CSN - March 2018 by ensembleiq

W H AT ’ S N E X T I N C O N V E N I E N C E A N D F U E L R E TA I L I N G

The Disappearing Middle

Several midsize chains are gobbled up by this year’s Top 20 Growth Chains.

2018 CATEGORY CAPTAINS ARE DRIVEN BY DATA

MARCH 2018 CSNEWS.COM

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Convenience Store News Top 20 Growth Chains Keep Growing Big consolidators and strong regionals put pressure on midsize chains CONGRATULATIONS TO ALIMENTATION COUCHE-TARD for once again topping

our exclusive 2018 Convenience Store News Top 20 Growth Chains ranking. The Canada-based retailer, which operates the Circle K chain in the United States and globally, was also the Top Growth Chain in 2016 following its acquisition of The Pantry. This past year, Couche-Tard added more than 1,000 stores to its location count with its acquisitions of Holiday Stationstores, CST Brands and Jet-Pep. Perhaps more impressive, though, is Andeavor Corp., the San Antonio-based retailer formerly known as Tesoro. Andeavor registered the second-highest net store count increase on this year’s ranking and the highest percentage gain in the industry, nearly doubling in size. Andeavor swallowed up last year’s Top Growth Chain, Western Refining, in a monster deal, proving that being a consolidator doesn’t protect you from being consolidated yourself (as retailers like CST Brands and The Pantry can attest). Meanwhile, GPM Investments, the top percentage gainer in 2014 and last year’s No. 2 Top Growth Chain, had an impressive increase of 84 net new stores to rank third on our 2018 list — and that doesn’t include the pending close of its deal to buy the 282store E-Z Mart chain.

And Kwik Trip had its best store-growth year ever via both acquisition (34 PDQ convenience stores) and organic growth (new builds) to secure fourth on this year’s roster. As in past years, the CSNews Top 20 Growth Chains ranking is dominated at the top by large, acquisition-minded consolidators, like the companies above. Scattered among these consolidators are a group of strong regional players that have increased store count considerably through organic growth, such as Casey’s General Stores, Wawa, Love’s Travel Stops, Murphy USA, QuikTrip, Sheetz and Maverik. Even these regional powerhouses are huge retailers, ranging in size from more than 2,000 stores to about 300. Meanwhile, midsize chains of between 50 and as many as 200 stores are getting squeezed by these large players (see this issue’s cover story on page 40). We’ve seen the disappearance of scores of midsize chains over the past few years, but all is not lost for the medium-sized player. There are still more than 75 chains with store counts of between 50 and 300 stores, and for the ones that really want to compete, these are still good times for growth. For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or dlongo@ensembleiq.com.

EDITORIAL EXCELLENCE AWARDS (2013-2017)

2016 American Society of Business Press Editors, National Azbee Awards Gold, Best How-To Article, March 2015 Bronze, Best Original Research, June 2015 2016 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best How-To Article, March 2015 Silver, Best Original Research, June 2015

EDITORIAL ADVISORY BOARD

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

2015 American Society of Business Press Editors, National Azbee Awards Silver, Best Profile (long form), February 2014 2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014 2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012

2017 Eddie Awards, Folio: magazine Winner, Business to Business, Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business, Retail, Single/Series of Articles, June 2016 2016 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2015 Business to Business, Retail, Single/Series of Articles, August 2015 2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014 2014 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2013 Business to Business, Retail, Single Article, February 2013

2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

4 Convenience Store News C S N E W S . c o m

2013 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2012

Brett Atherton Bolla Management

Jack Lewis GPM Midwest

Jon Bratta Core-Mark International Inc.

Danielle Mattiussi Maverik Inc.

Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Jim Hachtel Eby-Brown Co. Ray Johnson Speedee Mart Kirk Leff McLane Co. Inc.

Kyle McKeen Alon Brands Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger Convenience Management Services Inc.

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CONTENTS MAR 18

VO LU M E 54 N UMB ER 03

40 78

26 FEATURES

DEPARTMENTS

COVER STORY

VIEWPOINT

STORE SPOTLIGHT

40 The Disappearing Middle Several midsize chains are gobbled up by this year’s Top 20 Growth Chains.

4 Convenience Store News Top 20 Growth Chains Keep Growing Big consolidators and strong regionals put pressure on midsize chains.

78 A Fresh Take on On-the-Go The Chopped & Pressed Café caters to busy consumers searching for wholesome, quality food.

12 CSNews Online

NEW HORIZONS

CATEGORY CAPTAINS

52 Driven by Data Twelve suppliers are named 2018 Category Captains for helping retailers achieve excellence.

OUT & ABOUT

26 Now Showing: Tobacco Tobacco Plus Expo 2018 addresses market changes as alternative products enter the scene. 32 New Products SMALL OPERATOR

52 6 Convenience Store News C S N E W S . c o m

34 Putting the Spice in C-store Retailing The Patel family continues to embrace its independence despite growing its store count.

80 What Do Your Job Postings Say About Inclusion? It’s time to rewrite the script when it comes to recruiting. EXPERT’S VIEW

82 The Trump Effect on the C-store Industry: An Update The President’s first year in office has been very controversial and had many highs and lows. GETTING TO THE CORE

98 In Need of a Healthy Makeover? Consumer wellness concerns may require certain categories to change their ways.

CONTENTS MAR 18

VO LUM E 54 N UMB ER 03

8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631 (773) 992-4450 Fax: (773) 992-4455 www.csnews.com Direct Mailing Address for Convenience Store News: 11-43 Raymond Plaza West, 16th floor, Newark, NJ 07102 BRAND MANAGEMENT Vice President/Group Brand Director Paula Lashinsky (917) 446-4117 plashinsky@ensembleiq.com EDITORIAL Editorial Director (201) 855-7606

Don Longo dlongo@ensembleiq.com

Editor-in-Chief (201) 855-7608

Linda Lisanti llisanti@ensembleiq.com

Senior News Editor (201) 855-7618

Melissa Kress mkress@ensembleiq.com

Associate Editor (201) 855-7619

Angela Hanson ahanson@ensembleiq.com

Associate Managing Editor (201) 855-7604

Danielle Romano dromano@ensembleiq.com

Assistant Editor (201) 855-7614

INDUSTRY ROUNDUP

CATEGORY MANAGEMENT

16 Kroger Decides to Exit Convenience Channel 18 Eye on Growth 20 Retailer Tidbits 22 Fast Facts 23 In the Public Eye 24 Supplier Tidbits

Contributing Editor (303) 741-3377

Renée M. Covino reneek@aol.com

Contributing Editor (201) 280-2614

Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS

FOODSERVICE

14 7-Eleven Puts Its Largest Acquisition in the Books

Chelsea Regan cregan@ensembleiq.com

66 Safety First The more important foodservice becomes to the convenience store industry, the more important food safety becomes to retailers. ALCOHOLIC BEVERAGES

70 Cheers to the ‘Lesser’ Beers In line with “less is more” wellness trends, low- and no-alcohol brews are gaining ground.

Associate Brand Director & Northeast Sales Manager (508) 385-2524

Rachel McGaffigan rmcgaffigan@ensembleiq.com

Associate Brand Director & Western Sales Manager (330) 840-9557

Ron Lowy rlowy@ensembleiq.com

Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Account Executive, Southeast (803) 315-0694

Cindy DeBerry cdeberry@ensembleiq.com

Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com EVENTS Senior Vice President, Events & Conferences Maureen Macke (773) 992-4413 mmacke@ensembleiq.com CUSTOM MEDIA

SERVICES

74 A Tale of Two Car Washes Successful c-store operators — one chain, one independent — share their best practices.

General Manager, Custom Media (224) 632-8244

Kathy Colwell kcolwell@ensembleiq.com

AUDIENCE DEVELOPMENT Director of Audience Development Gail Reboletti (224) 632-8214 greboletti@ensembleiq.com List Rental (800) 529-9020

The Information Refinery Brian Clotworthy

Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net ART/PRODUCTION Director of Production (973) 358-4875 Creative Director (973) 607-1320 Advertising/Production Manager (314) 403-4753 Art Director (224) 632-8245

Kathryn Homenick khomenick@ensembleiq.com Colette Magliaro cmagliaro@ensembleiq.com Roz Gilman rgilman@ensembleiq.com Michael Escobedo mescobedo@ensembleiq.com

CORPORATE OFFICERS Chief Executive Officer Chief Operating Officer & Chief Brand Officer Chief Business Development Officer President of Enterprise Solutions/ Chief Revenue Officer President & Executive Director, P2PI Chief Digital Officer Chief Human Resources Officer

David Shanker Rich Rivera Korry Stagnito Ned Bardic Mike McMahon Joel Hughes Jennifer Turner

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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.

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Copyright © 2018 by EnsembleIQ. 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 Chicago, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

8 Convenience Store News C S N E W S . c o m

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THIS IS

OUR WATCH WE I.D. TOBACCO PURCHASES

HELP KEEP TOBACCO OUT OF THE HANDS OF MINORS. I.D. ANYONE UNDER 27.

It’s up to us to protect our community from underage tobacco use. To help prevent sales to minors, FDA has created the “This Is Our Watch” program. Look for your materials in the mail. Learn more about federal tobacco regulations and order free materials at www.FDA.gov/ThisIsOurWatch.

CSNEWS ONLINE

ONLINE EXCLUSIVE

TOP 5 DAILY NEWS HEADLINES

Pepsi Gives Nod to the Past in New 2018 Global Campaign

With its latest global creative campaign, “Pepsi Generations,” the beverage brand is marking its history in pop culture for 120 years. The campaign celebrates the best moments of Pepsi’s past, creates new moments for today, and sets the stage for the future, according to the brand.

Motiva Doubles Sales Force to Accelerate 76 Brand Expansion

Motiva has doubled its 76 sales force and plans to increase print, digital, social and broadcast marketing and advertising in 2018. The company intends to grow its supply and support of 76-branded retail stations by 250 sites annually.

Meet 2017 Hot Beverages Innovator of the Year: Cumberland Farms

Cumberland Farms launched its biggest advertising campaign ever last year to support its popular Farmhouse Blend Coffee. The multichannel campaign urged consumers to “Come to Your Coffee Senses.”

Five C-store Chains Rank Among Top 100 Restaurants

Wawa Inc., Sheetz Inc., Casey’s General Stores Inc., 7-Eleven Inc. and Circle K Stores earned a spot on the latest Nation’s Restaurant News Top 100 ranking of the restaurant industry. Wawa and Sheetz have been innovating for years with self-ordering kiosks and specialty foods, while Casey’s has been aggressively carving out a unique niche with scratch-made pizza, including delivery at many of its locations.

Dunkin’ Unveils Three-Year Blueprint for Growth

The strategic plan’s goal is to grow revenue by low-to-mid single-digit percentages and operating income by mid-to-high single-digit percentages. In order to achieve these targets, Dunkin’ Brands intends to position its core Dunkin’ Donuts U.S. brand to compete even more effectively in the coffee and beverage segment.

EXPERT VIEWPOINT: The (in)Convenience of Clerkless C-stores Clerks still play an important role in the brick-and-mortar ecosystem, especially when it comes to purchases that require additional human interaction. Think alcohol or cigarettes, writes Chris Francis of Worldpay US. Rather than relying on technology that may add friction to the checkout process, convenience store owners can continue delivering a shopping experience loyal customers have come to expect. As far as payments go, register clerks provide options modern-day technology simply cannot. If, for example, a customer wishes to make a purchase using cash, he or she might be better off shopping at a convenience store that still employs human workers. After all, RFID and mobile technology aren’t adept at accommodating customers who opt for cash. 12 Convenience Store News C S N E W S . c o m

The Legislative & Regulatory Issues to Watch This Year Long a frustration of retailers, legislative and regulatory issues can make or break a convenience store’s bottom line for a month, a quarter, or even a whole year. For 2018, matters such as interchange fees, state and local-level activism, the National Labor Relations Board, regulatory reform, labor organizing and carryover issues are those to keep a close watch on. “But it’s interesting, with Trump at the helm, no one in D.C. really knows what’s coming up first, whether we’ll have repeal of Obamacare, global tax reform, immigration issues, etc.,” said Lyle Beckwith, senior vice president of government relations for NACS, the Association for Convenience & Fuel Retailing. “Hopefully, we’ll get these carryover issues dealt with, but it really hinges on what the new administration’s top priorities are.” For more exclusive stories, visit the Special Features section of www.csnews.com.

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INDUSTRY ROUNDUP

7-Eleven Puts Its Largest Acquisition in the Books The convenience store chain closes deal for more than 1,000 Sunoco locations

7-ELEVEN INC. MARKED A MILESTONE in its 90-year history, closing its largest acquisition ever.

As of Jan. 23, the Irving, Texas-based convenience store chain took ownership of approximately 1,030 Sunoco stores located in 17 states. This acquisition brings 7-Eleven’s store count to approximately 9,700 in the United States and Canada. The purchase totaled more than $3 billion.

The sale to 7-Eleven is a strategic divestiture on Sunoco’s part as it shifts its focus to fuel distribution and logistics. “Part of what makes the 7-Eleven brand so iconic is our global presence and our continued growth,” said Joseph DePinto, 7-Eleven’s president and CEO. “The acquisition of over 1,000 Sunoco stores supports our accelerated growth strategy, and we look forward to serving these great new customers.” The transaction closed days after an agreement with the Federal Trade Commission (FTC), which required 7-Eleven to sell 26 retail fuel outlets that it owns to Sunoco, and for Sunoco to retain 33 fuel outlets that 7-Eleven otherwise would have acquired.

14 Convenience Store News C S N E W S . c o m

According to the FTC, the original acquisition agreement for roughly 1,100 retail sites — which was announced in April — would have harmed competition in 76 local markets across 20 metropolitan statistical areas, violating federal antitrust law. Sunoco will convert the acquired and retained stations from company-operated sites to commission-agent sites, and it will have full control over fuel pricing and supply. The sale to 7-Eleven is a strategic divestiture on Sunoco’s part as it shifts its focus to fuel distribution and logistics. In addition to the retail sites, the deal included a 15-year take-or-pay fuel supply agreement under which Sunoco will supply approximately 2 billion gallons of fuel annually to 7-Eleven, with an additional 0.5 billion gallons of committed growth in the future. Sunoco’s strategic conversion of 207 West Texas retail sites to a commission-agent model also remains on schedule, with a conversion date expected late in the first quarter of this year. Dallas-based Sunoco is a master limited partnership that distributes motor fuel to approximately 9,200 convenience stores, independent dealers, commercial customers and distributors located in more than 30 states. Sunoco’s general partner is owned by Energy Transfer Equity LP. Seven & i Holdings Co. Ltd., the parent company of 7-Eleven Inc., operates more than 65,000 stores in 18 countries.

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INDUSTRY ROUNDUP

Kroger Decides to Exit Convenience Channel U.K.-based buyer EG Group will enter the market with more than 700-store acquisition a deal to sell its convenience store business unit to EG Group, a privately held convenience and gas retailer based in the United Kingdom, for $2.15 billion.

establish a North American headquarters in Cincinnati, Kroger’s hometown.

The transaction is expected to close during the first quarter of Kroger’s fiscal year.

“As part of our regular review of assets, it has become clear that our strong convenience store business unit will better meet its full potential outside of our business,” said Mike Schlotman, Kroger’s executive vice president and chief financial officer.

THE KROGER CO. REACHED

Under the terms of the agreement, EG Group will continue to operate the 700plus stores under their current banners, which include Turkey Hill, Loaf ‘N Jug, Kwik Shop, Tom Thumb and Quik Stop. The acquirer will also

EG Group is not acquiring Kroger’s supermarket fuel centers or its Turkey Hill Dairy.

This deal marks EG Group’s first foray into the United States.

INDUSTRY ROUNDUP

Eye on Growth

ExtraMile Convenience Stores LLC, a newly created joint venture between Chevron USA Inc. and Jacksons Food Stores, officially began operations Feb. 1. Plans call for doubling the number of ExtraMile locations by 2027.

Casey’s General Stores Inc. bought five Wisconsin c-stores from Frawley Oil Co. The sale allows Frawley Oil to focus on its fuels and lubricants business.

Pester Marketing Co. is acquiring the convenience stores and gas stations of Western Convenience Stores Inc. The 43 sites are located in and around Denver, Colorado Springs, Pueblo, Grand Junction, Colorado mountain resort locations, and western Nebraska.

TravelCenters of America LLC’s TA Restaurant Group opened its first Quaker Steak & Lube Express walk-up concept in Gary, Ind. The new quickserve, counter-service dining option offers customer favorites like wings, fried chicken, steak sandwiches, steak burgers, salads, wraps and side items. Online ordering and a breakfast menu will be among the future features still to come to Quaker Steak & Lube Express.

Enmarket Stations Inc. has agreed to purchase 34 E-Z Shop sites from Brabham Oil Co. Inc. Enmarket will assume operation of the stores in mid-April.

The deal also includes Brabham’s wholesale fuel distribution company.

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INDUSTRY ROUNDUP

Retailer Tidbits

Following the recent tax package approved by Congress, Family Express Corp. is upping its starting wage to $11 per hour. The pay adjustment will be permanent.

Alimentation Couche-Tard Inc. began franchising its Circle K convenience store brand in Canada. This marks the first time Circle K will be franchised in the country.

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Cumberland Farms Inc. redesigned its SmartPay Check-Link mobile app. One of the new features is a secure biometric touch ID sign-in process.

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QuikTrip Corp. is testing delivery through Uber Eats at four stores in Tulsa, Okla. It joins fellow c-store retailers 7-Eleven Inc. and Wawa Inc. in offering delivery. QuickChek Corp. created a new position, vice president of foodservice, and tapped retail industry veteran Scott Zoeller to fill the role. He joins QuickChek from Kings Supermarkets and Balducci’s, where he was most recently vice president of deli, prepared foods, meat and seafood.

