An exploding population, a surge in tourism and annual celebrations that attract more than half a million people. Placed in the epicenter of that challenging environment, many agricultural cooperatives would stick to their roots and steer clear of vacation home builders and weekend warriors.
The CBH Co-op board of directors and management team doubled down on the opportunities.
Based in Sturgis, S.D., at the foot of Black Hills National Forest, CBH is taking full advantage of visitors drawn to the stark beauty and recreational charms of the Black Hills and Badlands and the thousands of new residents streaming into the region. Half of the cooperative’s revenues come from retail sales and the team is using the income to build a more resilient cooperative able to serve its ranching and farming owners through the ups and downs of the ag economy.
The well-appointed interior of the new CBH Elkhorn Ridge travel center includes a beer cave, casino room, kitchen and more.
Ready to grow
The co-op’s latest acquisition, a travel center in Spearfish, S.D., took just six weeks from suggestion to taking ownership. It was an opportunity that fit the co-op’s strategic vision perfectly, says Ken Snyder, board chair and fourth-generation Meade County rancher.
“As a board, we’d had two good annual strategic planning sessions with detailed, easily understandable financials. When the board saw how much of our sales come from retail and how much margin is generated, we were ready for another c-store, either a new build or buying one. That was one of our goals.
“When the Elkhorn Ridge travel center — a really nice store in the middle of our trade area — became available, we were ready.”
The Cenex®-branded retail store is located just off a busy freeway and next to a sports complex, an easy choice for busy families, travelers and riders heading to and from the Sturgis Motorcycle Rally every August.
Snyder and board members and ranchers Angela Simons and Casey Miller readily admit they aren’t retail experts, although Simons once worked at a CBH retail location.
“Some years agriculture is going to make money and some years it won’t,” says Miller. “The margins from our retail operations allow us to do things in agronomy and our ag locations that we might not be able to do if we were strictly an ag-based co-op.”
“We know the retail operation will make money,” Simons adds. “It’s our constant.”
Convenience store sales and propane deliveries to vacation homes and non-ag businesses equal nonpatronage dollars, explains CBH Co-op CEO Todd Reif. “That’s why we work to have our balance sheet ready for the next retail growth opportunity.”
CBH Kitchen, which provides eat-in and take-out food at the co-op’s retail facilities, is building brand awareness and a fan following.
Staking a claim
Evidence of the ability to turn revenues into value for ag customers is the new ag center CBH is building in Belle Fourche, S.D. The center will include retail and warehouse space for agronomy, feed and farm supplies, plus offices to bring the feed and ag team together in one location. With a CBH-owned Cenex travel plaza at the end of the same block anchoring a busy intersection of two highways, Mike Galloway, CBH, director of sales and marketing, jokes that it could be called the CBH Quarter Mile.
The co-op’s roots in agriculture mean there’s a constant need to educate others on the value of buying from CBH, says Galloway. “If we have customers who buy only propane from us, I’ll remind them that when they put gas in their cars or buy dog food at our feed store and use their CBH member card, that goes toward their patronage paid out at the end of the year.”
CBH Co-op membership stands at about 14,000 individuals, businesses and municipalities, he adds. Per the co-op’s governance, about 1,500 members have voting rights and about 5,000 meet the annual minimum of dollars spent with the co-op to earn patronage, Reif reports.
Even as new residents flock to western South Dakota, traditional CBH ag owners are scattered across thousands of acres. That creates divergent customer expectations.
The state’s population is growing at four times the national rate, according to the Dakota Institute, and Rapid City, with about 80,000 residents was named the fastest-growing city in America in 2023 by the U.S. Census Bureau. Adding casino rooms and alcohol sales, including a trendy beer cave, in some retail stores helps meet customer expectations and drive revenue, says Reif. In other locations, like Union Center, S.D., rural residents look to CBH to provide auto repair, tires, fencing supplies, seed and feed.
CBH members can combine retail purchases from gas and diesel fuel to dog food and fencing supplies toward year-end patronage.
Tech expectations
Retail growth has driven CBH investments in technology to manage operations like propane truck routing and data security. Tech upgrades, including propane tank monitoring, artificial intelligence in accounting and cloud-based data storage, are added expenses, but provide peace of mind and customer satisfaction, says Snyder.
“A co-op has a lot of data. We owe it to our members to be secure. When they have a monitor on their propane tank at a second home and they are heading out to ski or ride ATVs, they can look at their phone, see their propane tank is full and feel good about it.”
The co-op’s energy business has continued to grow based on reliability and quality, says Chance Hershey, CBH director of refined fuels and chief operations officer. “It’s not because we were the cheapest; it’s because we had the best service and quality products. We picked up commercial customers in Rapid City who previously had been out of fuel for close to a week at times. We bought bigger trucks so we could service them better and started going direct to the terminal, which doubled our capacity and reduced costs per gallon.
“We also ran a campaign to add tank monitors, which has helped with efficiency while allowing us to give better service,” he adds. “If a monitor allows us to cut one delivery per year, we’ve paid for it. We can’t afford not to monitor tanks.”
Kelsey Junge, left, a retail business specialist with CHS, visits CBH retail operations every month, offering suggestions and reviewing plans with Julie Batterman, right, CBH director of retail.
Mindset matters
“Retail requires a customer-centric mindset, which is top of mind for the CBH retail team,” Reif says. Retail products, program offerings and facility upgrades are a priority in planning sessions, he adds. “Convenience is table stakes and upgrading the scope of retail offerings is the goal for staying current.
“We lean on Kelsey Junge, a retail business specialist with CHS, who makes the rounds of our stores once a month.”
Junge works closely with the CBH director of retail, Julie Batterman, providing input on new products and suggestions for store operations. CBH Kitchen operations, which produce food items in three locations for sales at six CBH retail stores, is raising brand awareness, while capturing margins for in-store and take-home prepared food sales.
“The CBH team is customer-centric,” says Junge. “They want to take care of their customers, but they’re not just looking at today; they’re looking forward five, 10, 15 years, asking, ‘How can we be here for the long term?’”
Leading with service and quality
Chance Hershey, left, with CBH, consults with Solid Construction’s Daryl Ristow, center, and Austin Himley.
“We work with CBH because of their customer service,” says Daryl Ristow, manager of Solid Construction. “They take care of us with no hesitation. If we run out of something and it’s late at night, they’re there first thing in the morning so we aren’t held up."
A concrete contractor and trucking company based in Box Elder, S.D., Solid Construction counts on CBH Co-op for its fuel, lubricant, coolant and other fluid needs. Increasing on-site fuel storage to 8,000 gallons has helped ensure fuel is available every night when trucks return to home base for refilling and timely maintenance. CBH also handles on-site fuel delivery for large-scale jobs, providing portable fuel tanks with remote tank monitors to keep job sites humming.
Upgrading to Cenex Roadmaster XL® premium diesel fuel has improved fuel efficiency and reduced maintenance for the Solid Construction fleet, says Austin Himley, assistant manager. “The whole fuel system runs cleaner and we have fewer injector issues.”
“It costs a little more for the fuel,” adds Ristow, “but we’re saving money in maintenance and the trucks run better.
“There are other energy suppliers, but I like to work with local vendors. The CBH team is Johnny-on-the-spot,” he adds. “Without CBH, Solid Construction wouldn’t exist.”
Learn more about CBH Co-op.
Check out the full fall 2024 C magazine with this article and more.
