The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements included elsewhere in this report. Additional discussion and analysis related to our company is contained in our Annual Report on Form 10-K, including the audited consolidated financial statements for the fiscal year ended December 30, 2007. Our fiscal year contains either 52 or 53 weeks and ends on the Sunday closest to December 31. All references to the third quarter of 2007 and 2008 refer to the 13-week periods ended September 30, 2007 and September 28, 2008, respectively. All references to the nine months of 2007 and 2008 refer to the 39-week periods ended September 30, 2007 and September 28, 2008, respectively. EBITDA and Adjusted EBITDA are non-GAAP financial measures of performance and liquidity that have limitations and should not be considered as a substitute for net income or cash provided by (used in) operating activities - please see footnote 2 under "Key Operating Metrics" below for a discussion of our use of EBITDA and Adjusted EBITDA in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and a reconciliation to net income and cash provided by (used in) operating activities for the periods presented.

Forward-Looking Statements

This report, including without limitation, our discussion and analysis of our financial condition and results of operations, contains statements that we believe are "forward-looking statements." These forward-looking statements generally can be identified by use of phrases such as "believe," "plan," "expect," "anticipate," "intend," "forecast" or other similar words or phrases. Descriptions of our objectives, goals, targets, plans, strategies, costs, anticipated capital expenditures, expected cost savings, expansion of our foodservice offerings, potential acquisitions, and potential new store openings and dealer locations, are also forward-looking statements. These forward-looking statements are based

on our current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements, including:

• Competitive pressures from convenience stores, gasoline stations, other non-traditional retailers located in our markets, and other wholesale fuel distributors;

• Changes in economic conditions generally and in the markets we serve, consumer behavior, and travel and tourism trends;

• Seasonal trends in the industries in which we operate;

• Currently unknown liabilities in connection with the acquisition of Town & Country;

• Volatility in crude oil and wholesale petroleum costs;

• Wholesale cost increases of tobacco products, or future legislation or campaigns to discourage smoking;

• Litigation or adverse publicity concerning food quality, food safety or other health concerns related to our restaurant facilities;

• Intense competition and fragmentation in the wholesale motor fuel distribution industry;

• The operation of our stores in close proximity to stores of our dealers;

• Devaluation of the Mexican peso or imposition of restrictions on access of Mexican citizens to the United States;

• Unfavorable weather conditions;

• Dependence on one principal supplier for merchandise, two principal suppliers for motor fuel and one principal provider for third-party transportation of the majority of our motor fuel;

• Inability to identify, acquire and integrate new stores;

• Our ability to comply with federal and state regulations including those related to environmental matters and the sale of alcohol and cigarettes;

• Dangers inherent in storing and transporting motor fuel;

• Our ability to insure our motor fuel operations;

• Dependence on senior management and the ability to attract qualified employees;

• Acts of war and terrorism; and

• Other unforeseen factors.

For a discussion of these and other risks and uncertainties, please refer to "Item 1A. Risk Factors" in Part II of this document, and those contained in our Annual Report on Form 10-K for the year ended December 30, 2007. The list of factors that could affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The forward-looking statements included in this report are based on, and include, our estimates as of the date hereof. We anticipate that subsequent events and market developments will cause our estimates to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if new information becomes available in the future.

Overview

We are the largest non-refining operator of convenience stores in Texas based on store count and we believe we are the largest non-refining motor fuel distributor by gallons in Texas. Our operations include retail convenience stores and wholesale motor fuel distribution. We acquired 168 retail stores from Town & Country on November 13, 2007, as further described in Note 3 of the accompanying Notes to Consolidated Financial Statements. As of September 28, 2008, our retail segment operated 509 convenience stores in Texas, New Mexico and Oklahoma, offering merchandise, foodservice, motor fuel, and other services. During the nine months ended September 28, 2008, we purchased approximately 859 million gallons of branded and unbranded motor fuel from refiners and distributed it to our retail convenience stores, contracted independent operators of convenience stores, unbranded convenience stores and commercial users. Our total revenues, net income and Adjusted EBITDA for the third quarter 2008 were $1,214.0 million, $6.9 million and $31.8 million, respectively, compared to $674.0 million, $4.8 million and $16.8 million, respectively, for the third quarter 2007. Our total revenues, net income and Adjusted EBITDA for the first nine months of 2008 were $3,444.9 million, $10.2 million and $80.1 million, respectively, compared to $1,895.5 million, $8.7 million and $41.3 million, respectively, for the first nine months of 2007. Our business is seasonal, and we generally experience higher sales and profitability in the second and third quarters during the summer activity months and lowest during the winter months. For a description of our results of operations on a quarterly basis see "Quarterly Results of Operations and Seasonality" of this Item 2.

