VIEWPOINT By Don Longo, Editorial Director
Keeping Up With the Top 100 CSNews’ iconic list is still the standard for in-depth look at the industry’s biggest retailers
F
or close to 30 years, the editors of Convenience Store News have researched and compiled annually a list of the largest convenience store chains by store count. It’s the longest-running, most accurate and comprehensive continuously published list of its kind in the industry. The list started in the mid-1980s as the Top 50. Circa-2000, it was expanded to the Top 50 and The Next 50. Then, around 2005, we rolled it up into today’s iconic Top 100 report. This year’s CSNews Top 100 is bigger and better than ever. And when I say bigger, I don’t mean we’ve just added another retailer or two to the list. This year’s report is dramatically improved and remains the gold standard by which industry retailers are ranked. As in past years, our editors start with the official store count data compiled by TDLinx, a service of Nielsen, which is the official record-keeper of store count in the convenience store industry. (TDLinx provides the official store count data for NACS.) We then conduct our own research via hours of phone calls and Internet research to confirm and enhance the data. This results in a list that doesn’t just include the number of stores operated by each of the largest retailers in our business; rather the CSNews Top 100 is the only list that also includes the number of corporate-run stores, franchised/licensed stores, the primary store banners under which each retailer operates, and an estimate of each retailer’s latest year-end sales. In addition, this year’s Top 100 report includes profiles on each of the 10 largest retailers, and analyses into CSNews has been recognized with more editorial awards, including the prestigious Jesse H. Neal Award for business journalism, in the past six years than any other industry publication. 2013 Jesse H. Neal National Business Journalism Award Best Single Issue, October 2012 2013 Jesse H. Neal National Business Journalism Award Finalist, Best Profile, August 2012 2008 Jesse H. Neal National Business Journalism Award Best Single Issue, October 2007
the future of two major acquisitions that will result in the merging of four of the largest chains — Speedway with Hess, and Sunoco with Stripes. We’ve also put together several informative breakouts: UÊ/ iÊÌ «ÊÓäÊV > ÃÊ Ê company-operated stores; For comments, please contact Don Longo, Editorial Director, UÊ/ iÊÌ «ÊÓäÊV > ÃÊ ÊvÀ> at (201) 855-7606 or chised/licensed stores; dlongo@stagnitomail.com. UÊ iÜÊ>`` Ì ÃÊV «> iÃÊ that cracked this year’s Top 100); UÊ À « vvÃÊV «> iÃÊÌ >ÌÊvi Ê vvÊÌ ÃÊÞi>À½ÃÊ ÃÌ®ÆÊ> ` UÊ/ iÊ£äÊV «> iÃÊ ÊÌ iÊVÕÃ«Ê Ã°Ê£ä£ ££äÊ Ê store count). We resisted calling our report the Top 110 this year because the Top 100 just has a nicer ring to it. IN MEMORIAM: JOHN MACDOUGALL John MacDougall was inducted into the CSNews Hall of Fame in 2003, three years before I became editor-in-chief of the publication. However, over the years, I’ve grown to know and respect him and his wonderful chain of Nice N Easy Grocery Shoppes in central New York. His death on June 21 saddens me. The convenience store industry lost a great leader and innovator. My condolences to his family, friends and his Nice N Easy family — which I believe will continue John’s strong values and people-first business philosophy. We’ll all miss his jolly and fun attitude toward work and life. RIP, John. CSN
2013 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2012 2011 Silver Eddie Award, Folio: magazine Business to Business, Retail, Full Issue, October 2010 2011 Silver Eddie Award, Folio: magazine Business to Business, Retail, Best Single Article, October 2010 2009 Gold Ozzie Award, Folio: magazine Best Use of Illustration, October 2008 2009 Silver Eddie Award, Folio: magazine Business to Business, Retail, Full Issue, October 2008 2009 Bronze Eddie Award, Folio: magazine Business to Business, Retail, Website 2007 Silver Ozzie Award, Folio: magazine Best Use of Typography, November 2006
2013 American Society of Business Publication Editors, Midwest Regional Bronze Azbee Award Best Editorial/Commentary, July 2012 2010 American Society of Business Publication Editors, Northeast Regional Silver Azbee Award Feature Article Design, November 2010 2010 Trade Association Business Publications Intl. Tabbie Awards Honorable Mention, Front Cover Illustration, October 2009 2009 Trade Association Business Publications Intl. Tabbie Awards Gold, Front Cover Illustration, February 2008 Honorable Mention, Best Single Issue, October 2008
WWW.CSNEWS.COM | JULY 2014 | Convenience Store News 3
CONTENTS July 2014
VOLUME 50/NUMBER 7
26 | COVER STORY Steady for Now, Shakeup Coming With several large M&A deals on deck, this year’s Top 100 ranking is like the calm before the storm.
INDUSTRY ROUNDUP 14 | Retailers Fight Swipe Fees on Several Fronts 16 | Nice N Easy Founder John MacDougall Passes Away 18 | Eye on Growth 20 | Retailer Tidbits 21 | Supplier Tidbits 22 | Competitive Watch 24 | Marketing Moves
HOW TO DO WORLD-CLASS FOODSERVICE 56 | How to Take Your Coffee Program to the Next Level 56 | Call to Action: Foodservice 101 58 | Call to Action: Foodservice 201 60 | Call to Action: Foodservice 301
Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by Stagnito Business Information, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright © 2014 by Stagnito Business Information. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.
4 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
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CONTENTS 111 Town Square Place, Suite 400, Jersey City, NJ 07310 (201) 855-7600 Fax: (201) 855-7373 www.csnews.com
BRAND MANAGEMENT Group Brand Director (201) 855-7610
Michael Hatherill mhatherill@stagnitomail.com
EDITORIAL
44 64 66 70
Editorial Director (201) 855-7606 Executive Editor (201) 855-7608 Managing Editor (201) 855-7614 Senior Editor (201) 855-7618 Field Editor (201) 855-7619 Assistant Editor (201) 855-7629 Contributing Editor (303) 741-3377 Contributing Editor (201) 280-2614 Art Director (224) 632-8245 Director of Market Research (201) 855-7605
Don Longo dlongo@stagnitomail.com Linda Lisanti llisanti@stagnitomail.com Brian Berk bberk@stagnitomail.com Melissa Kress mkress@stagnitomail.com Angela Hanson ahanson@stagnitomail.com Samantha Negraval snegraval@stagnitomail.com Renée M. Covino reneek@aol.com Tammy Mastroberte tmastroberte@gmail.com Michael Escobedo mescobedo@stagnitomail.com Debra Chanil dchanil@stagnitomail.com
MARKETING & PROMOTION
FEATURES 44 | Category Captains 2014 CSNews’ awards recognize suppliers for driving convenience store business.
CATEGORY MANAGEMENT FOODSERVICE
64 | Dessert-Inspired Beverages Hit the Sweet Spot C-stores need to stay relevant by continuing to offer unique flavors. TOBACCO
66 | The Wait Is Over Industry says FDA followed the science with its deeming regulations for tobacco products. SERVICES
70 | Marking Milestones Car wash & convenience store chain Bobby and Steve’s Auto World is celebrating two anniversaries this year.
DEPARTMENTS VIEWPOINT
3 | Keeping Up With the Top 100 CSNews’ iconic list is still the standard for in-depth look at the industry’s biggest retailers.
Audience Development Manager Shelly Patton (646) 217-1045 spatton@stagnitomail.com List Rental The Information Refinery (800) 529-9020 Brian Clotworthy Reprints and Licensing Wright’s Media (877) 652-5295 sales@wrightsmedia.com Subscriber Services/Single-Copy Purchases (978) 671-0449 Stagnito@e-circ.net
President & CEO Harry Stagnito Chief Information Officer Kollin Stagnito Vice President & CFO Kyle Stagnito Senior Vice President, Partner Ned Bardic Chief Brand Officer Korry Stagnito Vice President/Custom Media Division Pierce Hollingsworth (224) 632-8229 phollingsworth@stagnitomail.com Production Manager Anngail Norris Human Resources Manager Sandy Berndt Strategic Marketing Director Bruce Hendrickson (224) 632-8214 bhendrickson@stagnitomail.com Vice President, Events John Failla (914) 574-5709 jfailla@stagnitomail.com Director, Conferences & eLearning Amy Walsh (781) 856-8381 awalsh@stagnitomail.com Audience Development Director Cindy Cardinal Director of Digital Media John Callanan (203) 295-7058 jcallanan@stagnitomail.com
CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor
EDITORIAL ADVISORY BOARD Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Kyle McKeen Alon Brands Inc.
Richard Mione GPM Southeast Rick Crawford Green Valley Grocery
Ian Johnstone Cenex Zip Trip
Matt Paduano Nice N Easy Grocery Shoppes
Jon Urbanik CST Brands Inc.
Jonathan Polonsky Plaid Pantries Inc.
Roy Strasburger Convenience Management Services Inc. Joe Hamza Tedeschi Food Shops Jack Lewis Village Pantry LLC
The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations. 6 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
Chester’s Bold + Savory Baked Beans
We’ve kept the secret of Chester’s flavor safely under our
hat for over 50 years. Ever since he opened his first foodservice business in 1952, our founder, W.O. Giles, was driven to perfection. In pursuit of the world’s best tasting fried chicken, he spent years perfecting every detail. This included the creation of unique marinades, batters, and seasonings, as well as his own special cooking equipment and preparation processes. Finally, in 1965, Chester’s was born. Its famous taste has become a growing favorite around the world. Today, we are proud to introduce sides worthy of the best fried chicken in the industry.
Chester’s International, LLC 2020 Cahaba Road Birmingham, AL 35223 USA (205) 949-4690 www.chestersinternational.com
CSNEWS.COM ONLINE EXCLUSIVE
TOP 5 Daily News Headlines The most viewed articles online.
Hostess Balances Old & New in Comeback Strategy As the new Hostess Brands nears the one-year anniversary of its “Sweetest Comeback in the History of Ever,” its return is producing some surprising results. Not only have brand loyalists welcomed it back, but also new consumers are giving Hostess a try, particularly young adult males. Rather than be dragged down by a shaky sweet snacks category, Hostess’ return to the market has actually lifted overall sales of sweet baked goods, taking the market from a nearly 8-percent decline during Hostess’ absence to 3-percent growth upon its return.
1 | 7-Eleven Hangs For-Sale Sign on 75 Stores 7-Eleven Inc. put 75 sites on the market after determining they do not fit its current business model. The sites are being sold without 7-Eleven branding and range from 1,870 square feet to 4,740 square feet. 2 | Dallas C-store Owner Creates Wall of Shame A convenience store owner in south Dallas is responding to thefts by posting photos of suspects on a “Wall of Shame” in the store’s front window, along with descriptions of what they tried to steal. Sam Farah, who owns several c-stores and gas stations, set up a surveillance system that includes 200 interior and exterior cameras at his Exxon Rayyan location.
For more exclusive stories, visit the Special Features section of www.csnews.com.
PRODUCT HIGHLIGHT
3 | Casey’s Will Not Spin Off Assets Into a MLP Casey’s General Stores Inc. will not spin off its real estate and fuel assets into a master limited partnership (MLP), Chief Financial Officer Bill Walljasper stressed during the convenience store retailer’s 2014 fiscal fourth-quarter earnings call. A major missing component preventing Casey’s from formulating a MLP is a wholesale fuel distribution business.
The most viewed New Product online.
4 | 7-Eleven Faces More Franchisee Issues Dilip and Saroj Patel allege in court documents filed in March that 7-Eleven used “storm trooper interrogation and isolation tactics” to pressure them to give up their store, which they ran since 1995, with no compensation. 5 | Kum & Go Plans Headquarters Move A Des Moines City Council memo shows that Kum & Go LC is applying for more than $8.5 million in state tax incentives to move its headquarters from West Des Moines to downtown Des Moines.
Vamp E-Cigarette Vapor Brands International Inc. reintroduced the Vamp E-Cigarette. The product can be found at select retail locations, as well as online at www.vampire.com and at the Vampire Lounge & Tasting Room across from the entrance of the Peninsula Hotel in Beverly Hills, Calif. Vapor Brands International Inc. Los Angeles (800) 549-3579 www.vaporbrands.com
EXPERT VIEWPOINT
Never Good Timing for Bad Laws When consumer confidence is relatively weak, unemployment is higher than normal and the business community feels threatened, certain government mandates often appear illogical and the last thing anyone should recommend. Issues such as minimum wage increases, mandated paid leave time and health insurance proposals have often been defeated or postponed because “the timing is just not 10 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
right.” This position can be a problem because it implies that under “better” circumstances, businesses may support the proposal. This does not leave the business community much to fall back on when the economy begins to recover and consumer confidence rises. — Joe Kefauver, Parquet Public Affairs Visit the Expert Viewpoints section of www.csnews.com for more exclusive expert columns.
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NJOY INC.
RJ REYNOLDS - VUSE NICOTEK LLC ALTRIA - MARKTEN
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25 20 15 10 5
9.0 6.3 5.2
0
2.9 1.2 3/13
4/13
5/13
6/13
7/13
8/3/13 8/31/13 9/13
10/13 11/13 12/13
1/14
2/14
3/14
4/14
5/14
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* LOGIC® calculation is based in part on data reported by Nielsen through its Service for the Total Anti-smoking Product category for the 4-week period ending 6/7/2014, for the Total US market and Total Convenience channel. Copyright © 2014, The Nielsen Company.
