Convenience Store Decisions July 2017 by WTWH Media LLC

Volume 19 28 • Number 67 •• JUNE JULY 2017 Volume 2008

Business Solutions for Retail Decision Makers

® A

HARBOR COMMUNICATIONS

P U B L I C AT I O N

2017 Chains to Watch

With growth plans in place, Yesway is capitalizing on new opportunities. In Kentucky, Clark’s Pump-N-Shop has expanded its retail operation to include Florida.

Young C-Store Executives in Utah ......20 Deli Is Taking Center Stage ..................34 Set for the Beverage Season? ............42

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With a unique drive to constantly innovate in every aspect of AGDC, we bring the smartest strategies and comprehensive resources to retailers. We are committed to evolve with the latest industry trends and consumer insights so that we can help elevate your business.

your business

ÂŠ2017 Altria Group Distribution Company | For Trade Purposes Only

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DEPARTMENTS 8 Editor’s Memo: NAG to Honor Friend and

Mentor Bill Kent

10 Campus Profile: NC A&T State's C-Store

Serves Student Needs

14 Front End: CSD’s Quick Bites 16 Front End: Industry News 18 Front End: Amazon Acquires Whole Foods 20 YEO Roundtable: Young C-Store

Executives Convene in Utah

25 Convenience Store Solutions: No Excuses

for Poor Performance

38 Foodservice: Meeting Healthy

Foodservice Demands

42 Category Management: Set for the

Beverage Season?

JULY 2017

•

Volume 28

•

46 Category Management: Energy Exhibits

Issue 7

Staying Power

48 Category Management: Protein-Powered

Profits

InsidethisIssue

52 Category Management: Salty Snacks’

Steady Influence

26 Chains to Watch: Yesway Charts Its Course With an all-star team and best practice plans, Yesway is prepared to deliver.

54 Operations: Addressing Inventory

Challenges

56 Operations: Discount Retailers’ Impact

30 Chains to Watch: Clark’s PNS Plots Its Future

on Rural C-Stores

The retailer’s goal to assimilate fuller foodservice and larger stores while exploring new markets are just a few reasons why Convenience Store Decisions has chosen Clark’s Pump-N-Shop as one of its 2017 Chains to Watch.

58 Technology: When Cash is King, Safety

34 Deli Is Taking Center Stage

60 New Stuff!

In their quest to craft hardy deli programs, more c-stores are combining the drawing cards of freshness and authenticity with their ace in the hole: convenience.

64 Quick Stop

Rules

65 Ad Index 66 Industry Perspectives: Attracting,

Retaining Top-Notch Talent

4 Convenience Store Decisions

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Convenience Store Decisions

A H A R B O R C O M M U N I C AT I O N S L L C C O .

EDITORIAL

CONTRIBUTING EDITORS

Vice President, Editor-in-Chief John Lofstock jlofstock@csdecisions.com

Anne Baye Ericksen Brad Perkins Jeffrey Steele

Senior Editor David Bennett dbennett@csdecisions.com

COLUMNISTS

Senior Editor/News & Online Erin Rigik Del Conte edelconte@csdecisions.com Associate Editor Howard Riell hriell@csdecisions.com

Jim Callahan Carrie Luxem John Matthews Mark Radosevich Bill Scott

PRODUCTION

Associate Editor Marilyn Odesser-Torpey mot@csdecisions.com

Production Manager Barbra Martin bmartin@csdecisions.com

ART

Webmaster Dave Miyares dmiyares@csdecisions.com

Creative Director Erin Canetta ecanetta@csdecisions.com

EDITORIAL ADVISORY BOARD

NATIONAL ADVISORY GROUP BOARD

Robert Buhler, President and CEO Open Pantry Food Marts • Pleasant Prairie, Wis.

Peter Tamburro, Board Chairman Clifford Fuel Co. • Utica, N.Y.

Jim Callahan, Director of Marketing (Retired) Geo. H. Green Oil Inc. • Fairburn, Ga.

Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo.

Brad Call, Executive Vice President Maverik Inc. • Salt Lake City

Greg Ehrlich, Chief Operating Officer Beck Suppliers Inc. • Freemont, Ohio

Greg Lorance, Dispensed Category Manager Cumberland Farms • Framingham, Mass.

Doug Galli, Vice President, General Manager Reid Stores Inc./Crosby's • Brockport, N.Y.

Kyle McKeen, President and CEO Alon Brands • Dallas

Joe Hamza, Chief Operating Officer Nouria Energy Corp • Worcester, Mass.

Billy Milam, President RaceTrac Petroleum Inc. • Atlanta

Brent Mouton, President and CEO Hit-n-Run Food Stores • Lafayette, La.

Patrick J. Lewis, Managing Partner Oasis Stop 'N Go • Twin Falls, Idaho

Robert O’Connor, President and CEO O’Connor Petroleum Co. • Hales Corners, Wis.

Scott Zaremba, President and CEO Zarco 66 • Lawrence, Kan.

Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.

Convenience Store Decisions is a three-time winner of the Neal Award, the American Business Press’s highest recognition of editorial excellence.

SUBSCRIPTION INQUIRIES To enter, change or cancel a subscription: Web (fastest service): www.ezsub.com/csd Phone: (844) 862-9286 (U.S. only, toll-free) Fax: (440) 333-1892 Mail: Convenience Store Decisions P.O. Box 986, Levittown, PA 19058 Copyright 2017, Harbor Communications, LLC 6 Convenience Store Decisions

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ADVERTISING President, Harbor Communications Dan Ramella dramella@csdecisions.com (440) 250-1583 Group Publisher Tom McIntyre tmcintyre@csdecisions.com (440) 250-1583 Publisher John Petersen jpetersen@csdecisions.com (440) 250-1583 Vice President, Sales Tony Bolla tbolla@csdecisions.com (773) 267-1897

YEO BOARD OF DIRECTORS Jared Sturtevant, Board Chairman CST Brands, Director of Marketing

Alex Olympidis, Board Vice Chairman Family Express Corp., Director of Operations Alli Bixler, Assistant to the President The Kent Cos. Sharif Jamal, Corporate Training Manager Chestnut Petroleum Distributors Lindsay Lyden, Vice President, Development Truenorth Energy Dana Moloney, Food Service Director Warrenton Oil Co. Jeremie Myhren, Vice President, IT Road Ranger Bart Stransky, Executive Director, Merchandising RaceTrac Petroleum Inc.

OFFICE LOCATIONS

Headquarters

19111 Detroit Rd., Ste 201 Rocky River, OH 44116 (440) 250-1583 (440) 333-1892 (fax)

Editorial and NAG

1420 Queen Anne Rd., Suite 4 Teaneck, NJ 07666 (201) 837-2177 http://twitter.com/CStoreDecisions www.facebook.com/CStoreDecisions

Convenience Store Decisions (ISSN 1054-7797) is published monthly by Harbor Communications, LLC., 19111 Detroit Rd., Suite 201, Rocky River, OH 44116, for petroleum company and convenience store operators, owners, managers. Qualified U.S. subscribers receive Convenience Store Decisions at no charge. For others, the cost is $80 a year in the U.S. and Possessions, $95 in Canada, and $150 in all other countries. Single copies are available at $9 each in the U.S. and Possessions, $10 each in Canada and $13 in all other countries. The annual Sales Trend Handbook can be purchased for $75. Periodicals postage paid at Cleveland, OH, and additional mailing offices. POSTMASTER: Send address changes to Convenience Store Decisions, P.O. Box 986, Levittown, PA 19058. GST #R126431964, Canadian Publication Sales Agreement No: #40026880. Materials in this publication must not be reproduced in any form without written permission of the publisher. Direct requests to: Editorial Department, 1420 Queen Ann Rd., Teaneck, Suite 4, NJ 07666. Phone: (917) 601-9623. Copyright 2016, Harbor Communications LLC. All rights reserved. Circulation audited by Business Publications Audit of Circulation, Inc.

www.linkedin.com/CStoreDecisions

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EDITOR'SMEMO

NAG to Honor Friend, Mentor Bill Kent

JOHN LOFSTOCK Editor-in-Chief (201) 837-2177 jlofstock@ csdecisions.com Follow me on Twitter @CSDEditor

UILDING RELATIONSHIPS IS A fundamental principle for succeeding in business. The convenience store industry is certainly no exception. Trust, appreciation, compassion and shared experiences are the backbone of countless industry friendships that span decades and, in some cases, generations of family leadership. These relationships are extremely important to the National Advisory Group (NAG) and our members. NAG, a convenience store trade association focused on small, mid-sized and family-owned businesses has a long history of dedication to fostering relationships that help convenience store owners improve their operations. Through the years, many individuals have selflessly dedicated their time and energy to ensuring NAG has succeeded in holding a special place with convenience store owners. As a result, NAG is delighted to recognize these individuals every year with the NAG Lifetime Award for Convenience Retailing. I'm proud to report that Bill Kent, president and CEO of The Kent Cos. in Midland,Texas, will be honored as the 2017 recipient at the NAG Conference in Nashville this September. Kent is the third winner of award. He follows David Johnson, of Toot’n Totum and Bill Weigel, of Weigel's Inc. Bill Kent has been a friend, a mentor and so much more to NAG and to me personally. He has never failed to offer his leadership or a word of encouragement to keep us focused. Ten years ago, when NAG was contemplating what its role would be in the hypercompetitive convenience store industry, Bill's guidance was instrumental in identifying our mission and creating an inclusive strategy that resonates with convenience store retailers today. It’s our pleasure to honor him with this distinguished award.

KENT COS. HISTORY The Kent Cos. has a long history in Texas. This year marks the company's 60th anniversary in the convenience store industry. The company got its start after as the oil market began consolidating. During the 1950's, Reed Oil Co. was a chain of gasoline service stations serving a major portion of West Texas. 8 Convenience Store Decisions

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In 1975, the company opened its first convenience store, when it remodeled one of its service stations in Odessa, Texas. This was the beginning of a new direction for the Kent Cos. The company's management at that time consisted of Bill's father, Buck Kent and his oldest son, Jim Kent. Together, they made the decision to expand into convenience store retailing by converting service stations to retail space. Bill Kent joined the company full-time in 1978 after graduating from Arizona State University and continued the company's push into the growing convenience store industry. In November 1984, Bill Kent purchased 100% ownership of Kent Oil and Kent Distributors. The companies at that time operated 12 high volume convenience stores and a few service stations. Bill Kent also assumed majority ownership of Kent Lube, which was up to six locations, through this transaction. In December 1985, Kent Oil and Kent Distributors were combined into one entity, Kent Oil Inc. The company has since expanded operations to include Avis Lube Fast Oil Change Centers, Mr. Payroll and two Kent Tire stores. It is also a franchisee of the Huddle House and Baskin Robbins brands. Today, the company operates 43 convenience stores and has more than 1,000 employees throughout Texas, Oklahoma and New Mexico. Please join us in September as we honor Bill and his accomplishments at the NAG Conference. NAG remains steadfast in our mission to provide industry leaders a peer-to-peer forum for the exchange of ideas to improve their business performance.The association is also committed to the industry’s next-generation leaders through the Young Executives Organization (YEO). YEO members are industry trailblazers focused on a career within the convenience store industry. For information on NAG, YEO or attending the 2017 NAG Conference, visit www.nagconvenience.com or contact me at jlofstock@ csdecisions.com.

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FRONTEND: CONVENIENCE ON CAMPUS

NC A&T State’s C-Store Serves Student Needs By Erin Rigik Del Conte, Senior Editor

Currently revamping its c-store and constructing a new dining hall, Campus Enterprises at NC A&T State uses student feedback to better plan food and c-store offerings.

ORTH CAROLINA AGRICULTURAL AND Technical ter in the epicenter of campus. (NC A&T) State University has embarked on major During construction, a temrenovations to bring its convenience store and porary structure called Aggie Dome, currently houses both dining services to the next level. Currently under construction and set to debut in the the Aggie C-Store—at 660 fall of 2018 are an improved Aggie Convenience Store square feet—as well as food featuring an open layout and increased offerings, as well retail operations, including a as a second dining hall with fresh foods prepared to order Sub Connection, Chick-fil-A, Pizza Hut and its proprietary in front of students. NC A&T, located in Greensboro, N.C., is home to more foodservice program called than 10,000 students and employs about 2,000 people. Aggie Wings. All businesses currently To accommodate this community, the university features Donna Morris-Powell, available in Aggie Dome will “Aggie C-Store,” its only campus convenience store. director for retail opera“We’re all known as ‘Aggies’ on our campus. That’s the eventually reside in the new tions, Campus Enterprises. name of our (bulldog) mascot. So you’ll find that termi- student center, set to open in nology used a lot on campus,” said Donna Morris-Powell, the fall of 2018. When the student center opens, a brand new who has been the director for retail operations, Campus Enterprises, for the last three years. Her role involves ensuring 1,000-square-foot Aggie C-Store will greet students, feaall retail operations meet student needs and upholding out- turing grab-and-go snacks, grocery items, microwavable meals, coffee, tea, health and beauty aid products, greetstanding customer service, while growing revenue streams. Previously the director for the campus bookstore for ing cards and an increased selection of dorm supplies seven years, Powell has had her finger on the pulse stu- from surge protectors to more cleaning materials. Fresh flowers will also be added for special events such as dent demand for the last decade. Valentine’s Day, Mother’s Day weekend and administrative assistant days. CAMPUS RETAIL “We’re looking to add things that can appeal, not only At present, NC A&T is constructing a new student cento our student population, but our on-campus community as well. We have faculty and staff on our campus throughout the day, so we’re looking to offer services that meets their needs as well,” Powell said. As Campus Enterprises plans the new c-store, it is considering trends and best practices in convenience store retailing. “We want this new convenience store to feature an open-market-type feel and be exciting when our students come to shop and to relax,” said Powell. “The open layout concept will allow them to clearly see everything available in the store.” Aggie C-store is currently open in Aggie Dome from 9 a.m.-10 p.m. Monday-Thursday, 9 a.m.-5p.m. on Friday, as well as afternoon hours on weekends. While Aggie C-Store offers grab-and-go snacks—including packaged From grab-and-go snacks to greeting cards to dorm room supplies, sandwiches and microwavable dinners—it leaves hot, Aggie C-Store aims to provide for the needs of students as well as faculty and staff. made-to-order foodservice to the on-campus, foodser10 Convenience Store Decisions

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FRONTEND: CONVENIENCE ON CAMPUS vice provider.“They have their separate marketplace and we have ours,” Powell explained. From the grab-and-go section, students are demanding snacks that are easy to eat on the go, and many want healthier offerings. “We brought in fresh fruit this year, and offer yogurt and ice cream. Students are looking for reasonable prices,” said Powell. DINING OPTIONS Williams, NC A&T’s only dining hall, is a standalone building across campus from Aggie Dome and also features a McAlister’s Deli, Starbucks and Simply To Go. McAlister’s Grab-N-Go locations are also available in Craig Hall and McNair Hall. “We serve about 5,700 meal plan students daily and 200+ faculty and staff members daily in Williams, with the rest of the campus population eating in Williams or one of our other retail locations on a cash basis,” said Powell. “On a typical day we could serve 10,000-plus people.” Students can choose between several meal plans, from an unlimited pass to all food establishments and dining halls on campus, to a 25- or 50-meals per semester pass for individuals living off campus. In fall 2018, NC A&T will add a second dining hall. At presstime, the new dining hall had yet to be named and the exact fare was still being determined, but it will reside on the opposite side of campus from Williams and feature freshly-prepared foods made in front of students. Williams features a traditional dining concept, including a hot station featuring two meats and several different entrees on a daily basis, a salad bar and two different soup options. “We also offer pizza every day that is made fresh in our wood-fire pizza oven,” Powell said. Hamburgers and hot dogs are also always on the menu due to student demand, and a separate carving station offers additional meat options. Fresh fruit, ice cream and dessert are always available to the students. The menu rotations include foods of different ethnic origins—Chinese, Mexican, Greek, Indian, Caribbean and Asian for example—offered several times a week at different locations in Williams Dining Hall. The dining hall also celebrates different cultures with special events and meals like: Taco Tuesdays, Fortune Cookie Day (Chinese/Asian fare), Bao Bar (Asian Fusion), an Endless Adventure promotion featuring foods from around the globe, and Multi-cultural Night (a special event featuring foods from different cultures). The first Thursday of every month is “Food Truck Junction,” when food trucks gather in a parking lot next to the student bookstore and provide an alternative lunchtime offering.“The students look forward to it every first Thursday,” said Powell. “We have one truck with all turkey offerings, a Greek food truck, and some with more traditional fare like hot dogs and hamburgers.” 12 Convenience Store Decisions

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The Aggie C-Store currently resides in Aggie Dome while a new student union is being constructed. When the student union opens in fall 2018, a new and improved Aggie C-Store will greet students.