During the third quarter of 2008, we opened one new large-format convenience store and closed one, bringing our retail store count to 509 as of September 28, 2008. We opened two more stores to date in the fourth quarter and currently have four new stores under construction. An estimated 11 to 12 new retail stores are planned for all of 2008, and all of these stores include a Laredo Taco Company or Country Cookin' restaurant. In our wholesale operations, we added seven new dealer sites and discontinued sixteen during the third quarter, for a total of 375 dealer sites in operation at the end of the third quarter. We expect to add 25 to 30 new dealer sites for all of 2008.

Third quarter 2008 was impacted by two Category 2 hurricanes striking the Texas coast - Hurricane Dolly, which made landfall just north of Brownsville on July 23, 2008 and Hurricane Ike, which struck Galveston and Houston on September 13, 2008. The two hurricanes impacted 144 of our retail stores, which were closed on average 50 hours, but with no stores closed for more than a week. We lost 297 store days during the third quarter, representing less than 1% of total retail store days. Extended power outages following Hurricane Ike also impacted our wholesale customers but 72% of our contracted dealers were back in operation within one week. Refinery outages caused widespread fuel supply shortages and temporarily increased costs to a large part of the nation, particularly for unbranded fuel supply. While we were generally able to secure supply for our retail stores and contracted dealers, our fuel and transportation costs in certain parts of our region were negatively impacted. We estimate the incremental expenditures from both hurricanes will be $3.0 million to $4.0 million, of which $2.0 million to $3.0 million is expected to be capital replacement costs. We are working closely with our insurance carriers to determine how much of these costs will be recoverable from our property and business interruption policies.

The economy in Texas, Oklahoma and New Mexico continues to fare better than many other parts of the nation, partly buoyed by energy related activities, a relatively stable housing market and a healthy banking market. We saw continued reductions in consumer demand for fuel during the third quarter as retail fuel prices peaked in early July. This softness was particularly evident along the Texas / Mexico border, as fuel prices in Mexico remained substantially lower than in the U.S. side, and at our highway locations most used by independent truckers. High energy prices are directly contributing to increased credit card fees and utility costs, and indirectly causing inflationary pressures on many prices of delivered products during 2007 and 2008. We have generally been able to pass along to consumers the increases we have experienced in credit card fees and in merchandise costs. Energy prices have recently begun a downward trend, but coupled with the current turmoil in the nation's credit markets, we are unable to predict the extent of this trend or its impact on our operations. We believe we have adequate liquidity and financial flexibility to continue to operate and grow our business. During the second quarter we expanded our revolving credit facility by $30 million and used the proceeds of a $30 million senior note issue to pay down borrowings on the credit facility to maximize credit availability for working capital requirements. We have no significant maturities of long-term debt until November 2012.

Results of Operations

The following table presents, for the periods indicated, selected items in the
consolidated statements of operations as a percentage of our total revenue:



                                           Three Months Ended                       Nine Months Ended
                                    September 30,       September 28,       September 30,       September 28,
                                        2007                2008                2007                2008
Revenues:
Merchandise sales                            16.1 %              15.6 %              16.2 %              15.8 %
Motor fuel sales                             83.0                83.7                82.8                83.4
Service and other revenue                     0.9                 0.7                 1.0                 0.8

Total revenues                              100.0               100.0               100.0               100.0
Cost of sales                                90.1                90.3                90.3                90.7
Gross profit:
Merchandise                                   5.3                 5.4                 5.3                 5.4
Motor fuel                                    3.7                 3.7                 3.5                 3.2
Service and other gross profit                0.9                 0.6                 0.9                 0.7

Total gross profit                            9.9                 9.7                 9.7                 9.3

Selling, general and
administrative expenses                       7.5                 7.2                 7.6                 7.1
Depreciation, amortization and
accretion                                     1.2                 0.8                 1.1                 0.9
Other operating expenses                      0.0                 0.0                 0.0                 0.0

Income from operations                        1.2                 1.7                 1.0                 1.3
Interest and other                            0.4                 0.8                 0.5                 0.8

Net income before tax                         0.8                 0.9                 0.5                 0.5
Income tax                                    0.0                 0.3                 0.0                 0.2

Net income                                    0.8 %               0.6 %               0.5 %               0.3 %

Pro Forma Results of Operations

The following table presents the quarterly and annual 2007 results of operations, on a pro forma basis for Susser Holdings Corporation as if the acquisition of Town & Country had occurred on January 1, 2007. We are presenting this unaudited information to provide a basis for comparison against our actual 2008 results, due to the significant impact of the TCFS Acquisition on our operating results.