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INDUSTRYROUNDUP FAST FACT
The top 100 convenience store chains in the United States operate 60,640 stores. Compared to last year’s 59,598, this is an increase of 1,042 units or 1.7 percent. These 100 chains represent 40.1 percent of the industry’s total stores. — Source: Convenience Store News Top 100; Nielsen TDLinx (page 26)
QUOTABLES
“Many people mistakenly believe that taking something from average to very good to great is linear in nature. It’s not. It’s exponential. To go from good to very good is not twice as hard, it’s 11 times as hard.” — Mathew Mandeltort, Eby-Brown (page 56)
Retailers Fight Swipe Fees on Several Fronts Industry takes its appeal of Fed’s debit card rules to the U.S. Supreme Court By Melissa Kress
A
s interchange fees paid on debit and credit card transactions continue to be a thorn in the side of retailers, the industry is pressing on in its long-standing fight against these costs. In early June, retailers took their case against debit card swipe fees to the highest court in the land, asking the U.S. Supreme Court to hear an appeal on the Federal Reserve rules. “Given how extensive these fees are and how they affect virtually every transaction that takes place in the United States ... it’s a serious case that the Supreme Court ought to hear,” said Doug Kantor, an attorney with Steptoe & Johnson in Washington, D.C., who represents the retailers. This legal battle over debit card swipe fees has gone several rounds up to this point. The case dates back to 2011 when the Fed limited swipe fees to 21 cents per transaction, but retailers objected and said the Dodd-Frank law intended the cap to be set even lower. NACS, the Association for Convenience & Fuel Retailing; the National Retail Federation; National Restaurant Association and other groups sued the Fed in 2011. A U.S. district court in July 2013 sided with the retailers and ordered the Fed to retool the fees. But then, the Fed appealed and a three-judge panel in March
14 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
reversed the lower court’s decision. The retailers had the option of appealing to the full appellate court or directly to the Supreme Court. The retail industry is also fighting against interchange fees incurred on credit card transactions. On June 16, the National Retail Federation and the Retail Industry Leaders Association filed a brief with an appeals court asking the judicial panel to overturn the credit card swipe-fee settlement between merchants and Visa Inc. and MasterCard Inc. The groups argue that a federal judge approved the deal after it was negotiated by only a handful of merchants. In addition, they claim the settlement fails to bring the fees under control. On Dec. 12, U.S. District Judge John Gleeson granted final approval to the $5.7-billion settlement, bringing to a close a 2005 class-action lawsuit that alleged Visa and MasterCard illegally fixed credit card interchange swipe fees. Soon after, the retailer organizations filed notices of appeal with the Second U.S. Circuit Court of Appeals in New York and then followed up with the joint brief presented to the court in mid-June. In the brief, the groups call approval of the mandatory settlement despite such “breathtaking scope in the face of widespread and substantive objection” unprecedented.
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Scientific evidence suggests but does not prove that eating 1.5 ounces per day of most nuts such as pistachios or almonds as part of a diet low in saturated fat and cholesterol may reduce the risk of heart disease. See nutrition information for fat content. ©2014 Paramount Farms International LLC. All rights reserved. WONDERFUL, GET CRACKIN’, the Package Design and accompanying logos are registered trademarks of Paramount Farms International LLC. MB10467 Source: IRI Convenience 12 weeks ending 9-22-13.
INDUSTRYROUNDUP
Nice N Easy Founder John MacDougall Passes Away Colleagues and friends remember him as motivator, friend, father figure John MacDougall, founder and president of New York convenience store chain Nice N Easy Grocery Shoppes,
16 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
passed away June 21 at the Cleveland Clinic surrounded by his family. He was 73.
MacDougall, who was inducted into the Convenience Store News Hall of Fame in 2003, opened the first Nice N Easy store in 1980. Today, the Canastota, N.Y.based company operates 81 stores across central New York, known for their friendly customer service, high-quality fresh food and community involvement. For the last 34 years, MacDougall’s strong values defined Nice N Easy and its mission statement, “Be Nice, Have Fun, Sell Stuff and Be the Best.” In addition to being a savvy and forward-thinking businessman with a successful company, he was widely regarded as a motivator, friend, father figure, a boss who created a loyal following among his employees, and a man who liked to have fun (he often joked about his love of beer, saying he was “built by Bud”). “I’ve learned that this industry remains, to this day, essentially a people business. I realized long ago that you had to build strong personal relationships with the ‘holy trinity’ — your employee, your customer and your supplier,” MacDougall told CSNews at the time of his Hall of Fame induction. “From the outside, we might appear to be all about moving product, but from the inside, I know that we are all about people — serving their wants and needs.” In a note to employees announcing MacDougall’s passing, Senior Executive Vice President Fran Duskiewicz said the best way to honor their leader is to “continue doing things the Nice N Easy way — ‘people first’ — the way he preached and lived.”
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eye on growth ■ Par Petroleum Corp. inked a deal
to acquire Koko’oha Investments Inc., the parent company of Mid Pac Petroleum LLC, for approximately $107 million. Mid Pac is the exclusive licensee of the 76 brand in Hawaii, and operates or distributes fuel through more than 80 retail sites and four terminals across the state. The deal is expected to close in the third quarter. ■ 7-Eleven Inc. signed a master
franchise agreement with Seven Emirates Investment LLC to develop and operate 7-Eleven stores in the United Arab Emirates (UAE). The expansion will mark the brand’s first entry into the Middle East. The first 7-Eleven store in the UAE is expected to open next summer in Dubai. Seven Emirates Investment plans to construct new 7-Eleven stores, as well as convert existing locations to the 7-Eleven brand. ■ GoMart Inc. pur-
chased two Cool Spot convenience stores and gas stations in Coolville and Tuppers Plains, Ohio. The total price for both locations was nearly $5 million. ■ Gate Petroleum Co. continues to
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grow its footprint in northeast Florida with plans to build a Gate Food Store at the Collins Crossing development in southwest Jacksonville. This marks at least the fifth new area Gate c-store and gas station under development in the past year.
INDUSTRYROUNDUP
retailer tidbits ■ Rutter’s Farm Stores was honored as the NACS
Insight International Convenience Retailer of the Year during the sixth annual International Convenience Retail Awards, held at the NACS Insight Convenience Summit — Europe. Rutter’s is the first U.S. company to earn this recognition.
■ Friendly Express has tapped global brand agency CBX
to update the design and branding of its 42 convenience stores in southeast Georgia. CBX will update the chain’s logo and redesign the interiors and exteriors of the stores. ■ Kum & Go LC plans to move
■ 7-Eleven Hawaii Inc. launched
a $30-million rebranding campaign that will take place over the next five years. Its 61 stores will be renovated to reflect the company’s new “Your Neighborhood Store” concept. Each site will undergo a $500,000 remodel. ■ Giant Eagle Inc.’s new GetGo convenience store in
Elizabeth, Pa., which opened in June, offers a walkin beer cave and more than 100 domestic, craft and imported beers. It is the retailer’s first GetGo store in the state to sell beer.
its corporate headquarters from West Des Moines, Iowa, to a $92-million, 120,000-square-foot building in downtown Des Moines. The retailer has been approved to receive $9 million in incentives from the Iowa Economic Development Authority. ■ VERC Enterprises Inc. won a 2014 Best of Plymouth
Award in the convenience stores category for the seventh consecutive year. The Massachusetts-based chain will also receive a special induction into the Plymouth Business Hall of Fame this year.
MANUAL
20 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
supplier tidbits ■ Tyson Foods won the bidding war for
Hillshire Brands Co. The winning bid came in at roughly $7.8 billion. The Tyson/Hillshire deal is conditional upon the dissolution of Hillshire’s $4.3-billion agreement to acquire Pinnacle Foods. ■ Reynolds American Inc. is backing up the national
rollout of its VUSE digital vapor cigarettes with a multimillion-dollar investment in its Tobaccoville, N.C., manufacturing complex. Under a service agreement, R.J. Reynolds Tobacco Co. will begin production of VUSE for R.J. Reynolds Vapor Co.
■ The Coca-Cola Co.’s new “Share a Coke” summer
promotion swaps out the brand logos on its 20-ounce bottles for 250 of the nation’s most popular names among teens and Millennials. Coca-Cola, Diet Coke and Coke Zero logos will also give way to group names like “Family” and “Friends” and nicknames like “BFF” and “Star.” ■ Ryko Solutions Inc. will acquire National Carwash
Solutions LP for an undisclosed sum. The transaction is expected to close by mid-July.
■ VMR Products LLC’s electronic cigarette products
are now available in 50,000 retail locations. Among the c-store retailers carrying the products are 7-Eleven Inc., Sheetz Inc., BP plc, Shell Oil Co., Kangaroo Express, Circle K and Pilot Flying J.
■ Wayne Fueling Systems and Wincor Nixdorf are form-
ing a global strategic alliance to provide forecourt control, point-of-sale, back-office and payment solutions to fuel retailers throughout the world.
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WWW.CSNEWS.COM | JULY 2014 | Convenience Store News 21
INDUSTRYROUNDUP
competitive watch ■ Drugstore chain CVS/pharmacy
saw double-digit increases.
brought back its popular “Free Gas ■ Burger King Worldwide Inc.
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Card” promotion, which allows loyalty customers to receive a fuel gift card when spending $30 on participating items. Through July 19, members of CVS’ ExtraCare program can earn one $10 gift card to Shell, ExxonMobil, BP or Amoco locations. ■ Dollar General will begin con-
struction on its first stores in Maine and Rhode Island this fall, with plans to expand into Oregon in early 2015. These new builds will extend the dollar store chain’s footprint to 43 states.
Subway is adding Keurig Green Mountain Inc.’s single-serve brewers to thousands of its North America locations. More than 50 percent of Subway restaurants in the United States and Canada have adopted the Keurig system to date.
positive and negative effects on U.S. restaurants in the first quarter of 2014. Total restaurant visits declined 1 percent from January through March, while delivery orders increased 4 percent, according to research from The NPD Group. Also, hot tea, hot chocolate and frozen/slushy coffee servings
22 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
■ Both Starbucks Corp. and Dunkin’
Brands Group Inc. are taking steps to capture more of the lunch crowd. New products launched by both companies are designed to boost afternoon sales after the morning coffee rush subsides. Starbucks began offering new
■ Sandwich chain
■ Poor weather conditions had both
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unveiled a new brand outlook called “Be Your Way,” a spin on the quick-service restaurant chain’s 40-year-old brand positioning, “Have It Your Way.” Burger King is integrating the new slogan into all national and regional advertising and communications, including digital and in-restaurant materials.
sandwiches at 178 locations in Phoenix and Richmond, Va., on May 6. The test lineup includes a grilled chicken sandwich with bacon and Swiss cheese for $5.95; a grilled cheese sandwich for $5.25; and a beef brisket and baguette for $6.95. All are prepackaged and then heated inside the stores. Meanwhile, Dunkin’ Donuts began offering a new grilled chicken flatbread sandwich for $3.99. Its marinade is made with grilled and rotisserie flavors, and toppings include cheddar cheese and ancho chipotle sauce.
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INDUSTRYROUNDUP
marketing moves ■ 7-Eleven Inc. promoted its new
Doritos Loaded hot snacks by hitting the road in a food truck and
offering free samples at two Dallas locations in mid-June. Other sampling events also were planned in advance of the product’s national rollout in early July.
■ The Hess Toy Truck will be back
for the 2014 holiday season, but it will be the last year the item is sold in Hess convenience stores. The 2014 toy truck will mark Hess’ 50th anniversary edition of
the holiday item. Hess intends to sell its toy truck online only beginning in 2015. ■ Hunt Brothers Pizza is teaming
■ Pilot Flying J is awarding double
rewards points on diesel fuel purchases for drivers who use their MyRewards card through Sept. 30. Points are redeemable on most in-store purchases, including food, beverages, laundry, showers and check-cashing. ■ Valero Energy Corp. and par-
ticipating Valero-branded locations are partnering with Paramount Pictures to give away a 2014 Camaro in the “Rumble with Bumblebee” sweepstakes. In addition to the grand prize, one first-prize winner will receive a private hometown screening of “Transformers: Age of Extinction,” which hit theaters June 27. ■ The Parker Cos. will be the pre-
senting sponsor for Picnic in the Park 2014, set to take place in Savannah’s Forsyth Park on Oct. 5. The event honors National Arts and Humanities Month.
24 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
up with The Coca-Cola Co. to offer consumers limited-time offer (LTO) combos through Dec. 31. All marketing materials feature the “Make It a Meal” message to promote the LTOs. Hunt Brothers is offering 10-percent savings on the bundles. ■ More than 900 customers vied
for the grand prize in Atlas Oil Co.’s monthlong text-to-win contest, which kicked off at the end of March and offered the chance to win a baseball suite package. The grand-prize winner won a 20-person suite for a Detroit Tigers game. ■ LAP Petroleum,
CITGO Petroleum Corp. and Miss Virginia 2013 Desiree Williams teamed up to host the Taste of India 2014 festival in Norfolk, Va. The eighth annual event drew more than 7,000 people.
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MILLION
Steady for Now, Shakeup Coming With several large M&A deals on deck, this year’s Top 100 ranking is like the calm before the storm A Convenience Store News Staff Report
his year’s Convenience Store News Top 100 ranking looks a lot like last year’s ranking. But if you were to wait a few months and then revisit the list, you would see some pretty noticeable changes thanks to currently pending acquisitions. Speedway LLC, the retail division of Marathon Petroleum Corp. (No. 7 on the Top 100), soon will become the second-largest c-store retailer in the United States. Speedway has agreed to acquire the retail network of Hess Corp. (No. 13 on the Top 100). Once the transaction is completed, Speedway will have 2,733 company-owned stores, up from its now 1,487. Energy Transfer Partners LP (No. 9 on the Top 100) will also be moving up the list shortly. The parent of Sunoco Inc. is in the process of acquiring Susser Holdings Corp. (No. 21 on the Top 100) and recently completed the purchase of 40 Tigermarket stores in Tennessee and Georgia. Susser’s retail operations consist of 630 convenience stores, largely branded Stripes. Adding these stores to its current unit count, the company will
T
26 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
have a total of 2,320 c-stores. Until these deals close later this year, however, the Top 100 list — the industry’s longest-running accounting of the largest convenience store chains by store count — is holding relatively steady compared to 2013. The top six companies were unchanged year over year, albeit for Alimentation Couche-Tard Inc. moving into the No. 4 position and Chevron Corp. dropping down to No. 5. 7-Eleven Inc. once again leads the pack with a store count of 7,749. The only company to drop out of the top 10 this year is The Pantry Inc., operator of Kangaroo Express stores. It was bumped by Marathon Petroleum, which went from No. 11 to No. 7. The CSNews Top 100 report is compiled in partnership with TDLinx, a service of Nielsen. TDLinx defines a convenience store as a small-format store of at least 800 square feet; with 500 to 1,500 SKUs; that operates at least 13 hours a day; and carries a limited selection of grocery items, including at least two of the following: toilet paper, soap, disposable diapers, pet food, breakfast cereal,
COVER STORY
Top 20 Company-Operated Chains tuna fish, toothpaste, ketchup and canned goods. According to TDLinx store count figures, this year’s top 100 chains operate 60,640 stores. Compared to last year’s 59,598, this is an increase of 1,042 units or 1.7 percent. These 100 chains represent 40.1 percent of the industry’s total stores, equal to last year’s result. The top 10 chains alone represent 24.3 percent of the total industry’s stores with 36,827 units. New Some other interesting tidbits Additions revealed in this year’s Top 100 report: to the List UÊ * Ê ÛiÃÌ i ÌÃÊ Ê gained 18 spots, going from My Goods Market a No. 42 ranking last year to Toot’n Totum Food Stores No. 24 this year. GPM acquired Express Mart Franchising Corp. VPS Convenience Store Group’s Southeast division, composed of 263 company-operated units and 33 dealer locations. Consequently, VPS dropped 22 spots on this year’s Top 100, falling from No. 28 to No. 50. UÊ iÌÌÞÊ,i> ÌÞÊ À«°]Ê>Ãà V >Ìi`ÊÜ Ì Ê Õ Ê Ê LLC, fell 25 spots from No. 14 last year to No. 39 this year. The company has been dealing with the fallout from the December 2011 bankruptcy of Getty Petroleum Marketing Inc., which had a 799-locaÌ Ê >ÃÌiÀÊ i>ÃiÊÜ Ì Ê iÌÌÞÊ,i> ÌÞ°Ê/ iÊV «> ÞÊ >ÃÊ sought to sell or lease many of those properties. UÊ ÕÀ« ÞÊ1- Ê V°]ÊÃ«Õ Ê vvÊvÀ Ê ÕÀ« ÞÊ" Ê À«°Ê in September, jumped up eight spots on this year’s Top 100 now that it’s on its own. Murphy USA sits in the No. 45 spot. UÊ > }Ê ÌÃÊv ÀÃÌÊ>««i>Àance on the Top 100 list is Drop-Offs My Goods Market (at No. From Last Year 78), the new c-store brand Mid-Atlantic from the company formerly Convenience Stores known as Pacific Convenience Buchanan Oil Co. & Fuels LLC. The retailer announced last year that it would be changing the name of the company and rebranding its stores to My Goods Market, a more upscale convenience concept. UÊ" iÊ > iÊ Ãà }ÊvÀ ÊÌ iÊ/ «Ê£ääÊ ÃÊ ` Atlantic Convenience Stores (MACS). A year after being acquired by Energy Transfer Partners, Sunoco made headlines in October when it purchased MACS and in the process, gained 301 convenience stores and gas stations in Maryland, Delaware, Virginia and Washington, D.C.
