChek side, the percentages have gone down, but the square footage is roughly the same. That's taking end-of-life, older stores without fuel and replacing them with larger, new stores with fuel.
Right, when we think about the investments that we're making across the business, those also improve the already high returns of those existing stores. And if you look on the right-hand side, you know, the NTIs, the raze and rebuilds, all perform much higher than the network average. And these stores are the ones built in the last three years, and so those numbers are numbers that are still ramping up, so a conservative estimate on those. You can see at the bottom, these are our unlevered after-tax returns. As I said before, we expect the current initiatives that we are working on will continue to enhance the returns on those investments. So we're getting more customers, we're getting more from our customers, we're investing in the productivity of our stores, we're building new stores, we're rebuilding stores, we got fresh reinvested offer out there.
What does that mean? It means we're taking share, right? We're building in our existing markets where we've got infill opportunities or sister stores in more rural areas. But as you can see here, on a volumetric basis compared to 2019, we're 98%-99% of 2019 levels. Where's the industry at? You know, the OPIS volume, which probably doesn't fully represent the entire industry, because high-volume retailers like us don't participate in it, those volumes are down 15%-20% versus 2019. That means we're taking share, and other high-volume retailers with their own unique flywheel are taking share as well. What does that mean? Last year, we spent a lot of time on slide 5 that showed you what the supply curve for the industry looked like.
You know, what is the marginal players' requirements from an operating expense, maintenance, facility, interest, credit card fees look like, and how much cents per gallon margin do they need to cover all that? With shrinking volumes, their unit costs go up. With inflation, their unit costs go up. With less volume, their profitability goes down. They have to continue to raise the fuel margin, because that's the pass-through item to consumers, to be able to cover all those costs. That has allowed our margins to increase structurally as an industry, and Murphy's margins uniquely to increase, but because of our higher productivity and efficiency, we simply capture and retain more of that increase in unit margin than our competitors.
Now, we talked about reinvesting in price, and as you can see here, in 2022 and 2023, our differentials to the top of the market, the marginal competitors, has widened, meaning we're being more competitive with this additional margin that we're capturing. And, you know, what we're seeing is, as we gain market share, the pressures on profitability for the marginal retailer continues this vicious cycle, as we've illustrated on the upper right, right? And if you think about 2023 versus 2022, it was an unremarkable year. 2022 was a unique year with prices falling off in the third quarter. We believe that $0.03-$0.04 of that 2022 margin was just due to the falling price environment where we benefited. There was nothing remarkable about 2023, and yet we retained high margins, and market share.
We've gained nearly 1 billion gallons since the spin, so we're now selling over 5 billion gallons a year of fuel, and that just reinforces the virtuous cycle that Murphy enjoys from being the everyday low price retailer with the everyday low-cost flywheel business model. So when you add all of that up, it just means that we have more free cash flow, right? And this is a free cash flow business. What's the first thing we do with that? We reinvest it for our customer. Starts and ends with the customer. We keep giving them price. People talk about what's going to happen to fuel demand over time, right? There's a lot of different models out there, right? Everyone's got their view of electric vehicles. I can tell you about our customer. They're not an adopter of electric vehicles. They can't afford it.... Right?
And so even if we see changes in fuel demand, it's going to put more pressure on the marginal player, so we can reinvest in price. What about tobacco? It's a category that's been in decline for four years. It's still a massive industry, and every year in the last four years, the manufacturers, the distributors, and the retailers have had larger profits from tobacco. And as more retailers care less about it, we can focus efforts on that and be the everyday low price retailer and grow share, and then play a bigger role in transitioning customers to non-combustible, lower risk, lower, higher, better products. In food and beverage, do the same at QuickChek, reinvesting in price as we did in 2022 and 2023 to grow that important breakfast daypart.
When we've seen other QSRs continue to raise price, raise price, and raise price, and now they're running into a ceiling in terms of how far they can raise price, QuickChek stayed very focused on being competitive and delivering value to the customer. Our story since the spin has been about improving our capabilities to get more out of our store. We're going to continue to invest in that, whether it's our pricing initiatives, our marketing capabilities, our promotion capabilities, our digital transformation, and our in-store experience. We're also investing in advanced technologies, and when we've looked across where generative AI can play a role in our business, we actually find there's a lot of activities, like transaction processing, exception reporting, et cetera, that could be more highly automated than they are today. So we've got real practical use cases, can have an impact and create scale.
One of the things to remember is, this marginal retailer cannot invest in those same capability-building investments. They're not going to be investing in the same things that we are, that give us an advantage, because they just don't have the wherewithal to do that. And the last, we're going to reinvest in our growth with new stores. We need to build up our pipeline of new stores. If there's one area we've been disappointed at ourselves, is hitting our NTI expectations of 50 stores a year. And frankly, with some of the permitting, utility, and other challenges, it's been a challenge. Performance hasn't been a challenge, but getting new stores are. So we're putting more in the pipeline, to be able to get to that 50 store a year opening. As we know, the contracting through construction to opening cycle time has increased.
So that's what it means for our customers, our capabilities, and the new stores. What does it mean for you as investors? Right? As we think about capital allocation, even in an unremarkable year like 2023, where we generated over $1 billion in EBITDA, we've maintained our commitment to our 50/50 capital allocation. And so in that middle pie chart, you can see between new stores and our one strategic capability building acquisition with QuickChek, is 50/50, related to, share buybacks and dividends. And what has that done? That's driven shareholder returns well above the major indices for any one year, 5-year since spin, any period, that you want to look at. The end result is more for you as shareholders.
This chart shows that our high average and low has been higher every year, and Costco is the only other retailer since 2013 whose high, average, and low closing price has been higher. And you can see the CAGR on the share price at the table, north of 20%. Shares outstanding, we bought back over 55% of the shares outstanding because of that capital allocation commitment, and we bought back 1 million shares last year per our commitment. When we say we raised the bar, what does that mean? What it shows there in 2028 is what would you have to believe to continue the same type of CAGR in our share price that we as shareholders have experienced thus far? We need to grow our EBITDA from $1.1 million to at least $1.3 million.
We continue to buy back 1 million shares a year. And by the way, if you started at less than 20 million shares, and you're buying back 1 million shares a year, over 5 years, you're going to buy back 25% of your float, that exists today. We may or may not get another turn in the multiple. I would like to think that as the advantage value player in our space, that would generate an increase in the multiple. If you're growing with the largest and fastest growing customer segment and taking share, that would support it. If we get up to our 50 stores a year and you've got that, it would support it. But whether you get it or not, it's going to lead to compounded annual returns north of 20%.
What's the walk between $1.1 million and $1.3 million? You've got new store growth. The 2024 build class at its full run rate will add 40 million, right? So when you start adding up build classes, even as they ramp up, that gets you there. The bottoms-up initiatives that we've talked about, right? Opportunities there. The campaign initiatives and returns on those, significant opportunities there. And so our goal would be, can you close the $1.1 million-$1.3 million gap without any change in fuel margin, right? That would be our goal.
But we've typically suggested that you could expect to see about 0.5% improvement in fuel margin year over year because of the vicious cycle of the marginal retailer, right, and what they're going through, and their need to push higher margins through to cover their higher unit costs, to make up for their lost profitability because of their lower volume, and then our ability to capture more of that, consume it back to our customers, and then reinvest the balance into our business. And so we're raising the bar again. Those are our expectations over the next five years. We've got an exciting set of initiatives and incredible leadership team to go drive those initiatives and achieve those results, but more importantly, maintain the track record and the credibility that we've built with investors to date.
Thank you, and we'll take questions in our breakout session.
With that, we'll head down to breakout now.