管理層發言
Welcome to the Yesway, Inc. Second Quarter 2026 Earnings Conference Call. Please be advised today's conference call is being recorded. I would now like to turn the call over to Nicole Harlow, Investor Relations representative. Please go ahead.
Thank you, operator, and thank you all for joining us today for Yesway's Second Quarter 2026 Earnings Conference Call. On with me today are Tom Trkla, Chairman, President and Chief Executive Officer; and Ericka Ayles, Chief Financial Officer. Before we begin, a reminder that today's discussion will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements made today are based on management's current expectations, assumptions and beliefs about our business and the environment in which we operate. These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, performance or achievements to differ materially from what is expressed or implied. These risks include, but are not limited to, volatility in global oil prices, general economic conditions and our ability to execute on our growth strategy and changes in consumer demand and fuel consumption trends.
For a detailed discussion of risks, please see our final prospectus dated April 21, 2026, as filed with the SEC on April 23, 2026, and our other filings with the SEC. Our forward-looking statements made on this call represent our outlook as of today, August 13, 2026, and we disclaim any obligation to update these statements, except as may be required by law. In addition, during this conference call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA and store contribution. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in our second quarter 2026 earnings press release, which was issued earlier this morning and is available on our Investor Relations section of our website. A replay of today's call will also be available on the same website shortly after we conclude the Q&A session. And with that, I'd like to turn the call over to Tom Trkla. Tom?
Thank you, Nicole, and good morning, everyone, and thanks for joining us today. We are pleased with the strong performance we delivered in the second quarter, and I look forward to discussing our results and the progress we are making on our growth priorities on today's call. First, I want to remind everyone what makes Yesway fundamentally different and why we believe our platform is well positioned for continued growth. Since our founding more than a decade ago, we built a distinctive convenience retail platform around a combination of trusted regional brands, destination foodservice, disciplined real estate development, differentiated fuel offerings and an award-winning loyalty program. Today, Yesway is one of the fastest-growing convenience store operators in the United States and the nation's 15th largest convenience store chain. Our portfolio is anchored by two powerful and highly complementary brands, Yesway and Allsup's. Both continue to have deep roots in the communities we serve, strong customer recognition and enduring loyalty.
This local connection is difficult to replicate and provides us with an important competitive advantage, particularly in the rural and suburban markets where we operate. We are also much more than a convenience stop for fuel and everyday necessities. In many of our markets, we are a true foodservice destination. Allsup's iconic world-famous Beef and Bean Burritos, together with our broader prepared food and proprietary merchandise offerings, remain a compelling reason for customers to visit our stores frequently and distinguishes us from the traditional fuel-oriented competitors. Our foodservice platform drives traffic throughout the day, supports attractive merchandising margins and strengthens the relevance of our brands. Our deep real estate expertise represents another significant differentiator. We've assembled and built a portfolio of strategically located stores across the Southwest and Midwest, often situated on oversized parcels with strong visibility, convenient access and favorable traffic patterns.
These sites provide the capacity to expand our forecourts, add dedicated high-flow diesel lanes and introduce larger format stores with enhanced foodservice and merchandise offerings. This real estate advantage also supports our fuel strategy. Greater diesel capacity enables us to serve both local customers and over-the-road professional drivers, broadening our addressable market and increasing fuel volumes. Diesel demand also tends to be less price sensitive during periods of elevated fuel prices, providing an additional measure of resilience in volatile market environments. Taken together, our trusted brands, destination foodservice platform, strategically advantaged real estate, growing diesel exposure, strong customer loyalty and proven operating capabilities form an integrated platform that is both differentiated and difficult to replicate. We believe these advantages will continue to drive repeat visits, attractive store-level economics and sustainable long-term value for our shareholders.
Turning now to our second quarter performance, which was the strongest quarter in our company's history, reflecting broad-based execution across both fuel and inside merchandising. We set new records across several of our most important operating and financial measures, including fuel gallons, fuel gross profit, inside merchandise sales, inside merchandise gross profit and store contribution. This operating momentum drove adjusted EBITDA to $71 million, an increase of 35% year-over-year. The most important takeaway is that these results were not dependent on any single factor and that the quality of the quarter was as strong as the headline results. We grew both fuel volumes and inside merchandise sales while expanding margins and generating greater profitability. These results underscore the strength and breadth of our platform, the advantages of our differentiated market positioning, the resilience of our business model amid continued inflationary pressures and volatile fuel markets and the disciplined execution of our team.