INDUSTRY ROUNDUP

FAST FACTS

Weekly sales of Amazon Fresh topped $7 million to close out 2017, rising from $3 million in January, to reach an estimated sales total of $350 million for the year. — One Click Retail’s Amazon Grocery 2017 Review

93 percent of Americans say bottled water should be available wherever drinks are sold. — Harris Poll & International Bottled Water Association

Millennials spend 88 minutes a day on food preparation, presentation and cleanup, a figure driven by ready-to-eat foods. — USDA Food Purchase Decisions of Millennial Households Compared to Other Generations report

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In the Public Eye Andeavor Corp., San Antonio In 2017, Andeavor increased its branded and retail store count by 31 percent, or 763 stores, year over year to boost its marketing portfolio to 3,255 locations, Chairman and CEO Greg Goff reported during the company’s fourth-quarter and full-year 2017 earnings call on Feb. 16. The growth came on both the acquisition front — including a $4.1-billion deal for Western Refining Inc. — and the organic front, including a move into Mexico. As of Jan. 31, Andeavor was supplying roughly 60 stations in Mexico, including 28 under the ARCO brand. The company expects to increase its marketing presence across the entire northern part of Mexico, with an estimated 250 to 300 stations planned through 2020. Andeavor generated overall earnings of $879 million for the fourth quarter vs. $78 million a year ago. Full-year earnings were $1.5 billion. Marathon Petroleum Corp., Findlay, Ohio During its fourth-quarter and year-end 2017 earnings call, held Feb. 1, Marathon Petroleum Corp. (MPC) said it will increase its investment in the

Speedway LLC division by $150 million more than the past year’s plan, for a total of $530 million. The increased investment is primarily targeted for construction of new store locations, with money also slated for the remodeling and rebuilding of existing locations. Speedway’s samestore merchandise sales increased 1.2 percent for the full year, while MPC overall reported full-year earnings of $3.4 billion, up from $1.2 billion in 2016. Murphy USA Inc., El Dorado, Ark. In an earnings call on Feb. 1, Murphy USA reported net income for the fourth quarter of 2017 of $124.8 million, compared to $43.8 million during the fourth quarter of 2016. For the full year, net income was $245.3 million, up from $221.5 million in 2016. Total merchandise sales reached $595.6 million in the quarter, up from $588.4 million in Q4 2016. Company executives cited yearlong initiatives that optimized Murphy’s offering and centered on key categories. The fuel category did show some weakness, with total retail fuel gallons falling 2.6 percent across Murphy USA’s network for the quarter. For the full year, the company opened 45 new stores and 21 raze-and-rebuild locations.

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INDUSTRY ROUNDUP

Supplier Tidbits

Keurig is buying Dr Pepper Snapple Group. The combined company, Keurig Dr Pepper, will have about $11 billion in annual sales.

Keurig will remain headquartered in Waterbury, Vt., and Dr Pepper Snapple will stay in Plano, Texas.

The Food and Drug Administration’s Tobacco Products Scientific Advisory Committee rejected Philip Morris International’s reduced-risk claims for iQOS. However, the recommendation to the agency is non-binding. The Coca-Cola Co. announced a global goal to help collect and recycle the equivalent of 100 percent of its packaging by 2030. This initiative is the centerpiece of the company’s packaging vision for a “World Without Waste.” On the eve of the 2017 winter solstice on Dec. 21, Hostess provided Twinkies and Hostess CupCakes for each of the 62 residents of Beaver, Alaska. The village has only one hour

of sunlight on the shortest day of the year. Fireman Capital Partners and Dunn’s River Brands teamed up to acquire the Sweet Leaf Tea and Tradewinds businesses from Nestlé Waters North America. Terms of the deal were not disclosed. Nestlé Waters North America introduced a new sparkling portfolio for its six regional spring water brands. The new sparking portfolio will include new flavors, a new bottle design and packaging, and introduce 12-ounce cans. Tobacco company Cheyenne debuted a new corporate logo, the first change to its visual identity since its inception in 2002. Additionally, Cheyenne overhauled its website to be easier to navigate. CSN

OUT & ABOUT

Now Showing: Tobacco Tobacco Plus Expo 2018 addresses market changes as alternative products enter the scene By Melissa Kress

A panel of retailers discussed how all tobacco industry stakeholders must rise up and evolve along with the category.

in the convenience channel finds itself undergoing change, Tobacco Plus Expo 2018 (TPE) displayed some changes of its own. Under the banner of Tobacco Media Group owned by Kretek International, TPE is the largest business-to-business tobacco trade show highlighting tobacco, vapor, alternatives, and general merchandise products available in the market.

JUST AS ONE OF THE LEADING CATEGORIES

For the first time, the National Association of Tobacco Outlets (NATO) co-located its Industry Outlook at TPE, which took place Jan. 31- Feb. 1 at the Las Vegas Convention Center. Held the day before the tobacco industry’s first show of the year kicked off, the NATO Industry Outlook meeting explored the ever-changing tobacco market, including legislative trends. According to Industry Outlook presenter Nik Modi, analyst with RBC Capital Markets, the state of the tobacco industry depends on several key factors:

ware, Indiana, Kansas, New York and Ohio. • Industry pricing: Based on historical trends, the next price increase is expected in March and will come in at the 9-cent to 10-cent range. Regulatory dynamics also weigh on the tobacco industry. In summer 2017, the Food and Drug Administration (FDA) announced a shift in its tobacco regulatory approach to now focus on nicotine. However, it’s too early to assess the effect of this change, according to Modi. “The menthol issue hasn’t been resolved at the federal level yet and that started seven years ago,” he pointed out. “These things take time.” Other issues topping regulatory agendas across the United States are age restrictions and flavor bans.

• Gas prices: Though they spiked in January, gas prices have remained relatively stable.

In regards to electronic cigarettes, Modi admitted to being negative toward the category initially because the science and technology were not good enough. The category is getting better, he acknowledged.

• Excise taxes: The $2 increase in California put pressure on the industry in 2017. States to watch this year are Connecticut, Dela-

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26 Convenience Store News C S N E W S . c o m

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OUT & ABOUT

thing for this industry,” he said.

Market Trends When it comes to selling tobacco products, convenience stores and gas stations still lead all traditional classes of trade. With approximately 56 percent of all stores in the United States, the convenience channel accounts for about

Still, the real obstacle lies much closer to home — local tobacco ordinances. “Local tobacco ordinances are the most significant threat to retailers,” said Brian Carr, NATO’s deputy executive director. Overall, there were 400 local tobacco issues topping agendas in 2017, according to Carr, and each one grew more restrictive. Three states especially stand out for tobacco legislation: California, Massachusetts and Minnesota. The measures generally fall into four categories: flavor bans; minimum cigar package size and prices; limit on number of tobacco retailer licenses; and higher legal minimum age to buy tobacco products. And, Carr warned, even if these issues have not reached your community, they are coming. “The time to engage is before the restrictions are at your door,” he said. “Then, it is too late.”

NATO Executive Director Thomas Briant spoke during the NATO Industry Outlook, which was co-located for the first time with Tobacco Plus Expo this year.

70 percent of nicotine volume, shared Don Burke of Management Science Associates. Tobacco outlets make up 3 percent of all U.S. stores and 8 percent of the nicotine volume. “Clearly, tobacco outlets and the convenience channel are very important to the category,” Burke said during the NATO Industry Outlook. In his opinion, though, the channel to watch is the dollar channel. Currently, dollar stores account for 2 percent of the nicotine volume, but they have the potential to take more share, Burke cautioned. According to data on total U.S. nicotine trends, dollar store volume increased 12.5 percent in the third quarter of 2017 vs. a year ago. Distribution grew 24.5 percent. Conversely, c-store and gas station volume dipped slightly by 0.5 percent, and distribution grew slightly by 0.7 percent.

Legislative Trends As Modi pointed out, legislative issues play a key role in the tobacco industry, which has been grappling with the FDA’s deeming rule and policy shift.

28 Convenience Store News C S N E W S . c o m

Change at the federal level, on the other hand, is going to take some time. The FDA announced its regulatory shift to reduce the nicotine level in cigarettes in July, and the agency is accepting public comments on the topic. Based on past regulatory experience, it may take years to implement, according to Thomas Briant, executive director of NATO.

Rolling With the Changes Retailers and manufacturers must rise up and evolve to fit into the tobacco category’s new normal. Evolution is something that Jonathan Drew, president of Drew Estates, knows something about. As the keynote speaker at TPE 2018 on Jan. 31, Drew described his journey from law school student to cigar retailer to president of one of the largest premium cigar companies in the world. His journey was not without challenges, and his success rose from the ashes of failures. According to the entrepreneur, it takes time, and success requires turning failures into innovation; innovation into success. It takes evolution on the retailing side of tobacco, as well. Speaking as part of a retailer panel on the TPE show floor, Randy Silverman, president of Klafter’s Inc., said the company’s cigarette volume based on cost was 82 percent in 2003 and now, 14 years later, that number has dropped to 48 percent. What happened? Several factors: the Master Settlement Agreement, increases in tobacco taxes, Food and Drug Administration regulations, and the expansion of the State Children’s Health Insurance Program (SCHIP). “We had to react to them,” Silverman explained. “In most cases, we looked at them as opportunities.”

OUT & ABOUT

For Terry Gallagher, president of Smoker Friendly International, his family opened its first cigarette-only store in 1989 and did very well the first few years by selling that single commodity and gasoline. As more retail channels have begun to make a bigger push into tobacco, though, the company has evolved into “total tobacco.” “We continue to evolve as the marketplace — both societally and legislatively — forces us to,” he said. Looking toward the future, the panelists agreed that there are several effective strategies retailers can embrace. They recommend capitalizing on manufacturer loyalty programs, utilizing social media, and exploring new product areas — notably, accessories in the tobacco space. For Jeff Borysiewicz, president of Corona Cigar Co., strategy has meant staying ahead of the curve and knowing the company’s customers. In the end, the cigar and spirits bar retailer “started changing the recipe for the cigar experience,” he explained. At Smoker Friendly International, the retailer began focusing on luxury, ultra-premium cigarettes and natural brands a few years ago, Gallagher pointed out. In the past two years, the company has seen its cigarettes segment grow 20 percent on account of these moves. “You have to have your associates engaged, Along with traditional tobacco products, the show floor also spotlighted the latest releases in cannabis accessories, vapor, hookah and more.

30 Convenience Store News C S N E W S . c o m

which takes education,” added Darren Collett, president of Collett Enterprises Inc. A key team tactic, he said, is implementing incentives at the point-of-sale for associates.

An Unconventional Convention As the sign outside the Las Vegas Convention Center’s South Hall read, TPE 2018 was an “unconventional convention.” This year’s event offered the latest releases in growing alternative categories, like cannabis accessories, vapor and hookah. Solace Vapor was just one example of multiple products on the expo floor that use nicotine salts, which essentially recreate nicotine as it exists in tobacco leaves. As the company explained, its vapor product is similar to a combustible cigarette, but without the additives. Designed for smaller open systems, Solace Vapor is available in two nicotine levels and several flavors, including Peppermint Patty, Strawberry Candy and Mint. Another TPE exhibitor Inhale Health takes a different approach to vapor products, one that delivers nutrients instead of nicotine. Come this spring, Inhale Health products will be available in Kroger’s c-store banners, as well as Maverik stores. They are currently in approximately 50 7-Eleven franchisee locations, according to founder and CEO Daniel Shapiro. On the market for six months, the company’s best-selling product contains melatonin for sleep. TPE 2018 also showcased offerings in the cannabis segment. Cannabidiol, known as CBD, is a hemp-derived product. Isodiol, an exhibitor at the show, manufactures and develops raw ingredients and consumer products derived from hemp. On display at TPE were its vapor and lifestyle brands. The four-year-old company has a sport brand coming out this year. CSN

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1. Seagram’s Escapes 2. Doritos Blaze 3. Dr Pepper 4. Hydrive Spiked Calypso Cotton Candy Energy Water New from Frito-Lay’s Doritos brand, Doritos Blaze Taste of Nature is expanding Hydrive Energy Water is Colada The Seagram’s Escapes Spiked line has a new variety: Calypso Colada. The new flavor is now available nationwide in 23.5-ounce single-serve cans for a suggested retail price of $2.50 to $2.99. Seagram’s Escapes Spiked launched late last year with two varieties: Jamaican Me Happy and Strawberry Daiquiri. The higher ABV Spiked line of Seagram’s Escapes premium malt beverages offers the same delicious, “fruit forward” flavor that Seagram’s Escapes is known for, but with an 8 percent ABV, according to the maker.

are flavored tortilla chips that deliver a complex flavor and heat that builds as you crunch. Doritos Blaze come in purple packaging with flames and thermograph handprints. The new variety joins the ranks of red Nacho Cheese Doritos and blue Cool Ranch Doritos on store shelves nationwide. Doritos Blaze are available in multiserve 9.75-ounce bags for a suggested retail price of $4.29 and 3-ounce bags for a suggested price of $1.69. Frito-Lay Plano, Texas (800) 352-4477 fritolay.com

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its cotton candy offering through a license agreement with Dr Pepper Snapple Group. The new Dr Pepper Cotton Candy delivers a unique taste sensation that is a favorite in today’s beverage marketplace, according to the company. The product comes in both 1.5-ounce and 3.1-ounce mylar bags. Merchandising vehicles include PDQ trays, pallet programs, floor shippers and clip strips. Taste of Nature St. Markham, Ontario (866) 742-6349 info@tasteofnature.ca tasteofnature.ca

adding two new flavors to its line that provides consumers with the hydration benefits of water with the added function of energy from B vitamins and caffeine. Along with a new Kiwi Melon variety, Hydrive is introducing a calorie-free version of Grape Fusion, a fan-favorite in its full-calorie line. All Hydrive Energy Water beverages have zero calories, 160 milligrams of caffeine, and 35 percent daily value of vitamins. The suggested retail price is $1.89 to $2.29 per bottle. Hydrive Energy Water Austin, Texas (512) 501-3890 hydriveenergy.com

5. PIXL Closed-Loop Vapor System PIXL is a new closed-loop vapor system from EZ CIG, manufacturer of premium vapor products. Powered by proprietary technology, PIXL redefines “Vapor Made Easy” with a top-level experience that provides a consistent nicotine level and outstanding vapor performance, according to the maker. The device features an ergonomic design, clean packaging and smart technology. PIXL uses a proprietary formula of NicSalt e-liquid, an exclusive blend of nicotine derived from natural leaf tobacco. The closedloop PIXLpods use a magnetic contact and are available in four flavors: Tobacco, Fresh, Glaze and Breeze. The PIXL Starter Kit includes a battery, one tobacco-flavor PIXLpod and a USB charger. The kit retails for a suggested price of $34.99, while each PIXLpod four-pack has a suggested retail price of $15.99. Phillips & King International Moore Park, Calif. (800) 532-4427 phillipsandking.com 32 Convenience Store News C S N E W S . c o m

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Putting the Spice in C-store Retailing The Patel family continues to embrace its independence despite growing its store count By Danielle Romano WHEN CONVENIENCE STORE NEWS FOR THE SINGLE STORE OWNER profiled Value & Variety

for its April 2012 cover story, co-owner Kulin Patel and his family had been in convenience retailing for only five short years. They had become single-store owners in July 2007 after acquiring a large Shellbranded gas station with 13 fuel pumps and a 4,000-square-foot convenience store in Clarksville, Tenn. It wasn’t long that the family realized the disadvantages of being a single-store operator when you’re on the playing field with larger chains. For starters, Value & Variety had to compete with other retailers who were selling in-store items at the price they had paid vendors for them. Then, there was the general lack of resources, lack of access to better pricing on fuel, and lack of support from larger suppliers that prefer to only work with the big c-store chains.

The Patel family, led by brothers Kulin and Kunal Patel, has grown from a single-store owner to operator of six Value & Variety convenience stores.

Another five years and five more convenience stores later, Patel attests that this seemingly exhaustive list of hitches is what Value & Variety continues to struggle with today. “The challenges that existed then are still existent,” he told CSNews in a special

follow-up interview. “We do not have deep pockets for advertising, investments in technology, design and planning tools. Some regulations from the government also prevent free expansion of business. For example, we cannot purchase beer from breweries out of state that do not have a distribution network in Tennessee.” For the past decade, the Patel family has tackled these challenges head-on by embracing the uniqueness that comes with being an independent player in the convenience channel. According to the co-owner, this includes the freedom and capability to create a niche that differentiates it from the large c-store competitors, who he says are a dime a dozen in the channel. “Our company works on the mantra of ‘embracing your independence.’ We are happily and luckily taking full advantage of being small and independent,” Patel expressed.

Setting Itself Apart Value & Variety is not just the name of the family’s six stores; it is also a distinctive range of products offered by the retailer. The Value & Variety product concept debuted with the family’s third store in Clarksville, which opened in July 2011. Calling the stores by this name says a lot about the company’s mission, according to Patel. “As simple as it sounds, it explains our company in totality. We offer a variety of products at value prices. Period,” he said. “We want our customers to find an exciting place, instead of a boring stereotypical neighborhood convenience store. “We describe our stores as ‘convenience stores with a spice of variety,’” he continued. “Our mission is to make available a range of exciting products at value pricing.” Beyond selling the items traditionally found in a c-store, regardless of size, Value & Variety has uniquely positioned itself with specialty items like craft sodas and craft beers. Conceptually, each Value & Variety store is designed so that when a customer walks in, the first thing they see is the vast selection of handcrafted sodas, purchased

34 Convenience Store News C S N E W S . c o m

your business LEGISLATION / REGULATIONS

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from almost every small and big brewer in the country and some from overseas. In addition, there’s a large range of craftbrewed and imported beers. On average, a Value & Variety store offers nearly 300 types of handcrafted sodas and 500-600 types of beer, with 20-30 on tap and sold by growler fills. “Although many stores have now caught up with the idea of draft beer to go, we remain pioneers and major players in this space,” Patel said. “Gourmet sodas are unique to Value & Variety — no one has the range of products in this category.” Value & Variety also prides itself on offering: • Specialty and imported novelty and nostalgic candy; • Hundreds of top-rated cigars; • Fast food like pizza, and fresh and cold sandwiches; • Staples like milk; • ATM and lottery; and • Clean public restrooms. Value & Variety continually adjusts its portfolio and adds new products to keep the “wow” factor, Patel noted, adding that being an independent gives them the opportunity to do so.