Company-Operated Stores
Company
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Alimentation Couche-Tard Inc. Casey’s General Stores Inc. The Pantry Inc. Speedway LLC 7-Eleven Inc. Hess Corp. CST Brands Inc. Kroger Co. QuikTrip Corp. Military Wawa Inc. Susser Holdings Corp./SSP Partners The Cumberland Gulf Group Energy Transfer Partners LP Pilot Flying J Sheetz Inc. GPM Investments LLC Kwik Trip Inc. Kum & Go LC Chevron Corp.
3,337 1,808 1,541 1,487 1,178 1,099 1,041 804 690 683 653 633 587 550 549 473 472 444 431 423
% of Total
77.1% 100.0 99.2 52.7 15.2 96.7 100.0 100.0 100.0 100.0 100.0 99.8 61.9 33.3 97.9 99.8 99.0 100.0 100.0 10.6
Source: Company information; Nielsen TDLinx; Convenience Store News Market Research, 2014
Top 20 Franchise/Licensee Chains Company
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Franchise/Licensee Stores
7-Eleven Inc. Shell Oil Products US/ Motiva Enterprises LLC BP North America Chevron Corp. Exxon Mobil Corp. CITGO Petroleum Corp. Marathon Petroleum Corp. Phillips 66 Energy Transfer Partners LP Alimentation Couche-Tard Inc. The Cumberland Gulf Group CHS Inc. RaceTrac Petroleum Inc. Clark Brands LLC Getty Realty Corp. Tesoro Corp. Sinclair Oil Corp. Krauszer’s Food Stores Kwik Stop Holiday Cos.
6,571 4,989 4,378 3,564 3,458 1,639 1,336 1,304 1,100 989 362 359 320 193 188 185 152 147 140 134
% of Total
84.8% 99.6 100.0 89.4 100.0 100.0 47.3 100.0 66.7 22.9 38.1 83.7 46.2 100.0 79.0 47.7 100.0 100.0 100.0 27.6
Source: Company information; Nielsen TDLinx; Convenience Store News Market Research, 2014
WWW.CSNEWS.COM | JULY 2014 | Convenience Store News 27
2014 2013 Rank Rank
Company, City, State
Total Store Count
Company-Operated Franchise/ Latest Year-End Sales* Primary Stores Licensee Stores ($000) Store Names
1
1
7-Eleven Inc., Dallas 7,749 1,178 6,571 Top Franchise/Licensee: Southwest Convenience Stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 Seven-Eleven Hawaii . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
$19,482,216
7-Eleven
2
2
Shell Oil Products US/Motiva Enterprises LLC, Houston
5,009
20
4,989
11,340,628
Shell
3
3
BP North America, Houston
4,378
0
4,378
15,592,304
Amoco, ampm, Arco, Arco Thrifty, BP, BP Connect, BP Shop
4
5
Alimentation Couche-Tard Inc., Laval, Quebec, Canada 1
4,326
3,337
989
19,421,200
Circle K, Dairy Mart, Gas Express
5
4
Chevron Corp., San Ramon, Calif.
3,987
423
3,564
20,756,892
Chevron, Chevron ExtraMile, Texaco
6
6
Exxon Mobil Corp., Irving, Texas
3,458
0
3,458
7,840,255
7
11
Marathon Petroleum Corp., Findlay, Ohio 2
2,823
1,487
1,336
14,475,000
8
8
Casey’s General Stores Inc., Ankeny, Iowa
1,808
1,808
0
7,250,840
9
7
Energy Transfer Partners LP, Dallas 3
1,650
550
1,100
7,100,000
APlus, Circle K, Sunoco
10
9
CITGO Petroleum Corp., Houston
1,639
0
1,639
3,555,552
CITGO
11
10
The Pantry Inc., Cary, N.C.
1,553
1,541
12
7,821,955
Kangaroo Express, Presto, Petro Express
12
12
Phillips 66, Houston
1,304
0
1,304
3,481,400
76, Conoco, Phillips 66
13
13
Hess Corp., New York 2
1,137
1,099
38
5,002,660
Hess, Hess Express, Wilco Food Mart, WilcoHess, Wilco Travel Plaza
14
15
CST Brands Inc., San Antonio
1,041
1,041
0
7,576,000
Corner Store, Diamond Shamrock, Total, Valero
15
17
The Cumberland Gulf Group, Framingham, Mass.
949
587
362
3,509,168
Cumberland Farms, Gulf
16
18
Kroger Co., Cincinnati
804
804
0
4,715,620
Kwik Shop, Tom Thumb, Turkey Hill Minit Mart
17
19
RaceTrac Petroleum, Atlanta
693
373
320
4,235,140
RaceTrac, Raceway
18
20
QuikTrip Corp., Tulsa, Okla.
690
690
0
11,210,000
19
21
Military, Arlington, Va.
683
683
0
4,192,916
AAFES Express, Coast Guard Mini Mart, CGXpress, Marine Mart, NEXCOM Mini Mart, Troop Store
20
22
Wawa Inc., Wawa, Pa.
653
653
0
7,868,380
Wawa
21
23
Susser Holdings Corp./SSP Partners, 3 Corpus Christi, Texas
634
633
1
4,175,600
Sac N Pac, Stripes
Exxon, Exxon On the Run, Exxon Tiger Mart, Mobil, Mobil Mart, Mobil On the Run Marathon, Rich Oil, Speedway Casey’s General Store
QuikTrip
22
24
Pilot Flying J, Knoxville, Tenn.
561
549
12
2,326,220
Flying J, Pilot Food Mart, Pilot Travel Center
23
25
Holiday Cos., Minneapolis
485
351
134
2,154,880
Holiday Stationstore
24
42
GPM Investments LLC, Richmond, Va.
477
472
5
1,516,000
Bread Box, Every Day Shop & Café, Fas Mart, Lil Cricket, Scotchman, Shore Stop, Young’s
25
26
Sheetz Inc., Altoona, Pa.
474
473
1
7,024,940
Sheetz
26
29
Kwik Trip Inc., La Crosse, Wis.
444
444
0
4,000,000
Kwik Trip, Kwik Star
27
27
Kum & Go LC, West Des Moines, Iowa
431
431
0
2,850,000
Kum & Go
28
16
CHS Inc., Minneapolis
429
70
359
933,140
29
31
Tesoro Corp., San Antonio
388
203
185
1,542,580
2 Go Mart, Big Johns, Mirastar, Tesoro, USA Gas
30
30
Delek US Holdings Inc., Brentwood, Tenn.
379
376
3
1,782,300
Delta Express, Discount Food Mart, East Coast, Fast Food & Fuel, Favorite Markets, MAPCO Express, MAPCO Mart
31
32
Stewart’s Shops Corp., Ballston Spa, N.Y.
332
332
0
1,457,820
Stewart’s Shop
32
34
Love’s Travel Stops & Country Stores Inc., Oklahoma City
322
322
0
890,812
Ampride, Cenex, Zip Trip
Love’s Country Store, Love’s Travel Stop
33
33
Allsup’s Convenience Stores Inc., Clovis, N.M.
318
318
0
340,340
Allsup’s
34
35
E-Z Mart Stores Inc., Texarkana, Texas
294
294
0
1,003,798
E-Z Mart
35
36
United Refining Corp. of Pennsylvania, Warren, Pa.
280
280
0
1,256,320
Country Fair, Kwik Fill, Red Apple
28 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
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2014 2013 Rank Rank
Company, City, State
Total Store Count
Company-Operated Franchise/ Latest Year-End Sales* Primary Stores Licensee Stores ($000) Store Names
36
39
TravelCenters of America, Westlake, Ohio
272
260
12
$1,869,140
Goasis, Minit Mart, Petro Stopping Center, TravelCenters of America (TA)
37
38
Maverik Inc., North Salt Lake City, Utah
264
264
0
512,616
Maverik
38
37
Fikes Wholesale, Temple, Texas
262
261
1
388,700
CEFCO Food Store, Food Fast Store, Taylor Petroleum
39
14
Getty Realty Corp., Jericho, N.Y.
238
50
188
557,440
Getty, Kwik Farms, Lukoil
40
41
Landmark Industries Inc., Houston
231
231
0
548,600
41
44
Western Refining Inc./Giant Industries, El Paso, Texas
229
229
0
1,285,574
42
43
Jacksons Food Stores Inc., Meridian, Idaho
204
204
0
197,288
Jacksons Food Store
43
49t
Lehigh Gas Corp., Bethlehem, Pa.
202
140
62
530,868
Choice, Express Lane, Joe’s Kwik Mart, Kwik Pik, Rocky Top Market, Uni-Mart
44
45t
Clark Brands LLC, Naperville, Ill.
193
0
193
482,560
Clark
45
53
Murphy USA Inc., El Dorado, Ark.
190
190
0
317,720
Murphy Express, Murphy USA
46
45t
Tedeschi Food Shops Inc., Rockland, Mass.
189
109
80
246,100
Tedeschi Food Shop
47
47
United Dairy Farmers, Cincinnati
185
185
0
326,040
United Dairy Farmers
48
49t
Thorntons Inc., Louisville, Ky.
174
174
0
631,800
Thorntons
49
48
The Jones Co., Waycross, Ga.
171
171
0
561,080
Flash Foods
50
28
VPS Convenience Store Group, Wilmington, N.C.
169
169
0
527,540
Next Door Food Store, Village Pantry
51
51
Convenient Food Mart Inc., Mentor, Ohio
167
67
100
265,980
52
52
Meijer, Grand Rapids, Mich.
165
165
0
1,522,300
53
55t
Two Farms Inc., Baltimore
156
156
0
305,500
Royal Farms
54
54
Warren Equities Inc., Providence, R.I.
155
155
0
573,560
Xtra Mart
55
55t
Sinclair Oil Corp., Salt Lake City
152
0
152
312,728
Sinclair
56
57
Krauszer’s Food Stores, Edison, N.J.
147
0
147
281,320
Krauszer’s Food Store
57
60
Timewise Food Store Giant, Howdy’s, Mustang, Sundial Deli Mart
Convenient Food Mart Meijer Gas Station
Giant Eagle Inc., Pittsburgh, Pa.
141
141
0
1,970,540
58t 58
Kwik Stop, Plantation, Fla.
140
0
140
264,680
Kwik Stop
58t 59
QuickChek Corp., Whitehouse Station, N.J.
140
140
0
249,860
QuickChek
60
61
Englefield Oil Co., Heath, Ohio
123
123
0
511,680
Duchess Shoppe
61
62
Martin & Bayley Inc., Carmi, Ill.
114
114
0
639,860
Hucks
62
63
7-Eleven Stores of Oklahoma, Oklahoma City 4
111
111
0
230,100
7-Eleven
63
64
Plaid Pantries Inc., Beaverton, Ore.
110
110
0
223,860
Plaid Pantry
64
67
Hy-Vee Food Stores Inc., Wes Des Moines, Iowa
109
109
0
265,460
Hy-Vee Gas Station
65t 65t
Gas Mart USA Inc., Leawood, Kan.
107
106
1
369,720
Eddy’s Mart, Gas Mart USA, Jumpin Jimmy’s
65t 65t
Go Mart Inc., Gassaway, W.Va.
107
107
0
534,300
Go Mart Food Store
67
Little General Stores Inc., Beckley, W.Va.
105
105
0
208,000
Little General Chucky’s Food Store, Sam’s Food Store
70
GetGo
68t 69
Sam’s Food Stores, Rocky Hill, Conn.
97
94
3
174,200
68t 87
Panjwani Enterprises, Houston
97
93
4
205,140
Star Stop
70
Terrible Herbst Inc., Las Vegas
95
95
0
281,580
Terrible Herbst
68
71t 72
Mountain Empire Oil, Johnson City, Tenn.
93
92
1
421,980
Roadrunner Market
71t 71
Town Pump Inc., Butte, Mont.
93
93
0
287,820
Town Pump Food Store
73
Admiral Petroleum Co., Coopersville, Mich.
90
90
0
218,140
Admiral Petroleum
74t 73t
73t
Gulshan Enterprises, Houston
89
68
21
160,680
Handi Plus, Handi Stop
74t 77
Blarney Castle Oil Co., Bear Lake, Mich.
89
89
0
468,780
E Z Mart
74t 75
True North Energy, Toledo, Ohio
89
89
0
150,280
True North
77
78t
Victory Marketing LLC, Ridgeland, Miss.
86
84
2
150,020
Sprint Mart
78
n/a
My Goods Market, Pleasanton, Calif.
85
85
0
519,220
Break Place, C Stop, My Goods Market
79
78t
MFA Petroleum, Columbia, Mo.
83
83
0
148,980
Break Time, MFA Oil, Petro Card 24
80
80
M.M. Fowler Inc., Durham, N.C.
83
83
0
222,040
Family Fare
81
82
C.N. Brown Co., South Paris, Maine
82
78
4
128,960
Big Apple, C.N. Brown
30 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
CONGRATULATIONS to WAWA on
years of superior innovation and customer service.
All of us at Swedish Match North America look forward to continuing our partnership far into the future.
Š2014 SWEDISH MATCH NORTH AMERICA, INC.