Let me highlight several key aspects of our second quarter's performance. Same-store inside merchandise sales increased 1.2%, marking positive growth in 18 of the past 19 quarters. Excluding the 29 stores in our Iowa and Kansas portfolio, which we expect to close the sale of by year-end, same-store merchandise sales increased 1.5%. Same-store fuel gallons increased 1.4% year-over-year. And again, excluding the 29 stores in our Iowa and Kansas portfolio, same-store fuel gallons sold increased 1.8%. According to OPIS data, the change in our same-store fuel gallons sold significantly outperformed the change in volume per outlet in our core markets, which we believe is a clear data point that we are gaining market share while also delivering stronger margins. Our value proposition continues to resonate, and we remain competitive in the communities we serve. Total fuel margin per gallon increased 27.4% year-over-year to $0.526 per gallon, driven by elevated fuel price volatility, increasing margin spreads between diesel and gas and continued mix shift towards diesel.
Importantly, we achieved this margin expansion while also growing volume. Robust store contribution supported adjusted EBITDA growth of 35% year-over-year to $71 million. On the strength of our second quarter performance, we are raising our adjusted EBITDA outlook for full year 2026, which Ericka will discuss later in this call. Our growth strategy remains disciplined and focused on three priorities: developing new stores, increasing the productivity of our existing store base and pursuing selective value-accretive acquisitions. Starting with new store development. We have now built 92 stores since 2020 through our new-to-industry store developments and raze and rebuild programs. This experience, together with our real estate experience, enables us to identify the markets, sites and formats with the greatest potential to generate attractive store-level returns. During the second quarter, we opened one new store, bringing our total store count to 450.
We remain on track to deliver our outlook of six to eight stores in 2026. As a reminder, today's reported store count includes the 29 stores in our Iowa and Kansas portfolio that we have agreed to sell as part of our strategy to sharpen operational focus, simplify our supply chain footprint and reinforce our concentration in core operating markets. We are pleased with the progress on this transaction and remain on track to close the sale by the end of 2026. Looking ahead, our new build expansion strategy is currently concentrated on four core states: Arizona, Oklahoma, New Mexico and Texas, with Arizona being a key near-term development priority. Arizona is a natural extension of our Southwestern footprint and offers attractive fuel market dynamics, meaningful development opportunities and strong receptivity to our foodservice offering. We believe our operating model is particularly well suited to the state's rural and suburban communities, and we are encouraged by the momentum we are building as we advance our pipeline of new locations.
Beyond new store development, we see opportunities to generate additional growth and improve returns across our existing store base. Our organic growth initiatives are centered on two principal areas: expanding our fuel capabilities and strengthening our merchandise and foodservice offerings. Together, these initiatives are designed to increase customer traffic, deepen loyalty, grow same-store sales and improve store level productivity over time. In fuel, we are upgrading dispensers, adding new dispensers and adding new diesel capacity across many of our existing locations. Our newer stores feature expanded forecourts and dedicated high-flow diesel lanes, supporting growth in commercial diesel. These efforts drive total fuel gallon growth and continue to drive mix shift towards diesel, which now represents approximately 38% of our total fuel volume compared to the NACS average of 27%. Within inside merchandise, foodservice remains one of our most important traffic drivers and competitive differentiators.
The iconic Allsup's Burrito remains the cornerstone of our offering and continues to drive customer traffic and repeat visits. We are also rationalizing our lower-velocity foodservice SKUs to reduce complexity, simplify store level execution, improve product consistency and concentrate our resources on the products that resonate most strongly with our customers. At the same time, we continue to evaluate opportunities to innovate and selectively expand our foodservice offering. Within private label, we are expanding our higher-margin offerings in categories where we can provide customers with a compelling combination of quality and value. These products strengthen our overall value proposition and complement our broader assortment of freshly prepared food, grocery items, beverages and snacks, enable us to meet a wide range of customer needs throughout the day. Our third avenue for growth is selective accretive M&A. Since our founding, we have demonstrated our ability to source, integrate and create value from M&A, having acquired more than 400 convenience stores through 27 transactions and establishing a strong foundation of experience and operating capabilities that we can apply to future opportunities.
