CrossAmerica Partners LP (CAPL): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at the competitive landscape for CrossAmerica Partners LP right now, trying to figure out how market pressures are shaping that $41.3 million Adjusted EBITDA they posted for Q3 2025. Honestly, the picture is complex: suppliers have leverage from oil volatility, while retail customers have near-zero switching costs, which you saw reflected in that 11% wholesale volume drop back in Q1 2025. Still, the company is actively managing this, evidenced by selling 96 properties for $94.5 million in the first nine months of 2025 to sharpen its focus. Let's break down exactly how supplier power, customer leverage, rivalry, substitution threats, and entry barriers are setting the stage for CAPL's next move below.

CrossAmerica Partners LP (CAPL) - Porter's Five Forces: Bargaining power of suppliers

The bargaining power of suppliers for CrossAmerica Partners LP (CAPL) is a dynamic factor, heavily influenced by commodity markets and the nature of its real estate holdings. You need to look closely at both the fuel suppliers and the landowners that underpin the physical network.

Suppliers hold leverage due to crude oil price volatility.

The primary suppliers-the refiners and wholesalers of motor fuel-wield significant leverage, which manifests through the volatility of the underlying commodity: crude oil. When crude prices swing wildly, it directly pressures CAPL's ability to maintain consistent margins. For instance, in the third quarter of 2025, the market experienced much less crude oil price volatility compared to the prior year, and the result was a compression in retail fuel margins. Specifically, the retail fuel margin on a cents per gallon basis decreased 5% year-over-year, settling at $0.384 per gallon in Q3 2025, down from a historically strong $0.406 per gallon in Q3 2024. Conversely, in the first quarter of 2025, motor fuel gross profit increased 8% largely because of the 23% increase in fuel margin per gallon, which was driven by crude oil and fuel market volatility and better product sourcing costs. This shows that while volatility can sometimes be exploited for margin gains, the inherent unpredictability gives the upstream suppliers a structural advantage in setting terms or influencing market prices that CAPL must absorb.

CAPL is a top distributor for ExxonMobil, mitigating power via scale.

CrossAmerica Partners LP counters supplier power through its sheer scale and established position within the supply chain. CAPL is recognized as one of ExxonMobil's largest distributors by fuel volume in the United States. This scale is substantial; the Partnership distributes fuel to approximately 1,600 locations across a geographic footprint covering 34 states. This volume provides a strong negotiating position when dealing with major brands. You can see the scale in the operational metrics:

• Distributes fuel to approximately 1,600 locations.
• Ranks as one of ExxonMobil's largest U.S. distributors by volume.
• In the top 10 for several other major brands.
• Around 94% of motor fuel distributed in 2024 was branded.

This relationship depth helps secure favorable sourcing, even if specific contract details aren't public. It's a classic case where size helps you push back against supplier dominance.

Long-term contracts with major oil brands (BP, Shell) reduce short-term switching risk.

To lock in supply stability and reduce the immediate threat of a supplier switching terms or favoring a competitor, CAPL relies on its deep, established relationships with multiple major oil brands. Beyond ExxonMobil, CAPL has well-established relationships with BP, Shell, Marathon, Valero, and Phillips 66. While the specific duration and pricing mechanisms of these agreements are proprietary, the existence of these long-standing ties with multiple key players inherently lowers the short-term risk of a single supplier unilaterally dictating unfavorable terms. The Partnership's strategy appears to be diversification across these major brands to prevent any one supplier from gaining excessive leverage over the entire operation. Still, the underlying commodity risk remains tied to the global oil market, which no contract can fully insulate against.

Real estate suppliers (landowners) have high power in prime locations.

The power of real estate suppliers-the landowners from whom CAPL leases sites-is concentrated in locations where real estate is scarce or highly desirable for retail fuel distribution. CAPL owns or leases approximately 1,000 sites as of late 2024/early 2025. The Partnership is actively managing this portfolio through its real estate rationalization effort, which involves selling non-core assets. For example, in the third quarter of 2025, CAPL sold 29 properties for $21.9 million in proceeds, and for the first nine months of 2025, they sold 96 properties for $94.5 million. Crucially, CAPL maintained a supply relationship post-sale with substantially all of these divested locations, suggesting that for many sites, the real estate relationship is separable from the fuel supply agreement, but the lease terms on the remaining sites in prime areas can grant significant power to the underlying landowners, especially if those leases are coming up for renewal.

Here is a quick look at the scale metrics relevant to supplier negotiations as of the latest reported periods in 2025:

CrossAmerica Partners LP (CAPL) - Porter's Five Forces: Bargaining power of customers

You're looking at the customer side of CrossAmerica Partners LP's business, and honestly, the power dynamic shifts dramatically depending on who you're dealing with: the wholesale dealer or the end consumer.

Wholesale customers, your dealers, definitely have leverage because you're selling them a low-margin, commodity product-gasoline. When margins are tight, they can push back hard on pricing or volume commitments. To give you a sense of the pressure, look at the recent volume trends. The wholesale segment distributed 179,241 thousand gallons in Q2 2025, down from 192,111 thousand gallons in Q2 2024. This pressure is clear in the gross profit figures, too. For the third quarter of 2025, wholesale segment gross profit dropped 10% compared to Q3 2024, landing at $24.8 million.