2014 2013 Rank Rank
82
76
Company, City, State
Total Store Count
Company-Operated Franchise/ Latest Year-End Sales* Primary Stores Licensee Stores ($000) Store Names
Nice N Easy Grocery Shoppes, Canastota, N.Y.
78
33
45
$214,500
83t 84t
Sunmart Inc., Spring, Texas
75
39
36
165,880
Sunmart
83t 81
Farm Stores Grocery Inc., Miami
75
31
44
128,440
Farm Store
83t 87t
Ranger Enterprises Inc., Rockford, Ill.
75
75
0
265,200
Road Ranger
83t 84t
Flash Market, West Memphis, Ark.
75
72
3
161,200
Flash Market
87t 95t
Certified Oil Co., Columbus, Ohio
74
73
1
48,672
87t 83
Tri-Star Energy, Nashville, Tenn.
74
74
0
244,920
Daily’s Express, Daily’s, Tri-Star Energy, Scot Market, Twice Daily
87t 87t
FKG Oil Co., Belleville, Ill.
74
74
0
277,160
Moto Mart
87t n/a
Toot’n Totum Food Stores, Amarillo, Texas
74
73
1
193,180
Toot’n Totum Store
87t 92t
Gate Petroleum Co., Jacksonville, Fla.
74
74
0
176,280
Gate Food Post
92
96t
Nice N Easy Grocery Shoppe
Certified
The Spinx Co. Inc., Greenville, S.C.
73
73
0
250,380
Spinx Store
93t 87t
Stop In Food Stores Inc., Roanoke, Va.
72
72
0
296,400
Stop In
93t 84t
Newcomb Oil Co., Bardstown, Ky.
72
72
0
226,200
Five Star Food Mart
95t 87t
Fast Stop, Bloomington, Ill.
71
0
71
100,360
Fast Stop
95t 92t
Handee Hugo’s/Sampson Bladen Oil Co. Inc., Clinton, N.C.
71
71
0
130,780
Handee Hugo’s
97t 92t
Dandy Mini Marts Inc., Sayre, Pa.
71
71
0
146,380
Dandy Mini Mart
97t 99
Johnson Oil Co., Rock Falls, Ill.
70
70
0
140,140
Express Lane
99
Express Mart Franchising Corp., Syracuse, N.Y.
69
68
1
117,520
Express Mart
Erickson Oil Products Inc., Hudson, Wis.
68
68
0
228,280
Freedom Valu Center, Super America Erickson Oil
n/a
100 98
Source: Company information; Nielsen TDLinx; Convenience Store News Market Research, April 2014 *Latest year-end sales are stated where available from company information or public record. In all other cases, All Commodity Volume (ACV) is provided by Nielsen TDLinx. ACV is an annualized range of the estimated retail sales volume of all items sold in a store that pass through the retailer’s cash registers. Lottery sales are not included; gas sales are included where applicable. The Nielsen TDLinx ACV is an estimate — a directional measure to be used as an indicator of company size. 1
Alimentation Couche-Tard Inc. operates convenience stores in both the United States and Canada. For this ranking, only U.S. stores are included. Marathon Petroleum Corp.’s Speedway LLC division is in the process of acquiring the retail assets of Hess Corp. 3 Energy Transfer Partners LP’s Sunoco Inc. division is in the process of acquiring Susser Holdings Corp. 4 7-Eleven Stores of Oklahoma is not affiliated with 7-Eleven Inc. 2
Editor’s Note: Licensees are included in the total store count of the parent’s banner name. For example, Southwest Convenience Stores is included in 7-Eleven’s total count. Data includes store count information as of April 1, 2014, and was obtained from each company or provided by Nielsen TDLinx, which utilizes the convenience store trade channel definition endorsed by NACS and Convenience Store News. The convenience store trade channel includes small-format stores of at least 800 square feet; with 500 to 1,500 SKUs; that operate at least 13 hours a day; and carry a limited selection of grocery items, including at least two of the following: toilet paper, soap, disposable diapers, pet food, breakfast cereal, tuna fish, toothpaste, ketchup and canned goods. This channel includes stores that may or may not sell gasoline and offer fast-food services.
The Top 10 Chains No.1 7-Eleven Inc. Having acquired more than 1,000 locations in the previous three years, Dallas-based 7-Eleven is now in transition mode. The company is working diligently to study each location and determine its potential; remodel, re-merchandise and convert sites to the 7-Eleven banner; and sell off those stores that simply do not fit the chain’s current business model. So far this year, 7-Eleven has announced the sale of nearly 150 convenience stores across 19 states. Even so, this will barely make a dent in the convenience store giant’s overall U.S. store count, nor will it threaten its No. 1 position on the CSNews Top 100 ranking. 7-Eleven currently operates 7,749 c-stores in the United States.
32 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
This total includes 6,221 franchised stores; 1,003 company-operated stores; 175 acquired stores that are not yet 7-Eleven branded, but which the chain operates; and 350 domestic licensed stores. While the retailer’s overall store count this year is slightly less than its prior-year count of 7,760 stores, 7-Eleven still maintains a lead of 2,000-plus units over No. 2 chain, Shell Oil Co. Along with converting acquired sites, 7-Eleven is also focused on its continuing journey to be a virtually franchised company in the U.S. An emphasis is being placed on finding new franchisees who want to take on multiple stores, thus helping to accelerate its franchising efforts. At this time, 85 percent of the chain’s stores are operated by independent franchisees.
TM
ENVIRONMENTALLY RESPONSIBLE PERFORMANCE EXPERIENCE
No.2
No.3
Shell Oil Products US/Motiva Enterprises LLC
BP North America
Capitalizing on another year of growth, Shell Oil/Motiva Enterprises once again landed in the No. 2 spot on this year’s Top 100 list. According to TDLinx data, Shell’s retail network, which is comprised almost entirely of franchisees and licensees, includes more than 5,000 stores that generate annual sales of more than $11.3 billion. Most recently, the Houston-based company made a big push into liquefied natural gas by forming a partnership with TravelCenters of America LLC (No. 36 on the Top 100) to jointly sell the alternative fuel to heavy-duty road transport customers in the United States at TravelCenters’ TA and Petro fueling centers. Additionally, Shell has been making technological strides by implementing NCR Corp.’s Radiant Point-of-Sale (RPOS) petroleum and convenience solution, as well as making LED lighting products available to the Shell network of branded wholesalers and dealers throughout North America through a new agreement with LSI Industries Inc. Simultaneously, Shell Oil’s parent company Royal Dutch Shell plc is striving to boost its brand globally with an aggressive digital and social media audience engagement strategy. As revealed to CSNews earlier this year, Shell continues to develop its loyalty programs, particularly its Fuel Rewards Network (FRN), which launched two years ago and boasts millions of members. According to Excentus, the program provider, FRN members have saved more than $300 million in fuel costs to date, with the goal being to save consumers $1 billion.
The more things change, the more things stay the same. That is certainly true for BP, which has secured the No. 3 spot on the CSNews Top 100 again. The retailer, with its U.S. base in Houston, also captured the No. 3 spot in 2013, 2012 and 2011. TDLinx puts BP’s total store count at 4,378 — all of which are franchise/licensee locations. BP’s retail banners include Amoco, ampm, ARCO, ARCO Thrifty, BP, BP Connect and BP Shop. The company’s latest year-end sales amounted to approximately $15.6 billion. BP’s unwavering position in the convenience store industry rankings comes one year after it marked the final milestone in its “strategic refocusing.” In June 2013, BP completed a deal to sell its Southwest retail assets and its Carson, Calif., refinery to Tesoro Corp. (No. 29 on the Top 100) for $2.4 billion. Under the terms of the pact, BP’s ARCO brand and associated registered trademarks, as well as its master franchisee license for the ampm convenience store brand, transitioned to Tesoro. In turn, BP exclusively licenses the ARCO retail brand rights from Tesoro for northern California, Oregon and Washington. BP also retains ownership of the ampm brand. So far this year, BP has further strengthened its focus by reiterating its commitment to be the No. 1 fuel brand east of the Rockies and unveiling plans to get there at the biennial BP Amoco Marketers Association Convention. In addition, BP launched a new retail image called “to go” in May.
No.4 Alimentation Couche-Tard Inc. Change has proven to be a good thing for Alimentation CoucheTard, the Canadian parent company of Circle K convenience stores in the United States. During the company’s latest earnings call, CEO Alain Bouchard announced that Couche-Tard is on the hunt for more acquisitions and is eyeing multiple convenience store operations of varying sizes. The retailer most recently made smaller purchases of stores in New Mexico, Florida and Illinois, while also maintaining a construction pipeline of new-build stores. As of its latest fiscal year-end, Couche-Tard operated 4,326 stores in the United States, of which 3,337 were company-operated and 989 were franchised or licensed. Sales generated by these U.S. stores at the conclusion of the latest fiscal year-end totaled more than $19.4 billion. In addition to unit growth, Couche-Tard is renewing its focus on
34 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
foodservice with its new-build stores, which are considerably larger — a minimum of 3,600 square feet and as large as 4,500 square feet — than stores it built just five years ago, Bouchard noted. “A tremendous pricing strategy and an excellent foodservice offer [has really paid off in] the U.S.,” the chief executive recently stated. In May, Couche-Tard revealed it had been considering purchasing Hess Corp.’s 1,256-store network. Ultimately, the price was more than Bouchard was willing to pay and Marathon Petroleum Corp.’s Speedway LLC division won the rights. Looking ahead, more change is on the horizon for the Laval, Quebec-based company with Chief Operating Officer Brian Hannasch poised to replace Bouchard as president and CEO effective Sept. 24, the date of Couche-Tard’s next annual shareholders meeting. Bouchard will become executive chairman of the board of directors at that time.
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No.5
No.6
Chevron Corp.
Exxon Mobil Corp.
After four years in a row in the No. 4 position on the CSNews Top 100, San Ramon, Calif.-based Chevron slipped one spot this year. The company, which was bumped by aggressive acquirer Alimentation Couche-Tard Inc., last found itself in the No. 5 spot in 2010. According to TDLinx, Chevron boasts a total store count of 3,987, including 423 corporate stores and 3,564 franchise/licensee locations. Its banners are Chevron, Chevron ExtraMile and Texaco. TDLinx also puts its latest year-end sales at nearly $21 billion. For the most part, Chevron has been laying low over the past year. In April 2013, the company dispelled any talk of noteworthy acquisitions, stating that any cash surplus would most likely be used to repurchase shares and increase its dividend to shareholders. This came after Hess Corp. and Chesapeake Energy Corp. were linked as possible acquisition targets. Instead, Chevron has been focusing on its existing retail outlets and customers, as well as its commitment to the communities it calls home. Within the last year, Chevron extended its gas rewards program with Safeway Inc., particularly in northern California and the Phoenix area. Under the program, consumers can use their Safeway card to receive fuel discounts at Chevron and Texaco locations. To show its community spirit, Chevron renewed its title sponsorship of the annual Chevron Houston Marathon through 2018. This year marked the ninth year that the race carried the Chevron name.
Solid and steady is the continuing trend for Irving, Texas-based Exxon Mobil Corp.’s retail arm, which ranks sixth on this year’s Top 100 — the same ranking it’s held for several years now. ExxonMobil currently has 3,458 convenience stores, all of which are franchise/licensee locations, according to TDLinx, which also lists the company’s latest year-end sales at approximately $7.6 billion. Its c-store banners include Exxon On The Run, Exxon Tiger Mart, Mobil Mart, Mobil On The Run, Mobil and Mobil Snack Shop. The company has emphasized speed and convenience in the last year, seeking to give consumers numerous reasons to visit its stores. It offered sizeable discounts to new users of the ExxonMobil Smart Card in the form of 18-cents-per-gallon rebates during their first two billing cycles, followed by ongoing rebates and a free Speedpass contactless payment device. ExxonMobil also piloted Speedpass+, a mobile payment app designed to get customers through the gas pump quickly. Mobile payments received additional attention when the company launched EM1, a comprehensive retail fuel technology platform that enables Exxon- and Mobil-branded gas stations to introduce mobile payments and other new forms of payment. EM1 allows its branded gas stations to provide exclusive discounts and other offers to reward loyal customers, too. Grant Doescher, U.S. branded wholesale manager for ExxonMobil, called the EM1 platform “a significant upgrade” and “an investment in the future” for its branded wholesale customers and consumers alike.
No.7 Marathon Petroleum Corp. After falling out of the top 10 in last year’s CSNews Top 100 list, Marathon Petroleum Corp. (MPC) and its Speedway LLC retail division are back. The Findlay, Ohio-based company climbed four spots year over year and now sits in the No. 7 position. Soon, though, MPC is expected to jump all the way to No. 2 on the Top 100 thanks to Speedway’s pending acquisition of Hess Corp.’s retail network. The $2.87-billion purchase made a big splash when it was announced in May and is poised to be what MPC President and CEO Gary Heminger called a “transformative transaction” that will make Speedway the second-largest c-store operator in the United States once the deal closes. Until then, MPC continues to operate 1,487 corporate-owned Speedway convenience stores and has 2,823 franchised and licensed c-stores under the Marathon and Rich Oil banners,
36 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
according to TDLinx. Its latest year-end sales are estimated at more than $10 billion. MPC’s unit growth is no surprise. In December, the company announced a $925-million capital infusion to expand Speedway through both organic growth and selective acquisitions. Speedway is targeting key growth markets, as well as “fill-in” opportunities in existing markets. On the Marathon-branded side, MPC began offering customers an extra incentive to stop into its stores with the launch of an instant cents-off-per-gallon discount program across its Marathon-branded marketing network. Its previous loyalty program was expanded to let operators offer these discounts in the form of gift cards and promotional cards, making for a more “flexible, efficient” solution, according to the company.
No.8
No.9
Casey’s General Stores Inc.
Energy Transfer Partners LP
Despite focusing on pizza to the point where it plans to soon operate six pizza-only locations, Casey’s General Stores hasn’t drifted from its convenience roots. In fact, the Ankeny, Iowa-based chain’s pizza venture is just part of its overall unit growth through new builds and acquisitions, which landed it at No. 8 on the CSNews Top 100 list. Casey’s currently owns and operates 1,808 corporate stores, with annual sales of approximately $7.8 billion as of its latest fiscal year-end in April. One of the retailer’s notable moves so far this year was the purchase of 24 Stop-n-Go stores in North Dakota and Minnesota. Casey’s Chairman and CEO Robert Myers referred to the acquisition as a “springboard� into the upper Midwest. The company has further plans to purchase and build new stores in the region as it discovers the right opportunities. To help it handle this growth and facilitate future expansion, Casey’s will break ground on a second distribution center in Terre Haute, Ind. The 250,000-square-foot facility will take 12 to 18 months to be completed. It will serve as a strategic location allowing the company to move further south and east from its current footprint, while increasing distribution efficiency to existing stores. Looking ahead, Casey’s has more than 25 stores under construction. It plans to build or buy 72 to 108 new stores and replace 25 existing stores during fiscal 2015. Pizza delivery is also slated to be added to approximately 80 more stores. Additionally, Casey’s plans to expand its Fuel Saver program that it offers in coordination with Hy-Vee Inc., but company officials are also investigating the possibility of creating Casey’s own fuel loyalty program.