We continue to evaluate acquisition opportunities that increase our density in existing markets or extend our brand portfolio into other strategically attractive markets. Continued fuel margin strength has supported significant cash generation, increasing our financial flexibility to fund our organic growth initiatives and pursue acquisitions when compelling opportunities meet our disciplined investment and return criteria. With that, I will now turn the call over to Ericka, who will provide a more detailed review of our second quarter results and updated full year financial outlook. Ericka?
Thanks, Tom, and good morning, everyone. As Tom mentioned, we delivered another strong quarter, including record performance across several key measures. Inside merchandise sales increased to $240 million, representing growth of 4.4% year-over-year or 1.2% on a same-store basis. Excluding our Iowa and Kansas portfolio, same-store inside merchandise sales growth would have been 1.5%. Despite higher fuel prices resulting in modestly lower traffic, according to Nielsen data, we gained share in both merchandise sales and units, demonstrating the strength of our value proposition and customer loyalty. We continue to deliver inside merchandise margin expansion versus prior year. Total inside merchandise margin expanded by approximately 50 basis points to 35.7% from 35.2% in the prior year period as a result of the continued store growth and the pricing actions taken during 2025. On fuel, sales increased 52.7% year-over-year to $673 million.
Fuel margin was $0.526 per gallon compared to $0.413 per gallon in Q2 last year. This increased margin was supported by our structural advantages in diesel and the benefits of elevated fuel price volatility during the quarter. Same-store fuel gallons sold remained resilient despite higher fuel prices and continued fuel market volatility, increasing 1.4% year-over-year during the quarter. Excluding our Iowa and Kansas portfolio, same-store gallons sold would have increased 1.8% year-over-year. Our gallon growth was driven by diesel contribution at our new-to-industry builds, while our legacy store gallon growth was supported by operational initiatives, including dispenser change-outs and fuel expansions. Notably, as Tom mentioned earlier, the change in our same-store gallons sold outperformed the change in volume per outlet in our core markets. During the second quarter, diesel represented approximately 38% of total fuel volume.
Our diesel mix is meaningfully higher than that of many traditional convenience retailers, reflecting our rural and suburban footprint and presence along commercial and regional transportation routes and our intentional focus to increase diesel gallons across our footprint. Our focus on the diesel platform also benefits inside merchandise sales as fleet drivers purchase more than three times as much inside the store on average as our typical loyalty customer. As discussed on our last call, geopolitical developments in the Middle East continue to create elevated fuel price volatility, resulting in higher fuel margins. While we recognize that this incremental benefit may moderate, Yesway has historically generated CPG margins above broader market levels. And we believe our favorable diesel mix, strategic footprint and supplier relationships position us to sustain attractive fuel profitability as market conditions normalize.
We achieved total same-store fuel and inside merchandise gross profit growth of 14% year-over-year, with same-store fuel gross profit and same-store inside merchandise gross profit increasing 29% and 2.5%, respectively, from the prior year. We continue to be disciplined on the management of store level expenses. Same-store operating expenses increased by 4.8% year-over-year, primarily driven by credit card fees, which accounted for approximately 96% of the increase. Same-store labor hours declined 2.4% during the quarter, marking the fifth consecutive quarter of reductions while maintaining high operating standards and supporting the customer experience. The standardized process, employee training and leading technology we have established across our store base allows certain locations to operate with a single employee during non-peak hours. Store contribution increased 29.5% year-over-year to $88 million.
The increase was primarily driven by the increase in fuel margin and inside merchandise margin from same-store sales and increases in fuel gallons and inside merchandise sales from new stores. Net income was $30 million compared to $24 million in the prior period. Adjusted EBITDA increased 35% year-over-year to $71 million, reflecting similar drivers as store contribution. As a result, we are increasing our adjusted EBITDA outlook for the full year, which we will touch on shortly. During the quarter, we opened one new store, ending the period with 450 stores. As a reminder, our reported store count still includes our Iowa and Kansas portfolio. Turning to the balance sheet. We ended the quarter with cash and cash equivalents of $82 million and total debt, including financing obligations and financing lease obligations, of $618 million. Net cash provided by operating activities was $57 million compared to $36 million in the prior year period.