Here's a quick look at how the wholesale fuel distribution side has been trending:

Now, flip that to the retail side. The end consumer buying fuel at the pump has high power, plain and simple. Switching costs for gasoline are near-zero; you just drive to the station next door. CrossAmerica Partners LP knows this, which is why their retail fuel margin in Q1 2025 was $0.339 per gallon on 126.5 million gallons sold. Still, even with that direct consumer interaction, same-store retail fuel volumes declined in Q3 2025.

The company's strategy directly reflects this dynamic. CrossAmerica Partners LP is actively shifting its customer base away from the lower-power wholesale dealers toward the higher-power retail segment, but that doesn't eliminate the power itself; it just changes the nature of the negotiation.

This strategic shift is visible in the segment results:

• A substantial portion of the wholesale volume decline in Q1 2025 was due to converting wholesale locations to retail.
• The wholesale segment gross profit decline in Q3 2025 was driven by the conversion of sites between segments.
• The future outlook anticipates continued conversion to optimize trade class, which is expected to reduce wholesale segment gross profit.
• The retail segment gross profit increased 16% to $63.2 million in Q1 2025, driven by higher site count from these conversions.

The wholesale volume decline of 11% in Q1 2025 definitely signals that customer pressure, whether from dealers or market forces, is a real factor CrossAmerica Partners LP has to manage.

CrossAmerica Partners LP (CAPL) - Porter's Five Forces: Competitive rivalry

You're looking at a business environment where the fight for market share in fuel distribution and retail is definitely tough. CrossAmerica Partners LP operates with a geographic footprint covering 34 states, which means the competitive rivalry is spread thin across a massive, fragmented landscape of retail and wholesale fuel distribution. This fragmentation itself fuels the rivalry because you have a mix of players all vying for the same volume and margin dollars.

The pressure from this intense competition shows up directly in the financials. For instance, CrossAmerica Partners LP's Wholesale segment gross profit declined 10% year-over-year, falling to $24.8 million in the third quarter of 2025 from $27.6 million in the third quarter of 2024. Honestly, that drop reflects the reality of intense price competition in the wholesale fuel market. You see this pressure even in the retail side, where the retail fuel margin on a cents per gallon basis decreased 5% year-over-year for Q3 2025, landing at $0.384 per gallon compared to $0.406 per gallon in Q3 2024.

The rivals you are up against aren't just small local players. CrossAmerica Partners LP has to contend with large national chains, which bring scale and deep pockets, alongside numerous regional jobbers who know their local markets inside and out. To stay competitive, CrossAmerica Partners LP is actively managing its asset base to focus on higher-performing locations. This portfolio optimization is a direct response to the competitive dynamics.

Here's a quick look at the scale of the competitive footprint and the recent portfolio actions taken by CrossAmerica Partners LP:

The company's strategy to rationalize assets is key to navigating this rivalry. Selling non-core assets helps free up capital and sharpen the focus on the best opportunities, which is smart when margins are tight. For the nine months ended September 30, 2025, CrossAmerica Partners LP sold a total of 96 properties for $94.5 million in proceeds. This is a clear action to optimize the portfolio against competitive headwinds.

The competitive landscape is defined by these key relationships and actions:

• Distributes fuel to approximately 1,600 locations.
• Maintains relationships with major oil brands like ExxonMobil, BP, Shell, Marathon, Valero, and Phillips 66.
• Ranks as one of ExxonMobil's largest U.S. distributors by fuel volume.
• Sold 29 properties for $21.9 million in proceeds during Q3 2025 alone.
• Used asset sale proceeds to reduce the credit facility balance by $21.5 million since the end of Q2 2025.

The rivalry forces CrossAmerica Partners LP to constantly adjust its operations, as seen by the shift in how some sites are accounted for, moving from wholesale to retail segments, which impacts segment-specific volume reporting. Still, the focus on merchandise gross profit growth, which increased 5% in Q3 2025, shows an effort to diversify revenue streams away from pure fuel margin pressure.

CrossAmerica Partners LP (CAPL) - Porter's Five Forces: Threat of substitutes

You're looking at the long-term viability of a business heavily reliant on motor fuel sales, so understanding what could replace that core product is critical. The threat of substitutes here isn't just a theoretical concern; it's a structural shift in transportation that CrossAmerica Partners LP must manage. While specific, quantified projections on the impact of Electric Vehicles (EVs) adoption on CrossAmerica Partners LP's total addressable market as of late 2025 aren't publicly itemized, the immediate pressure on fuel demand is already visible in the operational data.

The most direct evidence of softening demand pressure in the fuel segment came early in the year. For the first quarter of 2025, CrossAmerica Partners LP reported that same-store retail segment fuel volume declined by 4% when compared to the first quarter of 2024. This decline reflects broader market shifts that are certainly influenced by the growing penetration of alternative energy vehicles, even if weather and other seasonal factors also played a part.