Back in summer 2012, Energy Transfer Partners (ETP) and Sunoco Inc. grabbed headlines with news that Dallas-based energy company ETP was buying the Philadelphia-based oil giant. As the deal moved toward completion that October, the headlines gave way to speculation about the fate of Sunoco’s retail assets, including its APlus convenience stores. Approximately a month after the deal closed, though, ETP publicly stated that it did not intend to sell the retail segment. Any remaining questions about its commitment to retail quieted down in 2013 when ETP acquired the 301-unit Mid-Atlantic Convenience Stores chain, which had previously rebranded its Uppy’s c-store locations to Circle K. Now, less than two years after Energy Transfer Partners ventured into the c-store industry, ETP and its Sunoco Inc. division sit in the No. 9 spot on the CSNews Top 100 list. Although the combined company fell two spots from last year’s ranking, it is still holding strong. According to a company spokesman, its operations included 550 company-operated locations, 1,100 dealer/franchisee locations and 3,500 branded locations as of April. These locations carry the Sunoco, APlus and Circle K banners. Data provided by TDLinx puts ETP’s latest year-end sales at approximately $7 billion; however, a company spokesman declined to comment on that figure. Since April, news of other ETP acquisitions has grabbed headlines. Its pending purchase of Susser Holdings Corp. would strengthen ETP’s retail portfolio by 630 convenience stores.
No.10 CITGO Petroleum Corp. CITGO dropped one slot in this year’s CSNews Top 100 ranking, but still secured a place in the top 10. The company has 1,639 c-stores, according to TDLinx, and all are franchised. Factoring in all convenience store and gas station locations, the Houston-based chain’s network actually includes a total of 5,607 CITGO-branded locations, noted Public Affairs Manager Fernando J. Garay. (Not all sites meet the TDLinx definition of a convenience store.) As it does every year, CITGO has introduced a new slate of initiatives for 2014 aimed at moving the CITGO brand onward and providing its branded marketers with best-in-class programs. Among this year’s initiatives are: s .EW OFFERINGS FOR CONVENIENCE STORES FROM THE #)4'/ Retail Concept Center;
38 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
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On the Cusp (Nos. 101-110) 2014 Rank
Company, City, State
Total Store Count
Company-Operated Franchise/ Latest Year-End Sales* Primary Stores Licensee Stores ($000) Store Names
101
Buchanan Oil Co., Omaha, Neb.
67
67
0
$288,860
102
Miska Liquors Convenience, Chicago
67
0
67
165,620
103
MNS Ltd., Honolulu
65
65
0
51,220
104t
Weigel’s Stores Inc., Powell, Tenn.
64
64
0
169,000
Weigel’s, Jug O Milk Store
104t
United Oil Co., Gardena, Calif.
64
63
1
249,600
Apro, Rapid
104t
Mirabito Energy Products, Binghamton, N.Y.
64
58
6
154,960
Mirabito Fuel Group, Quickway
107t
Family Express Corp., Valparaiso, Ind.
62
62
0
138,580
Family Express
107t
Stinker Stations, Boise, Idaho
62
62
0
269,360
109
Jet Pep, Holly Pond, Ala.
60
0
60
85,800
110
Dash In Food Stores Inc., La Plata, Md.
59
59
0
179,920
Bucky’s Express Miska Liquors Convenience ABC Store
Stinker Station Jet Pep Dash In Food Store
Speeding Into the Future After months of speculation over who would purchase Hess Corp.’s retail division, the sale of which was announced in early 2013, Marathon Petroleum Corp.’s (MPC) Speedway LLC division announced in May that it would buy the 1,256 stores for $2.87 billion. The acquisition is a major move for Speedway, which will leap from 1,487 corporate stores to 2,733, placing it among the very largest U.S. c-store operators. But what else does it mean for the future? The actual deal was no surprise. Industry watchers noted that the strategy behind many of the recent industry mergers and acquisitions has been to increase market share by purchasing competitors, and the sheer size of the division for sale considerably narrowed down the possibilities. MPC was one of the last companies standing, and is known for its aggressiveness. “Marathon is the tail that is wagging the dog and they needed the outlets for their refinery to move more gallons of fuel,” said Terry Monroe, president and broker of American Business Brokers. However, responses are mixed when it comes to the question of whether the price is right. Some industry experts view the $2.87-billion figure as “staggering,” while others believe it is in the right range based on the actual assets in question. The high price does indicate that Marathon is looking beyond short-term profit. “If you are planning to buy something and then flip it, you have to buy it at a wholesale price and sell it for
40 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
a retail price,” Monroe explained. “But if you have a long horizon view for your business, then it is hard to overpay.” That long horizon view will likely mean good things for Speedway. “Given the size of the combined companies, Speedway’s ability to secure favorable pricing and terms for its convenience store merchandise will be greatly enhanced,” noted John Sartor y, managing director of Petroleum Capital and Real Estate LLC. “Its increased market share should also benefit the company greatly over time.” This will come in handy as Speedway begins competing with Northeast chains such as Wawa Inc. and QuickChek Corp., which have the advantage of a long histor y in the area. Industr y insiders, though, dismissed the notion of Speedway being seriously outmuscled by these chains, as it is buying stores already in that market rather than tr ying to split it up as a newcomer. If Speedway closes some Hess stores, it will most likely be due to particular sites not fitting with its vision. Ultimately, the biggest challenges may come from within. “As with any large corporate merger, the biggest challenge may lie in tr ying to mesh the corporate cultures of both companies,” said Sar tor y, who added that it is ver y impor tant for the former Hess employees to feel comfor table in their new roles at Speedway. “In addition, will Speedway and Marathon achieve their pro-forma corporate EBITDA projections for the combined companies? As with any acquisition, time will only tell.”
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Getting Bigger in Texas Thursday, April 28 began like any other until Energy Transfer Partners LP (ETP) stunned the convenience channel with news that it reached a deal valued at $1.8 billion to acquire Susser Holdings Corp. By acquiring Susser Holdings, Dallas-based ETP (owner of Sunoco Inc.) will own the general partner interest and the incentive distribution rights in Susser Petroleum Partners LP, approximately 11 million Susser Petroleum common units — representing approximately 50.2 percent of outstanding units — and Susser’s retail operations consisting of 630 convenience stores. “The Susser transaction came out of the blue. We had thought that Energy Transfer wanted to extricate itself from the retail fuel business it entered with the Sunoco acquisition. Instead, they doubled down,” said Ethan Bellamy, senior analyst with Robert W. Baird & Co. Once the deal closes sometime this quarter, ETP will “drop down” all of its retail assets to Susser Petroleum, which will continue to operate as a publicly traded master limited partnership (MLP). As a result, the retail business will operate separately from ETP. With the formation of the MLP, Energy Transfer is looking for synergies with all the other acquisitions it has done, according to Dennis Ruben, executive managing director of NRC Realty & Capital Advisors LLC. Those acquisitions include Sunoco in 2012, Mid-Atlantic Convenience Stores in 2013 and TigerMart in Tennessee earlier this year. The addition of Susser’s 630 convenience stores, mostly branded Stripes, to Sunoco’s network of more than 5,000 locations, primarily on the East Coast, will broaden Sunoco’s geographic footprint by giving it an exceptional base in Texas and the surrounding states. What will this newly formed powerhouse mean for the convenience store landscape in Texas? “My guess is there will be more pressure on players throughout the East and Southeast before expanding throughout the Southwest,” said John Flippen, managing director of Petroleum Capital and Real Estate LLC. Ramped-up competition for regional players will be just one consequence of the ETP-Susser merger. Another consequence could be increased acquisition activity. “All the c-store people with a significant presence in Texas will be looking hard at deals. They will realize that ETP is the ‘800pound gorilla’ and they will approach potential acquisitions by stepping up with a higher number to get some of these deals,” NRC’s
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Ruben said. “Frankly, that is good for people who are thinking about selling right now. It shows there will be a robust demand for companies that are well run and have good infrastructure.” Mid-sized companies with 25 to 75 stores will either have to grow, sell or die, he added. “In my view, it is becoming increasingly difficult for the midsized operators — family-run companies, for example — to compete with these large companies [that] have advantages like buying power and fuel supply. If QuikTrip or Wawa goes into some of these markets, it becomes much more difficult for the small guy to compete,” Ruben noted. In a broader sense, this deal could also signal that MLPs are the way to go. “MLP and publicly traded companies within the retail petroleum sector are natural extensions of the divestiture of retail assets by the major oil companies,” Flippen said. “The retail sector will continue to be consolidated by these public companies until interest rates rise and/or a recession occurs. The primary suppliers — major oil companies — have stated they would prefer a less fragmented market of customers.” Ruben also observed consolidation is the name of the game now, explaining that the recent Speedway LLC-Hess Corp. deal falls into the same bucket. “I see these last two deals as the next evolution of the industry. The last one was when [Alimentation Couche-Tard] tried to launch a hostile takeover of Casey’s. Things were kind of ‘business as usual’ up to that point,” he said. “Once Couche-Tard made the effort — and Casey’s fought real hard to resist it — everybody began looking over their shoulders. Are they going to be next?” The consolidation trend, which has existed for the past several years, has especially accelerated in the last three years with a more advanced rate by a handful of large players. The MLP structure has facilitated that to a great degree, said Ruben. But does consolidation bring the risk of convenience store companies becoming too big? Not necessarily, industry consultant and professional intermediary Terry Monroe believes. “There are around 150,000 convenience stores in the United States, with the independents having over two-thirds of the market,” Monroe explained. “Think of it like this. Who is the McDonald’s of the convenience store business? You are right. There isn’t one. And there isn’t a Burger King or Wendy’s of the convenience store business either. We have a long way to go before we see market dominance by a convenience store company.” CSN
Awards recognize suppliers for driving convenience store business By Susan Durtschi
C
ompetition is coming at convenience stores from all angles. Dollar stores, drugstores and grocers, to name a few, are luring customers in with cigarettes, beverages, foodservice and other convenience store products, making it more and more incumbent upon c-store category managers to get all the help they can from suppliers and employ the appropriate merchandising and shopper insight tools to differentiate their offerings and drive sales. The 2014 Convenience Store News Category Captains awards, which are newly redesigned this year, honor suppliers for their category management prowess demonstrated through their partnerships with convenience store retailers. This year, 10 winners have been selected based on compelling examples of key
44 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
category management initiatives. Category Captains are leaders. They have the ability to think strategically, navigate change and implement new processes and products. This year’s entries demonstrate that from foodservice to snacks, the supplier community continues to demonstrate its understanding of convenience store owners’ goals and offers innovative ways to achieve them — elevating the visibility and relevance not only of their own company brands, but also of the categories as a whole. Our winners know category sustainability is less about whose name is on the package and more about what’s inside and how they can deliver solutions to customers. This year’s Category Captains honorees are helping c-stores capture more than their share of consumers’ attention and dollars.
Beer/Malt Beverages
Candy
Anheuser-Busch
The Hershey Co.
With rapid new product launches and packaging developments come new challenges and opportunities for retailers to manage — and grow — a profitable business, as evidenced by SKU counts in the beer category increasing at a rate of 5 percent per year for the past five years. Anheuser-Busch found retailers were interested in insights and recommendations on how they were performing compared to the market and to key competitors. Although beer can be very profitable, retailers cannot leverage any one beer segment’s growth at the expense of another if they expect total beer category growth. In 2012, Anheuser-Busch developed the first phase of its “Balanced Portfolio Approach,” recommendations that analyzed data by beer segment (not by brand) to identify the fastest-moving SKUs so that retailers could maintain inventory and gain more customers by adding new product offerings. The first year of the program yielded many successes. Last year, Anheuser-Busch developed new partnerships with syndicated data experts to deliver an expanded approach that looked not only at which retailers were winning, but also why they were winning. Data was pulled from nearly 40,000 retail outlets from different syndicated providers. Revenue and unit sales, weekly display and feature information, price, assortment and space were all analyzed at the store level. Next, retailers were segmented by channel type — grocery, convenience, drug, etc. — and again by retail route-to-market. Then, data was segmented by population density to ensure all retail accounts had the same population of shoppers able to purchase beer. This segmentation normalized all stores to ensure likefor-like comparisons of sales. Once this was complete, Anheuser-Busch quartiled each cluster of accounts to determine winning retailers. Now, the company could look at the differences in space, assortment, features, displays and price between each quartile. This allowed Anheuser-Busch — for the first time — to see what the top 25 percent of retailers were doing vs. the bottom 25 percent. This hyper-focused approach evolved into the “Your Balanced Portfolio Approach” and AnheuserBusch was able to glean several key insights into what factors contributed to a winning retail mix.
One of the most significant challenges for the candy category over the last three years has been the continual rapid declines in the gum segment, which has fallen by $205.7 million or 17 percent since 2010. The Hershey category management team worked proactively to understand this trend from both an analytical and shopper perspective. As a leading consultative partner, Hershey provides comprehensive insights into the convenience store shopper, enabling a better understanding of recent trends. The Hershey team leveraged multifaceted shopper research with Nielsen Panel metrics to identify several key factors driving the declines in gum sales. The comprehensive analysis enabled Hershey’s retailer customers to have a firm understanding of their shoppers’ changing behaviors and expectations. The gum segment was suffering because of decreases in household penetration and buying rates (dollars per buyer), coupled with a lessfrequent purchase cycle. Hershey’s shopper research identified a variety of reasons for these trends. One of the more common was that shoppers were overwhelmed with the extensive innovation and frustrated by the challenge of finding their gum choice in the constantly growing item assortment. Shoppers also indicated that mints satisfied many of the same needs of gum, with greater social acceptance. The Hershey team was also able to discern that there were core gum items doing well, which also contributed a high percentage of overall segment dollar sales. The shopper insights gathered by Hershey reassured retailers that reducing the underperforming items would not only reduce confusion at the shelf, but also create space that could be allocated to growing segments. In addition, the Hershey category management team completed detailed analysis of the data to determine proper space allocation by segment in this changing environment. Despite challenging gum sales, the confection category has delivered healthy overall growth on the strength of chocolate and super king-size items along with mints. For optimal growth, Hershey determined that retailers should align space allocations with growing segments and reduce exposure to declining segments.
46 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
General Merchandise
Grocery (non-edible)
Ambess Enterprises Inc.