Capital expenditures totaled approximately $24 million compared to $22 million in the prior year period. As Tom discussed, our strong operating performance and cash generation provide us with flexibility to deploy capital consistent with our key priorities: number one, investing in organic growth; number two, maintaining a strong and flexible balance sheet; and number three, selective and opportunistic M&A. Our first priority is investing in high-return organic growth opportunities. Our cash position gives us the capacity to accelerate select new store remodel, foodservice and technology investments where we see compelling returns. Our second priority is maintaining a strong and flexible balance sheet. Through June 30, 2026, we have repaid $40 million of debt, including $10 million repaid with IPO proceeds. Our third priority is selective and opportunistic M&A. The convenience store industry remains highly fragmented, and we continue to evaluate acquisition opportunities that increase density in existing markets, expand our presence in attractive geographies and strengthen our brand portfolio.
We will remain disciplined and intend to deploy capital only where we see compelling risk-adjusted returns. Turning to our outlook. Our full year expectations reflect a strong first half performance, continued operating momentum and our current expectation for the remainder of the year. We've increased our full year 2026 adjusted EBITDA guidance to $235 million to $245 million, up from our prior outlook of $210 million to $220 million, reflecting our strong second quarter performance. While we do not provide a fuel margin forecast as this is difficult to predict, particularly in volatile markets, our outlook for adjusted EBITDA assumes that fuel margins moderate in the low $0.40 per gallon range for the second half of the year, consistent with our historical average. We have also reaffirmed our outlook for the following metrics: same-store inside merchandise sales growth of 1.25% to 3.25% and capital expenditures of $85 million to $95 million.
With respect to new stores, we continue to expect to open six to eight new stores in 2026, inclusive of the two stores we opened during the first half of the year. As a reminder, our guidance assumes our Iowa and Kansas portfolio sale is completed by year-end. While a sustained period of elevated fuel prices may add some pressure to inside merchandise sales in the near term, incremental cash generation from higher fuel margin would support acceleration of our growth investments while maintaining our strong balance sheet, positioning us well for the long term. The convenience store industry is essential and has experienced consistent growth for decades. It has proven resilient through challenging macroeconomic periods, including recessions, financial crisis and the COVID pandemic, and we remain confident in the long-term growth opportunities that lie ahead. Overall, we are pleased with the performance through the first half of 2026. We continue to generate strong cash flow, reduce leverage and invest in the long-term growth of the business. And with that, I'll turn the call back over to Tom for closing remarks.
Thank you very much, Ericka. To close, we are excited to report another quarter of strong performance, reinforcing the momentum in our business. As we continue to strengthen our differentiated offering, strong service culture and disciplined approach to capital allocation, Yesway is well positioned to continue delivering long-term value for our shareholders. Thank you again for joining us today. Operator?
分析師問答
Our first question comes from John Heinbockel with Guggenheim Securities.
Tom, I wanted to ask, how do you look at M&A versus new-to-industry (NTI) as priorities or preferences? I know valuation probably plays a role. And then what's the gating factor? You have more capital, real estate is available, the organizational gating factor on growth because obviously you want to be disciplined in that regard.
Thank you. Great question. As you all know, for historical context, we started in the first five years by buying 27 M&A transactions. In the last five years, plus or minus, we've been building. The biggest change is we're now looking to do both. So we're much more active right now in terms of M&A opportunities. The simple answer to your question about which one we choose is really mathematical. We're targeting 15% unlevered and achieving 50% unlevered IRRs on our new builds without the build-to-suit platform and upwards of 30%, in some cases higher, on the build-to-suits. We're looking at both right now in the quarter. And I guess the biggest change from our past five years is we're now much more active in terms of looking at accretive M&A. And the last point I'll make to reemphasize that, which we discussed last call, we're really concentrating on four states: Arizona, Texas, New Mexico and Oklahoma. And we believe our entire outlook guidance for new stores, which, by the way, you recall is only new builds, includes no M&A in terms of our five-year forecast; it is all in those four states. So we feel very confident. We've increased the number of opportunities for both. And as we'll talk about later, we feel very confident about hitting the 130-store target that we have in our model.