Three Value & Variety locations feature a drive-thru and two locations sell fuel.

Specialty candy and gourmet soda are two of Value & Variety’s competitive advantages.

feel on the inside. Initially, the company used a bold color combination recommended by its consultant but, over time, Patel said it has “perfected the aesthetic with trial and error.” He describes today’s interior design as “homey, casual and urban.” Decorative features include hanging mountain bikes, skateboards, wakeboards and guitars, finished off with multiple displays and custom signs. “Creativity is a part of everything we do. Our customers can easily tell that our stores are not controlled by the few big brands or names,” he emphasized.

Expanding Its Value “We have the flexibility of allocating space to new products as we please. [Not having] contracts with any major suppliers … saves us a lot of headaches and allows us to support and promote small brands and great products,” he explained. “We promote the small businesses like us, and the reciprocation we receive is very beneficial.” Even though Value & Variety adheres to the exterior aesthetics recommended by Shell, Exxon, etc., taking on a typical convenience store appearance outside, customers are welcomed by a boutique-like look and

36 Convenience Store News C S N E W S . c o m

If Patel and his family have learned anything over the past decade, it’s that investing in your business is inevitable, regardless of time or capital. That is why Value & Variety has been investing more and more into existing locations and growing vertically where possible. As part of its growth strategy, the company plans to open two new locations in 2018. It also recently acquired its first 10,000-square-foot store. Aptly named Value & Variety Fine Wines and Spirits, the store will sell liquor, wine, beer, sodas, cigars, and specialty cheeses and candy. “The entire convenience industry is evolving, or rather transforming rapidly, and whereas most operators are

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focusing on food, we are betting it all on the shopping experience and gourmet taste,” Patel explained. “Being a small company, growing with other small businesses like ours, has given us the leverage and confidence to not only survive, but to thrive.

Some customers refer to Value & Variety as “the store with the greatest beer selection,” while others call it “the store with the weird sodas,” according to Patel.

“Now, we wish to empower many other small operators like us fighting the might of the giants,” he added, sharing that the company is considering franchising Value & Variety. Moving forward, though, doesn’t come without reflection. When asked what he wishes he had known when he and his family first started out in 2007, Patel said it would be that financial leveraging or optimum utilization of resources is required for growth. He also

Value & Variety stores offer 500 to 600 types of packaged beer, on average.

wishes they were more involved in social media marketing and other customer engagement ideas, like loyalty programs. Value & Variety is in the process of rolling out these concepts, but Patel wishes they had perfected them by now. His advice for small operators who are just starting out is this: “Everyone has a budget, but when you start a venture with half the resources your competitors have, you are inviting hardships and compromises. One should never be skeptical of building something unique, and special customers will appreciate it and the returns will be seen. Perseverance will pay. Always keep additional resources at hand to enable you to compete and upgrade.” CSN

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COVER STORY

THE DISAPPEARING MIDDLE

Several midsize chains are gobbled up by this yearâ&#x20AC;&#x2122;s Top 20 Growth Chains A Convenience Store News Staff Report

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HOLIDAY STATIONSTORES, WESTERN REFINING, ROADRUNNER MARKETS, PDQ FOOD STORES, JETPEP, HONEY FARMS, FLYERS ENERGY, MAD MAX, PIC QUIK, JIFFY STOP, SAV-O-MAT, WES-T-GO.

These are just some of the midsize convenience store chains that were sold and acquired in the past year, gobbled up by the 2018 Convenience Store News Top 20 Growth Chains. Led by Alimentation Couche-Tard Inc. — which alone grew its U.S. store count by 23.4 percent between January 2017 and January 2018 by adding 1,253 net new stores — this year’s top growth chains combined added 2,573 stores, equating to an 11.5-percent increase. What’s more, they added nearly 1,200 more stores year over year than 2017’s top growers. The 2017 Top 20 Growth Chains added 1,396 stores combined, equating to a 5.9-percent increase. “Consolidate, then fragment. Consolidate, then fragment again. It seems like it’s been going on for many years,” Jeff Miller, president of Norfolk, Va.-based Miller Oil Co., said in reference to the past 40 years of mergers, acquisitions and breakups in the convenience store industry. Lately, interest rates for buyers have been so low and EBITDA multiples (earnings before interest, taxes, depreciation and amortization) for sellers have been so high that a midsize retailer who’s even thinking of selling, or has no family succession plan, is greatly tempted to sell, according to Miller, who himself is a midsize retailer, operating 20 c-stores in Virginia. “One thing that’s changed from the past is that technology has advanced to the point where an acquirer can scale up pretty efficiently. In the past, it was much more difficult to absorb large groups of stores because of all the infrastructure changes they’d have to make,” he added. With many midsize convenience store chains being private, family-owned and operated businesses, Dennis Ruben, executive managing director of NRC Realty & Capital Advisors LLC, also sees succession planning, or rather lack thereof, contributing to the disappearing middle. “We’ve seen a lot of instances with these companies where the guy who started

MAR

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Convenience Store News

COVER STORY

NO. 1 ALIMENTATION COUCHE-TARD INC. Tempe, Ariz. (U.S. headquarters) 2018 Store Count: 6,597 2017 Store Count: 5,344 Increase: 1,253 (23.4%)

About the company’s growth: Alimentation Couche-Tard had a big year in 2017, adding more than 1,200 stores through three key acquisitions. In June, the retailer completed a $4.4-billion purchase deal for CST Brands Inc., the San Antonio-based parent company of Corner Store. CoucheTard closed out the year by tying up its purchase of Holiday Stationstores, a chain of 522 Midwest convenience stores. Both transactions required some divestures as part of their regulatory approvals. In between, Circle K Stores Inc., a subsidiary of Couche-Tard, acquired 18 retail sites, a fuel terminal and associated trucking equipment from Alabamabased Jet-Pep for an undisclosed amount. NO. 2 ANDEAVOR CORP. San Antonio 2018 Store Count: 815 2017 Store Count: 277 Increase: 538 (194.2%)

About the company’s growth: Formerly known as Tesoro Corp., Andeavor saw most of its growth in the past year come from a June 1 acquisition of El Paso, Texas-based Western Refining Inc. — last year’s No. 1 growth chain. The $4.1-billion deal made

Andeavor a 3,000-station company and on the convenience store side, gave it locations in Arizona, Colorado, Minnesota, New Mexico, Texas and Wisconsin, operating primarily under the Giant, Howdy’s and SuperAmerica brands. Before the summer was over, Andeavor also purchased and added the 39 c-stores and gas stations of Auburn, Calif.-based Flyers Energy to its portfolio. NO. 3 GPM INVESTMENTS LLC Richmond, Va. 2018 Store Count: 933 2017 Store Count: 849 Increase: 84 (9.9%)

About the company’s growth: GPM Investments has been on a shopping spree for several years, and 2017 was no different. In the spring, the retailer began operating 92 Roadrunner Markets in North Carolina, South Carolina, Virginia and Tennessee. GPM acquired these stores from Johnson City, Tenn.-based Mountain Empire Oil Co. The company then grew in Missouri with the addition of seven stores from Jiffy Stop Food Mart, based in Lake of the Ozarks. Looking ahead, GPM is already poised to appear on next year’s Top 20 Growth Chains ranking as the company is in the process of acquiring 273 stores from Texarkana, Texas-based E-Z Mart Stores Inc. This move will expand its footprint into the Southwest. NO. 4 KWIK TRIP INC. La Crosse, Wis. 2018 Store Count: 607 2017 Store Count: 525 Increase: 82 (15.6%)

and is running the business wants to retire and there’s nobody to run it. So, a lot of times, [these businesses] are selling just because they have no one to take them over,” Ruben explained. He also believes midsize retailers are selling — or, in other cases, buying other midsize retailers — because of the increasing difficulty of competing in a marketplace with a lot of bigger players. Going up against the Circle Ks and 7-Elevens of the industry is especially challenging on account of their greater buying power and lower overhead costs. “I think a lot of them have figured out that they need to grow or they need to get out,” Ruben said of those convenience channel players currently sandwiched in the middle. To stay competitive, smaller operators must invest in larger-format stores, but may be limited by property size, financial constraints, overall scale, and continuous competitive pressure, noted Mark Radosevich, president of PetroActive Real Estate Services LLC. “The overall timing is right for a strategic exit, and many have finally realized that there is life after the c-store business,” Radosevich said. “Purchase multiples continue to hold at historic levels. The large guys have an insatiable desire to grow and can finance said growth through sale-leaseback and debt financing. New international players continue to enter and explore the viability of the U.S. c-store business.” Other factors contributing to the exodus of the middle men, according to John Schaninger, marketing guru and owner of The Schaninger Group LLC, are: • Channel-blurring, with convenience products now available in many outlets; • Escalating wage costs; • Uncertainty around the fuel needs of the future; and • A decline in fuel and c-store trips being caused by remote working, online ordering and delivery services. Given the staying power of these factors, and the continuing desire among convenience channel growers to expand their brands and efficiencies, Schaninger — a former top marketing executive for New Jersey-based QuickChek Corp. — expects the trend of small and midsize chains being acquired to continue for the foreseeable future. In fact, the acquisition of midsize chains is so appealing to the market right now that some smaller retailers are growing just to become a midsize chain and go up for sale. “I am presently representing a private equity group that is consolidating small chains of stores, from five to 50 stores in size, in hopes of getting to the 200-plus-store size. When I asked them why they wanted to be a 200-store chain, they said it makes them an easier acquisition target by a larger chain,” Terry Monroe, a professional mergers and

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acquisitions expert in the convenience store and petroleum properties industry, shared with CSNews. About the company’s growth: A mix of acquisitions and organic growth landed Kwik Trip at No. 4 on this year’s ranking. In early October, the retailer took ownership of the PDQ Food Stores chain in Middleton, Wis., with 34 c-stores across the state. In addition, new stores under construction in 2017 totaled 56, including 36 in its home state. Kwik Trip is now undertaking a $300-million capital investment project to meet the needs of the growing company. NO. 5 CASEY’S GENERAL STORES INC. Ankeny, Iowa 2018 Store Count: 2,020 2017 Store Count: 1,947 Increase: 73 (3.7%)

About the company’s growth: Casey’s opened its second distribution center, in Indiana, in 2016 with a goal to expand its reach into new markets and accommodate further growth. The retailer made progress on that goal throughout 2017. The publicly traded company had 47 new stores, 27 replacement stores and 16 major remodels under construction as of September, and celebrated the milestone of its 2,000th store opening in November. NO. 6 CROSSAMERICA PARTNERS LP Allentown, Pa. 2018 Store Count: 133 2017 Store Count: 76 Increase: 57 (75%)

About the company’s growth: CrossAmerica made its way into this year’s Top 20 Growth Chains with a late-in-

the-year acquisition of assets from Holly Pond, Ala.-based Jet-Pep for $72 million, plus working capital and closing costs. The purchase consisted of 101 commission-operated retail sites. CrossAmerica Partners’ general partner, CrossAmerica GP LLC, is indirectly owned and controlled by Alimentation Couche-Tard Inc. NO. 7 YESWAY Des Moines, Iowa 2018 Store Count: 77 2017 Store Count: 31 Increase: 46 (148.4%)

About the company’s growth: Yesway is appearing for the first time on the Top 20 Growth Chains ranking. The operating banner of BW Gas & Convenience took several steps in the past 12 months to boost its footprint, including the acquisitions of Kansasbased KAPS LLC, a fivestore chain; 35 Wes-T-Go and Chillerz Convenience Stores in Texas; five Pic Quik stores in Kansas; and the New Deal Travel Center in Texas. BW has publicly stated its plans to acquire, improve and rebrand approximately 500 convenience stores in selected regions of the U.S. over the next several years.

Meanwhile, on the buyers’ side, in addition to low interest rates and low cost of capital, the timing is right to acquire midsize retailers because of the economies of scale gained in both store operations and the purchasing of fuel; the trend in the market to diversify income given changes in the fuels landscape; and the fact that it takes almost the same amount of work to buy a large package of stores as it does a small package of stores, explained John C. Flippen Jr., a managing director of Petroleum Capital & Real Estate LLC (PetroCapRE).

What’s a Midsize Retailer to Do? Although the past year saw the disappearance of multiple midsize chains in the convenience store industry, many remain. This beckons the question: What’s a midsize retailer to do? Step one is to have a professional assessment (network rationalization process) done on the chain and each site within the chain, including facility, financial, operational and competitive considerations, says Radosevich of PetroActive Real Estate Services. This should result in a strategic plan that illustrates various actions, such as a sale, investment or divestment. “You need to know where you are (current state) before you know where you are going (desired state), and most small to midsize operators don’t really have a clue,” he stated. PetroCapRE’s Flippen agrees that operators need to take stock of their current situation. He suggests they consider the following questions: Who are my current competitors? Do I have a strategic advantage? How can I increase that advantage? What is my long-term strategy for the business? How do I increase my competitive advantage through growth? “If your competitive advantage is eroding away, then you should look to sell,” said Flippen. Monroe advises those without any succession plan to sell for the retirement cash, but he thinks those that do have

NO. 8 STINKER STORES Boise, Idaho 2018 Store Count: 106 2017 Store Count: 64 Increase: 42 (65.6%)

About the company’s growth: Stinker Stores kicked off 2017 with the purchase of Bradley Petroleum Inc. and Sav-O-Mat Inc. in February. This deal

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gave the retailer 40 convenience stores in Colorado and one location in Wyoming. Founded in 1936 with one service station in Twin Falls, Idaho, Stinker Stores today employs more than 500 people and its holdings include a mix of convenience stores and truck stops, mainly in its home state. NO. 9 SUNOCO LP Dallas 2018 Store Count: 2,285 2017 Store Count: 2,244 Increase: 41 (1.8%)

About the company’s growth: After completing $335 million in merger and acquisition activity in 2016, which added 38 companyoperated locations and more than 300 million gallons of fuel annually, Sunoco had a mixed 2017. The partnership worked on a project to rebuild and outfit locations along the Indiana Toll Road, expanding its network of locations westward. But, also during the year, Sunoco struck a deal with 7-Eleven Inc. to sell more than 1,000 of its c-stores for $3.3 billion, marking the start of its exit from the retail scene. NO. 10 EXXON MOBIL CORP. Irving, Texas 2018 Store Count: 3,404 2017 Store Count: 3,365 Increase: 39 (1.2%)

About the company’s growth: In addition to inching its store count higher in the United States last year, Exxon Mobil set forth plans to move south of the border into Mexico’s fuels market with the opening of eight Mobil-branded stations and a new signature

line of advanced Synergy gasoline and diesel fuels. The corporation intends to open more than 50 Mobil stations in Mexico during the first quarter of 2018.

a solid succession plan and an ability to keep the business growing should do so. And for those in the latter camp, he has two key pieces of advice. “They should constantly be culling through their list of stores and selling or leasing the weak stores that do not have a lot of upside to them, and taking the money and investing it in making their good stores great,” he said as his first recommendation. “Don’t hang onto stores that are underperforming, but instead build on the good stores.”

NO. 11 WAWA INC. Media, Pa. 2018 Store Count: 791 2017 Store Count: 753 Increase: 38 (5%)

About the company’s growth: Wawa jumped seven spots in this year’s ranking. The retailer’s portfolio increase was driven by organic growth, particularly the opening of its first stores in northeast Florida. Wawa expects to open six northeast Florida stores in 2018 and three to five annually for the following several years, eventually reaching 25. This past year also saw Wawa enter Washington, D.C., with its first store in the nation’s capital opening in midDecember. The D.C. store is the chain’s largest to date at 9,200 square feet. NO. 12 REID PETROLEUM Lockport, N.Y. 2018 Store Count: 87 2017 Store Count: 50 Increase: 37 (74%)

About the company’s growth: After years in the fuels business, Reid Petroleum entered the convenience store arena in 2002 and has since steadily grown its footprint in southwest New York and northwest Pennsylvania under the Crosby’s retail banner. The company expanded further in 2017 with the acquisition of Arrow Mart stores and Yellow Goose Markets from MWS Enterprises Inc. These new additions are located in New York.

His second recommendation: Keep growing by building or acquiring additional stores. “The convenience store business is a great business and is going to be around for a long time. And if you have a good location, you are going to have a profitable business for a long time, but you have to grow,” he said. “Too many times, I see the family getting bigger and more people trying to live out of a certain number of stores without building or acquiring additional stores. The cash flow starts to get tight and before long, they have themselves in a jam.”

“You have to have zero tolerance for inefficiencies and high costs or you won’t make it. You really have to be a great operator.” — Jeff Miller, Miller Oil Co.