Nestlé Purina PetCare
Cell phones are the center of the telecommunications segment of the general merchandise category in convenience stores. Smartphones and tablets need charging, which is where the Ambess Power Tower comes into play. The display is a compilation of the key USB component-based chargers, sync cables and accessories used today. The Ambess Power Tower showcases all of the top-selling USB chargers and accessories in an eye-catching 6.5-inch by 9.5inch footprint. This fast-moving assortment offers a blend of sync and charge cables, wall chargers, car chargers, ear buds, auxiliary cables and more. They are all barcoded for warehouse scanning, come in a variety of colors that attract all age groups, are componentbased with an interchangeable design for full flexibility with any USB device, and are backed by a lifetime manufacturer warranty. It is imperative for the success of any retail business to constantly work toward improving not only the efficiency of employees, but also the productivity of the store’s selling space and inventory. Ambess Enterprises assists convenience store retailers with both. Promoting the Ambess Power Tower requires no training and it’s ready to sell as soon as it arrives at the store. The display generates more than $600 net profit per square foot. Retailers that currently offer the Power Tower are selling an average of 1.25 displays per month, which equates to more than $750 net profit per square foot per month, the company’s entry noted.
Convenience store pet-food shoppers and product offerings have been increasingly studied with more focus on core assortments, location and pricing. Nestlé Purina PetCare (NPP) is the leading pet food solution for the convenience channel and has implemented some new strategies. Working in a limited-space environment, NPP is able to narrow down its broad offerings within seven subsegments of pet food to provide valuable customer-centric solutions on the shelf. The insights shared by the company with the retailer community have driven objective thinking, from adding large bags of dog food in rural areas to advising retailers of the alternative benefit of using cat litter for traction during the winter months. Other non-monetary ways of driving results were proven in 2013 by moving retailers to everyday multiple pricing on wet cat food. In grocery stores, shoppers purchase an average of 10 wet cat food cans per trip. At convenience stores, the single can cost was so high that it was encouraging shoppers to leave the store with just one can. The new strategy has the category poised for two-, three- and fourcan purchases, thus doubling the dollar ring and profit. Driving awareness that c-stores carry pet food is one of the biggest challenges facing the category. In late 2013, Beneful Healthy Smile was launched as a $1 dog-treat offering for counter display and has since generated demand for the overall pet category in c-stores. Retailers are now able to capitalize on the 73 percent of U.S. households that purchase pet food each year and shop at their stores, but leave without making any indulgent pet purchases. Initial results of this new strategy have seen wet cat food product sales increase by 6 percent.
48 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
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Foodservice: Frozen Treats
Foodservice: Prepared Foods
Donper America
Eby-Brown
Donper America helped speed the implementation of the self-serve frozen yogurt concept in the convenience store industry. The company designed the first, fully branded self-serve frozen yogurt kiosk that sought to solve two issues: the first was to visually capture the hip vibe of frozen yogurt within a self-contained, customizable kiosk; the second was to offer a kiosk that simplified the maintenance of traditional frozen yogurt concepts. The company developed a customizable frozen yogurt kiosk featuring up to four machines (eight flavors) and 12 toppings. The kiosk was created with dry topping containers to allow c-store owners to easily maintain the toppings bar, eliminating the spoilage problems that come with refrigerated toppings. The kiosk also features two advertising screens to capture the attention of customers. The first screen is a 39-inch overhead monitor that plays a frozen yogurt slideshow. The second screen is a tablet that doubles as a training app to show and remind employees how to use the machine. C-store operators are able to get into the frozen yogurt game with minimal investment in startup and space. Donper America’s frozen yogurt kiosks were showcased at the NACS Show in 2013 and since then, companies such as Roadrunner Markets, Kroger and several smaller c-store operators have implemented the solution. These stores have seen a profit margin as high as 80 percent, attaining the goal of increasing their foodservice and in-store revenue. Each kiosk installation includes a complete kiosk and machine diagnostic check and a one-day training session on how to use and maintain the machines. Operators also enjoy a training app that eliminates the need for a manual and is included with the tablet that comes with the kiosk. Additionally, the video procedures featured in the app allow employees to start, stop and replay maintenance steps, making learning how to use the machines even easier.
Foodservice in the convenience channel is a major focus today regardless of store size. Eby-Brown’s Savory Corner Café programs are designed with a category management approach to three important c-store foodservice categories: heat and eat, roller grill and hot-to-go. Each program consists of a comprehensive equipment and merchandising package, along with great-tasting product selections. The individual programs are designed to stand alone at retail, but they can also be merchandised together for a full foodservice presence in a c-store. Whether the retailer is just beginning its expansion of foodservice or looking to improve its current program, Savory Corner Café has a lot of options. The Heat & Eat foodservice solution created by Eby-Brown is a self-contained unit that includes a countertop refrigeration unit, commercial microwave and condiment/chip rack. The equipment fits together as one compact unit, requiring minimal counter space. Branded graphics featuring the Savory Corner Café logo draw customers to the foodservice products. The Roller Grill solution is a category management approach to roller grill and offers a selection of the best-selling, quality items. The program offers a gross profit margin of 48 percent. Finally, the Hot-to-Go foodservice solution is convenient, easy and profitable, and offers the best-selling, quality assortment of items.
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METHODOLOGY The Convenience Store News 2014 Categor y Captains competition applauds the outstanding categor y management initiatives implemented in the convenience store channel over the last 12 months. Entries were judged based on product innovation; creativity in merchandising, marketing, promotion and advertising; use of consumer insights; innovative and dynamic category management tools; demonstrated commitment to meeting retail customers’ specific needs; effectiveness at lifting sales for a brand’s products in the category; effectiveness at lifting an entire category’s sales for a retailer or retailers; and fact-based evidence of market-specific or account-specific sales results. CSNews partnered with Past Times Marketing, a consumer research firm, for the 2014 Category Captains competition. For more information, go to www.pasttimesmarketing.com.
Foodservice: Soups & Sides
Other Tobacco Products
Blount Fine Foods
Swisher International Inc.
Hot-to-go foodservice offerings have been heating up this past year. In the fall, Blount Fine Foods, a leading manufacturer of handcrafted artisan soups, sauces and side dishes for retail and foodservice, launched the first premium, single-serve, 10-ounce grab-and-go retail soup line in the marketplace. The entire line is shipped and sold fresh, and available for retail in cases of eight 10-ounce cups. Blount had the convenience store channel in mind when it developed this line, investing heavily in the processing technology and equipment to make it a reality. The company used research to better understand how consumers eat fresh soup. For example, consumers don’t always want to eat restaurant-quality fresh soup the day they purchase it. Furthermore, consumer research showed the new line would appeal to the higher end of the convenience channel. Influenced heavily by its long-successful line of Blount-brand foodservice soups, the 10-ounce offering includes a variety of flavors from New England Clam Chowder to gluten-free Chicken Tortilla Soup. Each 10-ounce cup has a 70-day shelf life. Blount launched the 10-ounce line as a test in two established New England convenience store chains, kicking things off with limited SKUs in just 10 stores in each chain. After a better-than-expected start, both chains added additional SKUs, which also outperformed, leading to chainwide rollouts at both companies just after the start of 2014. At about the same time, on the West Coast, Pacific Convenience & Fuels LLC rolled out Blount’s 10-ounce soups, first in Colorado, then Washington and finally Oregon. After seeing success in all three states, Pacific Convenience & Fuels continued the rollout into its southern and northern California markets in the first quarter of 2014. The offering is now available in 150 of its stores.
Category management has always been critical to the success of Swisher International and its trade partners. The foundation of the efforts has been in a balanced portfolio approach, with an intense focus on innovation, analytics and execution of winning strategies focused on the success of the entire other tobacco products (OTP) category. One of the key pillars of category management at Swisher is the company’s training program for its associates. The goal is to provide highly trained individuals, including certified national account managers, who can develop proven category recommendations actionable for retailers. Swisher is one of the first companies in OTP to become involved in certification. Retailers view certification as a vehicle to help drive collaboration while meeting adult consumer needs. Swisher International has 16 members of its national account team certified, with eight others currently undergoing the process. Due to the success of the certification, Swisher has achieved category captain status at many of the largest retail partners in the country. In 2013, Swisher also launched a number of key initiatives in how it delivers category management to its customers. The company incorporated both a detailed and high-level approach to assist retailers in analyzing adult consumer preferences and purchase patterns. By utilizing Management Science Associates Inc. (MSAi) distributor-toretailer data, the company has been able to develop specific, tailored analytics for retail partners in an immediate way. Additionally, Swisher has employed FusionPoint to integrate these analytics into automated yet relevant business reviews. It continues to build out the platform by contracting with Toolbox Solutions to improve design and implementation of new planograms. Expansion of Swisher’s Internal Business Analytics department is providing key insights and actionable data across all business segments and sales groups.
52 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
Enjoy Tecate® and Tecate® Light Responsibly. ©2014 TECATE® Beer. TECATE® LIGHT Beer. Cervezas Mexicanas, New York, NY El Jimador is a registered trademark used with permission.
Packaged Beverages
Salty Snacks
The Coca-Cola Co.
The Kellogg Co.
The Coca-Cola Co. continues to be a leader in understanding packaging innovation to drive sales. During the summer of 2013, Coca-Cola developed the CocaCola Chill Activated Can for an exclusive test pilot with a convenience store retailer partner. The initiative was designed to generate excitement, traffic and transactions, and to address two of the “portfolio” strategic priorities outlined in Coca-Cola’s 2020 Vision, a roadmap for success that takes into account the forces that will shape business in the future. An engaging package was created that allows consumers to instantly see if their can of Coke is ready to provide icecold refreshment. Printed with thermochromatic ink, the CocaCola Chill Activated Can reacts to fluctuating temperature by changing color. The visually appealing can drew attention at the cold vault (producing 53 percent of purchases) and at the sandwich case. Outside and point-ofsale signage about the offering helped introduce the new packaging and promoted a sandwich bundle opportunity to shoppers. Consumer appeal was further validated through guest intercepts at stores in several markets. Impressive sales metrics highlight the program’s success: UÊ ÀiÊÌ > Ê{°ÎÊ ÊÕ ÌÃÊà `Ê Ê iÃÃÊÌ > Ê four months. UÊ/ iÊ V> >Ê Ê VÌ Û>Ìi`Ê > ÊÀ ÃiÊÌ Ê>Ê higher position among the most-purchased nonalcoholic beverages. UÊ/ iÊ Ûi Ê«>V >}iÊà `Ê>ÃÊ > ÞÊ>ÃÊÈäÊ>ÛiÀ>}iÊ units per store per day in some stores. UÊ{ÈÊ«iÀVi ÌÊ vÊ«ÕÀV >ÃiÃÊÜiÀiÊ >`iÊ Ê>`` Ì ÊÌ Ê another beverage, typically not a sugar-sweetened soft drink. In response to those results, availability of the Coca-Cola Chill Activated Can has been broadened to all convenience store retailers.
Kellogg, from its inception in 1906, has always been about helping consumers eat healthier and better. The company learned that 83 percent of consumers today are eating snacks for nutrition and 40 percent of them are seeking benefits beyond basic nutrition. Kellogg understood that in order to be successful in convenience stores, it needed to be successful in salty snacks. Salty snacks are by far the most popular snack items purchased at convenience stores, and among the most popular items at every daypart. Six out of 10 Americans have given a lot of thought to what they consume and aspire for a healthier lifestyle. With the consumer looking for healthier options, convenience retailers were interested in finding a product line from a well-established brand that satisfied consumers’ cravings and provided incremental sales opportunities with a new type of consumer. Kellogg launched two Special K Cracker Chips in the convenience channel in late 2012 and expanded the portfolio to include five products in 2013. Although a cracker by name, this was truly a different salty snack for the immediate-consumption need. Kellogg’s Special K Cracker Chips helped put healthy snacks on the map for c-stores. Supported at retail with traditional price promotions, Kellogg’s Special K Cracker Chips also gained sales with coupons and pre-packed displays to help drive awareness around this offering. Overall, Special K Cracker Chips grew the category and delivered incremental sales to convenience store retailers, according to the company’s entry. “The addition of Special K Cracker Chips to our schematic was a definite win in a category not usually known as ‘better for you.’ With the initial addition of three flavors, we were able to appeal to women, who are not traditionally a convenience shopper, as well as anyone looking for a salty snack without the guilt! Definitely a positive addition to our stores,” said Debbie Skorupa, category manager of packaged foods for 7-Eleven Inc. CSN
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FOODSERVICE Prepared Food + Hot, Cold, Frozen Dispensed Beverages
"7Ê/"
How to Take Your Coffee Program to the Next Level By Maureen Azzato
T
he coffee business is vitally important to the convenience store business and when managed and executed well, it can be a powerful strategic and differentiating asset. Granted, competition from all sectors and a more discerning customer have made this category much more challenging over the past decade, but that has also improved coffee program quality in the convenience store industry. Dispensed beverages –– coffee, in particular –– are the foundation of any foodservice program in convenience stores. This is the most important building block that operators must get right before expanding into the prepared food side of the business. But too often, it is overlooked, according to the foodservice experts on the Convenience Store News How To Crew.