Maybe my follow-up, where do we stand with the loyalty program? I know that's been growing, usage has been increasing. And what is the inside comp opportunity to move those members kind of up the loyalty path?
Great question, John. Loyalty has been fairly steady in the second quarter. I think the opportunities that we see are really about how we convert those loyalty customers from fuel into the store on a more strategic basis. So that's something that the team is working on today. As far as penetration, it has been fairly steady. Some of the gains that we've seen have been in the professional driver tier. As we mentioned in our prepared remarks, that professional driver tier typically spends about three times more in the store on average. So we think that continues to be a great opportunity as we attract more of those customers.
Our next question comes from Seth Sigman with Barclays.
Nice quarter. I wanted to ask about the customer and whether you've seen any change in behavior over the last few months. Specifically, I'm looking at the 1.2% inside comp, I guess 1.5% adjusted. It moderated a little bit from Q1. I think Q1 was maybe around 2.5% if we adjust for the weather. It's all pretty similar on a two-year basis. So it seems steady. But anything else you can tell us about behavior and any changes you've seen in the customer?
Great question. We did see modestly lower traffic in the second quarter on a year-over-year basis. What we have seen in July is same-store inside merchandise sales trending slightly ahead of Q2. So we feel very good about where we stand relative to guidance. As far as behavior potentially trading down, we're actually not seeing any meaningful trading down inside the store. We see a little bit here and there, but really nothing that's moving the needle. Similarly, on the fuel side of the business, we have positive gallons in July. We are seeing very slight trading down from premium to mid-grade at the pump. But the margin expansion is more than making up for that differential. So we're actually not seeing a tremendous amount of behavioral shift other than the modestly lower traffic I mentioned.
Okay. Very helpful. And then my follow-up is around pricing. I think you rolled out some price changes late last year, early this year. Can you elaborate on that? What's been the response from the customer? And then how do we think about the next iteration and anything else as it relates to the pricing strategy?
Sure. From a pricing standpoint, we did take some price in 2025 and some price in early 2026. The reaction from the customer has been very positive. Those have worked out tremendously well for us. I think I mentioned on the last call we were very strategic about what we moved and what we didn't. That has been going very well. The other thing I would point out is early 2026 some inventory resets that have gone on have also been very well received as we shifted some of that SKU optimization I mentioned, really highlighting and focusing on what consumers are reaching for and moving out items that they're not. So we feel very good about that.
If I may, one of the things Ericka mentioned is strategic. It's very important to note we have not touched the golden goose, which is our burrito. We're selling, as you know, a little over 24 million a year right now. We see a continued differentiation in pricing value between our mainstay product and our competitors. We think that's largely a driver for a lot of our demand inside. So when Ericka says strategic, we looked at the last couple of years where we didn't take prices; we're certainly reacting to increases from our suppliers on an ongoing basis. But this was a proactive move that was very carefully implemented. We've seen very good results, and we do not plan to change the price point on our burrito in the near future.
Our next question comes from Bobby Griffin with Raymond James.
Congrats on a good second quarter. Tom, I want to start with your comments on menu optimization and something you guys have talked about before. Can you expand a little on where you are in that journey? Is that something currently complete or will be complete by the end of the year? And if there's savings from that, what are some plans — further pricing, new items once you rationalize the menu? Anything around that?
Sure. It's an ongoing process and will always be ongoing, but the bulk of what I'm trying to accomplish now will be done by year-end. It's basically looking at items where we don't sell a lot. As I said, we sell 41 million proprietary products and about 24 million burritos, so we are limiting price book options and concentrating on the items we sell the most of. It's ongoing now. It's not a major lift — we are not cutting out large swaths of items — but cleaning up items we don't need because they don't sell. We replaced a price book manager who's done a spectacular job. As we've mentioned in the past, we inherited an accumulated price book through all the M&A deals, and we completed that project. So the back end is now set up to handle these changes. Next, and we talked about this previously, one of our primary differentiators is our labor model: 2.6 employees per store to sell those 24 million burritos. We will advance foodservice and private label initiatives where we're at the margin. We're not completely changing our foodservice platform, but we are ideating things that are accretive and additive around our burrito platform. We also expect to have something new in the fourth quarter — not a major change — and then continue to roll out items into 2027.