Van Tarver, president of the Van Tarver Group and chairman of GreenPrint Corp., advises midsize operators — and really c-store operators of all sizes — to take a hard look at what their goals are; what do they want to accomplish? Then, secondly, he says they should ask: What is the value to me of selling? What is the value to me of acquiring stores? The industry as a whole also needs to address the problem of “secondary locations,” Tarver said, which he describes as small properties that don’t have the space available to make the improvements necessary to succeed in today’s convenience retailing industry, where competition is getting better and the consumer is getting more and expecting more. “There’s secondary locations in the big companies, midsize companies, and small companies,” the former CEO of The Kroger Co.’s c-store division said. “You have to ask: Am I going to relocate, reposition or dispose of these sites?” After addressing secondary locations, Tarver said another crucial piece of the puzzle is to make sure your business model is keeping pace with today’s customers, and change it if it doesn’t. “Build around product, programs and infrastructure based on customer data,” he stated. He foresees the following business model changes increasing in the industry: home delivery, click-and-collect, scan-bag-go

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programs, meal kits, and services like lockers. NO. 13 GLOBAL PARTNERS LP/ ALLIANCE ENERGY LLC Waltham, Mass. 2018 Store Count: 241 2017 Store Count: 205 Increase: 36 (17.6%)

About the company’s growth: Global Partners and Alliance Energy have been strategically growing over the past two years, shedding non-core assets while expanding in key geographies. Its boost in 2017 came largely from an October acquisition of Honey Farms for approximately $36 million. The deal comprised 11 company-operated retail sites with fuel and convenience stores, and 22 standalone c-stores. The combined portfolio of Global Partners and Alliance Energy includes company-operated, dealer-leased and commissioned-agent sites. NO. 14 LOVE’S TRAVEL STOPS & COUNTRY STORES INC. Oklahoma City 2018 Store Count: 452 2017 Store Count: 416 Increase: 36 (8.7%)

About the company’s growth: Love’s said 2017 was going to be a busy year and it was true to its word. The company opened 36 new locations — all ground-up new builds — including eight in the month of December alone. The expansion brought Love’s into Montana for the first time, marking its 41st state of operation. With these new locations, Love’s also added approximately 2,600 new truck parking spaces and 190 more showers to the nation’s interstates and highways.

NO. 15 MURPHY USA INC. El Dorado, Ark. 2018 Store Count: 290 2017 Store Count: 255 Increase: 35 (13.7%)

About the company’s growth: Murphy USA prefers to take the organic path to growth. In 2017, the company was not only occupied with opening new Murphy Express convenience stores, but also razing and rebuilding existing locations to fit its new business model. The retailer has been proceeding with its Independent Growth Plan since early 2016 when it was announced that Murphy USA would no longer purchase land from Walmart, but instead source new sites from third parties to build new Murphy Express stores. NO. 16 ENMARKET STATIONS INC. Savannah, Ga. 2018 Store Count: 96 2017 Store Count: 62 Increase: 34 (54.8%)

About the company’s growth: Enmarket took ownership of 35 Clyde’s Market convenience stores in southeast Georgia at the end of 2017. With the close of this acquisition, the chain’s footprint jumped to just four stores shy of 100 locations across Georgia, North Carolina and South Carolina. Formerly known as Enmark, the company opened its first two stores branded as enmarket in 2015 and has been continuing the rebranding process since. NO. 17 MARATHON PETROLEUM CORP. Findlay, Ohio 2018 Store Count: 4,401

“Be very disciplined about your investment of capital. Invest in programs that deliver the best returns. Don’t get emotionally attached to programs that are not performing,” Tarver stressed. “You need to be where the customer is going, and they’re changing faster than ever. … And remember, some midsize chains have the best programs in this industry.” Midsize operators will continue to survive as long as they remember to take care of their customers, develop a personal relationship with them, and become a key part of the local community, according to Miller. They can also continue to grow if they are very strategic. “It’s hard to compete with the huge consolidators with what they are willing to pay, but you can go where they ain’t,” he said.

The Future C-store Landscape Most of the industry insiders CSNews spoke to for this article believe the convenience channel will see continuing consolidation in the years ahead, with more midsize retailers disappearing from the landscape and possibly some of the larger chains merging. Monroe points to demographics. “There are 77 million baby boomers in the U.S. and they are getting older and tired. A lot of them do not have a succession plan for someone in their family to take the business over, so they are wanting to sell their business and use the proceeds from the sale to retire on,” he said as to why he sees the midsize consolidation trend continuing. As long as the acquirers keep getting the returns on their invested capital, consolidation will continue, Tarver agrees. “Given the strong performance of our industry year after year, it sets the table for people to say either we need to be in this or we need to be further in this,” he said. Tarver also wonders if the oil companies are poised to make a return to company-operated stores. He cites Andeavor Corp. (formerly Tesoro), this year’s No. 2 top growth chain behind Couche-Tard, which recently got back into company ops through acquisitions. In the past year, Andeavor increased its store count by a whopping 194 percent, adding 538 net new stores. “I’m wondering if some of the major oil companies are standing back right now and saying, ‘Gee, did we make a mistake?” Tarver said. “They have tons of cash.” NRC’s Ruben not only expects to see more buying and selling of c-stores in the months and years to come, but he also expects to see companies rethink some of the acquisitions they’ve already made. “I’ve been getting some phone calls from people wanting to basically optimize their portfolio by selling stores that either aren’t profitable or aren’t in good locations, or maybe are duplicative of a store across the street,” he said. “…I think you’re going to see people try to shed stores that don’t make sense over the next couple of years.”

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2017 Store Count: 4,369 Increase: 32 (0.7%)

About the company’s growth: Marathon Petroleum operates stores under several names, including Marathon and Rich Oil, but its most notable retail network is Enon, Ohio-based Speedway LLC. The company had explored selling Speedway in 2017, but ultimately decided to keep the retail midstream segment as a focus. This year, Marathon expects to invest $530 million in Speedway, a $150-million increase from the previous year’s plan. This investment boost is reflective of Marathon’s renewed commitment to aggressively grow the Speedway business and build up an industry-leading position. NO. 18 QUIKTRIP CORP. Tulsa, Okla. 2018 Store Count: 775 2017 Store Count: 745 Increase: 29 (3.9%)

About the company’s growth: QuikTrip continued its steady growth in 2017, boosting its footprint by 29 stores, up from 20 stores in the year prior. One key area of in-store growth for the chain is its QT Kitchens foodservice concept. Plans are in the works for a new 250,000-square-foot manufacturing and distribution facility in north Tulsa to accommodate QT Kitchens growth. QuikTrip will also expand this year into more Texas markets, with the first of roughly 100 stores opening in the

San Antonio and Austin regions this summer. NO. 19 SHEETZ INC. Altoona, Pa. 2018 Store Count: 565 2017 Store Count: 544 Increase: 21 (3.9%)

About the company’s growth: Sheetz marched along an organic growth path in 2017, opening 21 stores across its six-state footprint. That number included its sixth location in State College, Pa., close to its Altoona headquarters. Also in its home state of Pennsylvania, Sheetz spent 2017 adding beer caves to several stores, taking advantage of the change in the state’s liquor laws. NO. 20 MAVERIK INC. Salt Lake City 2018 Store Count: 312 2017 Store Count: 292 Increase: 20 (6.8%)

About the company’s growth: 2017 proved to be a banner year for Maverik, which opened its 300th convenience store. Located in Spokane, Wash., the nearly 5,000-square-foot store is one of the company’s “adventure stores,” a concept Maverik is using for new builds. The retailer’s current growth schedule calls for opening 25 to 30 new locations each year, and to continue remodeling locations that still have its old store format. At its current growth rate, Maverik expects to reach the 400-store mark in the next four to five years.

Radosevich agrees. He, too, expects many sites to come back on the market “as some store aggregators choke on subpar sites (within packages) that can’t [generate] cash flow enough to support rents or mortgage payments. This will be exacerbated when/if large unbranded operators arrive to eat their lunch, or if retailers like national dollar store chains embrace fuel, thereby putting innumerable (currently viable) rural sites in jeopardy.” With interest rates already creeping up, Miller thinks the industry will eventually settle down to another “calm” period for mergers and acquisitions. He also points out, “Eventually, the consolidators will realize they have to actually operate these stores they are buying.” The convenience store industry is very strong. It’s also very competitive, and there’s little room for just average operators, Miller added. “You have to have zero tolerance for inefficien-

THE MAKINGS OF A NO. 1 TOP GROWTH CHAIN Industry insiders say Alimentation Couche-Tard is just plain good at acquisitions Alimentation Couche-Tard Inc. is no stranger to the annual Convenience Store News Top 20 Growth Chains ranking. In the seven years that this report has been published, the Circle K operator has earned a spot on the list six times — and each time, within the top six. Couche-Tard is also no stranger to finding itself at No. 1 on the ranking, as it does again this year. The first time was in 2016, when it acquired The Pantry Inc. and added 1,510 net new stores, growing its U.S. footprint by 39.4 percent. This past year, it acquired CST Brands Inc. and added 1,253 net new stores, growing its U.S. store count by 23.4 percent. The way mergers and acquisitions expert Terry Monroe sees it, Couche-Tard will end up as the largest convenience store chain in the country before long. “They will eventually be the McDonald’s of the convenience store business because of their business model,” he said of the now roughly 6,600-store operator. “They will become the national brand for convenience stores.” Monroe commends Laval, Quebec-based Couche-Tard for being a good acquirer of stores, with a business model that makes things easy for the seller. “Let’s say that Couche-Tard was buying a 500-store chain. Chances are about a third of the stores they are intending to acquire do not fit the corporate business model, but they have a dealer program whereby the stores that may not fit the corporate business will fit the dealer model.

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cies and high costs or you won’t make it. You really have to be a great operator.” He can also foresee the future of the c-store industry perhaps including a further bifurcation of the industry’s store formats between large, high-volume operators with 8,000- to 10,000-square-foot stores and smaller, more convenient neighborhood outlets that are easier and quicker for consumers to get in, buy what they want, and get out. “Sometimes, smaller is better,” Miller noted. While it is an increasingly difficult time

Therefore, Couche-Tard will keep two-thirds of the stores as corporate and company-owned stores and the rest will be sold or leased to dealers who will carry the Circle K brand and contribute to the profitability of the parent company,” Monroe explained. “Everyone wins — the seller, the buyer and the dealers.” Couche-Tard’s size, access to capital and adeptness at assimilating assets into the company make the retailer a formidable consolidator and “just a very good operator,” according to Dennis Ruben, executive managing director of NRC Realty & Capital Advisors LLC. “They’re just very efficient in how they operate their acquisitions. Part of what they’re able to do is eliminate of lot of their corporate overhead because as they grow, their overhead per store keeps going down. So then, they’ve been able to pay more,” he explained. “And the larger the company, the more buying power they’re going to have with suppliers and other vendors.” Petroleum Capital & Real Estate LLC Managing Director John C. Flippen Jr. similarly points to Couche-Tard’s economies of scale in both operations and cost of capital. “If you can save more than the

for some, Schaninger sees “tremendous” promise for the future, and said there are four knowns to remember when it comes to convenience: • We deliver convenience better than anyone. • We can’t win on price or promotions alone. • The key for product sales is to deliver the ultimate value equation for your target consumer. • A strong strategy, process and execution to drive customer loyalty wins every time. CSN

next competitor, you can pay more than your competitor,” he stated. “One of the first things we typically advise our clients on when bidding on a package of assets is that it is not about the current business EBITDA, but the projected EBITDA that your company can produce. If the acquiring company is able to cut overhead, increase inside sales/margins and increase fuel margins, they will produce a higher EBITDA,” Flippen continued. “And if you combine those advantages with both traditional and non-traditional financing, that is how you win these bids.” But what impact is Couche-Tard’s continued growth having on the c-store industry at large? Flippen believes the retailer is motivating other players to speed up the industry’s consolidation due to concerns about “missing out,” while Ruben foresees Couche-Tard’s growth leading to fewer players bidding and buying c-store companies — and then falling prices. “The more big players that they or somebody else buys, the fewer bidders there are going to be for some of these deals, which probably means it’s going to maybe drive prices down a little bit,” Ruben pointed out.

Methodology The Convenience Store News Top 20 Growth Chains report is based on store count figures provided by TDLinx, a service of Nielsen. This is the seventh year that CSNews has partnered with TDLinx to identify the c-store retailers that added the most convenience stores in the past year. A convenience store is defined as a store that includes a broad merchandising mix, extended hours of operation and a minimum of 500 SKUs. Fueling stations with small kiosk stores do not meet the official definition and thus are not reflected in TDLinx’s store count figures.

For now, Mark Radosevich, president of PetroActive Real Estate Services LLC, says Couche-Tard is keeping the multiples high for quality, high-performing facilities. However, he questions if all of the assets Couche-Tard is buying can withstand the test of time. He believes the likelihood is high that the retailer will have to divest many underperforming sites. Aside from its booming store count and geographic reach, CoucheTard’s strength also lies in the pricing pressure at the pump it is able to exert on competing retailers, and its investment in fresh, said David Bishop, managing partner of sales and marketing firm Balvor LLC. Couche-Tard’s fuel rewards program additionally offers consumers significant savings in the price per gallon they pay, which in turn drives more customers onto its store lots. At the same time, by investing in fresh with its new hot dispensed beverage and bakery programs, Couche-Tard is improving in-store traffic and margins, according to Bishop. “The combination of these two factors, along with the fact that they have a strong private label cigarette program, makes [Couche-Tard] a formidable competitor for most,” he said.

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Driven by Data Twelve suppliers are named 2018 Category Captains for helping retailers achieve excellence By Susan Durtschi, Past Times Marketing IT’S ALL ABOUT THE DATA.

At least that seems to be a key component of this year’s winners in the Convenience Store News Category Captains awards program. The power of data is everything — it bolsters convenience stores’ capacity to personalize the customer experience, increase sales, and drive brand loyalty. Category Captains know a data-driven business achieves a sustainable competitive advantage and delivers greater value to c-store retailers in every way. This year’s Category Captains honorees are helping c-stores capture more than their share of consumers’ attention and dollars. The 12 suppliers recognized as 2018 CSNews Category Captains have earned convenience store retailers’ trust. Now in its fifth year, the CSNews Category Captains awards program honors outstanding category management initiatives implemented in the convenience channel over the past year. All entries were judged based on the following criteria: • Product innovation; • Creativity in merchandising, marketing, promotion and advertising; • Use of consumer insights to drive category sales;

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• Innovative and dynamic category management tools; • Demonstrated commitment to meeting the specific needs of retailer customers; • Efficiently lifting sales for the entire product category; and • Fact-based evidence of market-specific or accountspecific results. Past Times Marketing, a consumer research and product evaluation firm based in New York, once again judged the entries based on information supplied by participating companies. Several of this year’s winners are repeat honorees, like The Hershey Co. in candy, Swisher International Inc. in other tobacco products, Tyson Convenience in foodservice/ prepared food, Anheuser-Busch in beer/malt beverages, and The Coca-Cola Co. in packaged beverages. This year, Kellogg Co. won in the salty snacks category after being honored in edible grocery in 2017. New winners include Jack Link’s Protein Snacks in alternative snacks, McLane Co. Inc. in cigarettes, Land Mark Products Inc. in foodservice/grab-and-go, Eby-Brown Co. LLC in foodservice/hot dispensed beverages, S. Abraham & Sons Inc. in general merchandise, and Convenience Valet in health and beauty care. Here’s an in-depth look at this year’s winners:

ALTERNATIVE SNACKS: Jack Link’s Protein Snacks Jack Link’s has worked to establish itself as a trusted advisor in the world of snacking. Over the last 12 to 18

months, the organization rebuilt its Category Management and Insights Team from the ground up — building partnerships with key customers and thinking beyond the standard world of traditional salty snacks. The need to understand the “Total Snacking Universe” has become the new norm for this supplier. The organization invested in upgrading access to consumption data (Nielsen) across the entire center-store to gain access to more than 110 categories; purchased access to retailer data; and hired team members with a rich understanding of how to bring the information together into a compelling story. After the initial spending, Jack Link’s invested in a new Consumer Segmentation Model (Gongos) to capture the changing dynamics in total snacking and protein/meat snacking attitudes and behaviors. Additional investments were made in understanding how the consumer shops the protein snacks and meat snacks categories with the development of an updated Market Structure (IRI), reviewing more than 30 “protein snacking” categories. Consumer and shopper information together with an updated Kantar Shopper Genetics assortment and shelving analysis across channels and categories provided Jack Link’s with a rich understanding of the consumer. By combining consumer information with an updated Price Pack Architecture Study (IRI), Jack Link’s has helped key retailers drive sustainable growth in the meat snacks category and complementary/adjacent categories. The meat snacks maker continues to invest in developing relevant insights to inform merchandising and shelving strategies, and partnering with insight solution providers to develop strategies and solutions that win in the world of protein snacking.

within the convenience channel. The retailer plans to expand its sets beyond the current 3-foot endcap to an additional 3 feet of inline space in nearly 500 stores as a test throughout 2018. Kwik Trip Inc.: Jack Link’s worked with Kwik Trip to develop a five-brand strategy for its meat snack sets in 2017. In May, the c-store retailer reset to have only Urge (private label), Jack Link’s and Lorissa’s Kitchen (a brand extension of Jack Link’s) within its Bagged Goods set (jerky and sausages). Kwik Trip also reset its Count Goods set (sticks, steaks, pickled, combos and chew) to include only Slim Jim, Jack Link’s and Penrose. Kwik Trip also carries Wenzel’s meat snacks outside the main set at secondary locations throughout the store. As a result, Kwik Trip saw a 20-plus-percent increase in dollar sales compared to the same period one year ago driven by the pared-down brand strategy, especially in the bagged section.

BEER/MALT BEVERAGES: Anheuser-Busch Anheuser-Busch (A-B) serves as Category Captain at roughly 70 percent of the top 50 convenience store chains where captaincy is not shared among multiple brewers. Everything the A-B category team does is centered on supporting the shopper and retailer to solve both of their pain points and needs. The A-B Category Management Department’s mission statement is: “Create mutually profitable growth within and beyond beer as the most trusted partner by providing insight-led thought leadership to enhance the shopper experience.” Five key points drive A-B’s category leadership efforts:

Here are some results from specific convenience store chains: Speedway LLC: In late 2016, Jack Link’s was awarded captainship for the meat snacks category at Speedway. In 2017, the c-store retailer looked to the Jack Link’s team to identify market trends, growth opportunities, potential promotions, assortment optimization, and the potential of expanding beyond the primary set. Because meat snacks are a highly impulsive category, Speedway tested displaying Jack Link’s 1-ounce Beef Steaks at checkout during a promotion with candy. This resulted in a more than 300-percent unit lift and outsold all but one brand of the candies with which it was displayed. Due to the success of this promotion, Speedway repeated it again in 2017 and will run it twice this year. Utilizing data that shows the new Jack Link’s AM line is purchased in the morning with many common breakfast items like coffee and breakfast sandwiches, the Enon, Ohio-based retailer will test displaying Jack Link’s AM products on the coffee bar to increase morning basket dollar rings. The meat snacks category at Speedway is now outpacing national market trends and gaining additional market share

C-Store Explore Study: Anheuser-Busch built a CPG best-in-class “C-Store Explore” study in the second half of 2017 that allowed retailers to better understand their shopper and consumer for the alcohol category. It provided answers to the who, when, why, what and how questions that retailers ask suppliers, as well as recommendations around merchandising and store layouts. The study has become the foundational conversation on which a majority of strategies are based. Understanding who the shopper is and what their purchase behavior is likely to entail allows the retailer and vendor to increase their level of partnership to help best meet shopper needs. Custom Retailer Scorecards: Anheuser-Busch’s Category Management Department produces scorecards from internal retailer scan data. These reports identify trends and opportunity gaps, and give better visibility within the beer category that the retailer would not have, on a weekly basis.