COMMUNICATION COUNTS Campus Enterprises communicates with students about events or offerings via large yard signs, email and social media, she noted. “We Twitter, Instagram and Snapchat, which is what students are using. Our students consider Facebook to be taboo at this point” because parents use it. Each fall, Campus Enterprises conducts an electronic survey that provides solid feedback on all units from Aggie C-Store to the dining hall. “The staff goes out and encourages students to take the survey on an iPad for a chance to win a $5,000 scholarship for the following spring semester. We had over 2,600 students do the survey for us (this past) fall,” Powell said.“We also have a very active student food advisory board that meets once a month and is served a full-course meal while providing feedback. In the spring our foodservice providers perform a separate electronic survey.” Campus Enterprises also encourages year-round feedback using ‘What’s Up Wednesday’ where students can give feedback for a chance to win prizes. What differentiates NC A&T’s convenience store and dining program is its ability to cater to the many diverse cultures that make up the student population. “We have an understanding of the different cultures on campus and our food options demonstrate that we have a large Asian and West Indian population, and often they miss home and specific foods, so we include that cuisine,” Powell said. Campus Enterprises also hosts visiting chefs that help introduce students to foods from various cultures. “We continue to strive to offer outstanding customer service and consistently work to remain connected to our students so we fully understand their expectations and growing needs,” Powell said. CStoreDecisions ecisions .com

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FRONTEND

CSD’S QUICK BITES Why Are Americans Snacking?

What Helps Customers Identify ‘Craft’ Beer?

50% To treat themselves,

• 48% unique flavors, • 48% high-quality ingredients • 33% not mass produced

37% To give themselves a break during the day,

Dominant Craft Beer Label Characteristics

24% To relieve stress,

17% To control their weight, (up

• Barrel/wood-aged — sales up 27% • Sour — sales up 62% • Citrus — sales up 116% • Tropical — sales up 135%

from 10% in 2015).

Source: Mintel, June 2017

Source: Nielsen June 2017

National Restaurant Association (NRA) Show Top 6 Takeaways • Automate Your Way to Smarter: Operators are slow on implementation and it’s hurting bottom lines. •People Matter:Training, technology and equipment are critical tools that empower foodservice workers. • Better Safe: Safer kitchens help sidestep costly pitfalls. • Future-Proof Operations: By 2020, the connected kitchen is forecasted to help the restaurant industry save at least 15% in overall costs. • Grass is Greener in the Kitchen: Look to be more sustainable. • Strength of Partners: Look for partners who address your unique pain points.

Annual Beef Sales $345

$281

$168

Under 25

$193

25-34

35-44

45-54

Where Did Customers Get Meals/Snacks/ Beverages Consumed in Past Two Weeks? 28% That was ordered to be delivered. 34% “Pre-prepared” from a grocery to take away or eat at store.

58% Ordered to take a way. 64% Consisted of reheated leftovers at home.

68% Bought at a restaurant, coffee shop or café.

70% Made from “scratch” at home.

Source: Dining Out 2017 Report, The Hartman Group.

New Vehicle Technology Faces Uphill Climb A Fuel Institutes report prepared by Navigant Research titled “New Technology Adoption Curves: A Case Study on Delivering E25-Capable Vehicles to Market,” shows it would be highly unlikely for a new vehicle powertrain optimized to operate on a gasoline blend containing 25% ethanol (E25) to achieve 20% market share by 2025, due directly to fleet turnover rates.The existing light-duty fleet in the U.S. is so large, it will take considerable time for any new technology to reach market saturation.

Source: The Food Institute’s “Demographics of Consumer Spending 2017 Edition”

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INDUSTRYNEWS Sunoco CEO Retiring Sunoco LP’s President and CEO, Robert “Bob” Owens, plans to retire, effective Dec. 31, 2017, after more than 20 years with Sunoco and its predecessors. Owens, who joined Sunoco Inc. in 1997, has been serving as president and CEO since 2012. Effective immediately, Joe Kim, who has been serving as executive vice president and chief development officer for Sunoco since 2015, has been appointed president and chief operating officer. Owens will continue as CEO until his retirement and will then serve as a consultant to the Partnership through 2019. Sunoco executives Cynthia Archer, executive vice president and chief marketing officer and Boyd Foster, executive vice president manufacturing and distribution are also retiring, effective Dec. 31, 2017.

Wawa Expands Into Washington D.C. Wa w a , P a . - b a s e d Wawa Inc. has officially announced its expansion into the Washington, D.C. market and its plans to grow its fleet to 5-10 locations in the district. Wawa’s first store in the district is located at 1111 19th St., N.W. Washington, D.C., and set to open in December. At 9,200 square feet the new store will be Wawa’s largest to date. Wawa currently operates more than 750 c-stores in Pennsylvania, New Jersey, Delaware, Maryland, Virginia and Florida.

July Fourth Promises More Travel, Spending

A record-breaking 44.2 million Americans will travel 50 miles or more away from home over Fourth of July weekend—defined as Friday, June 30 to Tuesday, July 4, according to AAA. With 1.25 million more travelers than last year, 2017 will be marked as the most traveled A new survey from Tyson Convenience shows con- Independence Day holiday weekend ever. AAA noted sumer preferences when it comes to prepared foods the national average gas price is four cents cheaper at convenience stores. With 29% of consumers saying over last year—a contributing factor to the travel increase. they will drive more in June as compared to the previ- Meanwhile, according to an annual survey by the National ous month (2017 NACS Consumer Fuels), and U.S. gas Retail Federation (NRF) conducted by Prosper Insight & prices at the lowest level for the summertime since 2005, Analytics, 219 million respondents (88%) plan to celebrate convenience stores are ready to welcome a wave of the July 4 holiday. Some 162 million (66%) plan to take part consumers traveling near and far. Among other findings, in a cookout or picnic, spending an average $73.42 per the No. 1 reason (51%) American adults purchase food person, up from last year’s $71.34. The numbers cover only at a convenience store is to satisfy a craving. Also, many food items, not other holiday-related spending. (48%) would like to see a breakfast station serving waffles, biscuits, breakfast meats and baked goods at convenience stores.

Tyson Survey Indicates Food Preferences

Galli Joins NAG Board

Doug Galli, vice president and general manager of Reid Stores Inc./ Crosby’s has joined the National Advisory Group (NAG) board of direcDallas-based Empire Petroleum Partners LLC has tors. NAG is a retail trade association acquired the consignment and wholesale assets for convenience store and petroleum of Superior Transport Inc. (STi). Usher Transport Inc. operators. As a member of the NAG acquired the transportation division assets. Empire board, Galli will utilize his extensive Petroleum distributes fuel to more than 1,300 gas staindustry experience to help identify burning issues for tions and convenience stores across 27 states and the upcoming NAG Conferences, select speakers and serve District of Columbia. At the time of the sale to Empire, as a NAG ambassador for new and existing NAG memSTi retailed fuel through 47 consignment accounts bers. Galli, who replaces John Schaninger, the former and supplied wholesale fuels to 77 customers, serving vice president of sales and marketing for QuickChek, northern Alabama, northwestern Georgia and southhas agreed to a two-year board term. ern Tennessee.

Empire Petroleum Partners Expands

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FRONTEND News

Amazon Acquires Whole Foods Though details of the $13.7 billion deal have yet to surface, speculation looms on various retail fronts. By David Bennett, Senior Editor

HE BIGGEST NEWS TO hit the retail industry in recent identify Assortment (76%), Convenience (71%) and memory happened last month when Amazon Personalization (61%) as top motivators for shopping announced its intention to acquire Whole Foods online—an indicator of long-term digital adoption that should be front and center for retailers. Market for $13.7 billion. The acquisition of Whole Foods now gives Amazon control of 431 stores, nearly all of which are in affluent THE CONVENIENCE CHANNEL So should convenience store operators be worried and younger neighborhoods. Following the news, the NPD Group explained that those stores solve much of about the impact that Amazon’s future infl uence will Amazon’s “last-mile” delivery challenge for fresh food have on multiple retail channels? When you look at what some channels offer that items, which is arguably the biggest single reason that Amazon hasn’t been able to make a dent in the gro- others aren’t so proficient at, one of the biggest core cery shopping of the 60% of Millennials who already advantages that c-stores enjoy is fuel sales. While Amazon won’t be shipping gallons of fuel via drones buy Amazon merchandise. Amazon, which accounts for about 34% of U.S. online anytime soon, 431 Whole Foods locations in various sales, should see that market share grow to about 50% U.S. regions do allow the online giant a foundation to by 2021, helped now by the popularity of its Prime mem- conduct future fuel sales—even further opening up a futuristic stream of retail possibilities: Amazon car bership program. However, Amazon’s foray into brick-and-mortar retail washes, for example. “It does concern me,” said Jon Davis, president of with the Whole Foods acquisition has shaken things up drastically. If Walmart is considered the 800-pound retail Battle Creek, Mich.-based Davis Oil , which operates 19 gorilla, then Amazon has become a virtual King Kong C-Store-branded convenience locations in Michigan. swinging in from the Cloud to chunk fresh produce at “It’s only a matter of time until they see the potential of adding fueling positions at their locations. If Costco, the competition. The rewards are real and getting bigger, as a new Kroger, Meijer and other chains have moved into the Nielsen Total Consumer study, assessing some growing fueling business, I have to imagine it’s on their radar. I e-commerce trends, seems to indicate. Among some would speculate if Amazon decides to sell fuel, they’d try to find an innovative way to do so.” Nielsen findings: The pilot Amazon Go store in Seattle could offer a • E-Commerce in the Grocery Aisles Today e-commerce owns approximately 6% of glimpse of what Amazon might envision if it chooses to total sales, with non-food categories leading in share: automate the Whole Foods chain. Touted as a store of the future because it has neither cashiers nor checkout beauty (28%), pet care (27%) and healthcare (14%). lines, Amazon Go reflects the latest potential in pro•Fresh Food in Online Orders Although share of online fresh foods is 3% or less, con- grammed convenience. However, it’s a poor substitute sumers still want the experience of selecting their fresh for what makes a convenience store a go-to commodity items by hand. Fresh categories are more likely to be in local communities, said Lisa Dell’ Alba, president and included in a click-and-collect purchase when com- CEO of Square One Markets Inc. in Pennsylvania. Customer engagement is a key consideration. pared to the average e-commerce order, such as fresh “In a retail environment the interaction is in real time meat (223% more likely), produce (180%) and deli (163%). and not delivered in chunks or paragraphs of informa• Fresh, Biggest Growth Driver for Brick & Mortar Top-performing fresh retailers’ dollar sales are grow- tion,” said Dell’Alba. “We distinguish ourselves in the ing at a rate of 4% across total food, while dollar sales convenience industry by our great people. It’s what at low-performing retailers in fresh are declining 1% we are most proud of. I think this aspect of retail could be most challenging for Amazon, training their brand across the total store. ambassadors. If it’s done well, I think we have a new • Core Factors to Online Fulfillment Shoppers who are already digitally engaged online era; if it isn’t, Amazon could suffer.” 18 Convenience Store Decisions

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By Mitch Zeller

HIGHLIGHTS

Young Executives Organization

Convenes in Utah

NAG’s Young Executives Organization (YEO) gathers in Salt Lake City to learn about Maverik and focus on industry challenges. By Erin Rigik Del Conte, Senior Editor

H E N AT I O N A L A DV I S O R Y GROUP’S (NAG) fourth annual Young Executives Organization (YEO) Roundtable hosted by Maverik Convenience Stores welcomed more than 40 executives to Salt Lake City May 24-25. During the two-day event, attendees—all 40 years and younger— had the opportunity to learn first-hand about Maverik’s c-store operations.

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Maverik operates more than 275 c-stores across 10 Western states and was CSD’s Convenience Store Chain of the Year in 2013. Before the roundtable began, YEO members had the option to participate in a local Habitat for Humanity team building project to assist in building a home for a local family in need on May 23 (see sidebar on p. 24 for more details). “Maverik has a world-class culture and branding strategy you’re really going to enjoy,” said NAG Executive Director and Editor-in Chief of Convenience Store Decisions John Lofstock as he welcomed attendees to the roundtable on Wednesday.

CUSTOMER RETENTION Aaron Simpson, vice president of

Maverik’s new Base Camp headquarters hosted the fourth annual Young Executives Organization (YEO) Roundtable. More than 40 next-generation leaders were on hand. CStoreDecisions ecisions .com

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HIGHLIGHTS

Salt Lake City-based Maverik currently operates 275 convenience stores across 10 Western states. Aaron Simpson, Maverik’s vice president of merchandising, leads YEO members on a tour of Maverik stores around Salt Lake City. Members viewed four stores, showing off the chain’s evolution in design, foodservice and branding.

merchandising for Maverik kicked ing what makes your chain special off a day of educational sessions on for that target customer. Maverik’s core belief is that advenMay 24 with a presentation on customer acquisition and retention at ture elevates life. Every idea brought forth at Maverik, must go through an Maverik. Simpson gave attendees an “adventure lens.” Simpson outlined Maverik’s stratinside look at Maverik’s corporate culture and unique branding, as well as egy for continuing to build its brand tips retailers can bring home to their and how social media and loyalty play into its initiatives. own chains. Later in the day, attendees “One of the most important things is defining your target customer,” said received a tour of Maverik’s corpoSimpson, who noted that some tar- rate headquarters, which it calls its get customers are easier to influence Base Camp, including a look at the than others. The second step is decid- chain’s test kitchen on the ninth floor.

Rich Green, director of foodservice for Maverik, explains the chain’s commitment to quality, upscale foods.

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Heather Raffelson and Cyle Dickens of Illinois-based Beck Oil Co., participate in a discussion about corporate culture.

Rich Green, Maverik’s director of foodservice talked to attendees about what he wished he had known when he got started with foodservice, and Danielle Mattiussi, vice president of retail operations, spoke on Maverik’s approach to customer service, human resources and familyowned leadership. “Employees represent the brand and that’s an opportunity every day,” Mattiussi said. Maverik has 4,500 employees in its stores, and approaches customer service with the goal for employees to “earn a legendary reputation for thrilling customers.” After the educational sessions, attendees met for dinner and net-

(From left) YEO board members Sharif Jamal, of Chestnut Petroleum; and Road Ranger’s Jeremie Myhren, participate in a Q&A with Maverik executives.

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(Top) Lisa Stewart, of Impact 21; YEO Board Chairman Jared Sturtevant, of CST Brands; Ron Rutherford, of Apter Industries; Sharif Jamal, of Chestnut Petroleum; and Dyson Williams, of Dandy Mini Marts. (Right) Jared Sturtevant with Meredith Bright, of The Kent Cos.

working at Squatters Pub Brewery, sponsored by Altria, Apter Industries, PDI and R.J. Reynolds.

STORE TOURS On Thursday May 25, YEO members gathered at Maverik’s “Base Camp” headquarters in the morning for a session on Next Generation Leadership in the Family Business by Lisa Stewart, president, Impact 21. “Change is difficult to manage both in a family business when succession changes to the next generation, or a leadership change to

a new management team,” Stewart said. An open dialog can help manage the transition. Stewart spoke about her own experiences with leadership transition and outlined common issues that arise. Following the session, attendees took a bus ride to visit four different Maverik stores that demonstrated the evolution of the company’s store design. The first location was an example of a 30-year-old Country Store, of which the chain still has about 70. The next store showed the original

Maverik store design, of which the chain has about 125. The third location featured the latest design as of spring 2016, of which the chain has about 25 stores, with plans for 40 by the end of the year. Lastly, attendees saw an example of a Country Store that was rebuilt as a Maverik store, opening to the public the previous week. YEO members will meet again at NAG in Nashville, Sept. 10-13. For more information, contact NAG Executive Director John Lofstock at jlofstock@csdecisions.com.

Maverik’s Base Camp headquarters in downtown Salt Late City is a state-of-the-art facility for technology and foodservice development, but it was also designed with employee comfort in mind. Above, employees take a break from innovation planning meetings to enjoy a game of Spikeball. At right, Andrew McIntosh, of McIntosh Energy, scales the indoor rock wall during the YEO tour of the building. CStoreDecisions ecisions .com

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By Mitch Zeller

HIGHLIGHTS YEO MEMBERS JOIN IN HABITAT BUILD MORE THAN 25 OF the convenience store industry's young executives and next-generation leaders representing 13 convenience store chains, participated in the Young Executives Organization (YEO) Habit for Humanity team building project in Provo, Utah on May 23—the day before the YEO Roundtable.

The home, which is being built for the Harter/Blackham family, is a two-story, fourbedroom, two-bathroom house that’s silhouetted by the scenic mountainside in Provo. The construction is scheduled to conclude in late October. Harter, a single mom raising three kids, suffers from multiple sclerosis and needs a house that is ADA compliant. This house is being constructed to meet that need. She also has a special needs son, Denim, who was diagnosed three years ago with high functioning autism. Denim struggles with loud noises and bright lights. The house has a specially designed bedroom for him that will allow him to flourish. For the morning shift, YEO members split into two crews to help construct a fence along the east and west perimeter of the property. The afternoon crew helped frame the second story of the house to prepare it to receive the roof truss. “Our YEO members are the convenience store industry’s next generation of leaders. I am very proud that they are displaying their leadership skills and initiative outside of the c-store business for such a worthy cause,” said John Lofstock, executive director of NAG. “This is a volunteer opportunity, but the response to participate has been extraordinary.” LeAnn Hillam, volunteer coordinator for the Provo branch of Habitat for Humanity, explained that Habitat is not a giveaway program. Families help with construction of their own home and that of their neighbors. They must also pay a mortgage. “We hold the zero-interest mortgage and will not sell it, but our homeowners have the same financial commitments as other homeowners,” said Hillam.