Very good. And then my follow-up, on M&A and opportunities where you're open to both organic and M&A — where is the comfort level on leverage for the right deal? What would you feel fine taking the business to, to help us model?
Sure. We've had input from some of our bankers recently. Right now, our liquidity position is strong. Ericka has repaid debt and we've reduced revolver usage. We have approximately $140 million of available capacity on our revolver and about $90 million of cash on hand, so roughly $0.25 billion of liquidity. We've been advised we could go as high as four times leverage for the right acquisition, with the plan to bring leverage back down afterward. I'll let Ericka add to that.
Yes. Any increase in leverage would obviously be temporary for an acquisition. To the extent any larger acquisition came our way, some tuck-in acquisitions would have no impact to leverage if funded with cash off our balance sheet and no additional debt. What Tom described would be a temporary increase to leverage for a larger, accretive acquisition. There is nothing on the table to discuss today.
Our next question comes from Simeon Gutman with Morgan Stanley.
This is Zach on for Simeon. Great quarter. I want to follow up on the merchandise comps question. Are you willing to share whether traffic is positive? And do you expect sequential improvement in traffic through the balance of the year?
Sure. So Q2 did have modestly lower traffic. For July, I don't have traffic information available to share, but I can tell you same-store inside merchandise sales were growing in July, slightly ahead of where Q2 landed. So we feel very good about that. As far as fuel information, July had positive fuel gallons and fuel margin for July remained elevated in the mid-$0.40 range.
Okay. That's helpful. And then on new store productivity, it looks like you're making great progress. How should we think about the sustainability of new store productivity and the strength there?
What we see is our new builds continue, even when they come into the same-store comp set, to increase at a higher growth rate than our legacy portfolio. We are also seeing good comps on the legacy portfolio from several levers we've been pulling. One of the biggest factors is our fuel projects: fuel expansions, dispenser upgrades and replacements, and so on. Those are helping drive incremental gallons. We also had five new-to-industry stores come into the comp set in this reporting period, and those NTIs continue to grow at a faster clip.
Our next question comes from Bonnie Herzog with Goldman Sachs.
This is Ethan on for Bonnie. You raised your EBITDA guidance today, which was good to see. If our math is right, that implies just about 3% growth at the midpoint in the back half of the year versus 60% plus growth in the first half. I recognize year-on-year comps are more challenging and guidance implies fuel margins likely step a bit lower in the back half. But is there anything else underpinning the growth in the second half? Or is there some conservatism baked into your guidance? Essentially, trying to understand the major puts and takes in your guidance heading into the back half of the year.
Thanks. For our guidance, we are assuming low $0.40 per gallon CPG for the back half of the year. We will not underwrite any elevated fuel margin in this environment. So to the extent fuel outperformance continues into the back half, that would be upside. As you know, Q4 of 2025 was a very strong quarter with strong fuel margin, so we are not trying to be overly conservative but are recognizing fuel margin is difficult to predict. Overall, we feel really good about Q3 so far: positive gallons, positive same-store, and July same-store inside merchandise sales are trending better than Q2. Expense control has been strong and inside margin improvements have been consistent. But again, fuel margin is the key variable for the second half.
Got it. Maybe as a follow-up, you delivered impressive fuel margins of $0.526 per gallon in Q2 and healthy same-store fuel volumes of 1.4%. Can you touch on how you're balancing fuel volumes and profitability? What investments have you made recently to help drive this? Is that balancing act getting harder in this volatile environment?
Great question. On the legacy portfolio, we've been actively investing. Over the last 12 months, 45 stores have undergone pump changeouts, which are measurable supports for the portfolio. We've had six fuel expansions, focused on the diesel customer, which help drive incremental gallons. We also had five NTIs enter the comp set this period, and they continue to grow faster. Balancing gallons versus margin, our fuel team does a great job operating in volatile markets. Fuel volatility is an opportunity for those who can execute well to capture excess margin without harming customers. We want to be good stewards to our customers while focusing on delivering the highest gross profit dollars we can while maintaining gallons.