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A-B currently produces custom scan data reports for MAPCO, RaceTrac, Cumberland Farms, Wawa, Dunne Manning, Tri-Star Energy/Twice Daily, Sprint Mart, Pilot Flying J, Sheetz, GPM Investments, Spinx and more. Brewbox 360: This is a revolutionary, next-generation category platform that inspires partnership through mobilizing data, streamlining store validations, and enhancing the overall experience of all participants of the reset process, including retailer corporate office, retailer store level, distributors and vendors. Brewbox 360 allows for up-to-theminute tracking of progression and monitoring across all retail sites no matter geographic location. Since launching in the second half of 2017, there are multiple retailers who have switched over from their current platform to Brewbox 360 for mobile validation. This tool allows the category management work that the retailer and A-B have partnered on to come to life at retail and ensure strategic plans come to fruition. Shopper Analysis & Promo Elasticity: Anheuser-Busch helps retailers identify their shopper and where else that shopper is shopping. This process allows A-B to identify gaps it can fill. With Brewbox 360 in place, here’s an example of one regional c-store chain’s results: buyer conversion increased 26 percent; share of wallet lifted 47 percent; total category growth increased 2.2 percent; off-premise case share was up 2.1 percent; retailer total category dollars rose 11.6 percent; and retailer case share of segment grew 8.9 percent. Zip Code & Store-Level Assortment: Anheuser-Busch works closely with its retailer partners to not only provide the right category recommendations by SKU level, but also to do it at the specific store level. Its hyperlocal assortment of tools allows for demographic information, geographic store location, and packages that will meet occasions that best correlate with the shopper trip, coupled with store archetypes (i.e., highway hub, store of the community, college store). Retailers are now able to provide SKU-by-SKU offerings that best meet the needs of the consumer store by store. A-B works closely on the days of supply by SKU with the retailer so no consumer leaves the store without their favorite beer.

CANDY: The Hershey Co. Hershey is at the forefront of studying data and implementing strategies to gain more sales in the convenience channel. As trips into c-stores

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continue to get more and more compressed, it is critical that retailers maximize every trip and basket, and there is no better category to do that with than the confection category. This category has one of the highest household penetration rates at 98.9 percent; delivers the highest gross margins amongst snacking categories at 49 percent; has the shortest purchase cycle; and is the No. 1 most unplanned category purchase of all snacking categories. However, confection category availability where c-store shoppers dwell most in-store — the checkout — is the lowest across all channels. Convenience store shoppers spend an average of 17 percent of their total time in-store at the checkout. Unlike other channels, the convenience channel front checkout does not have a traditional cattle shoot with products available for purchase where the shopper is waiting in line to checkout. Research carried out in other channels by Hershey revealed that a queue line delivers the highest conversion. However, the lack of space in the convenience channel creates a challenge for a successful queue line. This posed the question: Would a smaller 4-foot queue deliver the same level of sales growth to key impulse categories like confection and improvement to shopper experience that a longer, more traditional-length queue does? Hershey partnered with a major c-store retailer and a thirdparty research company to test the impact a 4-foot queue line would have on sales and shopper experience. The company monitored shopper interaction, satisfaction, traffic patterns and conversion over a 12-week period. The test queue incorporated multiple snacking categories, providing choice to shoppers at the checkout. The results showed that the addition of checkout queue fixtures significantly increased the number of shoppers who took an interest in frontend merchandise. Overall, the checkout fixtures saw the number of shoppers engaging with products at the frontend more than triple, jumping from 2.5 per 100 frontend visitors to 7.8. These shoppers were also more likely to buy, leading to a 240-percent increase in overall purchasers. The checkout queue system proved to be effective at driving unplanned purchases. Shoppers who may otherwise have not paid attention to products at the frontend were now taking notice and making purchases more frequently. The categories that benefited most from being placed on the queue line fixture were those associated with impulse purchase and consumption. The percent of overall transactions

that included candy increased by 16 percent, and the percent of transactions including the candy items merchandised on the 4-foot queue line increased 100 percent. Of shoppers surveyed, 71 percent strongly agreed that the fixture helped make checking out faster, easier to shop, and improved variety. A smaller percentage also felt the fixture made the checkout process fairer and helped provide clarity, bringing social justice to the checkout process and reducing the anxiety that is often associated with checking out as it relates to who is next in line.

CIGARETTES: McLane Co. Inc. The McLane merchandising team — which manages a large volume of cigarettes and other tobacco products — is extremely knowledgeable on all segments of the tobacco category and has a combined total of more than 200 years of experience. The scope and size of their procurement, along with daily deliveries in many cases, allows for the freshest product to land in retailers’ stores, giving consumers the best experience possible with their cigarette and/or other tobacco purchase. McLane works closely with suppliers, industry organizations and governmental affairs to stay current on local, state and federal ordinances/ regulations in order to ensure compliance in delivery of product, and to assist retailers in understanding these ordinances/regulations. In addition, the company works with retailers to create tobacco planograms that meet their geographical, regulatory and consumer demands. The distributor also aligns with suppliers on promotions, new items and limited-time offers to ensure that items are set up, ordered and received at the retailer in a timely manner. By working with suppliers far in advance, McLane customers are ensured to be among the first to receive the latest new tobacco items. Receiving timely cigarette promotions also ensures maximum selling days during the promotional period and therefore, the highest potential for incremental sales. McLane’s procurement and merchandising team is designed to accomplish each task in an efficient and effective manner so that the right product is in the right place at the right time, especially all the latest new items in the tobacco category.

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FOODSERVICE/GRAB-AND-GO: Land Mark Products Inc. Land Mark’s Day’n Night Bites continues its category-leading effort in creating unique breakfast foods that succeed in grab-and-go environments. The most recent new addition to its grab-and-go line is “The Donut.” This sandwich — made of egg, cheese and breakfast sausage sandwiched within a sliced cake doughnut — has proven to be the company’s newest success and a valuable tool for c-stores interested in keeping their distinctive marketing edge. Day’n Night Bites’ innovative product development in 2017 has positioned the company as the third-largest sandwich provider to the c-store industry. The 2017 launch of The Donut sandwich has shown more than 60 percent of stores becoming repeat buyers. As part of the current Day’n Night Bites line, which also includes The Omelet Wrap, Maple Hot Cakes, Breakfast Pizza and more traditional breakfast sandwiches, The Donut reinforces the fact that today’s c-store customers reward innovation, in addition to quality. Launched in 2010 by Land Mark Products, the Day’n Night Bites line provides c-store and other foodservice operators with a simple-to-serve brand that can be profitably adapted to large chains or single-store operators. The line offers a full menu of pizza and sandwiches for all dayparts.

FOODSERVICE/HOT DISPENSED BEVERAGES: Eby-Brown Co. LLC CoGo’s, a chain of nearly 40 convenience stores in western Pennsylvania and Ohio, was the proving ground for Eby-Brown in its hot dispensed beverages program. The retailer turned to the c-store distributor to transform its outdated and fatigued coffee program. Taking a leadership role for the hot dispensed category, EbyBrown set out to create a coffee bar capable of competing with other c-stores, as well as quick-service restaurants like McDonald’s and Dunkin’ Donuts. First, Eby-Brown sought to understand CoGo’s foodservice capabilities and current market positioning by conducting operational audits of designated store locations, empirical observations, core customer analysis, existing foodservice sales and profitability, menu mix, and qualitative interviews with key organization personnel. Then, the distributor brought in leading coffee suppliers to assist in developing a go-to-market strategy to increase CoGo’s hot dispensed beverage program sales and profitability. This included market analysis, recommended size of the hot beverage area, equipment recommendations,

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sourcing, and advertising support. According to Eby-Brown’s findings, the foundation to a successful foodservice program is a well-designed, well-positioned and well-marketed hot dispensed location. Roughly 70 percent of hot dispensed beverages are purchased as a meal complement, driving sales lift in other foodservice segments. Seventy-nine percent of coffee purchasing decisions originate before the convenience store is in sight, reinforcing the importance of staying relevant in the mind of the consumer. C-stores with excellent ratings from consumers receive 12.5 percent more traffic between 5 a.m. and 10 a.m. than those with below-average ratings. The additional foot traffic equates to additional foodservice sales. With the help of Eby-Brown, CoGo’s coffee program was turned around and is experiencing significant growth after years of decline. CoGo’s chose Bunn brewers with exclusive soft heat server technology that controls the heat of brewed coffee with holding temperatures ideal for optimal flavor for longer periods of time. CoGo’s choice of Java Bean Cappuccino and Baronet 100-Percent Arabica Coffees means customers get a great cup of coffee every visit.

FOODSERVICE/PREPARED FOOD: Tyson Convenience Tyson Convenience, a trusted partner in the convenience channel, is dedicated to innovating for the benefit of retailers of all sizes by providing a broad and continually expanding portfolio of products and leading brands, as well as unparalleled support. At the 2017 NACS Show, Tyson Convenience introduced new product innovations and on-trend offerings, including the following seven items: • Tyson Red Label Chicken with No Antibiotics Ever, with a better combination of quality and performance that enables retailers to manage costs and menu quality.

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• Hillshire Farm Sausage Rolls wrapped in a variety of flavorful breads. • Tyson Chicken To Go Packaging featuring four new fully cooked items. • Fresh-Cut Sandwiches, which include the finest ingredients like homestyle breads, natural cheeses and premium meats, and are protected in Flavor-Guard clear packaging with a recessed, rigid lid to create a secure seal that ensures fresh taste up to 24 days. • The Hot ‘n’ Ready breakfast line upgraded to include: more bacon flavor in every bite; improvements to its homestyle biscuits with a more buttermilk taste; and updates to its packaging, including a window for easy product viewing, giving a fresh-made look and feel while protecting the sandwich and sealing in the flavor. • Tyson Single-Serve Chicken Nuggets in special microwaveable packages that help crisp the product and allow for easy heating in-store or at home in only minutes. • Hillshire Snacking Small Plates, which offer unique flavor pairings of tender cuts of pork or beef with premium, natural cheeses. Also in 2017, Tyson Convenience expanded its turnkey hot grab-and-go program with additional brands and in-store support to help retailers enter or expand their assortment in the snacking and grab-and-go categories. Bringing new options to the successful Ball Park–Hillshire Farm roller grill program was the next step in an already tremendously successful roller grill program with nationwide distribution that features the No. 1 brand in retail for the product categories (IRI Total US Multi-Outlet data through Aug. 6, 2017). New Hillshire Farm Premium Chicken Sausage Skinless Links deliver on-trend, bold flavors and create an opportunity to not only offer something new to current category shoppers, but also bring in new shoppers desiring health-conscious alternatives. Upon acquiring AdvancePierre, Tyson Convenience has become home to an expanding line of Fresh-Cut Sandwiches. In the past year, Fresh-Cut rolled out 13 new varieties, featuring the freshest ingredients and protective Flavor-Guard clear packaging, which uses a recessed, rigid lid to create a secure seal for locked-in freshness and a sturdy, protective clamshell to afford consumers a 360-degree view of the product. Fresh-Cut subs’ paper packaging has similar flavor-protective properties and includes a window. These packaging innovations were created to meet consumers’ desire for an unobstructed view of a product’s freshness, as well as to make the selection process easier for both consumers and operators. Tyson also offers turnkey equipment solutions to fit retailers’ needs across the foodservice spectrum, from retailers new to foodservice to more experienced retailers interested in

expanding their offering. There is a significant emphasis beyond its own products by providing consumer insights and in-store support to help retailers grow in today’s changing convenience channel.

GENERAL MERCHANDISE: S. Abraham & Sons Inc. Every time a cash register beeps, valuable information about the item, the customer and the overall profitability of a store is captured. Grand Rapids, Mich.-based S. Abraham & Sons (SAS), a convenience distributor to retailers in eight states throughout the Midwest, has been helping stores utilize this point-of-sale (POS) scan data to unlock valuable insights captured by their cash registers each day. By pairing POS scan data with store layouts and planograms, the SAS Retail Merchandising Team helps retailers understand their stores on a more holistic level before planning shelf resets. The transformations fueled by these insights are providing sales boosts and extra foot traffic that retailers are praising. The transformations begin with the SAS Retail Merchandising Team and its proprietary “True” space vs. sales process. Before a store reset takes place, the SAS team gets to know the location intimately through a custom shelf review and sales analysis. They measure the layout and draft an accurate digital model of the store using Trimble SketchUp software to measure the saleable space category by category. The goal is to understand the true profit productivity of each category on an equal basis, gross profit per linear foot, and to consider how the store’s layout may be affecting sales. Armed with this information, retailers plan impactful resets and reallocate underproductive space to make room for the higher profit-generating items demanded by customers frequenting that location. The shelf review is a key component and involves interviews with store personnel and managers to understand their impression of any pain-points and opportunities. Having the input of store personnel and involving them in decision-making

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has proven critical for many retailers. With the store’s physical layout mapped and categorized, the SAS team next turns to the POS scan data for a custom sales analysis. Retailers are asked to provide SAS with one year of item-level POS sales data for each location. A report is generated to give a one-year “snapshot” breakdown. Each product category has its actual profit dollar weighed against its actual percentage of shelf. This difference provides a store-specific measure of a category’s sales health. Taking it one step further, this data is then color-coded on top of the digital model for a custom Profit Heatmap, which gives an easy-to-comprehend visual of where shoppers are flocking and where they are leaving products unnoticed — for instance, a section of salty snacks that is getting overlooked because a prominent DSD endcap steals the customer’s attention first. With some data behind the situation, it is much easier to make the call to adjust the category placement and create a better profit-generating scenario for the retailer. Retailers also learn the true dollar size of each category. Tried-andtrue categories like edible and non-edible grocery are often culprits of having too much space allocated without the sales to back it up. SAS customers have this service available to them at their request at no extra charge. Positive results are coming in from stores that utilized the process to plan resets. Participating stores average same-store, year-over-year retail sales dollar increases of 16 percent across total center-ofstore categories. Participating stores also have lowered inventory costs through the elimination of SKUs.

HEALTH & BEAUTY CARE: Convenience Valet The health and beauty care (HBC) category generates high margins for convenience store retailers but, due to space constraints, it is imperative to know that not all subcategories within HBC are equal in a c-store. The typical footprint is small — usually 3 feet or 4 feet wide — making it crucial to get the brand and product assortment right. Convenience Valet’s concentration is focused on the top seven subcategories that represent more than 85 percent of the total HBC category, and the corresponding best-selling SKUs. Based on other channel research, Convenience Valet has found that 68 percent of consumers shopping for HBC will leave the store if their brand is not available. HBC shoppers have an immediate need and will be specific in filling it. When the shopper leaves to find what they are looking for, they go to another c-store (i.e., a competitor) and when they find it, nearly seven out of 10 consumers will then purchase an incremental item. Retailers must get the brands and products right or more than just HBC sales will be lost. Convenience Valet works with the retailer to define the category, assess current category performance, understand

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and/or help define strategic objectives, provide category tactics to support objectives, generate detailed planograms to ensure proper implementation, and (often overlooked) review the performance of the category scorecard on a six-month and annual basis.

and adult consumer demands. Swisher’s Partners in Profit program is a perfect example of the execution of this strategy. Swisher provides its partners with revenue-generating products and promotions in all of its OTP lines, with the objective to grow not only Swisher sales, but also the full OTP category in every store.

Also, as part of the company’s process, it conducts a retail price review to ensure that not only is the retailer set up for maximum sales and profits, but also that the set delivers on consumer pricing expectations in the channel for shopper satisfaction.

“Swisher has continued to evolve year over year to become a partner that is focused on total category growth,” said Ruth Ann Lilly, senior category manager at GPM Investments LLC. “In 2017, they added a JDA team that adds another layer of support with a focus on maintaining a collaborative mindset regarding the overall set process. They understand that as the category grows for the retailer, so will their brands. They provide excellent insight into the market trends that quickly help identify potential distribution gaps. They have a merchandising team that will physically support resets, which is invaluable for retailers.”

Convenience Valet’s award-winning category strategy works. In all cases, though results vary by retailer, the sets generate year-over-year double-digit increases in sales for retailers. Depending on the initial starting point, first-year results often reveal sales increases in the 20-30 percent range and, in many cases, help retailers drive sales increases of more than 40 percent. Additionally, when available, Convenience Valet supports these results with follow-up support by using distributor MSA data to ensure that planograms are fully implemented by retailers. By confirming sales have been recorded for faster-moving SKUs in all locations, the company can validate and help drive the retailer’s category performance.