Kimberly Harter, matriarch of the Harter/ Blackham family, poses with YEO members during construction.

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NAG Executive Director John Lofstock and YEO Board Chairman Jared Sturtevant (right), of CST Brands, finish fence work.

Mary Kolkoski, of Jetz Convenience Centers; and Kurt Weigel, of Weigel’s Stores Inc., help build a fence for a Habitat home in Provo, Utah.

Heather Raffelson, of Beck Oil Co., loads wood for the new Habitat home in Utah. YEO roundtable attendees helped frame the roof of the house and the interior for Harter/Blackham family.

The morning Habitat for Humanity crew takes a break to pose from the second story of the new Harter/Blackham home.

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Convenience Store Solutions

No Excuses for Poor Performance Everybody makes mistakes. One of the important things to teach your workers is that not only do too many excuses erode the trust factor, they highlight a bigger issue when those employees refuse to own up to their mistakes. By Jim Callahan

E’VE ALL HEARD THE old saying: “You’re only as good as your weakest link.” It reminds us that no matter how rock solid your group, team, business or organization, you can only assess the whole by your weakest individual person. You might say that a group of associates is only as strong as its laziest or untrained members. When you begin looking at individual employees, the same comparison might apply to a person’s skillset or personal abilities.

THE WEAKEST LINK Each and every one of us has strengths and weaknesses. This month’s column is dedicated to an individual weakness that can be harmful to any business organization. It might also be the easiest—or sometimes the hardest—to correct. In my 49-year career, I’ve encountered real examples of many individuals who make excuses to explain something away can indeed become the weakest link in your convenience chain. Here’s a news flash for all employees: Management would prefer to hear that you overslept rather than “my alarm clock got knocked over” or “there was a power outage in my neighborhood” or “my car wouldn’t start.” Management has pretty much heard it all, in one form or another. My personal favorite was “my pet ferret chewed through the electrical cord to my alarm clock.” Poor Billy took more than a month worth of razzing over that excuse and in truth, the incident was never really forgotten about by his co-workers. And, not once did anyone sympathize with the probable demise of his ferret, which surely was shocked severely when it got through the protective plastic coating of the electrical cord to the live wiring below. While in some measure, there was humor in his excuse, it generated more concern than humor. That’s because excuses, spread over time, are most often used as reasons to justify failure on the job. In my mind, there are three negative implications about fibbing around the facts, though the ill-effects can be far more reaching. Essentially: 1. People who get into the habit of making excuses instead of simply owning up to their mistakes or poor perCStoreDecisions ecisions .com

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formance weaken themselves tremendously in the eyes of friends, management, co-workers and even family. 2. Often his or her circle of contacts doesn’t take him or her to task for the bevy of excuses out of a sense of kindness, which in the end, the excuse maker takes as acceptance so there is no reason to change. 3. Sadly, the excuse maker ends up as one of the precious few believing the lie has some value and is now far down the path of a habit-forming problem. Don’t get me wrong—we all make excuses from time to time, maybe so we don’t risk hurting someone’s feelings by not attending their party or assuring a loved one that they look nice in that new dress or pair of jeans he or she just spent a small fortune on. However, multiple excuses in the workplace seems to have a direct impact on the quality of the employer-employee relationship. Too many excuses— whether its the weather, ferrets, just too busy to take care of a customer—are corrosive to a company’s mission. POSITIVE REINFORCEMENT So after making some obvious observations, this column suggests that the best thing a supervisor or manager can do for both sides is to curb the behavior immediately. It’s a delicate situation, questioning a worker’s honesty. We all have an obligation to address the excuse maker, as gently but firmly as we can if we are to salvage a professional relationship. As I said in the beginning, these employees are likely to have great strengths of their own and perhaps just need a little guidance that may be lacking. It’s on us as leaders to assist in a way that can be a positive learning experience rather than an embarrassing situation for the individual. Once the excuse problem is uncovered and addressed, the same individuals can begin to address their situation and begin to grow. As they grow, the overall chain grows stronger as well. Remember, while the truth often hurts, excuses can be downright killers. Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on CSDecisions.com. He can be reached at (678) 485-4773 or via e-mail at jfcallahan1160@gmail.com. July 2017

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COVER STORY

Charts Its Course

With an all-star team and best practice plans,Yesway is prepared to deliver convenience. By Erin Rigik Del Conte, Senior Editor

ESWAY’S CONVENIENCE STORE CHAIN may be fewer than two years old, but it boasts an aggressive expansion plan, which it intends to achieve by leveraging veteran c-store industry leadership, developing expanded foodservice offerings within its targeted rural and suburban areas, capitalizing on the real estate expertise of its founding firm Brookwood Financial Partners LLC and excelling in its commitment to build community relations. Brookwood, a Massachusetts-based private equity investment firm specializing in acquiring and managing value-add commercial real estate and related businesses, launched Yesway with the acquisition of Country Stores, a 10-store portfolio in western Iowa, in December 2015. From there, the chain’s growth has blossomed. In July 2016, Yesway established its regional headquarters in western Des Moines, Iowa and immediately acquired 21 stores from Kum & Go. In the months that followed, Yesway expanded its store count to 38 locations in Iowa and Kansas and recently acquired the Wes-T-Go and Chillerz chains in Texas and Oklahoma, bringing its store total to 73. “We expect to grow to 100 stores by the end of the summer across an expanded Midwest region,” said Thomas Trkla, 26 Convenience Store Decisions

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chairman and CEO of Yesway. Yesway recently executed purchase and sale agreements for six new stores, submitted or executed letters of intent to acquire 70 more, and is reviewing hundreds of potential locations across a swath that includes Missouri, Arkansas, Wisconsin and several other budding markets in the Midwest. Ultimately, Yesway plans to acquire approximately 500 locations within the next five years. Brookwood began considering a move into the c-store industry six years ago as it sought businesses not tied to the same “peaks and troughs” of the real estate industry. “As ‘value buyers,’ we acquire properties when they are relatively inexpensive, sell them once they have achieved their respective business plans, and then wait for the market to repeat the cycle, generating new opportunities for investment. We were seeking businesses that were countercyclical to our real estate strategy,” Trkla said. “By contrast, the c-store industry is relatively recession-resistant, while still providing a tremendous opportunity for adding value.” Once Brookwood settled on the c-store business, its next task was selecting the best states in which to grow. Considerations included demographic, economic and gas consumption trends, as well as regulatory concerns and CStoreDecisions ecisions .com

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Left: Yesway Chairman and CEO Thomas Trkla. Below from left: Brian Burkle, district manager; Krystal Roberts, manager at Yesway Store #1013, in Ottumwa, Iowa; with Doug Wald, vice president of operations; Thomas Trkla, chairman and CEO; and Brian Trout, senior vice president of operations.

ALL-STAR SENIOR TEAM

market saturation metrics. Yesway chose to put down its flag in the Midwest due to the abundance of target markets that ranked highly on these metrics. The Brookwood team understands the Midwest markets well. “I grew up in the Midwest, and so did many members of our senior management team,” said Trkla. “The regions in which we are looking to expand are not as dominated by one major player as are other areas of the country.” Yesway has the benefit of an all-star team of industry professionals in its senior ranks, most of whom come from household-name chains such as Walmart, 7-Eleven and BP, and include names like Joseph Petrowski, the former CEO of The Cumberland Gulf Group, and Brian Trout, former vice president of operations at both The Pantry and 7-Eleven. With its veteran team bringing the best practices from most of the major c-store chains in the country, Yesway plans to marry best-in-class operations with its targeted acquisition strategy in the rural and suburban markets where it believes it can add the most value. All this (and more) makes Yesway a 2017 Chain to Watch. WINNING STRATEGY To date, all of Yesway’s stores have been acquired as operating businesses. Yesway specifically targets rural and suburban mom-and-pop locations with long histories of profitably supporting their communities, but it also requires that locations offer further opportunities to increase profitability through capital and operational improvements and rebranding initiatives. In particular, Yesway is focused on dramatically improving the foodservice offering at many of its locations. CStoreDecisions ecisions .com

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Yesway features a veteran senior team with years of experience: Thomas Trkla Chairman and CEO Thomas Brown President, Director of Acquisitions Ericka Ayles Managing Director, Director of Finance Mark Daniels Chief Strategy Officer Doug New Chief Technology Officer Joe Petrowski Senior Advisor, Director of Fuels Jayne Rice Managing Director, Director of Marketing Brian Trout Senior Vice President of Operations Rick Winter Senior Vice President of Human Resources Jerami Davidson Associate General Counsel Jennifer Fermano Vice President, Retail Controller Greg Gardner Senior Vice President of Acquisitions Jamie Hatch Vice President of Construction and Maintenance Darrin Samaha Vice President and Brand Manager Tony Sparks Vice President of Merchandising Frank White Director of Food Service Doug Wald Vice President of Operations

Stormy Miller, associate; Shelly Fridley, assistant manager; and Jenni Bishop, manager of Yesway Store #1012, in Ottumwa, Iowa; with Yesway’s Chairman and CEO Thomas Trkla. Yesway’s employees offer first-name-basis customer service that small towns value. Yesway aims to be a great neighbor that builds and gives back to the communities it serves. July 2017

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COVER STORY “We create value in our real estate private equity business by making very targeted capital and cosmetic improvements to the physical property, by reducing operating expenses, by rebranding the property in its respective submarket and by improving operations to make the asset more appealing to tenants,” said Trkla. “We believe we can add value in a similar way with our c-store strategy.” Locations where development costs can be controlled are attractive areas. Yesway offers Cenex, “We are one of the few c-store chains of which we are aware Conoco, Phillips 66 that is growing by acquiring rural and suburban locations and BP branded fuels from more mom-and-pop owners, where we can make capital and plans to also offer improvements, reduce operating costs, streamline operations Yesway-branded gas. and add and/or improve foodservice or other product offerings,” Trkla said. We are not interested in urban locations, promotional and marketing best practices from exceptional which are higher-priced and have fewer ways to add value.” Yesway is in the process of completing over $10 million c-store operators in business today, but we are particularly in capital improvements on its first 73 locations in addition focused on the foodservice offering that we can introduce into to evaluating several raze-and-rebuilds. The majority of our stores,” Trkla said. Yesway’s new fresh portfolio-wide foodservice improveYesway’s stores are sized between 2,000-4,500 square feet, and the company is developing layout prototypes for each type ment program is already up and running in many of its current and size of footprint. While Yesway is open to building new locations. Featured items include roller grills with bold flavors stores from the ground up, that is expected to be the excep- such as chipotle bourbon and sriracha cheeseburger roller bites, fresh commissary sandwiches, salads, fresh fruits, vegtion instead of the rule. “As we evaluate stores for acquisition, we develop a gies, snack trays, fruit parfaits and a full bakery. The program features three levels of foodservice, dependdetailed and site-specific business plan for each location. We model the impact of cosmetic improvements, deferred ing on a store’s square footage and customer demographics. maintenance, expanded foodservice offerings, upgraded “The bigger the store and the more targeted the customerunderground storage tanks, improved operations and greater base, the more we can offer,” Trkla said. Many of the stores Yesway acquires arrive with limited, inconsistent or nonexenergy efficiency, to name a few,” said Trkla. istent foodservice programs. The chain plans to implement a basic foodservice offer in the locations where none existed BRAND BUILDING As it grows, Yesway is crafting its brand. “We hired [global before, and then, over time, upgrade individual locations furbranding firm] CBX out of New York, which did a terrific ther as merited. To create the most effective foodservice program possijob working with us to create our brand name and design,” Trkla said. “We understand the importance of branding to ble, Yesway plans to hire a full-time chef and develop a test our growth and improvement strategy, and we have an entire kitchen, most likely within its recently-acquired store in branding and marketing department at work on it,” Trkla Grimes, Iowa, only a few miles from Yesway’s headquarters. While it has not ruled out the idea of a future commissary, said. “Building the Yesway brand from concept through store Yesway is currently partnering with local suppliers to proroll-out has been incredibly exciting,” Because Yesway is acquiring individual locations and small vide fresh grab-and-go sandwiches and other items. “As we get closer to 250 stores, we will likely establish delivmom-and-pop chains, its stores come with little uniformity in terms of layout or product offer. As a result, it is implementing ery warehouses, but, right now, we want to walk before we several iterations of its capital plan to fit the needs of different run,” said Trkla. “Our Texas markets are different from our locations. Even as the square footage varies, Yesway stores will Iowa markets, so we are partnering with local food supplifeature uniformity in terms of signage, color schemes, equip- ers to support each region. Many of our stores have never had ment, loyalty offerings, fleet cards, uniforms and restroom salads, bakery items, or fruits and veggies before, and we are design. Yesway has also partnered with a range of gas brands seeing an increasing demand for fresh products like these.” including Cenex, Conoco, Phillips 66 and BP, and plans for DISTINGUISHING DIFFERENTIATORS several locations to offer Yesway-branded fuel. By creating a new brand in the market, the team at Yesway has a completely blank slate to define what it wants to be as TACKLING THE FOOD EQUATION Yesway plans to utilize industry best practices, which it fol- it grows to become one of the largest c-store chains in the lows closely. “We are constantly evaluating the operational, country. Yesway wants to let the industry know that it is dif28 Convenience Store Decisions

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COVER STORY ferent, and expects technology to play expand into additional product categories over time. Yesway has also added Fidelity Express money-order and walk-in bill a major role in setting it apart. Yesway partnered with Paytronix payment services in its stores. But c-store’s biggest differentiator is its people, both its to launch its “Yesway Rewards” loyalty program on June 28, which works veteran senior team and front-line employees who offer the via the Yesway app and/or a physical kind of first-name-basis customer service small towns value. Yesway aspires to be a great neighbor that builds and gives loyalty card. The program uses gamification to reward customers based on back to the communities it serves.“We will be providing new purchase frequency and dollars spent, services in a lot of these towns,” Trkla said. “We also actively while providing invaluable data on support local charities such as the Reading Buddies literacy program in Ottumwa, Iowa, as well as civic organizations purchasing habits and trends. “We place great emphasis on col- like the North Iowa Community Emergency Response Team lecting, analyzing and using specific in Mason City. We are committed to supporting local first and targeted data to inform all the responders and those who serve or have served in the military.” Trkla believes in his team’s ability to execute on their decisions we make,” Trkla said. “With Millennials now the largest block of population, Yesway strategy. “Over the past quarter century, we have earned a plans an ‘incredible emphasis’ on social media and digital well-deserved reputation for efficacy—for doing what we marketing communications “that is deeply baked into our said we would do—and for being fair and honest negotiators, operators and excellent corporate citizens,” he said. “These loyalty program.” Currently, Yesway is developing its own white-label, pro- attributes are now benefitting us in the c-store industry. As prietary products, set to launch by the end of 2017. It will a result, we are seeing a tremendous increase in the number begin with staples such as bottled water, which allows for of owners interested in selling us their stores. We are excited higher margins and more aggressive pricing, and plans to about what the future holds for Yesway and our customers.”

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COVER STORY

Clark’s PNS

Plots Its

Future

HERE ARE A NUMBER of convenience chains in the industry that go about their business quietly, taking advantage of opportunities when they present themselves and are regularly tuning into the needs of their customers. Arguably, that number is dwindling as large convenience corporations gobble up small competitors and middle-tier operators add so many bells and whistles that they are forgetting that customer service is a priority. Customer satisfaction drives all operational aspects at Clark’s Pump-NShop (PNS). Though the convenience retailer has been busy implementing more conveniences and technological advantages at its locations, Clark’s still maintains a level of customer service that has distinguished it as a c-store operator since it was founded in 1980. The retailer ’s goal to assimilate fuller foodservice, larger stores while exploring new markets are just a few reasons why Convenience Store Decisions has chosen Clark’s as one of its 2017 Chains to Watch. Clark’s parent company, Ashland, Ky.-based John Clark Oil Co. today operates the growing Clark’s chain. 30 Convenience Store Decisions

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With the company’s vision that customers will want to Return, Refresh and Refuel—Clark’s catchphrase—the growing c-store brand is gaining the attention of competing chains. The second-generation, familyowned company operates 63 store locations in Kentucky, Ohio, West Virginia and Florida, but that store count will soon change. Clark’s currently has four new stores under construction: two in Kentucky—in the cities of Lexington and Georgetown, respectively—as well as a new-build in Rio Grande, Ohio and a fourth project planned in The Villages, Fla. All the new Clark’s locations will feature large beer caves and expanded fountains and frozen drink centers. In addition, each store’s cooler area will average between 12-15 doors of retailing space. Ranging from 2,500-4,800 square feet, the planned stores also offer wider shopping aisles that provide patrons a large traffic area without the loss of shopping options. In addition, new sites boast open-vaulted ceilings, mostly all-glass fronts, wood tile flooring and LED lighting. Every new location will also feature

a drive-through. Clark’s currently has 43 locations with drive-throughs. Three more store locations are in the planning stages. The company will begin construction later this summer. “By December, we should be at 70 locations,” said Brian Unrue, director of operations for Clark’s. FUTURE IN FLORIDA For a number of years, Florida has been a top state for migrating Americans, and not just for the bluehaired set. Central Florida cities such as Jacksonville, Orlando and Tampa are desired metropolitan cities largely due to unusually strong job creation, reasonable housing prices, plus, the state has no income tax. Not surprisingly, Florida has also become a target destination of several c-store chains including Kangaroo Express, Thorntons and Wawa. The business opportunities in Florida were too much for the Kentucky c-store chain to ignore. About two years ago, Clark’s opened its first location in the Sunshine State—northwest of Orlando. Since that time, customer traffic and sales have consistently been off the charts, according to Unrue. CStoreDecisions ecisions .com

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Clark’s newest foodservice concept is called Jack’s South Ashland Deli, based on a poplar local retailer in Ashland, Ky., South Ashland Market. If Clark’s Pump-N-Shop continues to thrive in face of bigger competitors, its’s because of the family nucleus of Rick Clark (left), co-owner; John Clark (center), founder of the company; and Brent Clark (right), company president.