Our next question comes from Brad Thomas with KeyBanc Capital Markets.
Nice quarter. I want to ask about inside merchandise margins. Those continue to be healthy. Can you speak to the opportunity to continue to expand inside merchandise margins in the back half of the year and going forward?
Good question. We're proud of the growth in gross profit margin percentage over the last couple of years. A lot of it has been strategic pricing, but also growth of foodservice contribution that we've been able to achieve, particularly in the new-to-industry stores. Generally, those NTIs have a higher contribution of higher-margin products. Those are helping drive margin up. And as we continue to grow, we realize economies of scale. Margin expansion is something our team focuses on every day.
Okay, great. And then on fuel margin, how are you thinking about a floor or mean reversion level for fuel margins as the Middle East overhang evolves? How should we think about this for modeling 2027 and beyond, and how are you approaching this when evaluating acquisitions?
We won't project CPG, but a few points: historically, CPG trends in line with inflation over the long term, so we think that will likely expand over time for the industry. Prior to the Middle East conflict, we were operating in about a low $0.40 per gallon environment. New builds focused on diesel generally come in at a higher margin than gasoline CPG, which supports our preference for diesel-focused growth. Specific to Yesway, our 38% diesel mix and growing is a differentiator, and we believe that, together with our geography and supplier relationships, will help us settle out at a higher level than the industry average.
One thing to emphasize: our new builds are delivering over 40% diesel contribution as well as elevated foodservice contribution. After we sell the Iowa and Kansas portfolio, the weighted average of our portfolio diesel mix will get to or exceed 40%, which gives us a structural advantage relative to competitors on diesel contribution to margin. So wherever fuel margins settle, we expect to settle a little higher than peers.
Our next question comes from Tom Palmer with JPMorgan.
I wanted to ask on the guidance increase, $25 million both sides of the range. You noted the strength of Q2 as the reason for the increase, but can you clarify how much of the raise was actually Q2 versus what you're pulling forward for the back half of the year relative to prior guidance?
Thanks for the question. We are not going to provide quarterly guidance, but what we are seeing is continued momentum. July gives us confidence in the back half: fuel margin remained elevated in July in the mid-$0.40 range, positive gallons, positive same-stores trending higher than Q2. We've also done a great job on expense control, and inside margin improvements have continued. So we feel good about the back half, though fuel margin remains the key variable.
Our next question comes from Kelly Bania with BMO Capital Markets.
Tom, you expressed continued confidence in the new store growth outlook over the coming years. Can you be more specific on the pipeline into 2027, number of stores, visibility and quality of locations? Any thoughts on changing the mix of financing new stores, either build-to-suit or owner-owned structure given continued strong cash generation?
Great question, Kelly. We feel very confident we'll exceed the 130-store target we have and that we will demonstrably increase the number of stores we both build and buy next year. We generated significant excess cash and our focus is to deploy that capital to EBITDA-producing opportunities as soon as possible. We have more fuel expansions and will buy in addition to building. Our pipeline for both is very strong. We have directed our real estate teams to increase front-end acquisitions of land and front-end due diligence to deploy excess cash. Actual numbers we'll discuss over future quarters, but we feel very confident in increasing beyond the 130-store target over the next several years. Regarding financing mix, the majority of our short-term model is build-to-suits, but we will keep a majority of our real estate ownership. Currently about 65-66% of our stores are owned, and we'll continue to throttle between new builds and build-to-suits, maintaining healthy ownership. We moved three build-to-suits to NTIs to deploy cash sooner and will continue to evaluate the mix.
Okay. To confirm, did you say July fuel margin was in the mid-$0.40s? And as we think about 2027, should we be thinking about low $0.40s as a reasonable assumption for fuel margin?
Yes, July fuel margin was in the mid-$0.40s. As for 2027, we will not provide guidance on fuel margin. We ended 2025 in the low $0.40s and historically see CPG track with inflation. More stores with higher productivity and higher diesel contribution will generally sit on the higher end of the range for the portfolio.
Thank you. This concludes the question-and-answer session. Thank you for your participation. You may now disconnect. Everyone, have a great day.