56 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
Before thinking about expanding and elevating your coffee program, it’s a good idea to take stock of your existing program to make sure you have the basics buttoned up first. Is the quality and taste of your coffee consistently good and fresh? Is the staff well trained and attentive to the program 24/7, and especially focused on the coffee area during peak times to make sure it is kept well stocked and clean? Do customers rave about the quality and taste of your coffee? Do customers make special requests for more flavors and coffee styles? Is your current coffee sales volume high and trending upward? If the answer is “yes” to the above questions, you may be ready to take your coffee program to the next level. If you’re wondering how high your coffee sales volume should be before considering
CALL TO ACTION: Foodservice 101
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FOODSERVICE Prepared Food + Hot, Cold, Frozen Dispensed Beverages
program expansion, several of our How To Crew experts said the minimum should be 100 cups per store per week, while others pegged the number significantly higher –– at 150 to 200 cups per store per week. Most of our experts noted, however, that numbers don’t tell the whole story. In fact, numbers are “virtually impossible to pin down since coffee volume is very regional and tied closely to weather, as well as type of location,” one How To Crew member said. Neighborhood store coffee sales volume, for example, would be considerably lower than highway locations or stores on commuter routes. The rule of thumb that all experts seem to agree upon is that coffee sales should be upward trending before operators consider program expansion. What’s next? Be sure to scope out the competition and know exactly who you will be competing against store by store before you expand and elevate your program. “Competing with Starbucks is different than competing with McDonald’s or the convenience store across the street,” explained Mathew Mandeltort, corporate foodservice manFoodservice 201 ager at Eby-Brown UÊ iÌÊÞ ÕÀÊ iÃÃ>}iÊ ÕÌ°Ê*À ÌiÊÞ ÕÀÊ and a new member «À }À> Ê Ã `iÊ> `Ê ÕÌà `iÊÌ iÊÃÌ Ài° of the CSNews How UÊ ``Ê>ÊvÀià ÊL> iÀÞÊ vviÀ }ÊÌ Ê>VV To Crew. Clearly «> ÞÊÞ ÕÀÊV vviiÊ«À }À> ÊÌ Ê > iÊ ÌÊ>Ê identifying the comÌÀÕiÊ i> Ì iÊ VV>à °Ê petition will enable UÊ >ÛiÊvÀià ʫÀ `ÕVÌÊ>Û> >L iÊÓ{ÉÇÊp operators to deter ÌÊ ÕÃÌÊ ÊÌ iÊ À }ÊpÊ vÊÞ ÕÊÜ> ÌÊ mine their market Ì ÊLiV iÊ>ÊV vviiÊ`iÃÌ >Ì ° positioning “and the UÊ `ÊÞ ÕÀÊÃÌ>vvÊ>VV Õ Ì>L iÊÌ Ê`i ÛiÀÊ strategies and tactics Ì iÊ«À }À> ÃÊV à ÃÌi Ì ÞÊiÛiÀÞÊ`>Þ]Ê needed to support > Ê`>Þ° that positioning,” he UÊ ½ÌÊLiÊÌ iÊ } iÃÌ «À Vi`Ê«À `ÕVÌÊ said. “Once you do ÊÌ Ü ]ÊLÕÌÊ` ½ÌÊLiÊÌ iÊ ÜiÃÌÊi Ì iÀ° that, your focus has to be on consistent execution of the gold-standard cup of coffee with a focus on quality, not on cost savings.”
CALL TO ACTION:
KEY CONSIDERATIONS
Elements that can help operators differentiate and expand their coffee programs include elevated customer service, such as an assigned coffee hostess during peak times; consistent and attentive operating practices; an expanded and well thought-out condiment bar that supports coffee customization; branding and
58 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
program image building; new flavors and varieties of coffee; and rewards/loyalty programs. As is true with expanding any aspect of foodservice, upper-management commitment to all enhancements undertaken is key to ensuring program follow-through and execution at store level. Customer research and observation can also yield key insights. “Weighing customer interest in a next-level program is important, perhaps accomplished through shopper intercepts, focus groups or other formal research initiatives,” said How To Crew member Donna Hood Crecca of Technomic Inc., noting that coffee can be positioned as part of a strategy to expand the store’s consumer base. “Are there consumer groups that you’d like to drive into your stores? If so, where are those consumers sourcing coffee?” In addition to formal research, Crecca recommends operators visit area coffee outlets and observe who’s frequenting these outlets, what they’re buying, and what seems to be trending or missing. Going from a good coffee program to a great program takes careful planning, financial investment and attention to detail. It’s important for operators to know how many additional resources will be required to expand their program and commit fully to that investment before kicking off the program. “Many people mistakenly believe that taking something from average to very good to great is linear in nature. It’s not. It’s exponential,” said Mandeltort. “To go from good to very good is not twice as hard, it’s 11 times as hard. Also, understand that when you go to the next level, not every one of your customers may be thrilled with the move.” Maurice Minno, principal of foodservice consultancy MPM Group and a CSNews How To Crew member, concurs. “Whenever a change to the current coffee
FOODSERVICE
program is considered, always consider your existing coffee customer base and retaining these customers as the program evolves to the next level,” he said, adding that operators should incrementally graduate current customers to the next-level offer. “Do not, under any circumstance, move your coffee program directly to the next level and alienate your existing customer base in the process.” While enhancing the coffee product itself is integral to any next-level program, the customer service aspect of the coffee program is equally important to enhancing the overall image, our How To Crew experts agree. “Become coffee customer centric,” Minno said. “Focus on taking your coffee customer relationship management to the next level as well.” Retailer experts on the CSNews How To Crew also emphasize the importance of training and retraining to ensure proper execution of the new and expanded program, as well as a focus on overall merchandising and presentation –– including graphics and signage –– pricing, and marketing and promotions to enhance the perception and value of the new program. BEST MERCHANDISING PRACTICES
Operators using glass consider shifting to airpots and/or thermal urns as they take their coffee program up a notch because these systems best preserve flavor, aroma and temperature, according to How To Crew members. “Studies I have conducted show that consumers are more concerned with getting hot and fresh coffee than the vessels the coffee is dispensed
60 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
coffee pots should seriously
CALL TO ACTION: Foodservice 301
UÊ"vviÀÊ> Ê>ÀÀ>ÞÊ vÊv >Û ÀÃÊ> `ÊÛ>À iÌ iÃÊ to meet the needs of an expanding VÕÃÌ iÀÊL>Ãi° UÊ iÊV>ÀivÕ Ê>L ÕÌÊ>`` }ÊiÝ«i à ÛiÊ iµÕ « i ÌÊÌ >ÌÊ >ÞÊV vÕÃiÊVÕÃÌ iÀÃ°Ê ÌÊÌ> iÃÊÌ iÊÌ ÊÌÀ> ÊVÕÃÌ iÀÃÊ Ê ÜÊÌ ÊÕÃiÊ iÜÊiµÕ « i Ì° UÊ Ã `iÀÊ>`` }ÊL>À ÃÌ> ÃÌÞ iÊLiÛiÀ>}iÃÊ> `Ê Ì iÀÊÃiÀÛ ViÊLiÛiÀ>}ið UÊ ÊÌ ÊÌ iÊv>ÃÌ V>ÃÕ> ÊL> iÀÞÉV>vjÃÊ > `Ê `i«i `i ÌÊV vvii ÕÃiÊ«ÕÀÛiÞors for inspiration and to keep ahead vÊÌ iÊÌÀi `ð
FOODSERVICE Prepared Food + Hot, Cold, Frozen Dispensed Beverages
from, but some feedback I have received states that consumers view glass pots as being somewhat outdated,� said How To Crew member Paul Pierce, a former foodservice executive at c-store chains 7-Eleven Inc. and MAPCO Express. A solid coffee program should include regular, decaf and dark roasts, and expand from there. Some add-on options include flavored coffee (hazelnut and vanilla are the most popular), as well as organic coffee or Fair Trade coffee, depending on the customer base. “Consumer research shows that you can get very high levels of consumer preference coverage (upward of 80 percent) by simply offering four different varieties of coffee,� Mandeltort said. “After that, the gains are incremental in nature.� He also noted that operators often confuse variety with the number of options and flavors offered. Instead, operators should focus on a well-designed condiment bar and offer customers ample ways to customize their coffee with a wide variety of creams, milks, sweeteners, syrups, toppings, etc. CSN
Our How To Crew David Bishop — Balvor LLC `Ê ÕÀV…iÀ — Burcher Consulting Joseph Chiovera — XS Foodservice & Marketing
œ˜˜>ĂŠ œœ`ĂŠ Ă€iVV>Ê— Technomic Inc. >VÂŽĂŠ7°Ê Ă•ĂƒÂ…Â“>Â˜ĂŠâ€” Nice N Easy Grocery Shoppes Dean Dirks — b2b Solutions Ă€ÂˆVĂŠ ˆ>˜`iÂ?œ˜i — Mintel Foodservice >˜iĂŠ Ă•Â?>Ăƒ — CSM Bakery Products ˆVÂ…>iÂ?ĂŠ >ĂœĂƒÂ…iÊ— Paragon Solutions Mathew Mandeltort — Eby-Brown >ÀÀÞÊ ˆÂ?Â?iÀÊ— Miller Management & Consulting Services >Ă•Ă€ÂˆViĂŠ ˆ˜˜œ — MPM Group *>Ă•Â?ĂŠ*ˆiĂ€ViÊ— Pure Plates Tim Powell — Big Red Rooster Chad Prast — Murphy USA Inc. Bonnie Riggs — The NPD Group Jennifer Vespole — QuickChek Corp. iÀÀÞÊ7iˆ˜iĂ€ — Rutter’s Farm Stores
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FOODSERVICE Category Trends + Insights from
TRENDSIGHTS
Dessert-Inspired Beverages Hit the Sweet Spot C-stores need to stay relevant by continuing to offer unique flavors
D
essert-inspired beverages are trending on menus nationwide. In the first quarter of this year, Dunkin’ Donuts rolled out Brown Sugar Cinnamon coffee and lattes and brought back iced coffee flavors inspired by Baskin-Robbins’ ice cream. Also
Fastest-Growing Non-Alcohol Beverage Flavors at C-stores 63.6%
Caramel
22.2%
Hispanic
20.0%
Spiced
18.2% 16.7%
Vanilla Lemon Mocha
12.5%
Pumpkin
11.1% 10.0%
Sweet Hazelnut
9.1%
Cherry
8.7%
Base: 295 menu items at 40 c-stores (Q1 2014); 262 menu items at 40 c-stores (Q1 2013) Source: MenuMonitor, Technomic
Seasonal & Unique Beverages at C-stores How much do you agree or disagree with the following statements about convenience store beverages? (By age, top two boxes — agree and agree completely)
18-34
35+ 52%
My beverage preferences tend to change depending on the season/time of year I wish convenience stores would offer more unique flavors for their beverages
41% 45% 27%
Base: 500 c-store customers Source: Convenience Store MarketBrief (Summer 2013), Technomic
64 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
in Q1, Starbucks unveiled a Tiramisu Latte and Caramel Flan Latte. Some of the fastest-growing flavors on non-alcohol beverage menus in the last year include caramel (up 63.6 percent in Q1 2014 vs. Q1 2013), vanilla (up 18.2 percent By Donna Hood Crecca Senior Director, during the same timeframe), mocha Technomic Inc. (up 12.5 percent) and hazelnut (up dcrecca@technomic.com 9.1 percent), indicating the growth of traditional dessert flavors in the beverage menupart. Several convenience store operators are innovating to satisfy consumers’ desire for sweet sips. Recent c-store dispensed beverage menu additions include Quik Stop’s Whoopie Pie-flavored coffee, QuickChek’s Red Velvet Cupcake coffee and Family Express’ cotton candy-flavored Squeeze Freeze frozen beverage. Dessert-inspired beverages appeal mostly to younger consumers, who grew up during the Starbucks era drinking beverages like the Frappuccino and now routinely think of specialty beverages as appropriate snacks at various dayparts. However, these very consumers indicate a void in c-store beverage options: 45 percent of consumers aged 18 to 34 say they wish c-stores would offer more unique flavors in their beverages. As restaurant beverage menu creativity increases, c-stores need to stay relevant by continuing to offer unique beverages that appeal to consumers — not only for traditional categories and dayparts, but also for impulse-driven occasions. By offering beverages featuring flavors such as whoopie pie or cotton candy, operators take advantage of diners’ nostalgia for classic dessert favorites. Another way in which c-stores can incorporate dessert-inspired drinks into their beverage program is by promoting seasonal flavored syrups to add to coffee or carbonated water. Whatever the approach, tapping into consumers’ thirst for sweet indulgence can drive traffic, frequency and sales. CSN
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TOBACCO Cigarettes + Cigars + Smokeless + E-Cigs + Other OTP
The Wait Is Over Industry says FDA followed the science with its deeming regulations for tobacco products By Melissa Kress
T
he long wait is over — sort of. Three years after saying it would regulate electronic cigarettes as tobacco products, the Food and Drug Administration (FDA) finally released its proposed deeming regulations in late April. However, when the regulations will be implemented — and what they will look like in the end — remains to be seen.
The agency has the authority to regulate tobacco products under the Family Smoking and Tobacco Control Act of 2009, but the FDA must issue deeming regulations to extend its authority to cover additional tobacco products. Products included in this latest proposal include electronic cigarettes, cigars, pipe tobacco, nicotine gels, water pipe (or hookah) tobacco and certain dissolvables not already under the FDA’s authority. The agency currently regulates cigarettes, cigarette tobacco, roll-your-own tobacco and smokeless tobacco. The proposed deeming regulations call for minimum age and identification restrictions to prevent sales of the products to underage youth; requirements to include health warnings; and prohibition of vending machine sales unless in a facility that never allows minors, such as bars and nightclubs. With the effects of electronic cigarettes on public health still largely unknown, the warning labels for
66 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
e-cigarettes will only be addictive warnings, Mitch Zeller, director of the FDA’s Center for Tobacco Products, said during a briefing on April 24, the day its proposal was released. According to the FDA, under the proposed rules, manufacturers of newly deemed tobacco products would have to, among other requirements: UÊ,i} ÃÌiÀÊÜ Ì ÊÌ iÊ Ê> `ÊÀi« ÀÌÊ«À `ÕVÌÊ> `Ê ingredient listings; UÊ" ÞÊ >À iÌÊ iÜÊÌ L>VV Ê«À `ÕVÌÃÊ>vÌiÀÊ FDA review; UÊ" ÞÊ > iÊ` ÀiVÌÊ> `Ê « i`ÊV > ÃÊ vÊÀi`ÕVi`Ê risk if the FDA confirms that scientific evidence supports the claim, and that marketing the product will benefit public health as a whole; and UÊ ÌÊ` ÃÌÀ LÕÌiÊvÀiiÊÃ> « ið A 75-day public comment period began April 24 and was recently extended by 30 days to Aug. 8. “This is an important moment for consumer protection and a significant proposal that if finalized as written would bring FDA oversight to many new tobacco products,” stated FDA Commissioner Margaret A. Hamburg. “Science-based product regulation is a powerful form of consumer protection that can help reduce the public health burden of tobacco use on the American public, including youth.” WHAT’S MISSING?