“Our grab-and-go food program is setting huge sale numbers,” said Unrue. “Our cold vault sales are so incredible, and this can only help inside gross numbers, along with great food sales. The weather is so consistently beautiful I believe our patrons just enjoy getting out. We also expected dips when the snow birds would return home, but honestly, we have kept steady sales year-round.” DELECTABLE DESTINATION A few years ago, Clark’s executives decided they could offer certain foodservice items at a higher quality than surrounding c-store competitors. Under its Clark’s Café platform, the c-store chain has expanded its breakfast offerings and is putting a greater emphasis on fresher food options. The program consists of full menu offerings for breakfast, lunch and dinner. Clark’s Café also offers traditional grab-and-go selections including burgers, personal pizzas, pretzel sticks, nachos, honey corn dogs and Tornados. Krispy Krunchy Chicken, which is also part of Clark’s Café, is a staple in many Clark’s locations and will be part of three new stores under construction. In the fourth location, the c-store is tweaking its newest dining concept: Jack’s South Ashland Deli. CStoreDecisions ecisions .com

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“When we added foodservice in our bigger locations a few years ago, we were not very good at it. Through trial and error and with Brian Unrue’s leadership over the past few years foodservice has grown to be a profitable category for us,” said Rick Clark, company co-owner. “Our partnership with H.T. Hackney and Krispy Krunchy has been invaluable. As a result of everyone’s busy lives, our foodservice program provides a fast hot meal for our on-the-go, active customers.” H.T. Hackney Co. serves as the wholesaler for Clark’s. All four locations are designed inside to accommodate Clark’s expanded foodservice format. “All of the new stores will have foodservice operations and all will have high-top seating in the dining rooms,” said Unrue. Clark’s is finalizing its Krispy Krunchy Chicken locations’ new catering menu with delivery available. The catering program is set to roll out this month. By listening to customers and following sales trends, Clark’s has developed new foodservice strategies for its various markets. “Once we got in it and learned and worked it we realized that the margin and the additional sales tied to the department were going to be a great

CLARK'S PUMP-N-SHOP at a glance • Founded in 1980 by John Clark • 67 Store Locations • Headquarters: Ashland, Ky. • Parent Company: John Clark Oil Co. • Clark’s PNS President: Brent Clark • Co-Owners: Brent and Rick Clark

addition to our inside sales gross profit. We now want to be your destination of choice for that foodservice item,” Unrue said. New breakfast items are on the agenda. Clark’s has been expanding its breakfast program to accommodate broader customer demand. So far, the plan is working. “Breakfast is a huge part of our foodservice program. It accounts for almost 50% of food sales. Mainly due to the high quality and the added attention this segment receives. All items are fresh baked and can be made to order. The customers who are in a hurry to get to their destination love the idea of that one-stop: for gas, coffee, breakfast and snacks for the day,” Unrue said. Offerings range from fresh breakfast biscuit sandwiches to the Clark’s Cafe Special—two eggs, small biscuit July 2017

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COVER STORY

As Clark’s Pump-N-Shop continues to build bigger and better stores, the retailer is featuring grocery and foodservice options that keep customers coming back such as its expanded beverage selection, as shown on the left in a store in Huntington, W. Va. Clark’s is now building four new stores, each store’s cooler area will average between 12-15 doors of retailing space. Also, the chain has revamped its foodservice, which includes a new deli concept and an expansion of its popular Krispy Krunchy Chicken program. chain integrated the name into the new foodservice platform as well as in its new store design. As company’s foodservice agenda has changed, the deli menu has also. Jack’s South Ashland Deli offers various side dishes and sandwiches including meatloaf, barbecue and tuna salad. “We really try to do a lot of newer items monthly as a (limited time offer) LTO. If they take off we consider adding them to the menu,” Unrue said. DELI AND BEYOND When it operated, the South Ashland “We have learned that if you are in Market had a loyal following in town. an area where most customers are Even when it ceased to exist and Clark’s the same, and you don’t have people had acquired the business, the deli was migrating through on a regular basis, so popular with area residents that the your regulars do get tired of the same

and gravy with a choice of a sausage or three strips of bacon. But the options vary. “You can get a biscuit stuffed from a selection of sausage, ham, bacon, chicken and even bologna if you wish,” said Unrue. “Lunch and dinner consists of daily, freshly-made specials, whether it’s steak and gravy, meatloaf, fish, chicken and tenders—made daily.”

menu. This is where we would offer daily specials that typically steer away from the normal everyday menu offerings. In these type of delis, people do like and want a change.” To further push its foodservice to new heights with the deli offering, the c-store is incorporating fresher, more nutritious options for patrons, especially as more stores come online. “In October we are opening a new concept at two locations, which will be tied in with Clark’s Café/Jack’s Deli, offering soups, salads and fresh, delicut sandwiches,” said Unrue. “We have chosen to place one in a residential, high-volume location with lots of rooftops. The second will be off an exit of a well-traveled highway. We are really excited about this new venture.” To get the word out about its new offerings, Clark’s is promoting deals on the company’s app and on social media. Another item that the c-store pushes regularly is bottled water. Eight years ago, the retailer began carrying its own brand of bottled water. For its digital marketing strategies, Clark’s partners with OpenStore by GasBuddy. “Facebook, Instagram, our app and As part of its current expansion plans, Clark’s has implemented a new store design that features wide customer aisles, fuller fountain options and its new Jack’s South Ashland Deli offering.

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COVER STORY our web page are four of our biggest tools,” said Unrue. COMMUNITY TIES Clark’s works tirelessly to strengthen its bonds to local communities. For instance, the company this year sponsored the 102nd Clark’s PumpN-Shop Kentucky Amateur golf tournament. The Kentucky Amateur has been contested since 1911, crowning some of the state’s finest golfers. Clark’s in 2015 established the Rodney Clark Memorial Scholarship to honor Rodney Clark, a co-owner who died in January 2016. Rodney excelled at many of the technical fields offered at Ashland Community and Technical College, which is affiliated with the annual scholarship. In the entire month of February, Clark’s also collects for St. Jude Children’s Research Hospital annually. Clark’s revels in being a c-store the community can depend on, whether it’s for good food, affordable prices or just a friendly face. Embraced by the company’s employees, these tangible qualities and practised principles begin and end with the Clark family. Most industry experts agree that next-generation executives will be instrumental shaping the fabric of the c-store industry. Besides awareness, creativity and desire, good communication is also a key tool.

“We all talk face-to-face in morning meetings with one owner (youngest brother Brent) and usually meet with the other owner (oldest brother Rick) in the afternoons,” said Unrue. “Everyone’s ideas and opinions are listened to and evaluated and if it will

benefit the company, it becomes part of the operation. Another huge part is the respect that is shown from the owners to everyone involved in operations. Honestly, it isn’t about the quantity of people but the quality of the people that are involved.” CSD

PA R T N E R I N G ➤ Low investment ➤ Simple operation ➤ Floor plan flexibility ➤ Portable made-to-order sandwiches & salads ➤ Great fresh food options for all day-parts ➤ Proven operational & control systems

Whether you are looking to own and operate a SUBWAY® restaurant yourself or lease space to an existing SUBWAY® franchisee and earn rental income, the SUBWAY® restaurant chain can offer a formula that works. Friendly customer service has helped Clark’s Pump-N-Shop become a regular part of many of the local communities it operates in. CStoreDecisions ecisions .com

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www.subway.com call Allison Morrow 800.888.4848 x1736 or 203.877.4281 x1736 e-mail: morrow_a@subway.com

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FOODSERVICE

Deli Is Taking Center Stage In their quest to craft hardy deli programs, more c-stores are combining the drawing cards of freshness and authenticity with their ace in the hole: convenience. By David Bennett, Senior Editor

crab cakes in Maryland or red beans RESHNESS IS ON EVERYONEâ&#x20AC;&#x2122;S billion by 2021, Mintel forecasted. Anymore, c-store patrons can enjoy and rice in Louisiana. mind lately, including Amazon, Retailers with robust deli programs which last month announced its a variety of offerings from rotisserie intention to buy Whole Foods chicken to homemade meatloaf, from often make use of genuine ingredients craveable, hot sides to specialty salads. in presentations that earn consumer Market for $13.7 billion. trust. Substituting tuna fish for crab Fresh is certainly no new concept to in your crab cakes or pork and beans the convenience store channel, which FLYING HIGH While more than half of all consum- for red beans will only go so far with is marked by a growing number of retailers that are punctuating their ers have made any c-store foodservice customers. Authentic food made from foodservice programs with fresher purchase in the past three months, dif- fresh, wholesome ingredients are what ingredients, fresher menu offerings ferent consumers perceive c-stores U.S. consumers increasingly expect as and fresher promotions. That col- differently, according to Mintelâ&#x20AC;&#x2122;s food- part of their dining experience. For national chains such as Pilot lective concept includes many deli service report. Those who purchase programs that are expanding beyond a variety of foodservice items from Flying J, offering its patrons food that the line-up of soups, traditional salads c-stores tend to have positive associa- goes beyond a pizza slice or roller grill tions with c-store foods. For example, item can be a challenge. However, the and sandwiches. Sales of foodservice items at 56% of consumers who had purchased Knoxville, Tenn.-based convenience c-stores continue to grow, reaching an five or more foodservice items from a retailer sought to break some barriers estimated $34.5 billion in 2016, accord- c-store in the past three months agreed in 2013 when it rolled out its PJ Fresh Marketplace deli program. ing to a Mintel Group report released that c-store food is high quality. PJ Fresh is a departure in a sense Homestyle dishes that reflect the March 2017, tracking foodservice trends in the convenience store chan- flavor of a particular region are the that it gives customers at select locanel. Moreover, foodservice sales in the ones that often earn a loyal following, tions a broad menu that includes channel are expected to rise to $41.8 whether itâ&#x20AC;&#x2122;s a bowl of chili in Texas, chicken tender salads, chicken tender 34 Convenience Store Decisions

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Join us for the 2017 National Advisory Group conference!

September 10 thru13 th

The National Advisory Group (NAG) is an association of small, mid-sized and family-owned chains and the executives that run them. This group convenes at an annual conference to exchange ideas with the motivation to improve their business performance and ultimately their bottom line. The setting of this conference encourages an extremely educational, yet highly social environment. The schedule consists of top-notch speakers, retailer information exchanges, opportunities to address the burning issues within your business, a chance to get to know your peers in similar size operations and much more!

THANK YOU TO OUR SPONSORS:

Nashville, TN Downtown Hilton

Visit www.nagconvenience.com for more information 2017 NAG 4-pager.indd 1

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Sunday, September 10, 2017 1:00 – 7:30 pm: Registration 1:00 – 4:00 pm: NAG Hospitality Room Open 4:00 – 5:00 pm: NAG/YEO Board Meetings 6:00 – 7:00 pm: The 2017 NAG Confernece Welcome Reception in the NAG Hospitality Room 7:00 – 9:00 pm: NAG Dine-Around at the Hilton Nashville Downtown 9:00 – 12:00 am: NAG Hospitality Room

Monday, September 11, 2017 7:00 – 8:00 am: Breakfast 8:00 – 8:15 am: Welcome/Conference Overview by NAG Executive Director John Lofstock 8:15 - 9:15 am BURNING ISSUE 1: The Impact of Family Business on Convenience Retailing: Since the inception of the modern convenience store industry more than 75 years ago, c-stores have provided the foundation for retailing excellence. This commitment to excellence begins with an outstanding corporate culture and an unwavering loyalty to employees and customers. So while bigger corporate entities have their sights set on family-owned chains—as much for their superior culture as for their balance sheets—they cannot replicate the value family businesses have in the communities they serve. In this session, hear from three of the convenience store industry’s most respected chains about their commitment to employees, customers and the tradition of family-owned business.

10:30 - 10:45 am: Break

SPEAKERS: • Cherrie Clay Clark, Professor of the Practice of Management at the Owen Graduate School of Management, Vanderbilt University Moderator: Jonathan Ketchum, Senior Vice President of Retail, Alon Brands

10:45 – 12:15 pm: INFORMATION EXCHANGES PART 1 The Information Exchanges are the heart and soul of what makes NAG so unique. Attendees will be formed into small groups of non-competing chains to discuss relevant business issues. We all want uninterrupted time with people who “do what we do,” but rarely do our busy lives allow us the luxury of benchmarking what we do and how we do it with other professionals. As you listen, learn and share with your small group of retailers, you will find that what you are doing right will be validated, what you might be doing wrong will be challenged, and how you might do things better will be encouraged. The relationships formed in this intimate setting will last a lifetime and be firmly measured in increased profitability and decreased legal liability. 12:15 – 1:15 pm: Lunch 12:45 – 5:00 pm: NAG Golf Outing, Hillwood Country Club Nashville (boxed lunch will be served.) 1:15 – 5:00 pm: Free Time/Spouse Events 6:30 – 9:00 pm: Retailer/Supplier Dinners On Your Own to Experience Nashville 9:00 – 12:00 am: NAG Hospitality Room

Tuesday, September 12, 2017 7:00 – 8:00 am: Breakfast SPEAKERS: • Joseph Sheetz, President and CEO, Sheetz Inc. • Jeff Miller, President and CEO, Miller Oil Co. • Allison Moran, CEO, RaceTrac Petroleum Inc. Moderator: John Lofstock, Executive Director, the National Advisory Group 8:46 am: Moment of Silence in Observance of 9/11 9:15 - 9:30 am: Break 9:30 - 10:30 am: BURNING ISSUE 2: Navigating Stafﬁng: Attracting, Motivating and Retaining Millennials. Words used to describe Millennials: entitled, lazy and spoiled as well as tech-savvy and smart. As the largest generation in the workforce, they aren’t going away. Those retail organizations that learn how best to lead Millennials will have a competitive advantage in the marketplace. The process begins with understanding why they are different from prior generations and what motivates them in the workplace. The answers may surprise you.

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8:15 – 9:15 am: BURNING ISSUE 3: Competing On Fuel: Understanding RIN’s, alternative fuels and declining gallon sales. The Renewable Fuel Standard (RFS) is changing fuel economics across the country and not for the better. Credits for renewable identiﬁcation numbers (RINs) are escalating and convenience store chains are having a harder time competing on price and in some cases they are being forced to retail fuel at a loss. Combined with these regulatory requirements, enhanced fuel-efﬁcient vehicles and alternative power sources are muddying gasoline’s future. Learn what you can do to protect fuel sales to remain competitive in the gasoline business. SPEAKERS: • Stanley Roberts, President & CEO, Capital Oil Inc. • Wendy Chronister, President & CEO, Chronister Oil Co.

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Moderator: Suzanne Murray, Partner, Haynes and Boone, Lead Counsel for the Small Retailers Coalition

1:00 – 2:30 pm: Information Exchanges Part 2

9:15 - 9:30 am: Break

2:45 - 3:45 pm: YOUNG EXECUTIVES ORGANIZATION (YEO) BREAKOUT SESSION: What Does Omnichannel Mean to Convenience Retail? Omnichannel retail is a multichannel approach to sales that seeks to provide customers with a seamless shopping experience whether the customer is shopping in-store, online or from a mobile device. What distinguishes the omnichannel customer experience is that there is true integration between channels on the backend. Using an omnichannel approach means retailers know and respond to their customers’ shopping preferences in real time and can tailor marketing efforts to meet their needs. Presenting a uniﬁed physical and digital customer experience in the age of Amazon is an essential requirement for today’s convenience stores.

9:30 - 10:30 am: BURNING ISSUE 4: The Future of Fresh Foods in Retail: As consumers increasingly seek fresh options in convenient formats, retailers are rising to meet the demand. While customers have a tendency to talk healthy and eat otherwise, there is a clear need for quick, healthy foodservice solutions and convenience stores are in a prime position to meet this demand. Driven by the consumer’s demand for convenience, food retail concepts, formats and locations are converging. Today’s shoppers are pushing convenience retail businesses to expand, invest in fresh foods and provide a consistent brand experience.