OTHER TOBACCO PRODUCTS: Swisher International Inc. In 2017, Swisher took on a new challenge of bringing space management capabilities to its customers, adding another layer to its category management portfolio. The Swisher Space Planning team can assist in all aspects of building a profitable other tobacco products (OTP) category, either remotely or in-person at a retailer’s headquarters. Swisher’s objective is to provide its customers with the best possible product and sales experience, while providing needed expertise in specific market dynamics. Utilizing MSAi insights, programs and planograms are customized to meet specific customer goals

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2017 included several key initiatives in how Swisher delivers category management to its customers. The company incorporated both a detailed and high-level approach to assist its retailers in analyzing adult consumer preferences and purchase patterns. By utilizing MSAi distributor-toretailer data, Swisher has been able to develop specific tailored analytics for retail partners in an immediate fashion. Additionally, Swisher has employed MSAi to integrate these analytics into automated yet relevant business reviews. Swisher is committed to growing and developing the OTP category, and believes that one of the key ways to encourage this endeavor is to invest in and support bestin-class category management practices. Swisher is seeing rewarding results from its focus on quality products and category management. Customers who signed on to the Partners in Profit chain program increased volume by 17.5 percent in the large cigar category for the 48 weeks ending Dec. 2, 2017.

PACKAGED BEVERAGES: The Coca-Cola Co. As convenience store retailers face in-store traffic declines, it’s more important than ever for retailers to make every trip count by growing incidence and average spend. However, 74 percent of people who purchase gas leave the c-store lot without making any other purchases, with most consumers saying they just don’t need anything, among other reasons for not entering the store. Research from The Coca-Cola Co., though, shows that beverages are purchased in more than one in four convenience retail trips, making drinks the primary trip-driving item. By providing innovative beverage experiences, retailers can drive sales. This is the premise behind the company’s latest

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piece of innovative equipment, the Arctic Coke cooler. Using proprietary technology, the Arctic Coke cooler redefines what it means to enjoy an “ice-cold Coke,” as it keeps beverages cold enough to be on the verge of freezing. When consumers select a beverage from the Arctic Coke cooler, they place it on a Coca-Cola proprietary device that initiates formation of ice crystals. This provides a “super cold” beverage experience that has never been offered in retail before. Coca-Cola engineers have experimented with this concept for nearly 20 years, and the new proprietary technology, which was refined throughout the past four years, consistently delivers this slushy treat. Offering the coldest Coke possible has multiple benefits: beverages stay colder longer, won’t be watered down by ice, and the transformation enabled by the technology generates surprise and delight among consumers. Having the capacity to change the temperature of Coca-Cola beverages essentially creates a new beverage category experience for consumers, as well as a new daypart occasion. Testing of the Arctic Coke cooler has revealed an incredible demand for “super cold” beverages — research showed that purchase intent of “super cold” beverages was more than 70 percent, with the new category experience resonating particularly strong with teens. Initial tests also revealed that offering a “super cold” beverage resulted in a purchase intent of 88 percent (up 11 points) and overall liking of 82 percent (up 18 points). It achieved high scores for liking, differentiation and believability, and also contributed to incremental growth for 20-ounce Sprite (35.7 percent) and 20-ounce Coca-Cola (16.6 percent). The cooler also encouraged impulse purchase behavior, as 20 percent of consumers who tried the “super cold” beverages were visiting the convenience store for something other than a beverage. A large-scale test of the cooler conducted in stores across Minnesota yielded similar results. During the test period of August to November 2017, stores with the cooler present saw

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increased sales of 20-ounce Diet Coke and 20-ounce Sprite. Specifically, the sales performance gap between test stores and control stores with no cooler widened by 4.5 percent for Coca-Cola, 4.4 percent for Diet Coke, and 11.4 percent for Sprite. Also notably, overall beverage sales grew in the test stores, while slightly declining in the control stores. By creating an innovative beverage category experience for consumers, the Arctic Coke cooler is poised to continue bringing excitement to the packaged beverages category and growing sales for convenience retailers in 2018 and into the future.

SALTY SNACKS: Kellogg Co. Convenience store chain Holiday Stationstores was looking for a creative solution to drive incremental salty snack sales in the hot foods section of the store, while increasing operating profit at the same time. The retailer wanted to convert from a wire racking system to something more versatile that would be able to promote more profitable items in the store. Kellogg’s worked with Holiday on an innovative solution to be able to merchandise Pringles underneath the roller grills at a majority of Holiday locations. By developing a Glide Rack, Kellogg’s was able to create an affordable merchandising system that can strategically fit into any-size space underneath the roller grill. The rack is adjustable and has the flexibility to fit any width or depth needed in the store. Because it is made of plastic, it is more affordable than a traditional racking system. Kellogg’s was able to add anywhere from an additional 20 to 30 facings of Pringles per Holiday location due to the Glide Rack system. Pringles sales at Holiday experienced double-digit increases in dollars and units as a result of the program. Along with Pringles, there was no disruption of any other major brand sales in the store, making this an incremental program for Holiday that helped fuel total salty snacks growth in the retailer’s stores. Holiday also benefitted from having a strong warehouse brand that drove higher profit dollars to the store. This made it a win-win program for both parties. CSN Susan Durtschi is president and CEO of Past Times Marketing, a consumer research and product evaluation firm based in New York. For the fifth consecutive year, Convenience Store News partnered with Past Times Marketing to conduct the Category Captains awards program. For more information, go to www.pasttimesmarketing.com.

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FOODSERVICE

Safety First The more important foodservice becomes to the convenience store industry, the more important food safety becomes to retailers By Angela Hanson FIFTEEN YEARS AGO, La Crosse, Wis.-based Kwik Trip Inc. had just begun to transform its foodservice offering from a roller grillbased program to a full-fledged initiative, which would eventually be honored as Convenience Store News’ Foodservice Innovator of the Year in 2015. From the onset, Kwik Trip CEO Don Zietlow pinpointed a potential occurrence that could have devastating effects on the convenience store chain: a foodborne illness.

That early foresight led Kwik Trip to build a culture of food safety that incorporates training at all levels of the organization — something every convenience store that offers prepared food should imitate, according to industry experts. When it comes from the top, safety is more likely to be a key component and not an afterthought.

dles training and staff promotion. All employees receive computer-based training, and those who are ready to move up the management ladder get the opportunity for hands-on development. Instead of moving directly up to shift leader, they are moved into the role of foodservice leader, in which they take responsibility for the kitchen. Experience with food and food safety is a fundamental part of the leadership journey at Kwik Trip, not an alternative path. Individuals who pursue multi-store leadership roles, such as district roles, get even more food safety training on a broader level. Through a combination of classroom study and hands-on training, future leaders learn to audit stores from a safety perspective, and they go through ServSafe food safety training and certification. The result is a cadre of leadership with extensive food safety knowledge, according to Putz.

Size Doesn’t Matter When It Comes to Safety While the training needs of small operators and single stores in the convenience store industry may not need to be as complex as Kwik Trip, size doesn’t make a difference in a retailer’s ability to build a safe, trustworthy foodservice program. “It’s not necessary to be a large corporation or have a multitude of financial resources to create a food safety culture,” said Francine Shaw, president of Food Safety Training Solutions Inc. “It begins with a desire to serve safe food.” Shaw recommends that c-stores with more limited resources prioritize creating a personal hygiene standard for employees and implementing a pest management program. They should also develop standard operating procedures for purchasing, receiving, storing, cooking, cooling, reheating, holding and serving food; cleaning and sanitizing equipment; and cleaning the facility’s interior and exterior.

“When your CEO says this is an issue that could destroy our company, it puts it high on people’s radar that we need to follow food safety principles and food safety programs,” said Marty Putz, director of food safety and quality assurance for Kwik Trip, operator of 600-plus stores. To instill food safety knowledge at all levels, Kwik Trip re-examined how it han-

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C-store retailers of all sizes should also be mindful of the fact that in 2015, the U.S. Food and Drug Administration began shifting its food safety focus from reaction to prevention, holding retailers accountable for compliance with the Food Safety Modernization Act (FSMA). “The FSMA calls for food retailers to establish preventive control systems modeled after HACCP [Hazard Analysis and Critical Control Points] guidelines to help prevent foodborne illnesses,” explained Jordan Anderson of

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ParTech Inc., a provider of restaurant and retail hardware, software and services. “It also mandates that the FDA has access to at least two years of documentation showing adherence to this new protocol. If you are a food retailer and the FDA comes knocking at your door, what do you have to show them?”

Setting Safety Standards One of the most impactful ways of achieving food safety is also one of the simplest: Employees must be diligent about washing their hands. “One of the most common food safety-related issues is personal hygiene. Don’t misunderstand me; some organizations do a fantastic job of training their team members. Others just don’t seem to understand the importance. Personal hygiene is so very basic, yet so very essential,” Shaw said. She recommends implementing a double handwashing policy. “Wash once in the restroom and again when returning to the work station. After all, employees are touching the doorknobs that everyone prior to them touched and who may not have washed their hands,” she pointed out. “Did you know the average door handle has about 360 types of bacteria on it?”

On the opposite end of the complexity spectrum, advances in technology are making it easier to avoid safety lapses — or to identify them once they occur. Wireless technology now enables continuous monitoring of coolers, freezers, and heating units. Digital records make it easier to access and organize crucial food safety information. There are also solutions that cater to the changing needs of foodservice operators. ParTech developed its SureCheck solution to automate food safety and task management operations through a combination of mobile app, multi-mode wireless temperature-measuring device, and a cloud-based enterprise configuration and reporting server application. While some retailers prefer pen and paper records because that’s what they’re comfortable with, industry experts warn that this method has major drawbacks, such as increased risk of personal error and inefficiency of data that can’t be searched or easily manipulated. “Paper records are easy to use (though sometimes they are difficult to locate in emergencies) and change is a process — it takes time,” Shaw said. “However, major industries, including c-stores, should embrace technology to elevate the way they track inventory, manage machines,

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record and organize data, increase efficiency, save costs, and even save lives.”

Preparing for a Crisis Even after investing in the best safety protocols and the most thorough training, it’s possible a retailer will still face a safety incident, such as exposure to a foodborne illness that can be traced back to their store. How they respond could make or break consumers’ continued trust in the brand. The most effective response involves appropriate public messaging, as well as taking the proper steps to determine how the incident happened and how it can be avoided in the future. Shaw recommends creating honest, authentic and apologetic messaging that describes the situation and explains a solutions-focused plan for moving forward. It is in the retailer’s best interest to be straightforward with the media in identifying what happened and where there was a breakdown in safety, whether it happened on the vendor side or at the store, she said. “It’s important that someone in a position of authority monitors social media and responds to negative and/or

erroneous comments. Don’t get defensive and don’t get sucked into toxic, negative message spirals,” Shaw advised. “Stay on message, remain positive, and explain how the company is working to fix the situation.” Meanwhile, the retailer should re-train employees on safety protocols, change vendors if necessary and, above all, stay calm. Once the crisis has passed, it’s time to discuss what went wrong, how it could have been prevented, and how it can be prevented in the future. Kwik Trip’s Putz encourages working with regulatory authorities that are responsible for public safety, as their concerns go hand-in-hand. On a store level, Kwik Trip requires employees to report any symptoms they exhibit. This information is entered into an electronic log. “It is still self-reporting, but it’s a way to exclude [employees] and get them out of the kitchen and away from food when they’re high-risk,” Putz said. Kwik Trip views food safety as an ongoing activity with a continual improvement process. The retailer is always asking: What can we improve on next? What can we get better at? CSN

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ALCOHOLIC BEVERAGES

Cheers to the ‘Lesser’ Beers In line with “less is more” wellness trends, low- and no-alcohol brews are gaining ground By Renée M. Covino COULD NONALCOHOLIC (NA) BEER become the electronic cigarette of the beer industry? Might it be the category-equivalent “wellness disruptor” that vape is to tobacco?

innovation as millennials, in particular, seek healthier and less-calorific beer options. This goes hand-in-hand with a number of brands working to raise the quality of the product, especially nonalcoholic beers.”

These are real possibilities, according to global beverage experts. The beer niche that has become known as low/no alcohol — low alcohol is traditionally defined as below 3.5 percent alcohol by volume (ABV) — is not exactly new, but it is gaining ground and a better reputation on all fronts: media, consumers, manufacturers and retailers.

Control has become the key “watchword” for today’s younger drinkers, according to Forsyth. “Unlike previous cohorts, their nights out are documented through photos, videos and posts across social media, where it is likely to remain for the rest of their lives. Over-drinking is, therefore, something many seek to avoid,” he noted.

Gone are the days of calling it “near beer.” Recent research from Mintel confirms that nonalcoholic beer is shedding its stigma on a global level. “As health and wellness trends influence alcohol consumption more and more, consumers are being drawn toward moderate beer options, and the stigma of drinking lowand no-alcohol beer is being challenged,” said Jonny Forsyth, global food and drink analyst at Mintel. “Looking to the future, the global beer market will see even more moderate

Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities LLC, recently made mention of low- and no-alcohol beer in a beverage industry report, noting that it is “currently predominant in five global markets, but there’s a large potential for broader global relevancy.” Skeptics should also consider these other documented signs of the times: • Beer consumption fell by 3.2 percent per adult in the past year, thanks to education around the health concerns of drinking, tighter DUI law enforcement, and people choosing to spend their time on non-alcohol events, according to global beverage alcohol market researcher IWSR. • Dry January (also called Drynuary and the Dryathlon), a 31-day break from all alcohol, was first put into play in Britain by a nonprofit in 2013. The following year, it became a U.K. government-backed public health campaign. It has now taken hold in the United States, with USA Today assessing the benefits of this increasing after-holiday practice in a January 2018 article. • “That’s right, the next big thing in beer is booze-free,” a December 2017 Men’s Health article stated. This same article cited a report published by Research and Research that predicts the global nonalcoholic beer market is expected to provide “sustainable growth opportunities” from 2017 to 2025. Currently, China is the most prolific global innovator of low/no alcohol beer product launches, according to Mintel’s Global New Products Database. More than one in four beers launched in China in 2016 (29 percent) were low/no alcohol, compared to one in 10 beers launched in Spain (12 percent), Germany (11 percent) and Poland (9 percent). For comparison, the global average sits at 8 percent. China is believed to lead in nonalcoholic beer innovation because Chinese consumers, in general, prefer less strong beer in terms of ABV, compared to the global market.

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However, Germany is still synonymous with good beer and, therefore, the harbinger of what could be in store for the nonalcoholic beer category. In recent Mintel research, more than one-quarter of German consumers (27 percent) expressed that low/no alcohol beer tastes just as good as full-strength beer. What’s more, three in 10 Germans aged 18 to 24 (31 percent) agreed that low/no alcohol beer tastes just as good as “regular” beer (traditionally, 4-6 percent ABV). Only 9 percent of the Germans surveyed said they would be embarrassed to be seen drinking low/no alcohol beer. “The success of nonalcoholic beer innovation in Germany offers lessons for what can work in other markets,” stated Forsyth. “German nonalcoholic beer producers have vastly improved production techniques.”

Global Swigs The world’s largest brewing company, Anheuser-Busch InBev, has taken notice of the low/no alcohol movement. CEO Carlos Brito has publicly stated that the company wants 20 percent of its volume to be low/no alcohol by 2025 vs. about 7 percent today. Not quite in the NA realm, A-B InBev is launching a new variant of Michelob Ultra in the U.S. that has fewer calories than the original. Michelob Ultra Pure Gold is touted as a “superior light beer” made with organic grains. It boasts only 2.5 carbs and 85 calories per serving. The company said it is “raising the bar in a big way” with the Michelob Ultra brand, taking active lifestyle and health and wellness to the next level. A-B InBev also launched a nonalcoholic version of Budweiser, called Prohibition Brew, last year in Canada. Heineken recently dived into the NA arena as well. Last May, it launched an alcohol-free version of its flagship lager, Heineken 0.0. The results are “already looking promising” in the U.K. and France, according to the company. The brand became available in Canada in January. Heineken 0.0 is an alcohol-free lager brewed with only 69 calories per 330-milliliter bottle or can. The brand’s iconic green label has been turned blue — the color associated with the alcohol-free category. Canada is the first country in North America to get Heineken 0.0.

WellBeing Brewing founder Jeff Stevens sees nonalcoholic beer as a healthier alternative to sugary sodas and sports drinks.

The Boston Beer Co., maker of Samuel Adams, has gone low alcohol, but not yet ventured into the no-alcohol niche. It just released Sam ’76, a lower ABV union of ale and lager. With a 4.7 percent ABV, Sam ’76 “delivers on craft beer taste and aroma and finishes crisp and clean,” according to the company. Boston Beer has never brewed a nonalcoholic beer “because we haven’t figured out a way to make it taste great — and great-tasting beer is our top priority,” Jim Koch, brewer and founder of Samuel Adams, told Convenience Store News. “In general, we are seeing some drinkers reach for lower ABV beers to enjoy in social occasions, which was our rationale behind Sam ’76.”

Domestic NA Rebels While the beer giants are mostly sticking to the lesser alcohol shores, especially from a domestic perspective, there are two smaller U.S. brewers banking on the booze-free trend with all they’ve got — Bravus Brewing Co. in Santa Ana, Calif., and

“Removing alcohol from regular 5-percent Heineken would have been easy, but it wouldn’t deliver the best-tasting alcohol-free beer,” said Willem van Waesberghe, global craft and brew master at Heineken. “Heineken 0.0 is brewed from scratch and has a perfectly balanced taste with refreshing fruity notes and soft malty body.” Currently available in 16-plus global markets, Heineken’s NA beer is aimed at consumers who are “increasingly interested in living a balanced, healthy lifestyle,” as well as those interested in “responsible alcohol consumption,” according to the company.

New low-alcohol brew Sam ’76 and no-alcohol brew Heavenly Body Golden Wheat are just two examples of this trend.

