Does Kroger Own Tom Thumb In 2024?
Kroger, America’s largest supermarket operator with over 2,800 grocery retail stores, does not own convenience store chain Tom Thumb in 2024. Tom Thumb and its 780 locations across the Southwest are now owned by UK-based petrol retailer EG Group.
Kroger‘s History of Strategic Acquisitions
Kroger has strategically acquired regional grocery chains over the past 20 years to expand its store footprint nationally. After purchasing Fred Meyer, Ralphs, Harris Teeter, and other brands, Kroger grew from $60 billion in sales in 2004 to $141.5 billion in 2022.
Acquiring convenience store chains also previously helped Kroger capture more of customers‘ spending. As the convenience channel grew, Kroger acquired Tom Thumb parent Randall‘s in 1999 and Turkey Hill in 1981, building a network of over 800 c-stores.
However, in 2018 Kroger elected to sell its c-store business, including Tom Thumb, exiting the convenience sector to refocus on its higher-margin supermarket operations. This opened the opportunity for EG Group to enter and establish itself in the U.S. convenience market.
Kroger U.S. Supermarket Locations
| Banner | Locations | Key Geographies |
|---|---|---|
| Kroger | 2,022 | Nationwide |
| Fred Meyer | 133 | West Coast, Alaska, Idaho, Oregon, Washington |
| Harris Teeter | 266 | East Coast, North and South Carolina, Virginia |
| Ralphs | 373 | Southern California |
Source: Kroger 2022 Annual Report
Tom Thumb Now Under EG Group Ownership
Tom Thumb operated for almost 20 years under Kroger before EG Group‘s $2.15 billion acquisition of Kroger c-stores in 2018. This moved Tom Thumb, Turkey Hill, Loaf ‘N Jug and other chains under the ownership of the UK petrol and convenience retailer.
EG Group formed EG America, which now runs over 1,700 c-stores under ten c-store brands in the U.S, including Tom Thumb. However, in February 2023, EG Group announced plans to consolidate its U.S. brands under the Cumberland Farms banner over the next two years.
EG America‘s U.S. Convenience Store Network
| Banner | Locations | Key Geographies |
|---|---|---|
| Tom Thumb | 780 | Texas, New Mexico |
| Cumberland Farms | 600 | Florida, Northeast |
| Fastrac | 55 | New York |
| KwikShop | 400 | Midwest |
Source: EG Group Investor Presentation Q1 2022
This upcoming Tom Thumb rebranding puts the chain under the same name as EG Group‘s largest convenience store presence, Cumberland Farms. The move aims to boost operational efficiency and consumer recognition of its convenience brands as Cumberland Farms expands west from its stronghold in the Northeast.
Behind Kroger‘s Decision to Divest C-Stores
Kroger‘s rationale for its 2018 divestment of all convenience store holdings tied to increasing competition and its "Restock Kroger" plan to focus on its core operations.
As Frank Moscetti, retail expert and professor at City University of New York, explains:
"Facing wafer-thin margins and disruption from online grocery, Kroger is betting on its supermarket and ecommerce ecosystem. Exiting the c-store business helps Kroger concentrate resources on higher-margin natural and organic products and prepared foods."
Kroger also sold its convenience stores at attractive valuations. In offloading Turkey Hill, Tom Thumb and other c-store chains for $2.15 billion, Kroger earned an estimated 10-12x multiple relative to their annual earnings. This strongly exceeded the 6-8x industry standard for c-store transactions at the time.
How Do Kroger and Tom Thumb Compare?
Under past Kroger ownership, Tom Thumb shared some similarities with Kroger stores:
- Loyalty programs offering personalized coupons and fuel discounts
- In-store pharmacy and health services
- Selection of own-brand items
However, with Tom Thumb‘s transition to EG Group, key differences in the chains‘ strategic positioning have emerged:
Kroger vs. Tom Thumb Store Comparison
| Attribute | Kroger | Tom Thumb |
|---|---|---|
| Primary Focus | Grocery, Fresh | Convenience |
| Ownership | Public | Private |
| Average Store Size | 60,000 sq ft | 5,500 sq ft |
| Geographic Scope | National | Regional (Southwest) |
| Number of Items | 35,000 | 5,000 |
Sources: Annual Reports, Store websites
The divergence in floor space, regional scope, and product range shows Kroger and Tom Thumb now playing distinct retail roles for shoppers.
Outlook for Both Brands
Despite no longer having ownership ties, the outlook appears strong for both Kroger and Tom Thumb under their respective parent companies pursuing differentiation.
Kroger retains its position as the #1 U.S. supermarket operator, now with a greater focus on higher-margin categories. Meanwhile, EG America believes Tom Thumb stands to gain from rising consolidation and Cumberland Farms‘ expansion westward.
According to EG America CEO George Fournier:
“C-stores have never seen greater tailwinds thanks to busy customer lifestyles. Rebranding Tom Thumb fits our growing geographic platform."
So while Kroger and Tom Thumb are no longer affiliated, both brands can benefit from renewed strategic clarity under separate owners targeting their own retail domains.