2:30 - 2:45 pm: Break

SPEAKERS: • Pat Lewis, Partner, Oasis Stop ‘N Go, Twin Falls, Idaho 5:30 – 6:30 pm: Young Executives Organization (YEO) Reception, NAG Hospitality Room

SPEAKERS: • William Baine, CEO, Git’N Go Market • Mario Spina, CEO, The PRIDE Stores Inc. Moderator: Matt Lally, Manager, Analytics & Insights, Nielsen Perishables Group

6:30 – 9:00 pm: NAG Conference Dinner & Awards Ceremony 9:00 – 12:00 am: NAG Hospitality Room

10:30 - 10:45 am: Break

Wednesday, September 13, 2017

10:45 - 12:00 pm: BURNING ISSUE 5: Developing Real Estate: How to Find and Invest in Great Locations: The retail industry is more dynamic than ever. Retailers must evolve to succeed over the next decade. However, the cost of real estate continues to rise so convenience store operators must make wise decisions about how to develop properties. This includes capital investments, site selection, store design and layout and the service offered. Other strategies, such as sale-leasebacks, can help c-stores access capital to acquire new locations. This session will explore the best practices of real estate development to help retailers stay ahead of the competition.

8:00 – 9 am: Breakfast

SPEAKERS: • Charlton Bell, Senior Vice President of Facilities, Tri Star Energy • Robert Buhler, President & CEO, Open Pantry Food Marts • Jack Kofdarali, President & CEO, J&T Management Inc. Moderator: Mark Radosevich, President, PetroActive Services 12:00 - 1:00 pm: Lunch

9 am - 10:15 am: BURNING ISSUE 6: Foodservice: Delivering the Goods. UberEats and Amazon have muscled into the foodservice market and are changing how consumers purchase their meals. Other services like Doordash and Instacart are also gaining momentum, keeping customers away from convenience stores in favor of home delivery. Emerging services such as Munchery deliver food directly from commissaries, bypassing the brick-and-mortar stores altogether. To remain competitive, convenience store operators must keep pace to maintain sales in this crucial category. SPEAKERS: • Bonnie Riggs, Director, Industry Analyst – Foodservice, The NPD Group Moderator: Ed Burcher, Foodservice Management and Strategy, FriendShip Food Stores 10:15 –10:30 am: Break 10:30 – 12:00 pm: IDEAS BOOT CAMP: Game-changing ideas retailers can take home with them that are guaranteed to boost retail proﬁtability. 12:00 pm: Conference Wrap Up and Takeaways

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As the convenience store and petroleum industry continues to evolve, training the leaders of tomorrow is more important than ever before. To help young executives have a group that is solely focused on exchanging personal experiences with peers in their age group, the National Advisory Group (NAG) is proud to announce that it has relaunched the Young Executives Organization (YEO). YEO’s mission is to cultivate young talent in the convenience store and petroleum industry through implementation of education and networking. YEO accomplishes this mission by leveraging the experience of NAG members to help foster superior leadership skills. YEO members are industry leaders who are approximately 40 years of age or younger. Members are entrepreneurs, leading top businesses and actively pursuing a higher level of professionalism in the convenience store and petroleum marketing industry. Membership in YEO provides young convenience store and petroleum industry executives with an opportunity to network with other NAG members and inﬂuential industry leaders. It also gives young executives a platform to express their ideas, leadership abilities and vision for the future of convenience retailing. Membership in YEO is open to all NAGmember company employees at no cost. If you are not a NAG Member, join NAG now at www.nagconvenience.com. If you are a young executive or if your operations has a young up-and-coming executive please join us in Nashville! For additional information, contact John Lofstock at jlofstock@csdecisions. com or YEO Board Chairman Jared Sturtevant at jared.sturtevant@ cstbrands.com.

PGA Class A Head Professional Mike Lathrop oversees the 18-hole, par 72 golf course at Hillwood Country Club. Originally designed by legendary golf architect Dick Wilson, the 7,000+ yard course opened for play in 1957 and was renovated by Bruce Hepner of world-renowned Renaissance Golf in 2003 & 2011. HOW TO REGISTER Go to: www.nagconvenience.com. NAG will conﬁrm your hotel room and your meeting registration. A credit card number must accompany your registration. HOTEL PRICING

A block of rooms has been reserved for the NAG Conference at the special rate of $249/night, inclusive of guest room, high speed Internet and exclusive of taxes. Your hotel costs are NOT included in the cost of the conference and should be booked through the NAG registration site. Please make your room reservation by 8/7/17. It is NOT necessary to call the hotel. Please contact the NAG Event Coordinator for suite pricing and availability at NAGRegistration@mocandco.com.

CONFERENCE REGISTRATION RATES Member Super Saver available until July 11th: Super Saver Price, $549 Early Bird July 12th - August 11th: Early Bird Price, $699 Standard August 12th onward: $749 Non-Member Super Saver available until July 11th: Super Saver Price, $649 Early Bird July 12th - August 11th: Early Bird Price, $799 Standard August 12th onward: $849 Spouse/Guest $399 Registration for the conference is open to retailers only at this time. Suppliers interested in attending should contact info@nagconvenience.com.

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The National Advisory Group (NAG) is an association of small to mid-size and family-owned convenience store chains and the executives who run them. Members meet annually to exchange ideas with the motivation to improve their business performance and ultimately their bottom line. The setting of this conference encourages an extremely educational, yet highly social environment. The schedule consists of top notch speakers, retailer information exchanges, opportunities to address the burning issues within your business, a chance to get to know your peers in similar size operations and much more! For information on NAG membership or NAGâ&#x20AC;&#x2122;s Young Executives Organization (YEO) contact NAG Executive Director John Lofstock 201.837.2177 â&#x20AC;˘ jlofstock@csdecisions.com

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FOODSERVICE “PILOT FLYING J IS LASER FOCUSED ON SOURCING THE BEST POSSIBLE INGREDIENTS AND ADDING VALUE TO THOSE INGREDIENTS BY SHOWING CARE IN HANDLING AND PREPARATION. IT’S THROUGH THESE PRACTICES THAT OUR GUESTS KNOW AND EXPECT A DIFFERENCE IN OUR FOOD QUALITY.” -SHANNON JOHNSON, VICE PRESIDENT OF FOOD INNOVATION, PILOT FLYING J for KFC, and product innovation direcsteak, potato wedges and homemade locations across the country. “Offering our guests a variety of tor at McDonald’s U.S.A. mac and cheese. Deli patrons can combine their favorite protein, two fresh, quality food is a top priority sides, a roll and a drink as part of their for us at Pilot Flying J,” said Shannon COOKING WITH LOVE Customers of PJ Fresh Marketplace “Make it a Meal” deal. Still, the chain Johnson, Pilot Flying J’s vice presiacknowledges that fresh and authentic dent of food innovation. “This year, shouldn’t expect duck confit as part we are quickly moving to incorporate of their deli selections anytime soon. offerings are what sell. The fast-casual dining concept, now enhanced equipment technology at all However, the retailer is adding some available at 38 travel center locations, store locations to provide our guests additional flair to its food. To achieve has been modified to provide patrons with the very best possible food and this, the company last month hired more selections than ever before. beverage selections. We are also work- well-known food professional Tim Another pilot program is PJ Fresh ing to incorporate a made-to-order Love to energize the foodservice proBreakfast Sandwiches, a new line-up of platform at all locations in order to gram even more. Aficionados of southwestern cuibreakfast sandwiches featuring hearty, provide customers with the freedom to customize their orders to best meet sine might recognize the chef from his artisan ingredients. appearances on CNBC’s “Restaurant It’s another component of Pilot their needs and tastes.” Johnson, who joined Pilot Flying J in Startup.” He also owns the TexasFlying J strategy to become a foodservice destination for Americans on the early 2017, boasts a resume that includes based restaurants Lonesome Dove move. The company operates 750 retail serving as chief food innovation officer Western Bistro, Love Shack and Woodshed Smokehouse. Over the next two years, Love will partner directly with Johnson to develop new signature food items. Love was tapped to create food items specifically for Pilot Flying J’s Southwest region locations, focusing on the flavors and specialties that represent the region’s cuisine. “I’ve always been a big fan of the brand, especially its Knoxville roots, and have been visiting locations regularly over the years while traveling,” Love said in a prepared statement. “I thought there might be an opportunity to see what we could do in this type of setting, as it’s very different from the dining experiences I usually oversee and operate. There is certainly a need to challenge Whether it’s healthy items or homestyle, hearty meals, more convenience retailers are the status quo for those on the go and incorporating innovation and promotion when it comes to their deli programs. Whether provide wholesome options.” it’s a national chain such as Pilot Flying J or a smaller operation such as Flory’s ConveWith better foodservice the ultimate nience, Gas & Delis in New York State, retailers are satisfying their customers’ demand goal, the national retailer is ensuring for fresher, authentic food offerings.

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FOODSERVICE that it doesn’t skimp on the details. “Pilot Flying J is laser focused on sourcing the best possible ingredients and adding value to those ingredients by showing care in handling and preparation,” said Johnson. “It’s through these practices that our guests know and expect a difference in our food quality.”

media every day we post all our different locations and pictures as the hot food comes out and is placed. That’s really working.” The c-store is also using beacon technology to track customer locations, and their preferences. Combined with

the capability of being able to message patrons through their mobile phones, the intent is to heighten the customer experience. “That was our goal for this year— to get everything right in their mobile device,” Flory said. CSD

FLORY’ISHING IN NEW YORK Flory’s Convenience, Gas & Delis, based in Fishkill, N.Y., has been converting passing motorists into loyal customers since 1970. Spelled out in its name, a strong deli program has been a staple of Flory’s, which operates four stores— with a fifth store in the planning stage. Over the years, Flory’s has refined its menu to include fresh breakfast sandwiches soups, churros and traditional favorites such as pastrami and other Boar’s Head cured meats and cheeses, locally popular wedge fries, chicken cutlets, and hot entrees such as meaty spaghetti and chipotle chicken over Spanish rice and sautéed vegetables. Flory’s learned that a good deli program was a main attraction. Flory’s offers 10 cents off a gallon of gas during the morning, which is driving customers inside to purchase breakfast, snacks and drinks. The c-store also provides diners more choices so they can customize their sandwiches. In some locations, customization has taken on a grander scale. For example, in the city of Mahopac, N.Y., which has a larger Hispanic population, Flory’s has tailored its deli menu to include more Hispanic dishes. Still, Flory’s is developing new ways to deliver freshness—some based on technology, said Jamy Flory, company vice president. The c-store earlier in 2017 implemented a new company app so customers can order food items before they arrive. Online ordering and text order is really taking off for us now that we have introduced it,” Flory said. “Now we’re really promoting it—on social CStoreDecisions ecisions .com

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FOODSERVICE

Meeting Healthy Foodservice Demands

Many chains are turning to proprietary programs to meet the needs of health-conscious customers seeking “better-foryou” options, while others find their needs best met via co-branded partnerships. Marilyn Odesser-Torpey, Associate Editor

N A “U.S. RESTAURANT Outlook” survey of 1,008 adults THE PROPRIETARY WAY Some c-store retailers like NOCO Express help customers published in April by AlixPartners global consulting firm, 91% of the respondents said that the availability of to select “better-for-you (BFY)” options by offering a proprihealthy menu options is at least somewhat important to etary line and labeling the BFY varieties in green in its cold them. That number is higher than the 86% recorded last year. case, said Linda Hulings, manager of the company’s propriEric Dzwonczyk, AlixPartners’ managing director and etary Nickel City Foods brand. All green-labeled items are co-head of restaurants, hospitality and leisure practice, displayed together so customers can identify them quickly. The grab-and-go sandwiches, wraps and salads are made pointed out that an increasing number of c-stores are taking in Nickel City Foods’ own commissary, and available in 35 this message to heart. “Seven or eight years ago, [the consumer call for more of the 37 NOCO Express stores in western New York. “Our wraps and salads are very popular,” Hulings said. healthful options] was thought to be a fad, but instead it became a trend,” said Dzwonczyk. “To consumers, the “And we’re considering adding a new salad in a wrap.” When Nickel City first started selling salads it offered a meaning of the word ‘healthful’ can run the gamut from how food is raised, à la the Chipotle model, to offering more choice of two. Now that number has doubled in the larger grab-and-go salads, wraps and fresh-cut fruit like the sand- stores to include a Berry Salad, Greek Chicken Salad and a wich chain Pret a Manger, to posting calories and other new Autumn Salad with mixed greens, mandarin oranges, crumbled feta cheese, tart green apples, sunflower seeds nutritional content on menu boards and on apps.” Forty percent of consumers surveyed for a “Convenience and a raspberry vinaigrette dressing. For customers looking to add more protein, Nickel City Stores Keynote Report” released last year by Datassential research company said that healthier food options would offers in the cold case roasted chicken breast strips and make them choose a convenience store over another option cheese crumbles, sticks and string, which can be eaten alone or added to a salad. To assuage snack attacks, the stores also for prepared foods. 38 Convenience Store Decisions

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FOODSERVICE offer fresh-cut fresh fruit cups and veggie cups. Visiongain business information portal estimated that the global gluten-free foods and beverages market will be worth $5.12 billion in 2017 due partly to the number of people diagnosed with gluten intolerance or celiac disease. The demand for these products is further increased by the growing number of non-gluten-sensitive consumers who perceive gluten-free products as healthier and better for you, the company noted. Pilot Flying J and its proprietary brand, PJ Fresh Marketplace, is always adapting to meet consumer demands. Gluten will soon be eliminated from PJ Fresh Marketplace-brand soups, salads and entrées whenever possible without sacrificing the quality of the products, but gluten will still be included in places where you would expect to find it, such as bread and pizza, said Shannon Johnson, the company’s vice president of food innovation. To give customers more meal and snack choices, both

“This way, guests can add extra dressings, pickles, peppers and other ingredients to add more vibrant flavors or they can skip those ingredients they don’t want,” Johnson said. “We don’t want to be the food police; we just want to offer the widest possible range of fresh options to our guests.” In some stores, Pilot Flying J also has a hot food program. While “BFY” is a broad-based descriptor and can be interpreted in many different ways, Johnson defines it as food that “hasn’t been manipulated and is clearly fresh and recognizable.”

PARTNERING PAYS OFF For chains that don’t have the capability to offer proprietary food or made-to-order sandwiches, salads and pre-cut fruits and vegetables, Dzwonczyk suggested partnering with one or more good suppliers to provide premade items. “Retailers won’t have to make the investment in inventory and labor to offer these items,” he said. “With the right supply partners, all the retailers need to provide is some open space in the cold case display. The partners will actively manage the category in the stores just as direct-service delivery suppliers of salty snacks and other c-store items do.” Coffee Cup Fuel Stops, which has nine stores in South Dakota, North Dakota and Wyoming, partners with Subway in four of its locations. The partnership is in its sixth year, said Tom Heinz, president of Coffee Cup. Heinz, who has been in the c-store industry for 36 years, noted that prior to partnering with Subway, Coffee Cup had operated a proprietary foodservice program. “We found that we couldn’t meet our food costs and customer expectations to provide the quality of affordable food that we wanted to offer to our customers on our own,” Heinz said. “With Subway, the healthful, customizable Seven or eight years ago, the consumer call for more healthful sandwiches so many of our customers want are available dining options was thought to be a fad, but instead has became a 24 hours a day.” robust trend. To keep up with evolving eating trends, c-stores are As an international brand, Subway brings a bigger presadding the means to offer diverse, healthy foodservice options, ence to the Coffee Cup stores in the stores’ marketplaces. which are drawing more U.S. consumers to c-store locations. In The franchisor also provides nutritional information such turn, demand for healthier options is boosting sales for conveas calorie counts for its sandwiches, “something that would nience retailers that are competing with other channels. be nearly impossible for me to do on my own with any kind of accuracy,” Heinz said. He pointed out that the training Subway offers to the indulgent and BFY, PJ Fresh Marketplace will begin offering made-to-order sandwiches in some Pilot Flying J stores staff would be cost-prohibitive for Coffee Cup to handle on its own. “Their support is priceless,” Heinz said. this summer. Regular in-store inspections by Subway ensure that the Presently, Pilot Flying J operates at least 750 stores in the U.S. and Canada, the majority of which offer fresh food program is being operated correctly. “Subway’s discipline extends all the way to how ingredioptions, according to Johnson. The company is also planning to open 17 new food locations, two-thirds of which will ents are handled by its suppliers to mitigate the chances of foodborne illnesses,” he said. “We have confidence that the be in brand new stores, by the end of the year. An open-kitchen format was set to be introduced in these ingredients we receive are healthful and safe.” Coffee Cup Fuel Stops also partners with Pizza Hut. new food locations starting this June. These locations also feature an extensive toppings bar for grab-and-go sand- Beverages ranging from a basic cup of joe to dessert-worthy creations are available in-store from Caribou Coffee. CSD wiches and salads. 40 Convenience Store Decisions