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ALCOHOLIC BEVERAGES

WellBeing Brewing Co., based outside of St. Louis, in Maryland Heights, Mo. Founded in June 2016 in Southern California and dedicated solely to the production of nonalcoholic craft beer, Bravus’ IPA (India Pale Ale) was released in fall 2017. Its target market is varied and includes the typical nonalcoholic demographics, such as those in recovery, pregnant, designated drivers, those with health issues, and those that choose not to drink due to religious reasons. But it also includes those that choose to abstain from drinking because they want to live a healthier lifestyle. “It’s this last market where we have seen tremendous growth. Although perhaps counterintuitively, we don’t really use the words ‘healthy’ or ‘wellness’ in our marketing because all that serves to do is make an extremely niche-sized market even smaller,” Bravus Brewing founder Philip Brandes explained to CSNews. “At the end of the Bravus Brewing Co. founder Philip Brandes day, we’re simply a has observed tremendous growth in great-tasting, nonalconsumers abstaining from drinking because coholic craft beer for they want to live a healthier lifestyle. everyone. The fact that our beer only has about 100 calories is really secondary to us.” When asked how he is able to craft such a high-quality NA beer, Brandes is cagey. “I can’t talk much about our process because it is proprietary, but I can tell you that almost all the other NA beers on the market distill the alcohol out. They basically heat up the beer to drive the alcohol off and, of course in the process obliterate the malt, hops and everything else. That’s why most NA beer tastes like burnt sugar water,” he said. “We use a process that is pretty much identical to traditional craft beer brewing, which is why it is almost impossible to distinguish our craft beer from an alcoholic craft beer.” WellBeing Brewing came on the scene last fall, launching two beers to start: Heavenly

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Body NA Golden Wheat and Hellraiser NA Dark Amber. Both are brewed with hops, barley malt, yeast and water; the alcohol is removed at the end of the brewing process. Founder Jeff Stevens told CSNews that he invested in a high-tech vacuum distillation piece of equipment that basically boils off the alcohol at a low temperature, rather than burning it off, thereby avoiding the burnt sugar taste. Stevens is very open about why he got into the NA beer business: after spending most of his career working with beer and spirits marketing as a recovering alcoholic, he was tired of his “unfun” drink choices and saw a need that was unfulfilled. “Hellraiser speaks out that we’re here to have as much fun as those drinking alcohol,” he said. “And on top of that, I would love nothing more than to give this new generation coming out a true choice that they don’t have to mindlessly drink as generations did before them.”

C-stores & the Future Could convenience stores really do well in the near future with low/no alcohol beer? Brandes admits it may seem like an unlikely pairing, but he offers up a simple rationale for the convenience channel to consider: “If nonalcoholic beer can break the stigma, so can they.” NA beer is not really cannibalizing the “regular” beer market, but actually offering up a healthier alternative to certain other nonalcoholic beverage categories, such as soda and sports drinks, which are both “dying a fast death,” according to Brandes. Stevens agrees and cites global scientific studies that point to nonalcoholic beer as an excellent recovery beverage for marathon runners. He said the 2011 data was a bit ahead of its time, but is still valid for the c-store industry to consider. “I’ve been in beer marketing my entire career and I didn’t need a trend report to tell me this is a healthier alternative to soda and sports drinks,” he said. “We will take more market share from sugar sodas than from craft beer, without a doubt. Because if consumers want to drink alcohol, they will drink it. But in the nonalcoholic category, this is a wonderful choice to have.” The fact that WellBeing’s NA beer brands will be in cans by April should be another convenience channel consideration, Stevens said. “That will be a big deal for the channel getting into this — getting the right package,” he added. Looking a little farther into the future, WellBeing Brewing is ready to help the NA beer category realize its full potential. “I love the idea of taking the alcohol out and adding back in things like probiotics, antioxidants, potassium, CBD oil, and even marijuana,” said Stevens. “We’ve started looking at all kinds of things to put into beer and I’m all for it.” CSN

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SERVICES

A Tale of Two Car Washes Successful c-store operators — one chain, one independent — share their best practices By Renée M. Covino RUNNING A GOOD, CLEAN BUSINESS is literally and figuratively behind the mission of convenience stores that also operate car washes. Convenience Store News recently chatted with two successful operators — one from the chain side and one from the independent side — to find out their best practices for mastering today’s c-store car wash business.

CASE STUDY #1: CEFCO Convenience Stores Temple, Texas 225 stores 45 sites with some type of car wash Earlier this year, CEFCO went the way of the “waterfall.” More specifically, the retailer debuted Canyon Creek Waterfall, an arch that covers the car with a presoak for a superior clean. It is the first of its kind in the central Texas area. Located in the company’s hometown of Temple, this premium CEFCO car wash location is the only tunnel wash in the chain. The “waterfall” is a step up from the former “sheet foamer,” which came down like a blanket over the car, according to Kirk Jornlin, general manager and category manager of CEFCO’s car wash division. “The waterfall is a new design — a rain ‘foaminator’ that we use for a presoak when the car enters the tunnel. It looks like it’s raining streams of foam that come down and cover the car,” Jornlin explained. “It’s an upgrade, and it brings much more of a wow factor to the customer.” What’s more, this Temple location also upgraded to Wheel Boss — said to provide a deep clean experience for tires and rims — and added a Magnum Wheel and Rocker Panel Blaster to deliver high-pressure cleaning. The Rocker Panel Blaster is three-feet high with six nozzles of high-pressure water that “blasts and loosens dirt on rims, puts a chemical on the rim, while the high-pressure water cleans the rocker panels and the bottom half of the car,” Jornlin said. The intent of all this was twofold: have more satisfied customers and reduce labor costs. “We were basically looking to deliver a cleaner, shinier, drier car, but I wanted the car wash tunnel to function basically as an exterior-only car wash, delivering everything customers wanted without having to put labor behind it,” Jornlin told CSNews. “Now, all our staff has to manually do is clean the inside, so our main goal was to reduce labor.” Based on the results so far, that intent is being achieved. “We’ve reduced labor, while sales and profitability are up in the car wash. And the convenience store is also up in sales,” Jornlin reported. “So, these upgrades have proven to be a real benefit.” Additionally, this location’s water system was enhanced to deliver a spot-free rinse through the use of RainX Complete Surface Protectant and Extreme Shine Carnauba Wax; a new soft-touch foam was added to improve vehicle cleanliness; and the detail shop was renovated for an “enhanced customer experience.”

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C-store car wash businesses should take regional preferences and needs into consideration, too. In Texas, for example, Jornlin learned that customers exceedingly prefer a friction wash — a wash with foam brushes or some type of friction. “I don’t know about the East and West, but the South is really geared toward getting road film and dirt off the cars, which is hard to get off with chemicals alone in high-pressure water,” he said. “Plus, they’ve made a lot of advances in friction washes, so it’s much safer than it was 20 years ago.” In the North, on the other hand, where car washes are geared more toward getting salt off, Jornlin said a touchfree environment is more effective.

CASE STUDY #2: CEFCO’s new Canyon Creek Waterfall is an arch that covers the car with a presoak for a superior clean.

CEFCO’s No. 1 competitor in the area is Mister Car Wash, which recently bought out seven sites in the region. This prompted the retailer to take action. “When you’re going against a national chain, it’s different than going against local competition,” Jornlin acknowledged. Now that the Canyon Creek Waterfall is producing such positive results, CEFCO is looking into new sites where it can build another tunnel wash from the ground up. The chain utilizes car wash systems from MacNeil, based in Ontario, Canada. “It’s very challenging to take a 45-foot bay and turn it into a 100-foot bay, which is needed for a tunnel, so we expect to do a brand-new tunnel site sometime in 2018,” Jornlin relayed. As for CEFCO’s other 44 car wash locations already in existence, the chain is working on upgrading two or three a year. “They will still be in-bay automatics, rollover-type designs, but they will be enhanced. There comes a point where you have to put money back into the car wash if you want to continue to be successful,” he told CSNews. “Ten years is pretty old for a car wash. You should be continuously looking at what’s new in the marketplace and what you can incorporate into your wash.”

Speedi Car Wash & Fuel Flagstaff, Ariz. One location Speedi Car Wash & Fuel in Flagstaff has been around since 1970, but it continuously reinvents itself, with its most recent car wash overhaul garnering the business various local accolades, such as Best Car Wash from Flagstaff Business News in 2014, 2015 and 2016, and Best Car Wash from Best of Flagstaff, owned by the Arizona Daily Sun, in 2015 and 2016. As of press time, it was awaiting 2017 award announcements and expected to make the town’s best car wash cut once again. To stay ahead of the game, Speedi (under new ownership since 2011) is adamant about bringing in the newest and latest technology to help expedite the customer experience, according to Jeremy Goerts, general manager. Recently, it upgraded its car wash payment system and certain key aspects of the car wash operation. The independent operator, which also works with MacNeil on the supplier side, is known for its rubber foam brushes, which attracts high-end cars in the area. “We had a Bugatti come in here, Rolls Royce, and experimental cars from Honda and Volvo,” Goerts told CSNews. “We also had a group of General Motors executives come through with 30 cars, five or six models. We got them in and out pretty quickly and with the excellent service we have become known for.”

This includes offering competitive VIP monthly passes. The Canyon Creek Waterfall location recently added a fullservice wash package for $49.99 unlimited per month. The package includes a premium in/out wash with vacuums, hand-finish rims, and hand-applied tire shine.

Speedi is intent on offering services that make it stand out among its competition, such as a tire shine, extreme shine and wheel blaster. What’s more, it recently changed its tire shine system from a chemical silicone base to a biodegradable base, “which is not as thick, not as slimy, and doesn’t attract as much dirt and grime,” said Goerts.

“We realized we were losing customers to Mister Car Wash, which was offering full-service VIP passes when we weren’t. So then, we started doing it and now they discontinued it,” Jornlin said. “What you worry about is if customers come in every single day during the month and utilize the full-service. But so far, we haven’t found customers doing that.”

Along with the automatic car wash, there’s also a self-wash side at Speedi. Here, the business has made improvements as well by offering a free vacuum system that is wellmaintained, making sure “hoses and lines are not clogged, trash can liners are frequently replenished, and [there’s] frequent filling of water for the squeegees,” he explained.

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SERVICES

When a car is super dirty with mud, as is typical in the town’s monsoon season, Goerts will often advise the owner to go through the self-wash first and then through the automatic, rather than having to go through the automatic multiple times.

Speedi Car Wash & Fuel offers both an automatic wash and a self-wash.

“Customers appreciate these kinds of suggestions. They know we have their best interest at heart,” he said. Promotion-wise, Speedi makes community outreach a priority, recognizing that its local angle is its best angle. The business recently came up with a creative promotion for its Fast Pass program, offering customers the first day of the month for free and the first day of the second month for half-off. It also honors veterans with free car washes on Veterans Day and Memorial Day, and “has even helped out a few people in the community who have been dealing with cancer or have been down on their luck,” Goerts relayed. To gets its promotional messages into the market, Speedi still believes in utilizing the United States Postal Service to send flyers and other promotional pieces to very targeted local customers (within a few miles). Speedi also uses social media, but Goerts is mindful that “it can either make or break your reputation in an instant.”

Of course, word-of-mouth is still common and effective in the community. Goerts cites his mother, who is well-known by Speedi customers for bringing her immaculate car through the car wash every other day and touting the tire shine to customers. “Sometimes when you’re able to show customers proof of the service, they’ll give it a try,” he said. CSN

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STORE SPOTLIGHT

A Fresh Take on On-the-Go The Chopped & Pressed Café caters to busy consumers searching for wholesome, quality food By Danielle Romano

Gas Land Petroleum tapped a Michelin-star chef turned consultant to help develop the Chopped & Pressed menu.

At a Glance

Chopped & Pressed Café Creator: Gas Land Petroleum Inc. Location: Crystal Run Service Station, 2 Ben Gillman Way, Middletown, N.Y. Size: 5,200 square feet Unique Features: Handcrafted sandwiches, soups and salads; online ordering, catering, delivery

TACKLING THE COMMON MISPERCEPTION of what “gas station food” is can be a hefty undertaking for even the most seasoned operator, but Mitch Nesheiwat, president and CEO of independent wholesale petroleum distributor Gas Land Petroleum Inc., was up for the challenge when he created the company’s first Chopped & Pressed Café concept.

While visiting a relative at the Westchester Medical Center in Valhalla, N.Y., Nesheiwat was inspired by the fast-casual bakery and café Au Bon Pain located on the hospital’s first floor, with its bustling crowd of hospital staff, nurses, and visiting family and friends. He was immediately drawn to the idea of providing warm, fresh food options in a location that is already packed with people going about their busy lives. “Mitch was especially drawn to the concept and efficiency of the soup and salad fastcasual restaurant, and noticed how patrons were enjoying the fresh, quality food in an environment that does not typically lend itself to such items,” recounted Zeidan Nesheiwat, Mitch’s son and Gas Land’s vice president. “Terrible hospital food is about as cliché as terrible gas station food, or franchises that microwave what they say is a fresh sandwich.” Gas Land took the soup and salad fastcasual concept, combined it with what the company knows best — gas stations — and thought specifically about how customers

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filling up on their way to work would appreciate quality options just as much as the hospital clientele, especially if offered to them “on the go,” Zeidan told Convenience Store News.

Goodbye Tin Foil, Hello Handcrafted The Chopped & Pressed Café concept made its debut on Dec. 8, 2017 at Gas Land’s newest site, Crystal Run Service Station in Middletown, N.Y. The company had originally been working on placing a deli in this station, but Mitch scraped that idea — along with the prospect of tin foil-wrapped sandwiches — after finding the inspiration for Chopped & Pressed. Combined with Gas Land’s aspiration to build a stronger presence in New York’s Orange County, where it currently owns and supplies more than 20 locations, Zeidan said Crystal Run Service Station was the “perfect” place to debut this kind of new concept because of its proximity to the Town of Wallkill’s “medical corridor,” the New York State Trooper Barracks F, four major branded hotels, and busy roadways. “As any good business person would do, we surveyed the area to determine whether quality soups and salads were otherwise available in the area and noticed a gap in the market,” Zeidan said. “We set out to fill that gap to better serve the community and offer people like local cops, medical professionals, and hungry commuters wholesome meal options.”

Gas Land tapped Michelin-star chef turned consultant Anthony Nichols to help develop Chopped & Pressed’s menu of handcrafted sandwiches, soups and salads. Nichols has experience working with popular fast-casual restaurants, such as Pret A Manger and the New Yorkbased American eatery Dig Inn. Today, Chopped and Pressed’s menu features: • Sandwiches, like the Upstate Grilled Cheese made with

a full-service Dunkin’ Donuts on the left and a fully-stocked convenience store on the right. The Chopped & Pressed Café is prominently positioned front and center, highlighted by a glass case showcasing menu options. Customers who are in a rush can pick up ready-made Chopped & Pressed offerings from a cold case located in front of the café’s counter. The concept also offers online ordering, catering and free delivery. Other amenities include: a Dunkin’ Donuts drive-thru; indoor seating, as well as patio seating in the warmer months; an ATM; 52 parking spots; 12 fueling positions; a milkshake station; an air machine and vacuum; and a Coca-Cola Freestyle fountain machine.

“Essentially, we hope that Chopped & Pressed will be the first choice for lunch breaks, coffee runs, or gas stops alike. We want to upgrade work meetings and conferences with more than just the typical wedge of deli meats.” — Zeidan Nesheiwat, Gas Land Petroleum Inc.

country bread, fresh mozzarella, cheddar and provolone cheeses, herbs and butter; • Bowls, like the Falafel and Sriracha Chicken; • Build-your-own salads; and • A variety of soups. “We gave Chef Anthony our vision and he presented various options, and we worked together from there to finetune the menu. With the master menu set, we are still improving and coming up with new ideas with fresh, wholesome ingredients,” explained Zeidan. Aesthetically, Crystal Run Service Station and its Chopped & Pressed Café exudes a sleek, modern look that is light, bright and features clean lines. Upon walking in, customers are greeted by

Future Franchising Opportunities Currently, Gas Land’s Crystal Run Service Station has a franchisee for the Sunoco convenience store, but as of now, Chopped & Pressed will remain company-operated until the franchisee is “110 percent trained and the menu is fully completed to our liking,” according to Zeidan. Gas Land is in the process of introducing Chopped & Pressed into three existing gas station locations. The company also has growth plans in three Hudson Valley markets. Zeidan said more Chopped & Pressed Café locations will be determined through a site-by-site analysis. The company has even begun to receive inquiries for franchising the concept.

Fresh, wholesome ingredients are the cornerstone of Chopped & Pressed, which offers both made-to-order and grab-and-go options.

“We did not expect to receive inquiries for franchising so soon. We anticipated for entrepreneurs to wait for us to have a proven concept, but what they saw was enough to ask for additional information,” said Zeidan. “That positive feedback prompted Mitch to roll out franchising by [this] spring, rather than his original plan, which was 2019.” CSN

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NEW HORIZONS

What Do Your Job Postings Say About Inclusion? It’s time to rewrite the script when it comes to recruiting YOUR COMPANY’S ABILITY TO ATTRACT THE BEST TALENT — and create a truly inclusive work-

place — starts with a few well-chosen words. The way you write your recruitment ads and job descriptions is the first step in attracting a diverse pool of candidates and recruiting the “21st century” leadership skills you need today. By Sarah Alter, President & CEO, Network of Executive Women

These skills — empathy, collaboration, a willingness to seek help, and the capacity to nurture others — are often called “feminine leadership traits,” but you don’t have to be a woman to leverage them. In fact, they are critical for everyone who wants to manage today’s multigenerational, multicultural work teams. Millennial, women and multicultural leaders are far less likely to respond to job posts filled with “bro-speak” written by men and (often unconsciously) for men. Even companies that value diversity and women’s leadership will scare off talented prospects if they consistently emphasize “hardcharging” candidates who will “do whatever it takes,” according to researchers. Textio, which analyzes the hiring outcomes of more than 10 million job posts each month, found that companies that write job descriptions with gender-neutral language — such as using “extraordinary” instead of “rock star” — attracted a more

diverse group of candidates. These companies also filled jobs an average of 14 days faster.