Electronic cigarette industry watchers were expecting the proposed regulations to closely mirror those of cigarettes, which the FDA began implementing in 2009. While the proposal does include some components of cigarette regulations, it does not immediately call for a flavor ban, restrictions on marketing such as television advertising or a ban on online sales, nor does it set product standards. Any future regulation will require separate rulemaking and public comment once the proposed deeming rule is finalized. In order to impose restrictions on
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marketing and advertising, for example, the FDA must first have jurisdiction over the products, which is what deeming regulations accomplish, according to Zeller. “It is sort of walk before you run,” he explained. Zeller added that although online sales are not prohibited under the proposal, they will be subject to the age restriction provision once the deeming rule is finalized. Bonnie Herzog, managing director of beverage, tobacco and convenience store research at Wells Fargo
Securities LLC, pointed out that the FDA cannot enact a federal tax on e-vapor products or ban Internet sales because those actions fall under the realm of Congress. In addition, the agency cannot legally ban e-cigarette advertising because it is considered “commercial speech,” which is protected by the First Amendment. “We believe the process could take as long as two years before final regulations are implemented given the rulemaking process, though some items will need to be complied with immediately,” Herzog concluded. CSN
In Their Own Words Electronic cigarette manufacturers were quick to react to the Food and Drug Administration’s (FDA) proposed deeming regulations. While fearing the worst and hoping for the best, many industry players were happy the agency “followed the science” when crafting its proposal. Lorillard Inc., maker of blu eCigs, applauded the agency’s initial efforts to establish a “reasonable” regulatory framework for the e-cigarette category — something it has supported since the beginning — such as establishing minimum age-of-purchase requirements, setting product quality and safety standards, and listing ingredients and other relevant consumer information. “It appears the FDA is taking a sciencebased approach and that the proposed rule itself defines a constructive process that recognizes that e-cigarettes are different than combustible cigarettes,” said Murray S. Kessler, chairman, president and CEO of Lorillard. “Despite what I am sure will be a robust give-and-take process over the coming months, we remain committed to our belief that electronic cigarettes represent a major opportunity to align the interests of business and public health.” Eli Alelov, CEO and founder of LOGIC Technology Development Corp., echoed the sentiment. He told Convenience Store News he’s happy the FDA took a science-based approach to regulating electronic cigarettes, noting that the agency took a very strong position in supporting the e-cigarette industry. Scottsdale, Ariz.-based NJOY has also been in favor of electronic cigarette regulations and welcomed the FDA’s proposal. “We have long supported FDA regulation of electronic cigarettes and believe the issuance of [the] proposed regulations is a critically important milestone,” said Craig Weiss, NJOY’s president and CEO. “By resisting calls to regulate ahead of — and indeed
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in opposition to — the science and data, the FDA has brought NJOY a giant step closer to achieving its corporate mission of obsoleting cigarettes. There are encouraging signs that 10 years from now, this date will be remembered as the beginning of the end of the tobacco epidemic.” VOLCANO eCigs applauded the FDA’s decision to take measured steps in establishing sensible regulation for the electronic cigarette industry. However, the company’s chief said more details are needed on the proposed rules that create manufacturing and labeling standards, as well as required registrations. Cory Smith, CEO and co-founder of Honolulu-based VOLCANO eCigs, also raised questions about the application process. “I think the main concern for all manufacturers and retailers will be the application process and the cost companies will have to bear to get through it. The FDA’s proposal will require that all electronic cigarette products introduced onto the market after February 2007 be registered with the FDA, which equates to nearly 99 percent of all products currently on the market. In the interim, though, the FDA is proposing to allow companies to conduct business as usual,” Smith said. Kyle Newton, president and CEO of SSO Choice LLC, maker of 7’s Electronic Cigarettes, told CSNews that he believes the FDA’s new proposed controls are a powerful form of consumer protection that can help reduce the public health burden of tobacco and bolster support of electronic cigarette distribution that fortifies convenience store sales. “The growth of the electronic cigarette industry has reached a welcomed FDA regulatory stage that defines what we believe are requirements that help ensure quality, functionality, numerous comparative benefits and value,” he said.
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SERVICES Car Wash + Lottery + ATM + Prepaid + Financial
Marking Milestones Car wash & convenience store chain Bobby and Steve’s Auto World is celebrating two anniversaries this year By Tammy Mastroberte
B
obby and Steve’s Auto World, known for combining car washes with convenience stores and auto repair, has reason to celebrate this year. Bobby Williams, founder of the chain based in Eden Prairie, Minn., is celebrating 60 years in the convenience store and fuel industry, while his multi-faceted business is celebrating its 16th anniversary. From tires, quick lubes and auto repair, to convenience stores, gas stations and car washes, the eightlocation Bobby and Steve’s chain aims to be a one-stop shop for its customers.
Offering car washes, quick lubes, auto repair and convenience stores, Bobby & Steve’s aims to be a one-stop shop.
“The convenience store and gas side of the business brings in the most foot traffic, but the auto repair leads in terms of profit,” Madalena Ferreira, director of convenience store operations for Bobby and Steve’s, told Convenience Store News. Throughout 2014, the company is celebrating the anniversaries at one location per month with a party and a week of games and promotions. Also, one Saturday during the month, customers can take advantage of a
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one-hour promotional offer of 60 cents off per gallon of gasoline. They will even find Williams pumping the gas for customers himself, noted Ferreira. Six of the retailer’s locations are Mobil branded and two offer BP fuel. Customer loyalty is cultivated at Bobby and Steve’s in several ways. Seven of the chain’s stores feature an automated car wash, with some also providing car detailing services. In 2007, the retailer launched its WorldPass membership car wash program. For $29.99 a month, customers can get an unlimited number of washes at any Bobby and Steve’s Auto World location. “It’s been a really good program for us, and we really have our employees promote it because it creates loyalty and traffic,” Ferreira explained. “We have point-of-sale ads, and teach [our] team members and car wash attendants to talk to customers about it.” Currently, there are more than 970 WorldPass members. When customers join the program, they receive a tag to attach on their car’s windshield with an RFID chip that identifies them as WorldPass members when they pull up to the car wash. Non-members can choose from three or four wash options and are able to purchase a car wash at the pump, in-store or via a kiosk at the car wash entrance. Bobby and Steve’s also offers a separate loyalty program called World Rewards. In the past month, it’s had more than 13,400 active members, said Ferreira. For every dollar spent — whether on auto repair, car wash, gasoline or in-store — customers receive one point, which can be redeemed for any purchase at the location. They are also entitled to 3 cents off each gallon of gas, and have access to monthly promotions. The convenience store portion of the business contributes 23 percent of overall sales, second only to the service department. With the service department playing such a large role in the chain — representing 51
SERVICES Car Wash + Lottery + ATM + Prepaid + Financial
percent of total sales — the stores offer large automotive departments ranging from 8 feet to 12 feet in size. FOCUSED ON FOOD
As part of its objective to be a one-stop shop for its customers, Bobby and Steve’s offers a variety of food and beverage options. Its Eat Well program, focused on offering all-natural and gluten-free packaged foods, continues to do well. Some locations have the products scattered throughout, while others group them all together on one end-cap. “We love to hear people say, ‘You can actually eat healthy here,’ when they walk in,” Ferreira said. In terms of fresh food, the chain is focused mainly on breakfast and lunch, but its offerings are available through dinner time, and include made-to-order sandwiches, wraps, fresh fruit, salads, burgers and more. There are five different salad varieties and five wrap options. “Our salads are big and we can’t keep up with them in the summer, which is great,” Ferreira added. At three of the locations, Godfather’s Pizza is avail-
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able and is doing very well, plus the chain has a chicken program through Martin Brothers in Iowa, but actually seasons and cooks the chicken at the store. “Lunch is pretty busy for us,” Ferreira said. “We expanded our breakfast options in the beginning of the year, and we are seeing that do well. We added more selections and focused on creating a better image and packaging. We renamed our sandwiches and created a brand name — Great Big Café — which is our proprietary brand.” Three breakfast options are now available: The King, made with eggs, a choice of meat and cheddar cheese on a sourdough bun; The Warmup, made with eggs, sausage, pepper jack cheese and “mean green” sauce on wheatberry bread; and The Ultimate, made with eggs, sausage, bacon, American cheese and cheddar cheese on a sourdough bun. Bobby and Steve’s serves up Great Day coffee and plans to expand the rest of its foodservice options with the same image and name over the next year, said Ferreira. CSN
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74 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
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HOTPRODUCTS Special Advertising Section
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IF YOU HAVE A ADVERTISE IT HERE!! Terry Kanganis: 201-855-7615
WWW.CSNEWS.COM | JULY 2014 | Convenience Store News 77
CLASSIFIED POS/Equipment/Supplies
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CLASSIFIED Credit Card Processing / Merchant Services
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CLASSIFIED Cellular Products
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CLASSIFIED ATM’s
WWW.CSNEWS.COM | JULY 2014 | Convenience Store News 81
CLASSIFIED ATM’s
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CLASSIFIED FROZEN BEVERAGES
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CLASSIFIED ATM’s
Credit Card Processing/Merchant Services
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CLASSIFIED AIR VACS
Air Vacs
Age VeriямБer / POS
1-800-542-3336 WWW.CSNEWS.COM | JULY 2014 | Convenience Store News 85
CLASSIFIED Pre-Paid/Cellular Products
Air Vacs
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CLASSIFIED Age VeriďŹ er
Services
Plastics
Equipment and Supplies
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CLASSIFIED Financial Services
Scales
General Merchandise
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570 Lake Cook Road, Suite 310, Deerfield IL 60015 Phone (224) 632-8200 Fax (224) 632-8266 www.stagnitobusinessinformation.com
Harry Stagnito President and CEO 224-632-8217 hstagnito@stagnitomail.com Kollin Stagnito Chief Operating Officer 224-632-8226 kollinstagnito@stagnitomail.com
ADINDEX Add System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.addsy.com Advance Pierre . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 . . . . . . . . . . . . . . . . . . . . . . www.advancepierre.com Altria Group Distribution Co . . . . . . . . . . . . . . . . . . 11, 22, 24 . . . . . . . . . . . . . . . . . . www.insightsc3m.com Anheuser- Busch . . . . . . . . . . . . . . . . . . . . . . . . . . . Back Cover . . . . . . . . . . . . . . www.anheuser-busch.com
Ned Bardic Senior Vice President/Partner 224-632-8244 nbardic@stagnitomail.com Korry Stagnito Chief Brand Officer 224-632-8171 kstagnito@stagnitomail.com
Berry Plastics Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . www.versalite.com Blu Cigs/LOEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.blucigs.com Cash Depot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 . . . . . . . . . . . . . . . . . . . . . . www.cashdepotplus.com CB Distributors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 . . . . . . . . . . . . . . . . . . . www.21stCenturySmoke.com Chesterâ&#x20AC;&#x2122;s International LLC . . . . . . . . . . . . . . . . . . . 8-9 . . . . . . . . . . . . . . . .www.chestersinternational.com
Michael Hatherill Group Brand Director 201-855-7610 mhatherill@stagnitomail.com
Chiquita Brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 . . . . . . . . . . . . . . . . . . . . . . . www.chiquitaToGo.com Coca Cola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. . . . . . . . . . . . . . . . . . . . . . . . www.cokesolutions.com Commonwealth Altadis, Inc. . . . . . . . . . . . . . . . . . . 35, 41 . . . . . . . . . . . . . www.commonwealthaltadis.com Convenience Store News . . . . . . . . . . . . . . . . . . . . 53 (Regional). . . . . . . . . . . . . . . . . . . . www.csnews.com DelMonte Fresh Produce Inc . . . . . . . . . . . . . . . . . . 63 . . . . . . . . . . . . . . . . . . . . . . www.freshdelmonte.com
Terry Kanganis Account Executive & Classified Advertising 201-855-7615 tkanganis@stagnitomail.com
Directory of C-Stores . . . . . . . . . . . . . . . . . . . . . . . . 55 (Regional). . . . . . . . . . . . . . . . . . . www.c-stores.com Eby-Brown LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 . . . . . . . . . . . . . . . . . . . . . . . . . www.eby-brown.com Eonsmoke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 . . . . . . . . . . . . . . . . . . . . .wholesale@eonsmoke.com Foster Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 . . . . . . . . . . . . . . . .www.fosterfarmsfoodservice.com GPMI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 . . . . . . . . . . . . . . . . www.gpmicompany.com/cstores
Mark Tisdale Southeast Regional Sales Manager 770-490-8091 mtisdale@stagnitomail.com
Growth Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 (Regional) . . . . . . . . . . . . . www.ethanolretailer.com Happy and Healthy Products Inc. . . . . . . . . . . . . . . 62 . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.fruitfull.com Heineken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 53 (Regional) .www.enjoyheinekenresponsibly.com HR 360 Summit . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 (Regional) . . . . . . . . . . . .www.hispanicretail360.com
Kevin McKay Western Regional Sales Manager 847-49-9519 kmkay@stagnitomail.com
Imageworks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 . . . . . . . . . . . . . . . . . . www.imageworksdisplay.com Kelloggs Company . . . . . . . . . . . . . . . . . . . . . . . . . . 5 . . . . . . .www.kelloggsconvenience.com/growmystore Keurig, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .www.keurig.com Krispy Krunchy Chicken . . . . . . . . . . . . . . . . . . . . . 62 . . . . . . . . . . . . . . . . . . . . . . www.krispykrunchy.com Liggett Vector Brands . . . . . . . . . . . . . . . . . . . . . . . 39, 67 . . . . . . . . . . . . . . . www.liggettvectorbrands.com
Kim Hansen Midwestern Regional Sales Manager 847-726-1590 khansen@stagnitomail.com
Living Essentials . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover-Tip. . . . . . . . . . . . . . . . . . .www.5hourenergy.com Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-13 . . . . . . . . . . . . . . . . . . . . . . . . .www.logicecig.com Mars USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 . . . . . . . . . . . . . . . . . . . . . . . www.mars24seven.com McLane Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-21 . . . . . . . . . . . . . . . . . . . . . . . www.mclaneco.com Numark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover . . . . . . . . . . . . . . . www.markten.com
Rachel McGaffigan Northeast Regional Sales Manager 508-385-2524 rmcgaffigan@stagnitomail.com
Paramount Farms. . . . . . . . . . . . . . . . . . . . . . . . . . . 15 . . . . . . . . . . . . . . . . . . . . . . . . . www.getcrackin.com Perfetti Van Melle USA Inc. . . . . . . . . . . . . . . . . . . . 37 . . . . . . . . . . . . . . . . . . . www.perfettivanmelleusa.us R.J Reynolds Tobacco Co/Camel . . . . . . . . . . . . . . . 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.rjrt.com Ryko. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.ryko.com S&D Coffee Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 . . . . . . . . . . . . . . . . . . . . . . . . .www.sdcoffeetea.com
Roz Gilman Ad Manager 224-632-8243 rgilman@stagnitomail.com
SCA Tissue North America . . . . . . . . . . . . . . . . . . . 73 . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.torkusa.com Society Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 57 (Regional) . . . . . . . . . . . www.societyinsurance.com Store Brands Collaboration Summit . . . . . . . . . . . . 89 . . . . . . . http://collaborationsummit.storebrands.info Swedish Match NS, Inc. . . . . . . . . . . . . . . . . . . . . . 31 . . . . . . . . . . . . . . . . . . . .customerservice@smna.com The Procter & Gamble Company . . . . . . . . . . . . . . . 49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.pg.com Tillamook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 . . . . . . . . . . . . . . . . . . . . . . . . . . . .www.tcsjerky.com Vapex, Blac Label LLC . . . . . . . . . . . . . . . . . . . . . . Inside Bk Cover . . . . . . . . . . . . . www.blaclabelcigs.com
90 Convenience Store News | JULY 2014 | WWW.CSNEWS.COM
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