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CATEGORYMANAGER’S NOTEBOOK

Set for the Beverage Season? C-stores hope consumers choose to beat summer’s heat with cold and frozen beverage offerings. By Anne Baye Ericksen, Contributing Editor

WENTY-TWO YEARS AGO, 7-ELEVEN rolled out “Operation

Chill.” The community outreach program partners the national c-store chain with law enforcement agencies to solicit goodwill via Slurpee citations. Over the past two decades, more than 19 million coupons for free Slurpees have been handed out to children who officers caught in the act of doing something good. This summer, approximately 1,000 law enforcement agencies have been supplied with more than 1.33 million Slurpee coupons. Positive community presence pays off year-round; however, summertime promotions have become particularly important for convenience stores when it comes to the cold and frozen beverage category. Not only does the category boast delectable profit margins, but is a perfect go-to for U.S. consumers during the travel season between Memorial Day and Labor Day. According to a National Association of Convenience Stores (NACS) survey, nearly 30% of consumers thought they’d do more driving in June, an 11-percentage point increase over 2016 numbers. C-store operators depend on summer temperatures to entice people with cold and frozen dispensed beverages. An overwhelming majority of retailers house beverage centers with soda dispensers as a focal point. Plus, more than 70% of retailers serve frozen beverages, according to more NACS data. “The warmer weather and the events that come with it draw more people out of their homes and onto the road,” said Steven Montgomery, president of b2b Solutions LLC, a Lake Forest, Ill.-based consulting firm. “That, coupled with an increasing desire for a refreshing beverage that naturally increases during warmer weather, drives sales of cold and frozen beverages.” However, beverage sales from Memorial Day week42 Convenience Store Decisions

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end came in weaker than anticipated. The 4-5% increase reported by Wells Fargo Securities was slightly depressed compared with last year’s summer-kickoff holiday boost. “Sales are down compared to last year, which was the highly promoted 50th anniversary of 7-Eleven’s Slurpee and included the introduction of exciting new flavors,” said Ray Zeiher, category manager for Alon Brands, part of 7-Eleven Inc. Alon, based in Dallas, operates more than 300 stores in Texas and New Mexico. Despite the season’s soft opening, c-store owners and operators remain positive about all beverage sales for the next few months. NACS reports that 80% of retailers are optimistic that in-store sales this summer will show improvement over last year. Additionally, 43% of c-store owners and managers believe cold and frozen fountain beverage sales will increase during the summer season. CARBONATED COMPETITION Not surprisingly, more retailers continue to gear up for the anticipated spike in customers’ demand for cold drinks. “Overall, units are growing slightly. We have over 200 locations with Coca-Cola Freestyle machines and have seen good growth in those stores,” said Joe Brumfield, category manager, dispensed beverages, for CST Brands. Part of Alimentation Couche-Tard Inc., San Antonio-based CST Brands operates 1,178 retail sites in nine states, including the Corner Store convenience chain. In many ways, convenience stores always have been a drink destination. Dispensed drinks fall within the foodservice category, which, according to the NACS’ 2016 State of the Industry report, represents more than one in every five in-store purchases. During the summer, however, cold and frozen beverages assume greater profit potential. As a CStoreDecisions ecisions .com

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CATEGORYMANAGER’S NOTEBOOK subcategory, slushes and other frozen options deliver an Coca-Cola, nearly two-thirds of customers prefer to choose average profit margin of 46%. But they also serve as impe- between traditional and new flavors, and 73% stated they’d welcome monthly rotation of options. Additionally, more tus for other impulse purchases. “Cold and frozen beverages are considered drivers in the than one-third of teens and Millennials say they select retailbusiness, and therefore create add-on in-store sales,” said ers based on the option to mix frozen flavors. “Today’s customers expect to be able to customize their Zeiher. At his stores, Brumfield highlights drinks on large die- drinks,” said Montgomery. “We recently spoke with a cut pole signs, featuring coffee, fountain and frozen options retailer that has fountain equipment with 16 heads. This depending on the season. This summer he plans to promote type of approach helps set a retailer’s dispensed beverage limited-time offers and other beverage promotions with programs apart from others and makes their stores a destination for cold and frozen dispensed beverages.” window and building signs along with pumptoppers. “We have anywhere from three to nine barrels of fro“Also, we continually promote beverage and food comzen carbonated beverages bos,” Brumfield said. (FCBs) in most of our locaW h i l e c - s t o re s h a v e tions. All of our new builds focused on growing the currently include an eightfoodservice category to barrel FCB program,” said compete with quick-service Brumfield. “This year we restaurants (QSRs), those made some significant same businesses have keyed changes in our frozen bevin on appealing to consumerage program by adding ers who just want a cold soda, Fanta products almost excluwhich is a demographic that sively. The improved taste traditionally popped into and the Fanta brand recogconvenience stores to quench nition has given us a nice their thirst in a hurry. boost in FCB sales.” “C-stores have historiIn fact, there are several cally been more focused new Fanta flavors, includon the drink occasion than ing grape, watermelon-lime, QSRs,” said Montgomery. and winter white berry. “However, the QSR industry Coca-Cola also announced has discovered that drinks 1. Cold coffee drinks are generating traffic in c-stores. 2. Traditional carbonated offerings still entice. Powerade, Minute Maid can drive traffic to their loca3. Consumers are increasingly drawn to new frozen flavors. and HI-C uncarbonated frotions. A prime example will zen beverages. be McDonald’s current $1 Other brands released price for any size fountain drink. We can anticipate other QSRs will consider this type new flavors for summer 2017. 7-Eleven’s Slurpee will feaof promotion in the future; if not to compete with c-stores, ture chrome cotton candy and sugar-free watermelon-lime. Both dessert and tropical profiles remain popular, too. then to compete with other QSRs.” Carbonated fountain selections also face pressure from water. Earlier this year, bottled water sales exceeded carbon- OPTIMIZING OPTIONS Sodas and slushes aren’t the only cold beverages with ated sodas for the first time. Now that rivalry is apparent at fountains. Last month, Coca-Cola added viatminwater to which customers can cool off. More c-stores offer milkits dispensers. The beverage giant expanded its soda dis- shakes in their dispensed beverage centers. “We have over 200 stores with f’real milkshakes, and all penser footprint, too. Freestyle machines began offering Barq’s Crème Soda, Minute Maid Sparkling and Mello Yello new builds have the large f’real blending bar,” said Brumfield. Many more stores have expanded coffee centers to in June. include iced or cold-blended caffeinated drinks. “We have a premade frozen coffee offering that allows us FOCUSED ON FROZEN While consumers may crave frozen drinks during colder to compete with coffee stores today,” said Zeiher. “We are in months, sales for this segment peak this time of year. Unlike the process of expanding that offering with 7-Eleven’s new sodas that tend to illicit brand loyalty, anecdotal feedback fresh-made coffee program later this year. Customers will and industry research indicate people react positively to be able to customize their iced coffee the same way they can frozen drink introductions. According to recent data from customize their coffee at our coffee bar today.” CSD

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CATEGORYMANAGER’S NOTEBOOK

Energy Exhibits Staying Power New energy product launches are helping energy drinks and shots gain some of their lost momentum. By Howard Riell, Associate Editor

UELED BY FLAVOR EXTENSIONS, cross-bundling, limited-time offers and Americans’ nonstop lifestyle, energy drinks are finding new consumers who are reviving lagging sales. At the same time, energy shots continue to provide a convenient alternative. For the 52-week period ending May 14, 2017, energy drinks sales in the convenience store channel rose 1.83% to $9.05 billion, according to data from Chicago research firm Information Resources Inc. (IRI). For the same period, sales of energy shots were $731.1 million, down 7.57% from a year ago.

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“Energy drinks continue to grow, but somewhat more modestly,” said Gary Hemphill, managing director of research for Beverage Marketing Corp. (BMC). “The last half of 2016 experienced a slowdown. The need state of energy is a large one, so we believe the category is likely to maintain solid growth in the years ahead.” NATURAL PROGRESSION Monster, Red Bull and Rockstar remain the leading brands. New-product activity in the category has been strong, as marketers attempt to draw in new consumers, but also increase consumption among loyal consumers. Studies show while the demographics of customers have broadened in the last couple of years, the core consumer of energy products continues to be younger males. “There is a broad set of leading, established energy drink brands like Monster and Red Bull,” said Chris Randall, managing director in global consulting firm L.E.K. Consulting’s Consumer Products division. “However, the functional beverage category is evolving, and other drinks like Kombucha are slowly becoming more mainstream. Many of the new, hot introductions focus on ‘natural’ in both drinks and shots, plus the combination of protein and energy.” Some c-stores that have experienced lagging beverage sales are seeing a rebound this year. “Energy drinks are actually making a comeback,” said Patsy Varpula, packaged beverage category manager for Fabulous Freddy’s Car Wash in Las Vegas. “I know that CSDs (carbonated soft drinks) are dying, but the category of packaged beverage isn’t completely down because energy drinks, as well as water, are salvaging it.” CStoreDecisions ecisions .com

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Fabulous Freddy’s operates eight locations in Las Vegas, foodservice. Promote in and around there, and then vice and St. George and Sandy, Utah. The stores feature full-ser- versa; promote your foodservice bundling opportunities on vice car washes with detail shops, express lube services, your cooler door.” 24-hour convenience store and gasoline. Red Bull’s steady stream of limited-edition summer fla- SHOTS AND MORE SHOTS Energy shots, BMC’s Hemphill said, have flattened in vors over the last few years has helped push sales higher, Varpula noted. “Its Kiwi-Apple was a summer addition, and their performance during recent years. “They are positioned differently than the drinks, which became a permanent addition. Now Grapefruit is looking at becoming another permanent fixture in its product line. Its are more viewed as lifestyle beverages,” said Hemphill. L.E.K. has noticed an emergence of multifunction energy diversifying is helping to reintroduce people back into that shots that include both caffeine and protein, capitalizing on category who are sick of seeing the same thing.” the growing demand for more protein in U.S. diets. “5-hour remains the clear market leader in energy shots with strong MIXING IT UP Retailers are employing their own strategies to wring the established distribution,” said Randall. “However, we have seen some emergence from natural brands like Yerba Mate most out of energy sales. “Last year, the energy category started to flatten out,” and private-label products.” Though 5-hour Energy continues to lead the way, new said Bailey Lyden, vice president of retail for Brecksville, Ohio-based Truenorth Energy LLC, which operates the 110- players are finding their way into the energy shot market. For example, truenorth offers just store chain truenorth. “They’d had 5-hour Energy, but according to Lyden double-digit increases for almost a that may change soon. “I’ve been seehalf-decade.” ing more of my competitors switch to The category, however, still remains different brands.” strong. The c-store’s strategy has been Having more than one energy shot to front-line all of its energy drinks. offering is better, Lyden explained. “Living “Everything that is 16-ounces, outEssentials, with that 5-hour Energy brand, side of Red Bull, we price the same at is pretty price proud; they are expensive, if $2.69, whether it be Amp, Rock Star, you will. I think we might have an opporMonster or Xyience,” said Lyden. “We tunity to reach more of our customers with make a tremendous amount of profit a value-added proposition in that shots on Amp and Rock Star just because category.” the cost is lower. We’ve found the cusShots do well, Lyden noted, with contomer doesn’t really identify that much, sumers unwilling to drink 16-ounces of and is not too discouraged, with that fluid. “They still want the pick-me-up. I’m price point. So, we make a tremendous a 5-hour guy myself,” he said. amount of gross profit by front-lining all 16-ounce drinks with Monster. It’s Though energy shot sales have lagged the VITALITY DRIVERS been extremely effective for us.” Energy shots are not traditionally a Company sales of energy drinks last few years, the segment is rebounding thus far in 2017 are up around 10%, he with the emergence of multifunction energy heavily promoted category, said Randall. shots with both caffeine and protein, capiHistorically, the key for driving exciteadded. talizing on the growing demand for more ment in the category has typically been The truenorth chain, which oper- protein in U.S. diets. new flavor introductions. ates in Ohio and Illinois, has found “Two key trends are likely to persist,” said Randall. “The some success by cross-promoting its energy drinks with foodservice. “We’re using, ‘buy sandwiches, get discounts emergence of more organic, ‘clean label’ energy shot brands on energy drinks,’” said Lyden. “Breakfast sandwiches are and products, following broader trends in supplements and food and beverage. And an ongoing diversification of flavor a great bundling opportunity with energy drinks.” The proliferation of flavors among major brands is add- profiles, as has also been seen in other food and beverage ing appeal for female consumers, Lyden suggested. So have categories.” For retailers hoping to grow energy sales, L.E.K. sees a the low-carb ‘diet’ line extensions. Limited-time offers like clear opportunity to drive additional sales with better marthose from Red Bull have likewise proven popular. “Anything we come out with always has good trial,” said keting that is focused beyond the young male consumer to Lyden. “Whether it stays is another thing, but anytime there appeal to a fuller set of consumers. “Flavor development continues to be a potential opportunity for additional sales is a new energy flavor, it does fairly well.” To take advantage of the natural draw of energy drinks, in the shots and energy drinks categories.” The consulting firm also suggested that retailers consider Lyden advises retail colleagues to look at cross-bundling opportunities. “Utilize other high-volume areas, such as more in-store sampling and demonstration events. CSD CStoreDecisions ecisions .com

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CATEGORYMANAGER’S NOTEBOOK

Protein-Powered Profits

Convenience retailers hoping to stay in step with consumers’ changing preferences for meat snacks must do their due diligence. By David Bennett, Senior Editor

RECENT STUDY FROM NIELSEN Co. finds that sales of on average), according to the same Nielsen report. In fact, total-channel meat snacks, including jerky and con- they’re more than 22% more likely to buy meat snacks than venience-packaged dry sausage sticks, has grown at the average shopper. In terms of age groups, baby boomers the same time chip sales have slowed. Broken down, are the biggest buyers, spending $28.48 per individual, per meat snack sales have increased 3.5% over the last year to year, making them 10% more likely to buy meat snacks than $2.8 billion, according to Nielsen, with 7% compound the average shopper. growth over the last four years. For convenience stores striving to stay in step with LEAN TIMES One likely factor behind the growth of c-store meat consumers’ changing snacking preferences, a little due dilisnacks sales is product diversity. As consumers hunger gence can go a long way in terms of increased sales. In the 52 weeks ending May 14, 2017, convenience store for healthier snacking options, makers of meat snacks are dollar sales of dried meat snacks rose 2.9% to $1.53 billion providing those options. Though beef and other tradicompared to the previous year, while unit sales dipped tional proteins continue to grab a bulk of meat snacks sales, 0.13%, according to data from Chicago research firm demand for specialty meats and wild game such as venison is steadily growing. Information Resources Inc. (IRI). “While beef meat snacks have sold more than the next One driver of rising sales is increasing demand from younger Americans who are putting more emphasis on most popular snack by a factor of six, consumers are gobsnacking. More studies show that Millennials are less bling up a wider range of proteins,” said Rost. “In fact, likely to sit down to full meals and more inclined to snack within the last year we’ve seen snacks including alligator throughout the day so they’re seeking snacking options that and wagyu beef (often referred to as Kobe beef), added to shelves.” will satiate them for extended periods. As manufacturers continue to expand the meat snacks “Millennials are increasing their spending on meat snacks faster than any other generation. That said, they’re still envelope, c-stores will determine quickly what sells and spending less per household than other generations,” said what fails. “Sales of leaner cuts of gamier meats are still small but Jordan Rost, Nielsen’s vice president of North American consumer insights. “So there is room to grow penetration are seeing some of the most rapid innovation and growth with younger consumers. Much of the growth areas within in distribution,” said Rost. “Consumers spent nearly $4 meat snacks pushing towards newer flavors and leaner, million on bison meat snacks over the last year (52 weeks healthier proteins align well with the drivers of Millennial ending May 27, 2017), making it one of the fastest growing consumption so there’s lots of opportunity for future devel- meat snacks. Other smaller but rapidly growing varieties include wild boar, venison and elk.” opment there.” Despite the propensity to indulge, health plays a key role In looking across generations and ethnicity, AsianAmerican households spend the most each year ($31.61 in the types of snacks consumers eat. Nearly one-third of 48 Convenience Store Decisions