Troublesome Terms Words used in job postings, Textio CEO Kieran Snyder says, reflect a company’s cultural norms, which can be at odds with what companies say they value. “When your PR talks about work/life balance, but your team consistently advertises jobs that are work hard/play hard, your team is the one telling the truth,” Snyder wrote in her company blog. A few months ago, Textio gained attention when it looked at 25,000 job descriptions published by power employers Amazon, Apple, Facebook, Google, Twitter, Uber, Netflix, Salesforce, Slack and Microsoft. Its analysis found that each firm relied frequently on specific phrases. For instance, in job descriptions posted by Amazon, terms that are statistically more likely to attract male applicants were used much more often than by other companies studied. “Wickedly” was used 33 times more often than the next-closest company; “fastpaced” was used 12 times more frequently. At Uber, the term “whatever it takes” was used 30 times more often than the next-closest company; “high-performance culture” 23 times more. On the flip side, Apple used phrases more likely to attract women and, I believe, people with the leadership skills needed most in today’s workplace. “Comfortably” was used 15 times more frequently than the next-closest company; “empathetic” five times more often. Other words and phrases that correlate to a higher proportion of female applicants, Textio says, are “our family,” “building alliances,” “care deeply,” “meaningfully,” “passion for learning,” and “diverse perspectives.” Men are more likely to respond to “disciplined,” “tackle,” “hungry for,” “weed out,” and “bull by the horns.”

Advice From the Experts Recruiting site Glassdoor offers tips for creating job posts free of gender bias.

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Here are a few that will lead to a broader pool of candidates who have what it takes to build strong, diverse teams:

resource groups, mentoring programs, and other female-friendly initiatives.

• Use gender-neutral titles. Avoid including words in your titles like “hacker,” “superhero,” “guru” and “ninja,” Glassdoor advises. Use more descriptive titles like “project manager.”

• List your family-friendly benefits. Parental leave, flextime and childcare subsidies benefit women and men. Let candidates know what you offer.

• Check pronouns. Use he/she or “you” when describing a job’s responsibilities. • Avoid or balance gender-charged words. For example, “analyze and determine” are associated with male traits, while “collaborate” is considered female. • Limit the number of job requirements. Glassdoor recommends identifying the “nice to have” vs. the “must have” requirements, and removing the “nice to haves” from job descriptions. Women are much less likely than men to apply for jobs if they don’t meet 100 percent of the requirements. You’ll get many less-than-qualified male applicants and very few female applicants who don’t have the exact experience listed. • Reconsider college major requirements. You may be limiting your candidate pool by unnecessarily requiring completion of a specific degree. • Express your commitment to equality and share your values. Women want to know they’ll be welcome and have the opportunity to advance their careers. If your company’s vision and values promote diversity, include them in your job descriptions. Make a note of employee business

As Snyder says, changing the words in your job descriptions won’t change your culture overnight. But being more intentional about language helps teams stay focused on diversity and inclusion — the first step to creating a more gender-balanced workplace and more successful leadership teams. CSN Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing nearly 11,000 members, more than 800 companies, 100 corporate partners and 21 regional groups in the United States and Canada. Learn more at newonline.org.

Convenience Store News is pleased to continue this series of exclusive educational columns by the Network of Executive Women (NEW), coinciding with the annual CSNews Top Women in Convenience awards given out each fall. Fifty female managers, executives and directors who work in the convenience store industry were honored in our 2017 program. In addition to being a presentation sponsor for the Top Women in Convenience program, NEW and CSNews have partnered to develop this series of columns directed at helping corporate leaders drive more inclusive company cultures. Founding & Presenting Sponsor:

Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.

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EXPERT’S VIEW

The Trump Effect on the C-store Industry: An Update The President’s first year in office has been very controversial and had many highs and lows PRESIDENT DONALD TRUMP RECENTLY CELEBRATED HIS FIRST YEAR IN OFFICE and it can

certainly be said it was anything but dull. The President’s ongoing and very open warfare with most of the largest cable and television news outlets and national newspapers, such as the Washington Post and New York Times, continued as if the election had never ended. In addition, Trump’s desire to communicate directly to the country and bypass the national media via his Twitter account continued at a breakneck pace, much to the chagrin and absolute horror of the Washington D.C. political establishment.

By John C. Flippen Jr. & John Sartory, Petroleum Capital and Real Estate LLC

While it was very easy to get caught up in the almost-daily media circus that seemed to surround the new administration — such as the ongoing Russian collusion investigation headed by Special Counsel Robert Mueller — the President and the Republican-controlled Congress were able to accomplish many of the pro-growth and pro-business goals outlined in our first article, “The Potential Trump Effect” (Convenience Store News, February 2017 issue), which was published shortly after the inauguration last year. Most importantly to the business community, the President’s White House economic team, his cabinet, House Speaker Paul Ryan and Senate Leader Mitch McConnell shepherded through Congress the most sweeping corporate tax reform legislation since the 1980s, while most of the national news media and the Washington political establishment stayed primarily focused and obsessed on the Russian investigation and the President’s latest provocative and controversial tweets. While the tax reform legislation’s favorability rating was polling below 30 percent in many of the nationwide polls just before it passed both Houses of Congress in December 2017, most of corporate America believes the country as a whole will benefit in the long run from the new flat federal corporate tax rate, the lowest rate in eight decades. The remaining portion of this article will highlight in more detail some of the major policy proposals the unified Republican government passed, or accomplished by executive order, in the first year of the new

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President’s term. It will also touch on several features of the new tax law that became effective in 2018 and did not receive a lot of media attention prior to the passing of the legislation, but may have a major impact on the ongoing consolidation in the convenience and gas (C&G) industry in particular.

Revisions to the U.S. Tax Code The movement of the federal corporate income tax rate to a flat 21 percent from the generally stated rate of 35 percent for most corporations in the U.S., and the provision in the legislation that made most of the changes to the treatment of businesses permanent while the revisions to the tax code impacting individual taxpayers are temporary, was the headline story that drew most of the media’s attention throughout the tax reform debate. The President originally proposed a flat 15 percent corporate tax rate, but in the end, accepted the 21 percent rate that the House and Senate conference committee members settled on just before the Christmas holiday. Prior to the passing of the new law, corporate tax rates, like individual tax rates, were progressive in nature. For business income produced in 2017, the corporate rate still varies based on the level of income generated and the tax rates range from 15 percent to 39 percent, while individual tax rates range from 10 percent to 39.6 percent. Although the brackets vary, the rates for individuals and corporations were pretty closely aligned under the old tax code. In order to offset the potential tax savings the new flat rate granted to corporations, the final tax package also includes a new tax break for businesses that are organized as a sole proprietorship and a pass-through

Most importantly to the business community, the President’s White House economic team, his cabinet, House Speaker Paul Ryan and Senate Leader Mitch McConnell shepherded through Congress the most sweeping corporate tax reform legislation since the 1980s. entity (S-corporation, limited liability company, partnership, etc.). Business income that passes through to an individual from a pass-through entity and income attributable to a sole proprietorship will now be taxed at the new individual tax rates less a deduction of up to 20 percent to bring the rate lower. However, this new tax break is subject to numerous income limitations and restrictions and, as a result, the new law has added a layer of complexity to the tax code for businesses that are organized as a pass-through entity and sole proprietorship. How the new deduction will precisely impact the amount of federal taxes these business entities will pay in 2018 will not be fully understood until further guidance is issued by Congress or the Internal Revenue Service later in the year. Another provision of the new tax law that should help many retailers is the ability to write off the cost of capital equipment immediately, instead of depreciating it over several years. This revision to the tax code should certainly help the numerous retailers that still need to upgrade their existing motor fuel dispensing equipment over the next several years to meet the new EMV standards. Unfortunately, like many of the favorable changes to the individual tax code, this provision is not permanent and will expire after five years. That said, given the low level of productivity growth the U.S. economy has been achieving over the past decade, many experts expect a future Congress will extend this section of the new legislation.

2022. Beginning then, companies will no longer be able to deduct depreciation and amortization from the formula and the tax code will move to a more restrictive deduction standard of 30 percent of its EBIT. This new tax treatment of net interest expense will certainly impact companies that are carrying a higher level of leverage due to prior merger and acquisition (M&A) activity that was funded primarily by issuing debt. These revisions are also occurring during a time period in which most experts expect the Federal Reserve to continue to

raise market interest rates over the next several years.

A revision to the business tax code that has not received a lot of attention may fundamentally change the way C&G industry operators have been historically financing their growth and could offset some of the benefits realized from other more favorable provisions of the new law.

The new treatment of net interest expense could very likely change a long-term fixture of corporate finance; debt is a more attractive way for companies to raise cash than issuing new stock. Many companies will certainly be less likely to use debt financing to fund share buybacks, pay dividends, and potentially force them to reevaluate their long-term expansion plans if the company’s interest payments are a large portion of profits.

The tax overhaul limits the net interest payments a company can deduct to 30 percent of its EBITDA, or earnings before interest, taxes, depreciation and amortization. The new standard also gets tougher starting in

The new tax law also contains another relatively obscure provision that may have a fairly important impact on M&A activity in our industry over the next several years. Under the new legislation, investors in real

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estate investment trusts (REITs) will have a smaller tax bill on the dividend income they receive from their investment in 2018. The new law now permits investors to deduct 20 percent of the income received, with the remainder of the income taxed at the investor’s marginal rate. Shareholders of REITs who will pay the top income tax rate of 39.6 percent on dividends received in 2017 will see that rate drop to 29.6 percent in 2018, according to the National Association of Real Estate Investment Trusts. Please keep in mind, REITs distribute at least 90 percent of their income as dividends

and don’t typically pay corporate taxes. It is their shareholders who pay the income tax on the dividends issued. A lower tax burden on REIT dividends should boost the appeal of REITs relative to other yieldoriented investment opportunities. REITs have been a major source of capital for numerous companies that have been active players in the M&A marketplace. Any positive impact on REIT valuations that may occur over time because of the new tax law should enhance

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EXPERT’S VIEW

products will be available to the U.S. motoring public over the next several decades. President Trump also filled two vacant seats on the five-member National Labor Relations Board and gave Republicans control of the board for the first time in a decade. In December of last year, the board reversed a controversial 2015 joint employment ruling that made it easier for workers at franchises to organize into unions.

the amount of capital REITs can raise in the future and invest in our industry. It is equally important that this critical source of capital for the C&G industry was not negatively impacted or put in a competitive disadvantage by the numerous revisions contained in the new tax legislation.

New Regulatory Environment President Trump moved very quickly to keep his pre-election promise to reduce government regulation and reshape the federal government’s relationship with the business community — the U.S. energy industry, in particular. This new attitude toward the domestic energy industry was quickly demonstrated when the President decided almost immediately after being sworn in to office to remove the remaining federal regulatory roadblocks that had prevented the Dakota Access Pipeline and Keystone XL Pipeline from moving forward toward completion. Due to the President’s quick and unambiguous actions, the Dakota Access Pipeline

opened for business in June 2017. The opening of the new pipeline has already led to an increase in the number of drilling rigs in service and the overall level of oil production activity in the state of North Dakota. Interior Secretary Ryan Zinke announced in January of this year that the administration would open more than 90 percent of America’s Outer Continental Shelf for potential energy development. This announcement was in sharp contrast with President Obama’s decision after the 2010 Deepwater Horizon oil spill to disallow energy extraction on approximately 94 percent of the Outer Continental Shelf. While several states, such as California and Florida, have indicated they will oppose any exploration activity off their state’s Outer Continental Shelf, the important energyproducing states of Alaska and Louisiana have already embraced this new approach. This decision, coupled with a special provision included in the recently passed tax reform legislation that opens a portion of the Arctic National Wildlife Refuge (ANWR) in Alaska to future drilling activity is great news for the entire petroleum industry. The vast petroleum resources situated below ANWR have been closed for energy development since 1980. While most experts are projecting it will take seven to 10 years to develop the petroleum reserves located in ANWR and the Outer Continental Shelf, these are the types of strategic actions from the federal government that are needed to guarantee that reasonably priced liquid motor fuel

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Labor Secretary Alexander Acosta put on hold and is reconsidering an Obama administration regulation that greatly expanded eligibility for time-and-ahalf overtime pay that was temporarily blocked by a federal judge’s ruling in 2016. The Department of Labor under President Obama approved the new regulation in 2016 and it nearly doubled the salary threshold whereby virtually all workers would be eligible for time-and-a half pay, from $23,360 to $47,476, starting in 2017. The overtime rule would have had a real economic impact on many of the smaller retailers in the C&G industry. Secretary Acosta has indicated he will issue a final ruling on this issue in the second half of 2018. It is currently assumed by numerous leaders in the business community that he will raise the income ceiling, but far below the level proposed by the Obama administration and any increase could be phased in over a number of years. While President Trump’s first year in office has been very controversial and had many highs and lows, it is certainly fair to say our industry could be facing numerous economic and new regulatory challenges by now if Hillary Clinton had been elected President. Mrs. Clinton made it abundantly clear during the election that she was no fan of the fossil fuel industry. CSN John C. Flippen Jr. and John Sartory are managing directors of Petroleum Capital and Real Estate LLC (www.PetroCapRE. com). The firm provides buy-side acquisition, refinancing, capital restructuring and select sell-side advisory services in the convenience and gas industry. PetroCapRE has assisted clients in completing transactions valued at more than $2.2 billion. They can be reached at jflippen@PetroCapRE.com and jsartory@PetroCapRE.com. Editor’s note: The opinions expressed in this column are the authors’ and do not necessarily reflect the views of Convenience Store News.

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FUR TAILS FROM $2-$15 DAVY CROCKETT HATS $5.00 Silver Fox tails are a good seller!

We have: Red Fox tails, Coyote tails, White tails, Racoon tails, etc.

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White rabbit skins for $4. Leopard rabbit prints and others for $8

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ADINDEX Altria Group Distribution Company ................................................... 2-3 Anheuser-Busch ........................................................................................ 55 BakeNJoy ..................................................................................................... 45 Blu ECigs ...................................................................................................... 73 Campbell’s ................................................................................................... 17 Cash Depot .................................................................................................. 38 Cookies United ........................................................................................... 49 Crown Imports ........................................................................................... 19 DanoneWave Foods ................................................................................. 65 Del Monte Fresh Produce N.A.,Inc. ..................................................... 15 Dosal Tobacco ............................................................................................ 23 E Alternative Solutions ........................................................................... 43 F.D.A. .............................................................................................................. 10-11 Fini Sweets USA ........................................................................................ 24 Forte Products ........................................................................................... 69 Heartland Ranch ........................................................................................ 16 Hershey’s ...................................................................................................... 5 Hughes Network System, LLC.............................................................. 100 ITG .................................................................................................................. 31 Industrial Vacuum Systems ................................................................... 76 Home Market Foods................................................................................. 61 J&J Snack Foods Corp. ........................................................................... 39 John Middleton .......................................................................................... 35 Krispy Krunchy Chicken.......................................................................... 21 Liggett Vector Brands ............................................................................. 29 LSI .................................................................................................................. 20 National Confectioners Association .................................................. 25 Nestle Waters North America, Inc. ..................................................... 63 New Pig ......................................................................................................... 22 OmegaFlex .................................................................................................. 18 Perfetti Van Melle ...................................................................................... 33 Phillips 66 ..................................................................................................... 77 Procter & Gamble...................................................................................... 37 RJ Reynolds Tobacco Company.......................................................... 9 Smart Food.................................................................................................. 67 Stryve Protein Snacks.............................................................................. 47 Swisher International ............................................................................... 27,57 Tyson Foods ................................................................................................ 7,59 Universal Merchant Services ................................................................. Outsert White Castle ................................................................................................ 99 The Wonderful Company/Pistachios ................................................. 13

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Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W, Bryn Mawr Chicago, Il 60631. Copyright © 2018 by EnsembleIQ. 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.

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GETTING TO THE CORE

In Need of a Healthy Makeover?

Consumer wellness concerns may require certain categories to change their ways Convenience store customers may not stereotypically be the core consumer for healthy options, but new research among frequent buyers in key categories reinforces that this image is changing. EIQ Research Solutions, sister company of Convenience Store News, recently surveyed consumers who shop at a c-store at least once a month about their feelings toward health and wellness, and then compared the results across categories such as prepared food, prepared beverages, fresh bakery, packaged beverages and packaged foods. Among the findings: Across all of these categories, a majority of frequent buyers agree that it is important for convenience stores to offer healthy food and snack options.

Percentage of Total Respondents Making an Effort to Choose Healthier: Prepared foods at convenience stores Packaged foods at convenience stores Beverages at convenience stores

53.0% 54.6% 60.2%

Percentage of Frequent Buyers in That Category Making an Effort to Choose Healthier: Prepared foods at convenience stores Packaged foods at convenience stores Beverages at convenience stores (frequent packaged beverage buyers)

Beverages at convenience stores (frequent prepared beverage buyers)

Prepared food appears to be most vulnerable to its frequent buyersâ&#x20AC;&#x2122; health concerns.

73.6%

The percentage of frequent c-store prepared foods buyers who say they are making an effort to choose healthier options in this category.

73.6% 65.3% 70.4% 65.8%

Base: Consumers who visit a convenience store at least once a month Source: EIQ Research Solutions

A majority of frequent beverage buyers indicate they are trying to choose healthier drinks at c-stores: 70.4% for packaged beverages and 65.8% for prepared beverages.

Want to collaborate and share expertise with your peers? The Council of Retail Experts (CORE) is an exclusive network of convenience store retail leaders who do just that. For more information on how to join CORE, please visit www.cvcoreinsights.com.

98 Convenience Store News C S N E W S . c o m

Survey respondents sourced via ProdegeMR, reinventing the market research process by taking a respondent first approach. Visit www.prodegemr.com for more info.

Frequent c-store fresh bakery buyers lead the other categories in making resolutions for 2018 to improve their health and diet (63.7% vs. 48.2% among all respondents).

For freezer door

For grab and go

THE ORIGINAL

SLIDER® SINCE 1921

WHICH WILL SELL FIRST: THE CHICKEN OR THE EGG? BRING THE MOST INFLUENTIAL SLIDERS* TO YOUR C-STORE FOR THE SALES YOU CRAVE. *Time News Feed, Time Inc., January 14, 2014

White Castle Food Products, LLC 555 West Goodale Street, Columbus, Ohio 43215 614-228-5781 | wcfp@whitecastle.com

Steve Ording 614-559-2473 | ordings@whitecastle.com