SQRL Sale? Acquisition Nears Amid Financial Troubles

The SQRL store at 709 S. Pine St. in Cabot is among a long list of closed projects after mass layoffs and financial problems. (George Waldon)

Amid rumblings of payroll problems and more staff cuts, SQRL Service Stations is entertaining new ownership.

The financially distressed Little Rock convenience store recently chain messaged concerned parties that a deal is in the works for a sale to Gas Hub Investments LLC.

“As many of you are aware, we have been facing significant liquidity issues over the past several months. In an effort to ameliorate this situation for all stakeholders, we have entered into a membership purchase agreement with Gas Hub Investments LLC, whereby Gas Hub Investments is the new owner of SQRL Service Stations,” the message stated.

A search for a corporate entity dubbed Gas Hub Investments came up empty. Adam Lusthaus, who replaced founder Joseph Blake Smith as SQRL’s CEO in February, couldn’t be reached for comment.

Leading up to the would-be Gas Hub deal, more SQRL convenience stores have closed during the past 30 days, while others show signs of the company’s continued financial strain. Some darkened stores sport a banner message: “Pardon the interruption. We’ll be right back.”

C-Store Dive, which covers the convenience store industry, recently reported SQRL is undergoing its third investigation since 2021 by the Department of Labor’s Wage & Hour Division.

C-Store Dive said investigations in 2021 and 2022 revolved around unpaid employees, which SQRL blamed on clerical errors. Arkansas Business sources have identified missed payroll as a focal point of the current investigation.

Fernando Loyola of Florida, a 23-year convenience store veteran who oversaw training and development for SQRL for two years until he was laid off, told Arkansas Business that the money owed to staffers goes beyond missed paychecks.

“They had employees pay for store expenses with their own credit card,” Loyola said of SQRL’s operations. “They owe me like a thousand dollars. They promised to reimburse us but didn’t and then we lost our jobs.”

He described most of SQRL’s 41 projects in Florida as “ghost stores,” with many closed and others operating understocked, with empty shelves and refrigerated display cases.

It’s a description reflected in Arkansas stores as well. More “no gas” signs have cropped up at projects such as SQRL’s Valero at 120 Marshall St. in Jacksonville. And the company’s high-visibility store at 8623 Warden Road in Sherwood is now closed.

On March 14, the company put out a press release announcing the future reopening of hundreds of convenience stores: “SQRL Service Stations and Blue Owl Capital are pleased to announce that all locations should be back up and running within the next three months. SQRL also intends to fully remodel and rebrand all locations.”

Jared Sheiker, principal at Blue Owl Capital Real Estate, declined comment on any questions regarding SQRL.

In its brief March 14 release, SQRL disclosed a master lease agreement governing 210 c-stores with the New York asset investment firm, which owns properties through several affiliates.

When the 210-store deal first was announced in October, the transaction was portrayed by then-CEO Smith as an acquisition without naming the seller.

SQRL essentially replaced the insolvent Mountain Oil Express as a tenant for Blue Owl, once the properties were extracted from Mountain Oil’s bankruptcy court last year. SQRL didn’t pay Blue Owl anything to enter into the lease agreement, according to sources familiar with the transaction.

The self-described “world-class leading gas station and convenience store company” that is “revolutionizing the convenience store industry through laser-precision tactical service models” was already experiencing money troubles at the time it was claiming the major expansion.

SQRL’s marketing hype stands in contrast to its operational and financial struggles under Smith, who stepped down as CEO in February but remained as chairman. That leadership move was mixed in with extensive layoffs across the company’s 20-state footprint as well as its corporate staff.