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CATEGORYMANAGER’S NOTEBOOK consumers say the majority of snacks they eat “OUR YOUNGER AAFES PATRONS are healthy and 28% say they are snacking on ARE STARTING TO LOOK FOR healthier foods this year than in 2016. In fact, HEALTHIER OPTIONS WITHIN THE snacks with health-related claims are among MEAT SNACK CATEGORY SUCH the fastest growing snack launches, with low/ AS ARTISAN BRANDS KRAVE, LORno/reduced allergen claims accounting for 46% of total new snack product launches in the U.S. RISA’S KITCHEN AND CHEF’S CUT.” in 2017, an increase of 30% over 2013, according – RANDY DEMSTER, BUYER, ARMY & AIR FORCE EXCHANGE SERVICE to Mintel Global New Products Database. Perhaps no retailer boasts a clientele that thrives on protein snacks as much as the Army & Air Force Exchange Service (AAFES). The organization operates about 650 store locations on U.S. military preference among U.S. consumers, in various package sizes bases throughout the world, including Exchange Express and formats. Tim Cote, vice president of marketing for Beaverton, convenience stores. According to Randy Demster, a buyer for AAFES, demand for leaner meat snack products is also Ore.-based Plaid Pantry, which operates 110 stores in Oregon and Washington State, said certain meat snack growing among the country’s military members. “Our younger AAFES patrons are starting to look for brands earn prominent display space in most locations. While some products are performing well, “Ball Park healthier options within the meat snack category such as artisan brands Krave, Lorrisa’s Kitchen and Chef’s Cut,” bags and Tillamook sticks are currently leading the way up,” Cote said. said Demster. On the military side, beef-based brands are first in order Because of the expanding product mix, AAFES’ meat snacks sales during the first half of 2017 are up 8.9% over of march. “Jack Link’s brand is king at AAFES in terms of sales and the first half of 2016. “Beef is still the number No. 1 seller, but chicken, pork loyalty,” Demster said. “Our larger pack types are drivand turkey are gaining in point of distribution and sales,” ing the business such as Jack Link’s 16-ounce, Old Trapper 10-ounce and Cattleman’s 10-ounce.” Demster said. Like the planning required in other successful categories, c-stores frequently strategize about the most effective inBEEFING UP SALES While exotic proteins may be gaining traction in the con- store displays and promotions that will resonate with their venience channel, beef meat snacks remain the top protein meat snacks-buying customers. Plaid Pantry is no exception. “In 2016, we had a couple coupon-based and pure price point-driven promotional events that drove significant volume,” Cote said. However, those events weren’t as numerous so far this year, resulting in a drop-off in related sales. “We are down mid-single digits,” said Cote. “Bags are down a bit due to a weaker than prior year promotional plan, while sticks are doing quite well. The bag market in our area (Portland, Ore.) has gotten very price sensitive.” More consumers are trying to eat more proteins, living healthfully and not surprisingly, their choices have never been more plentiful. As purchasing trends continue to evolve, the need for manufacturers and retailers to continue Top 5 Dried Meat Other Dried $ Sales % Snack Makers Meats $ Sales Chg Y Ago to innovate to remain on top of the evolving category is as pressing as ever. Conagra Foods $367,515,936 -0.13% “Half of all Americans say they eat protein in every meal. Link Snacks $334,120,192 -3.05% But, more consumers are also increasingly looking outside Frito Lay $19,115,296 9.21% meats for their protein and Americans are eating more nuts, seeds, legumes/pulses and other plant-based varieties,” Tillamook Country $15,585,971 10.32% Smoker said Rost. “All of this choice has opened consumers’ palates, but also put pressure on meat snack companies to appeal to Thanasi Foods $13,680,663 54.02% that growing sense of discovery.” CSD Source: Information Resources Inc. (IRI), Total US - Conv, 52 Weeks Ending May 14, 2017 50 Convenience Store Decisions

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CATEGORYMANAGER’S NOTEBOOK

Salty Snacks’

Steady Influence of Convenience Stores (NACS), believes both old and new products and brands contribute to the ongoing robustness of the chips and salty snack category—still led by potato chips. “There’s been significant growth in tortilla chips over the years with the considerable expansion of the Hispanic marBy Jeffrey Steele, Contributing Editor ket. Within the chip category, we’re seeing that chips are not necessarily made from potatoes. Whether it’s carrots or NYONE WORTH THEIR SALT knows that chips and onions, or other types of vegetables, these other chips may other crunchy, sodium-laden snacks are a big reason have a healthier halo, or at least a perception of a healthy Americans love convenience stores. A quick visit to a halo,” said Lenard. “We’re also seeing other things on the c-store and consumers can load up on old-fashioned outskirts, like sweet potatoes and kale. Another is Sriracha potato chips, newfangled veggie chips, pretzels, popcorn and with coconut chips. The chip has gone way beyond the traother savory products that can be perfectly paired with an ice ditional potato or corn chip.” In the meantime, not only are chip ingredients being cold drink or a ready-made sandwich. Not surprisingly, the salty snacks category continues to excel. refined, but also chip brands. “We’re seeing more of a private-label presence,” Lenard From 2011 to 2016, category sales grew 30%, reaching an estimated total of $11.2 billion, reported Mintel Group’s “Executive said. “The 7-Eleven chain has a very extensive private label in chips, as do some other retailers. That allows a chain to focus Summary of Salty Snacks in the U.S.,” released this past April. Sales are expected to continue increasing, to a level of a little more on the value customer if that’s a part of the cusabout $13.6 billion by 2021, Mintel said. Propelling the tomer base. You have a little more latitude to tell a brand story. overall sales growth in the salty snack category, is strong That’s because starting a private-label brand allows you to tell expansion of meat snacks and popcorn, followed by cheese a whole new brand story, and avoid what might be misconcepsnacks and corn snacks. Failing to carry their weight on the tions around a well-known brand.” growth front are pretzels and pork rinds, Mintel found. BEYOND CHIPS Beyond the chips aisle, industry observers are seeing NEW FOR OLD From his vantage point, Jeff Lenard, vice president of growth in better-for-you items, Lenard said. A growing strategic industry initiatives with the National Association body of health literature indicates that consumption of nuts

A staple of convenience stores, the salty snacks category remains relevant thanks to changing consumer tastes.

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health halo. For example, trail mix doesn’t fit perfectly into the nuts and seeds line, but the idea of offering nuts and seeds with chocolate and raisins “is worth exploring,” said Lenard. “(C-stores) are doing very well with trail mix.” Ready-to-eat (RTE) popcorn is a rapidly growing salty snack option due to its convenience, healthy halo and overall category innovation, Mintel reported. Chips and salty snacks have an important place in the evolution of c-stores, Lenard said. “As stores grow their prepared foods, it makes sense to tie in as many of their salty snacks as possible,” said Lenard. “If they’re offering a meal deal, it could involve a prepared side, or it could involve a salty snack side. And think about all the salty snacks that might be included. It’s not just chips, but seeds, nuts and other salty snacks.”

and seeds is fundamental to good health and longevity, with some experts reporting these are the very food items all Americans should be consuming more regularly. These reports may in part be helping nuts and seeds do “quite well” in c-stores. Nuts and seeds allow c-store operators to provide a healthier packaged product, which is important, Lenard stressed. Often c-store patrons entering a location have a craving for sweet or savory items. “It’s based on wanting a flavor profile,” Lenard said.”You may want something more indulgent on some days and healthier on other days. You don’t want to put the better-foryou item exclusively in one area. They can go in a salty snack section, but there should be a possibility of multiple placements in both salty and healthy sections of the store.” Sales of other salty snack items may also benefit from a

MAD FOR SALTY SNACKS At Mad Max Convenience Stores, a Saukville, Wis.based chain, the Frito-Lay product line dominates in chips, with Snyder’s of Hanover, Pringles, Uncle Ray’s and other brands following the leader. “Combos [Baked Snacks], nuts and meat products do well on the salty side,” said Steve Magestro, president of Mad Max. As for newer, healthier products, they haven’t proven top sellers—yet. “We really have not seen anything different in this area,” Magestro said. “Doritos are a strong line. When new flavors come out, even in a limited run, they seem to do well. Sweet potato chips taste great, but they just do not do well in our locations. People like the tried-and-true brands in our stores.” Mad Max takes the same approach in merchandising chips and salty snacks at all its locations. Chip lines are invariably merchandised across from the cooler doors, on endcaps and under the counter racks near checkout for the grab-and-go crowd, Magestro said. “We have found over the years the best location for the chip lines is always across from the cooler doors,” he said. “Salty snacks are on the opposite side of that.” The secret of successful sales of chips and salty snacks is “promo, promo, promo,” Magestro said. Mad Max stores have two-for-one deals “all the time” to compete with big box retailers located in the same towns. CSD

SNACKS DOMINATE AMAZON SALES RECENT NEWS OF AMAZON’S $13.7 billion bid for Whole Foods Market sent tongues in the retail world wagging. However, the online retailer has already shown an aptitude to turn a buck on grocery items, especially salty snacks and nuts, according to www.projectnosh.com. In its first quarter, Amazon earned $350 million in grocery sales. So far, the snacks and granola category is still in a top category spot with $80 million in sales. Next in sales are salty snacks, bringing in $16 million, followed by snack nuts and seeds and dried meat snacks. Some of the top brand sellers included KIND Snacks, Wonderful Pistachios, Annie’s Organic, Crispy Green and Lundberg Organic.

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COLUMN OPERATIONS

Addressing Inventory Challenges C-stores should be determing how to get more items in the market basket, eliminating non-profitable traffic and getting rid of the items non-profitable customers are buying. By Bill Scott

ESTERDAY, I STOPPED TO buy diesel at a store that is ing enough inventory to maintain customer service level located right off the interstate, along the path that I means less profits, ‘surely more inventory means greater frequently travel from my home out in the country to profits.’ Using the same logic, if my doctor tells me I need to drink more liquids, ‘drowning myself in the river should the metropolitan area of Jackson, Miss. I have been buying fuel there for over 10 years. The improve my quality of life.’ Most convenience store retailers have a favorite category owner is not a customer of mine, but I enjoy talking about his business and how things are going. I have found that they spend most of their time on. My friend in this story I can learn as much or more from non-customers as I can is all about tobacco, and his stores look more like tobacco stores with piles of convefrom customers I work nience items in the middle, with on a daily basis. This particular con- “THE GENERAL LOCATION(S) OF YOUR surrounded on one side by coolers, and windows venience store retailer STORE(S) HAS A GREAT DEAL TO DO crowded with tobacco owns four stores and he advertising on the other is always complaining WITH HOW YOU MAKE YOUR MONEY. two sides. about how his profits are dwindling. I instinctively IF YOU DON’T KNOW HOW TO ADAPT, STORE STUFF know what his real probYOU ARE ALWAYS GOING TO HAVE Usually, I have to jump lems are, but I also know up and down in the diesel how to identify an individTROUBLE, WHETHER YOU’RE IN LA lane in order to rise above ual who is set in his ways. the signs and catch their Consequently, I don’t want JOLLA, CALIF. OR HOT COFFEE, MISS.” attention to turn on the him as a customer. pump. In other words, it’s Oftentimes, when a person becomes convinced of something, there is nothing you a circus, and more than likely the reason for his dwindling can do to cause them to change, no matter how hard you profits than anything else. But since his concentration is try. Occasionally, I will drop a suggestion that’s usually met on tobacco, I don’t think he even cares one twit about the with a false narrative that has little or nothing to do with rest of the stuff in his store. His vendors take care of that, what I said. If he or she has been brainwashed into believ- and if he knew what his best-selling non-tobacco products ing that more inventory on hand equates to more traffic, are doing, it would surprise me to no end. This fellow is and that more traffic equates to more profit, you are not tobacco, through and through. When you know what category a person’s interested going to change his or her mind no matter how hard you in, most of the time you can bet that everything he or she try. Although the dedication to his beliefs sounds perfectly believes to be true is related in some way to that category. reasonable, he has no statistics to back them up. If not hav- Yesterday, his excuse for dwindling sales was all about 54 Convenience Store Decisions

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COLUMN OPERATIONS

It’s a fallacy in a store operation to think that the more inventory the better. Rather, convenience retailers can do better by instilling sound inventory practices where they can effectively monitor those categories that perform the best and implement management strategies that allow the categories to flourish regularly.

the educational level of the customers he serves. Rural Mississippi is not known as the bastion of superb education, and I can understand the effect that education has on his customers’ ability to afford tobacco products, but it isn’t the only reason for his negativity. He doesn’t see a bright future, but he’s got so much invested in his business, his choices are staying the course or moving elsewhere. The general location(s) of your store(s) has a great deal to do with how you make your money. If you don’t know how to adapt, you are always going to have trouble, whether you’re in La Jolla, Calif. or Hot Coffee, Miss. Nevertheless, his overall plan is to cram his store full of anything and everything a passerby might need at any given moment in time, and he uses his fuel as a loss-leader in hopes that his customers will buy something inside his store. If the average customer buys less than two items, it makes sense to him the emphasis should be on an increase in store traffic. If that’s your marketing plan, then a failure in either of these areas is going to see things getting worse. What you should be doing is figuring out how to get more items in the market basket, eliminating non-profitable traffic and getting rid of the items non-profitable customers are buying.

were driving from Arkansas to New York City to sell watermelons for $1 they had purchased in Arkansas for $1, and losing money on every trip. So, their solution was to buy a bigger truck. Just as a bigger truck would not solve those Arkansas farmers’ problems, convenience store operators who expect their vendors to bring them more inventory (which they have to pay for mind you) is not going to solve theirs’. What’s your margin on the products you do sell? No, it’s not only the difference between the purchase price and the selling price. You’ve got employees on your payroll, the interests you would have earned if you had invested the money you paid for that excess stock into something more profitable, the employment costs over and above salaries, theft and shrinkage, property leases, the insurance, RETHINKING THE NUMBERS the refrigeration, the cost of promotions, and last but not In most convenience stores you can take from 10-15% out least, the amount of confusion caused by excessive stock to the dumpster and you would be better off. Concentrate and how it affects your shoppers’ buying experience—it on the 30% of your inventory producing a profit and take goes on and on. a hard look at the 55-60% you might be better off without. The convenience store industry used to be easy. If you Through a process of repricing, moving or re-moving and had the money to build a store on a busy street you were replacing that inventory with proven, good sellers, you will successful. It’s not like that anymore. The convenience not only improve your profits, but attract more profitable store industry is a science, and most retailers are ill-precustomers by cleaning up your stores. pared to deal with outside forces that are bearing down on Unfortunately, there is a stark correlation between my them with ever-increasing force. friends thinking and my own. For the past 17 years, I have The good news is that almost all of your problems are been asking convenience retailers to let me help them man- solvable. But first, you need to accept the fact that you don’t age their inventory. I teach them, and get them heading in know what most of those problems are, and most likely, the right direction; but, left on their own, they eventually you are wasting your time on the wrong problems and limslip back into their old ways. Why do they do this? Because iting your ability to solve the ones that matter. It may be they have been doing it their way a lot longer than they did time for a third party to take a closer look and advise you it my way, and I don’t have time to run my business and on what you need to do to turn things around. theirs’ too, so they continue to see the debt pile up and the Bill Scott is the author of two retail books, a convenience store recosts go out of control. It reminds me of the story about the two fellows that tailing consultant and speaker, and the president at StoreReport LLC. CStoreDecisions ecisions .com

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COLUMN OPERATIONS

Discount Retailers’

Impact on Rural C-Stores Dollar General and Dollar Tree typically target rural unincorporated areas on well-travelled roads or in underserved small towns.The strategy eventually affects c-stores operating there.

Mark Radosevich

By Mark Radosevich

offerings that include sales, coupons and door-buster offers. Both companies do not directly target c-stores but rather position themselves as “fill-in shopping” for items generally found in supermarkets or discounters like Walmart. Dollar General features household or packaged food items typically priced at or below $5. Dollar Tree works from a model whereby everything in the store is $1. However, they are launching another division with stores that will compete more closely with Dollar General. Over the past years, both chains have added beer and cigarettes, which begins to cross over into traditional c-store territory. Research shows that the addition of cigarettes increased customer counts and that only 26% of all cigarette customers did not purchase other items during a visit. Both companies typically target rural unincorporated areas on well-travelled roads or in underserved small towns. Dollar General reported that 70% of its stores are located in towns with fewer than 20,000 people, and each new store results in employment opportunities for around 13 people. Construction management is so streamlined that the in-house teams can simultaneously work on up to 50 new stores, with construction time being 90 days from groundbreaking to the grand opening. Pre-construction due diligence activities can take up to nine months depending upon the location. By putting an emphasis on unincorporated areas—where governmental regulations are reduced—overall developTWO OF KIND Across the country, there are two primary dollar store mental time is shortened and growth targets are enhanced. Rural c-stores and nearby dollar stores run in parallel competitors: Dollar General and Dollar Tree, which acquired the Family Dollar chain a couple of years ago. Each com- with a commonality of both customer demographics and pany operates around 14,000 locations. Store sizes typically select products including candy, snacks, cigarettes, soft drinks and beer. The notion of “convenience” is also an run around 7,500 square feet but can go as high as 10,000. In 2016, Dollar General logged around $22 billion in sales, important point of commonality with the words “Save Time” with approximately 120,000 stock keeping units (SKUs). being part of Dollar General’s official company theme. The weekly promotional emails generally take a blanket Last year alone, the company added nearly 1,000 new units, and it has been documented that they have a total store approach where offers are valid at all stores, versus a targeted approach toward stores in a specific trade area. In the count target of 20,000 stores. To get a better sense as to how the two companies tar- future, select rural c-stores could be vulnerable in the event get their customers, I signed up for their weekly emailed that dollar store marketing decides to refine and expand its Y FIRM HAS RECENTLY been engaged in several

projects requiring extensive driving through rural areas of the Southeast. Nestled within the bucolic scenery is a growing number of new dollar stores popping up around seemingly remote intersections. I wondered how these stores could be economically justified given the lack of houses or people nearby. Yet their prevalence was unmistakable and I doubt that managements’ strategic plans included money-wasting growth tactics. As such, a renewed assessment of dollar stores and their impact on the convenience store industry seems appropriate. There has been much debate recently about the vulnerability of existing convenience store operations when a sophisticated unbranded c-store chain enters a market. Central Florida and upper South Carolina are good examples of the devastating effects that this can have on older store operations. It is accepted that stores located in rural communities are typically insulated from this type of business disruption. However, the increasing prevalence of dollar stores may represent a threat that has not been fully appreciated. After some research, I’ve taken the liberty of including some findings and recommendations that may prompt greater industry or store level consideration.