                                                                                                               Twelve Months
                                                          Three Months Ended (1)                                   Ended
                                    April 1,          July 1,          September 30,       December 30,        December 30,
                                      2007              2007               2007                2007                2007
                                                           (dollars in thousands, except share data)
Revenues:
Merchandise sales                 $    148,368      $    166,705      $       171,450      $     166,509      $       653,032
Motor fuel sales                       560,903           752,274              738,036            765,027            2,816,240
Other income                             9,017             8,758                8,740              8,671               35,186

Total revenues                         718,288           927,737              918,226            940,207            3,504,458

Cost of sales:
Merchandise (2)                         99,987           112,406              114,637            114,262              441,292
Motor fuel (2)                         534,971           714,783              698,298            731,240            2,679,292
Other                                      579               771                  593                518                2,461

Total cost of sales                    635,537           827,960              813,528            846,020            3,123,045

Gross profit                            82,751            99,777              104,698             94,187              381,413

Operating expenses:
Personnel                               27,069            28,692               29,230             29,253              114,244
General and administrative               8,134             7,963                9,286             11,058               36,441
Other operating                         23,483            26,814               27,708             24,428              102,433
Rent (3)                                 7,417             7,524                7,549              8,355               30,845
Royalties                                   66                -                    -                  -                    66
(Gain) loss on disposal of
assets and impairment charge                16              (221 )                271                116                  182
Depreciation, amortization,
and accretion (4)                        9,661            10,383               11,446              9,481               40,971

Total operating expenses                75,846            81,155               85,490             82,691              325,182

Income from operations                   6,905            18,622               19,208             11,496               56,231

Other income (expense):
Interest expense, net (5)              (10,267 )         (10,197 )            (10,196 )          (11,257 )            (41,917 )
Other miscellaneous                        105                91                  123                116                  435

Total other income (expense)           (10,162 )         (10,106 )            (10,073 )          (11,141 )            (41,482 )
Minority interest in income
(loss) of consolidated
subsidiaries                               (16 )             (18 )                 -                 (10 )                (44 )

Income (loss) before income
taxes                                   (3,273 )           8,498                9,135                345               14,705
Income tax expense (benefit)
(6)                                        767            (3,355 )             (3,603 )             (417 )             (6,608 )

Net income (loss)                 $     (2,506 )    $      5,143      $         5,532      $         (72 )    $         8,097

Net income (loss) per share:
Basic                             $      (0.15 )    $       0.31      $          0.33      $        0.00      $          0.48
Diluted                           $      (0.15 )    $       0.31      $          0.33      $        0.00      $          0.48

Weighted average shares
outstanding:
Basic                               16,705,404        16,705,404           16,705,404         16,822,071           16,734,571
Diluted                             16,705,404        16,766,204           16,776,347         17,017,075           16,817,417

                                                   Three Months Ended (1)                        Twelve Months Ended
                                 April 1,      July 1,      September 30,      December 30,         December 30,
                                   2007         2007            2007               2007                 2007
Merchandise Gross Profit, net        32.6 %       32.6 %             33.1 %            31.4 %                   32.4 %
Gallons:
Retail                            156,467      163,803            169,498           167,447                  657,215
Wholesale                         113,027      120,152            120,249           116,850                  470,278
Motor fuel margin (cents per
gallon):
Retail                              13.67 ¢      18.83 ¢            18.90 ¢           16.27 ¢                  16.97 ¢
Wholesale                            4.02 ¢       5.53 ¢             6.40 ¢            5.60 ¢                   5.41 ¢

(1) Town & Country's historical monthly results have been aggregated to correspond to our fiscal quarters, which differ from Town & Country's historical fiscal quarters, to more accurately reflect the combined quarterly seasonal trends on a pro forma basis. Therefore, this presentation varies slightly from the Pro Forma Condensed Consolidated Statements of Operations included in Note 4 of our Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 30, 2007, as that presentation was based on Town & Country's audited financial statements for the fiscal year ended November 3, 2007, as adjusted. Certain pro forma adjustments related to the TCFS Acquisition have been made, as further described in the following notes, which are consistent with our pro forma presentation in our referenced Note 4.

(2) Cost of sales has been adjusted to eliminate the impact of the use of the LIFO inventory method by Town & Country.

(3) Includes additional rent expense to reflect the $51.2 million sale/leaseback of Town & Country assets completed concurrent with the TCFS Acquisition.

(4) Reflects the effects on depreciation from the valuation of Town & Country assets to fair market value and the sale/leaseback transaction.

(5) Reflects the net increase in interest expense resulting from the issuance of the $105 million term loan and $150 million senior notes, along with amortization of issuance costs, and eliminates interest expense related to Town & Country debt which was paid off or defeased.

(6) Income tax expense was calculated at a 36% effective rate on pre-tax income, plus the Texas margin tax at 0.5% of gross margin. This calculation of pro forma income tax eliminates the effects of our release of a tax valuation allowance during 2007, of which the final $6.6 million was released in fourth quarter 2007. The TCFS Acquisition changed our tax position, and therefore this pro forma presentation will be more comparable to our 2008 income tax expense.