The non-fuel side of the business-convenience store merchandise-also shows signs of substitution pressure, though the company managed to grow gross profit through site expansion. For the same period, same-store merchandise sales, excluding cigarettes, were down 1% in Q1 2025 versus Q1 2024. This suggests that consumers are perhaps shifting their non-fuel purchases to other channels, like grocery stores or e-commerce platforms, which directly compete with the convenience store offering at CrossAmerica Partners LP sites.

Here's a quick look at the Q1 2025 retail performance metrics showing the volume pressure versus the merchandise growth:

To be fair, CrossAmerica Partners LP has a built-in mechanism to counter volume declines in its core fuel business: its real estate leasing model. The strategy here is to realize value from the underlying assets, which provides a financial buffer when fuel margins or volumes are weak. This is evident in their aggressive asset rationalization efforts throughout 2025.

Consider the progress made in monetizing their real estate portfolio across the first three quarters of 2025:

• In Q1 2025, CrossAmerica Partners LP sold seven sites for $8.6 million in proceeds, realizing a net gain of $5.6 million.
• In Q2 2025, the company sold 60 properties for $64.0 million in proceeds, resulting in a net gain of $29.7 million.
• Through Q3 2025, they sold an additional 29 properties for $21.9 million in proceeds, generating a net gain of $7.4 million.

This focus on asset sales directly impacts the balance sheet, which is a key hedge. The leverage ratio, as defined in the CAPL Credit Facility, improved significantly, moving from 4.36 times as of December 31, 2024, down to 3.56 times as of September 30, 2025. This reduction in leverage, achieved partly through asset sales, helps insulate the partnership from the risks associated with declining fuel throughput. Finance: draft 13-week cash view by Friday.

CrossAmerica Partners LP (CAPL) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry in the motor fuel distribution and retail space as of late 2025. For CrossAmerica Partners LP, the threat from brand-new competitors trying to set up shop is generally held in check by several significant structural hurdles. These aren't just minor inconveniences; they represent massive capital and logistical commitments.

High capital requirements for land acquisition and fuel terminal infrastructure create a significant barrier. Building out the necessary network-securing prime retail locations and, critically, owning or leasing the fuel terminal infrastructure-demands substantial upfront investment. Consider the scale of CrossAmerica Partners LP's existing asset base; for the nine months ended September 30, 2025, the company executed real estate rationalization, selling 96 properties for total proceeds of $94.5 million. This figure hints at the immense capital already deployed and required to compete on scale. A new entrant needs to match this level of real estate and infrastructure investment just to achieve meaningful market presence. Furthermore, capital expenditures for the third quarter of 2025 totaled $6.7 million, with $4.8 million specifically allocated to growth capex, showing the ongoing investment required just to maintain and slightly expand an existing footprint.

New entrants struggle to replicate established relationships with major branded oil companies. This is perhaps the stickiest barrier. CrossAmerica Partners LP has deep, long-standing ties across the industry. They distribute branded and unbranded petroleum across 34 states and maintain well-established relationships with key players. Specifically, CrossAmerica Partners LP ranks as one of ExxonMobil's largest distributors by fuel volume in the United States and is in the top 10 for several other major brands. Securing supply contracts with brands like ExxonMobil, BP, Shell, Marathon, Valero, and Phillips 66 requires years of proven reliability and volume commitment that a startup simply cannot offer immediately.

Regulatory hurdles and permitting for new fuel sites are complex and costly. Operating across 34 states means navigating a patchwork of local, state, and federal environmental, zoning, and safety regulations for every single site. The time and expense associated with environmental impact studies, underground storage tank compliance, and local zoning approvals for new or converted sites act as a significant time-to-market deterrent for any potential competitor.

CAPL's leverage ratio of 3.56x as of September 30, 2025, shows a strong balance sheet, deterring smaller entrants. This ratio, well below the covenant limit of 4.75 to 1.00 that was in place for fiscal quarters ending in 2025 and thereafter, signals financial stability and the capacity to weather market volatility better than a highly leveraged newcomer. The sheer size of the debt load already managed by CrossAmerica Partners LP-with $705.5 million outstanding under its CAPL Credit Facility as of September 30, 2025-demonstrates the level of financial backing required to operate at this level. A new entrant would likely face much tighter, more expensive financing terms.

Here's a quick look at the scale that defines the entry barrier:

The ability of CrossAmerica Partners LP to deploy capital for growth, even while managing existing debt, creates a financial moat. You can see this in their asset management strategy:

• Completed sale of 29 properties in Q3 2025 for $21.9 million in proceeds.
• Maintained supply relationships with substantially all divested locations.
• Reported Q3 2025 Retail Segment Gross Profit of $80.0M.
• Reported Q3 2025 Merchandise Gross Profit percentage of 28.9%.

It's tough to break into a market where incumbents are actively managing multi-million dollar real estate portfolios and hold preferred supplier status with the biggest names in the business. That's the reality for any firm considering a new fuel distribution venture against CrossAmerica Partners LP.