Key Operating Metrics

The following table sets forth, for the periods indicated, information
concerning key measures we rely on to gauge our operating performance:



                                                     Three Months Ended                                     Nine Months Ended

                                         September 30, 2007 (1)           September 28,        September 30, 2007 (1)         September 28,
                                                                              2008                                                2008
                                        Actual            Pro Forma          Actual            Actual         Pro Forma          Actual
                                              (dollars in thousands, except motor fuel pricing and gross profit cents per gallon)
Revenue:
Merchandise sales                   $      108,227        $  171,450     $       189,272     $   307,517     $   486,523     $       545,913
Motor fuel-retail                          291,413           466,153             619,692         813,849       1,285,353           1,757,527
Motor fuel-wholesale                       268,252           271,883             396,952         755,511         765,860           1,114,725
Other                                        6,130             8,740               8,123          18,590          26,515              26,740

Total revenue                       $      674,022        $  918,226     $     1,214,039     $ 1,895,467     $ 2,564,251     $     3,444,905
Gross profit:
Merchandise                         $       35,921        $   56,813     $        65,966     $    99,924     $   159,493     $       187,050
Motor fuel-retail                           17,247            32,041              36,282          47,705          84,268              88,557
Motor fuel-wholesale                         7,420             7,697               8,760          18,040          18,894              21,600
Other                                        5,885             8,147               7,791          17,762          24,572              25,429

Total gross profit                  $       66,473        $  104,698     $       118,799     $   183,431     $   287,227     $       322,636
Adjusted EBITDA (2):
Retail                              $       12,450                       $        26,274     $    31,793                     $        67,119
Wholesale                                    6,103                                 6,889          14,386                              17,531
Other                                       (1,790 )                              (1,350 )        (4,921 )                            (4,535 )

Total Adjusted EBITDA               $       16,763        $   31,640     $        31,813     $    41,258     $    78,331     $        80,115
Retail merchandise margin                     33.2 %            33.1 %              34.9 %          32.5 %          32.8 %              34.3 %
Merchandise same store sales
growth                                         7.9 %                                 4.8 %           6.5 %                               6.7 %
Pro forma merchandise same store
sales growth                                                                         6.7 %                                               8.0 %
Average per retail store:
Merchandise sales                   $        328.6        $    345.0     $         371.6     $     943.0     $     986.6     $       1,076.3
Motor fuel gallons                           333.6             347.3               325.9           982.0         1,011.7               997.2
Motor fuel gallons sold:
Retail                                     108,874           169,498             163,399         317,291         489,768             497,825
Wholesale                                  118,767           120,249             122,318         349,034         353,428             360,757
Average retail price of motor
fuel                                $         2.68        $     2.75     $          3.79     $      2.56     $      2.62     $          3.53
Motor fuel gross profit cents per
gallon:
Retail                                       15.84 ¢           18.90 ¢             22.21 ¢         15.04 ¢         17.21 ¢             17.79 ¢
Wholesale                                     6.25 ¢            6.40 ¢              7.16 ¢          5.17 ¢          5.35 ¢              5.99 ¢

(1) We are providing both actual results for the three and nine months ended September 30, 2007 and pro forma results as if the TCFS Acquisition had occurred at the beginning of our 2007 fiscal year. Refer to the preceding "Pro Forma Results of Operations" for additional description of the pro forma financial results.

(2) We define EBITDA as net income before net interest expense, income taxes and depreciation, amortization and accretion. Adjusted EBITDA further adjusts EBITDA by excluding cumulative effect of changes in accounting principles, discontinued operations, non-cash stock based compensation expense, and certain other operating expenses that are reflected in our net income that we do not believe are indicative of our ongoing core operations, such as significant non-recurring transaction expenses and the gain or loss on disposal of assets and impairment charges. In addition, those expenses that we have excluded from our presentation of Adjusted EBITDA are also excluded in measuring our covenants under our revolving credit facility and the indenture governing our senior notes.

EBITDA and Adjusted EBITDA are important measures used by management in evaluating our business because:

• Adjusted EBITDA is used as a performance and liquidity measure under our existing revolving credit facility and the indenture governing our existing notes, including for purposes of determining whether we have satisfied certain financial performance maintenance covenants and our ability to borrow additional indebtedness and pay dividends;

• Adjusted EBITDA facilitates management's ability to measure the operating performance of our business on a consistent basis by excluding the impact of items not directly resulting from our retail convenience stores and wholesale motor fuel distribution operations;

• Adjusted EBITDA is used by our management for internal planning purposes, including aspects of our consolidated operating budget, capital expenditures . . .