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COLUMN OPERATIONS loyalty and email programs to enable store-specific or trade area offerings.

operation. I believe that it will be easier for dollar stores to expand into fuel due to the fixed nature of their store layouts, operational model and the significant disruption BUILDING UP foodservice would cause. Considering the various points of commonality, the key When assessing a rural c-store chain acquisition or one’s distinctions between the two businesses are food and fuel. own stores, the following are a few important considerAlthough previously tested in some parts of the country, ations to make beyond traditional industry metrics: (Dollar General, for example purchased 41 Walmart Express • Do the c-stores have QSRs and if so, are they profitable locations in 2016 with plans to operate the fueling stations and popular in the community? Remember that c-stores at 37 of the sites), dollar stores have yet to pivot to fuel. As without QSRs are more vulnerable. such, it remains the primary point of differentiation and • Is there a dollar store in town and is it of a modern size driver for c-stores to maintain customer engagement. and configuration? C-stores that have demonstrated the Because the companies are publicly traded and the ability to compete with an established dollar store are a related imperative for same-store sales growth, it may be better bet for long-term viability versus a c-store in a town only a matter of time before they take on fuel sales in a seri- where a dollar store has yet to arrive. Given their growth ous way. The timing could be exacerbated as dollar stores targets, it’s only a matter of time until one or more does. reach their targeted national saturation points. Given new store growth rates, the “big two” may be only five or six Possessing more than 35 years of downstream petroleum experience,Mark Radosevich is president of PetroActive Real Estate Servicyears away from fuel becoming a viable addition. es LLC, offering confidential mergers & acquisition representation This highlights food as the No. 1 point of differentiation and financing services exclusively to petroleum wholesalers. He and stresses the importance of having a successful quick- can be reached by email at mark@petroactive.net or at (423) 442service restaurant (QSR) as a key part of any rural c-store 1327. His full professional bio can be found at www.petroactive.net.

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TECHNOLOGY

When Cash is King, Safety Rules From smart safes to best practices in ATM location and cash drawer management, savvy c-store retailers work to keep employees and customers safe from would-be thieves. By Brad Perkins, Contributing Editor

UMORS OF CASH’S DEMISE have been swirling for years. But if cash were no longer king, the lengths thieves go to get it would also have decreased. Technological advances plus increasingly bold thieves mean that even with chip-based Europay, Mastercard and Visa, ATMs, mobile apps that sync to ATMs and technologically-advanced cash drawers that link to security cameras or smart safes becoming more prevalent, skimming, fraud and theft are still a risk. Keeping cash safe is as important as keeping customers and employees safe. “Our No. 1 priority is taking care of our guests and ensuring we provide a safe environment for our team members,” said Terry Adkinson, chief operating officer for Kent Kwik, which operates 43 convenience stores throughout Texas, Oklahoma and New Mexico. “We make them truly understand we’re looking out for their safety as well as guest safety.” Doing so includes taking preventative measures to make sure ATMs and cash drawers are not compromised. “From the merchant’s perspective, if customers are realizing an ATM is not safe in that store, shoppers will stop going to that store,” said Bruce Renard, executive director of the National ATM Council.

Convenience store retailers have many equipment options to handle their cash management duties such as this model from APG, which is suitable to use at a high-volume point of sale for temporarily storing money. 58 Convenience Store Decisions l July 2017

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NOT TOO VISIBLE ATM placement is an important part of mitigating risk. “It’s a balancing act,” Renard said. “You want the machine visible and accessible so people know it’s there, but you also want it visible and accessible by store personnel so they can keep an eye on it. You don’t want to have it next to a window where someone can drive through the window or an outer wall and crash into the machine.” Crash-and-grabs are the most visible ways to steal money from an ATM. But they are also one of the most easily deterred. “Probably 20 years ago we had a crash-and-grab where they backed into our store and put chains around our ATM and tried to remove it,” Adkinson said. “But the way we secure our ATMs now—we use two- or three-inch diameter bolts and put four in the bottom of the ATM with massive tie downs into the concrete—if you wrap a chain around it, you’re not going to yank it out. You may get the front panel out, but you’re not going to get the safe.” Deterred from crash-and-grabs, thieves target fraud and skimming. They’re not the most dangerous to the physical store, but are incredibly damaging to a store’s reputation—and to its customers. And while skimmers used to be shoddy plastic devices that were easily detected, now they can involve tiny pieces hidden in the card reader, even smaller cameras, bluetooth and even Wi-Fi. Therefore, monitoring the ATM becomes even more critical. “We have a person internally who manages all of our ATMs—money, reconciliation, skimming; they are checked on a weekly basis by an internal person at company,” said Adkinson. “We don’t allow managers to fill ATMs. We have a gentleman who does that for us.” Skimming has become rare, according to the National ATM Council’s 2017 U.S. Retail ATM Skimming Survey, in which nine of 10 survey participants “reported never havCStoreDecisions ecisions .com

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Sean Sportun

TECHNOLOGY ing encountered a single skimming device on their ATM routes for years.” But it still happens. Last month devices were found on ATMs at gas stations in Massachusetts, Florida and Washington. That’s why the National ATM Council publishes an anti-skimming guide that includes monitoring the ATM, watching whether people are lingering too long at the machine or not doing anything that resembles a transaction and having customers cover their hands when entering their PINs. SAFEGUARDING YOUR CASH Monitoring safety and security of the register can be even more important for the business and as a crime deterrent. With so many ways to open the register, from brute force to no-sale transactions and any number of things that could go wrong moving the money, retailers can help avoid losses by setting storage guidelines, using smart safes and tills and being vigilant about monitoring them. “We only authorize $100 in each register between 12 a.m.-6 a.m. and that’s mostly the time we’d have a robbery,” Adkinson said. “Between 6 a.m.-12 a.m., we allow $150 in each register and we drop any bill greater than $20 (into a safe) on a daily basis.” Restricting the amount of cash in the drawer, removing large bills into a safe quickly and putting up “less than X dollars in the register” signage around the store can be great deterrents. “Your risk of loss in a robbery goes down significantly when there’s very little cash in the drawer,” said Brent Chadwick, chief financial officer at Plaid Pantry, who also advocates signage around the store indicating a low cash amount. At Kent Kwik, the district managers perform weekly cash audits, while at Plaid Pantry with 110 c-stores in the Portland, Ore. area, the task of moving the money to the bank was transferred from the managers to an armored car that picks up the cash directly from the safe each week. They’re the only ones who have access to the safe. “Just from a general safety and theft standpoint it’s a huge benefit,” Chadwick said. Plaid Pantry used to have the managers deliver the cash to the bank, which left the company open to a number of issues, so it decided to partner with Effective equipment solutions can assist c-stores when it comes to not only safeguarding money, but potentially employees and customers. CStoreDecisions ecisions .com

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BEST PRACTICES IN PREVENTING THEFT CONVENIENCE STORES CAN IMPLEMENT a number high- and/or low-tech security measures to help minimize theft. Here are a few: • Key Security: The simplest form of cash management, in which drawers can only be opened by a key that is trusted to only the managers and is stored in a safe place. • Money Management Systems: Keeping small amounts in the register, using a safe to store larger bills and investing in a till cover so that the money is not exposed as it’s moved to the back office. • Limit No-Sale transactions and use software that can identify when they occur. • Invest in additional security features like under counter mounting brackets or hasps that move the cash drawer below the counter so they can’t be seen. Hasps can lock the drawers open or closed, taking away the reason for the thief to open the drawer and avoiding destruction as well as theft. • Intelligent cash drawers keep track of all the money in the drawer, compare it to the transaction log, and can send alerts to management when a discrepancy occurs.This can eliminate training issues or sticky fingers and can be tied to security cameras so managers and owners can review the specific time an issue took place. Source: APG Cash Drawer, which makes the SmartTill and works with other cash security companies to build theft-deterrent cash management systems.

Bibbeo on its Tidel cash management system. The move allowed managers to focus more on the store, while reducing overall risk of theft and loss. “The alternatives are not pretty,” said Chadwick. “It is definitely a good investment and a good resource to have.” Making cash management a part of all employee training and staying abreast of cash security advances can help store owners see the importance of policies and technological help at the register and ATM. “We have attended loss prevention meetings annually and listened to loss prevention best practices,” Adkinson said. “[It] helps us do a better job in procedures and trying to be proactive instead of reactive.” CSD July 2017

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NEWSTUFF Creations & Innovations to Convenience Products and Services

GELATO MADE EASY

NAPKIN DISPENSERS

Carpigiani has introduced Mister Art Plus, an innovative one-of-a-kind frozen dessert machine that integrates two artisanal gelato production machines all into one countertop cabinet, which can produce gelato, soft serve, sorbets, gelato pastry single-serving treats and gelato/ ice cream/sorbet on a bar along with mousses and creams. Mister Art Plus features two side-by-side hoppers, two motors and two independent freezing cylinders.The double production machine can produce two diverse mixtures separately and simultaneously, increasing production and ROI. Mister Art Plus offers an all-in-one recipe book with 58 recipes: 30 for gelato, cakes and bars; 18 for gelato pastry and 10 for semifreddos, mousse and creams. Mister Art Plus allows operators to easily manage gelato production and create elaborate, rich specialties like gelato bars, pastries like cannoli, tarts, soft serve, multi-layered gelato cakes, and more. The flexible, versatile, threelever machine dispenses two single flavors of gelato, ice cream or sorbet and one mix of the two flavors. Mister Art Plus produces 485 2.5-ounce portion gelatos per hour or 580 gelato bars per hour.

Cascades PRO has introduced three new Cascades PRO Tandem Interfold Dispensers including a stand/wall unit, a smaller capacity tabletop unit, and a large capacity counter-top unit. Designed to reduce waste and costs for the foodservice market and any other establishments that handle the preparation, dispensing or consumption of food, these new dispensers are the latest additions to the Cascades PRO Tandem family of products. With Cascades PRO Tandem Interfold Dispensers, customers now have the option to choose a dispenser on a stand, in addition to the redesigned tabletop, counter top and wall units that were previously available. All of the interfold dispensers feature one napkin at a time dispensing, resulting in a 25% reduction in waste compared to traditional napkin dispensers. Featuring capacities ranging from 200 to 750 napkins, this new line of dispensers offers OnDisplay customizable window inserts on each unit to provide additional advertising opportunities for businesses.

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DUAL-FACED LABELING NAStar Inc. announced the granting of U.S. Patent Number 9,613,547 B2; Dual-Faced Labeling Systems, which covers a pressure sensitive label construction of two-face stocks with no liner. TwoFer Shelf Tags utilize a twoply laminate formed using alternate release and adhesive patterns on the back of each face stock, allowing the adhesive to transfer from one side where it becomes anchored to both sides of the product. When separated, it provides two individual labels. The labels can be paper, film or latex impregnated, with removable or permanent adhesives, and be conventionally or digitally printed.

For More Information From NAStar (800) 676-9665 sales@nastar-inc.com

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Harris Tea’s new BIG TEA line of self-serve hot teas caters to a previously untapped market of consumers who want a bigger helping of their favorite beverage—to go. Available in self-dispensing cartons of 30 large tea bags and featuring six all-natural flavors, including vanilla chai and caffeine-free herbals, customers just add 16-ounces of hot water to yield a double-size serving of tea. Emphasizing “twice the size and flavor” and featuring colorfully attractive packaging, BIG TEA is kosher-certified and available through your local foodservice distributor or online.

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DOUBLE-SIZE TEA BAGS

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PREMIUM FRANKS CHEF-CRAFTED MEAT TREATS Chef’s Cut Real Jerky continues to add to its increasingly popular line of meat snacks, all while staying true to its origins as a chef-crafted, hand-cut snack developed by founder Chef Blair Swiler. Chef’s Cut Real Jerky’s newest offering, Protein Packs, presents a modern take on a classic savory snack pairing, meat and cheese, while the brand’s new Real Meat Bars draw on some of Chef Blair’s favorite homemade soup recipes, providing a neverbefore-seen take on the meat snack category. Chef’s Cut traditional jerkies include its newest pork and steak jerky flavors, Asian Teriyaki (Steak), Sweet and Spicy (Steak), and Backyard Barbecue (Pork). As with all Chef’s Cut Real Jerky’s products, the newest additions are made with all real ingredients, packed with protein, and are gluten and nitrite-free.

For More Information From Chef’s Cut Real Jerky www.chefscutrealjerky.com

Snap Dog Inc. launched premium beef franks and sausage at the National Restaurant Association (NRA) Show in May. Known as “The Hot Dog With Its Name On It,” Snap Dog utilizes a unique, all-natural technique of branding its company logo and the word “beef” on the surface of every Snap Dog.This lets consumers know exactly what kind of hot dog they are being served. Born on the streets of New York City, Snap Dog has been the brainchild of former New York Restaurateur Keith Dorman, who has set out on a mission to upgrade the hot dog experience across America. Dorman ensures that Snap Dogs are made with 100% premium beef and cooked the old-fashioned way, in a real smokehouse. Snap Dog has a specially-formulated frank for those foodservice operators who prepare and hold their hot dogs in a water & steam environment and another formula is for those operators who use heated rollers or grills to prepare and hold their hot dogs. Also, there is a special “Children’s Nutritional Program” SKU, which complies with school lunch programs across the nation.

For More Information From Snap Dog

DIPPING CABINET Stoelting Foodservice, a division of The Vollrath Co. LLC, and manufacturer of frozen dessert equipment, has enhanced the design of its dipping cabinets that support continuous-flow frozen custard equipment. Available with two, three or four dipping wells, the new dipping cabinets keep frozen custard at a consistent temperature with natural, energy-efficient R290 propane-refrigerant and a new digital temperature control. The R290 propane-refrigerant has a low environmental impact and excellent thermodynamic performance. It is non-toxic with zero Ozone Depletion Potential (ODP) and very low Global Warming Potential (GWP). Each dipping well compartment holds 4.25-gallon (16 liter), square buckets that are removable for flavor changes and cleaning. The dipping cabinet well covers can be fully removed or locked in place to allow for flexibility during fill times or cleaning. New and improved heavy-duty casters allow for easier portability with greater stability.

www.abetterhotdog.com

DOUBLE MILK CHOCOLATE Stressful day? Make it a double. Introducing Milano’s newest flavor, Double Milk Chocolate. A combination of two fan favorites – Double Dark Chocolate and Milk Chocolate create a Double Milk Chocolate Milano cookie. It’s exactly what you’d expect. The same irresistible taste with a double dollop of smooth milk chocolate and only 70 calories per cookie. The new cookie is a perfect, sweet indulgence to take a moment for yourself and savor double the chocolate. Now available nationwide at an SRP of $3.69.

For More Information From Pepperidge Farm www.pepperidgefarm.com

For More Information From Stoelting Foodservice www.stoeltingfoodservice.com

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NEWSTUFF Creations & Innovations to Convenience Products and Services

MEATY LINE EXTENSIONS Jack Link’s is launching two new line extensions – Extra Tender and Hickory Smoked Bacon – along with retail availability of new Jack Link’s AM line, a morning snack targeting those who want to add protein to their breakfast. Jack Link’s Extra Tender is an extra tender meat snack that’s available in four flavors: Jack Link’s Extra Tender Original Beef Steak Strips, Jack Link’s Extra Tender Teriyaki Beef Steak Strips, Jack Link’s Extra Tender Sweet & Spicy Beef Steak Strips and Jack Link’s Extra Tender Peppered Beef Steak Strips. Jack Link’s is also adding a new bacon variety to its red bag line-up, Hickory Smoked Bacon Jerky, for all the bacon lovers out there. And lastly, Jack Link’s AM is now available in stores for consumer purchase.

For More Information From Jack Link’s

CHOCOLATE COOKIE BARS Mars Chocolate North America introduced TWIX Dark Chocolate Cookie Bars in May. Whether they prefer the Right Side or the Left Side, all TWIX fans will agree that new TWIX Dark is a winner. The distinctive new version of this favorite cookie bar brand features the classic crunchy shortbread TWIX cookie covered in golden caramel and enrobed in a rich dark chocolate. Dark chocolate is a driver of category growth and on trend with consumers. It’s considered a more permissible treat. Since dark chocolate plays in a different part of the category than milk chocolate, sales are incremental. The Dark Chocolate segment is growing at two times the rate of the total category, according to Nielsen. Suggested retail price: 99 cents - $1.09 for 1.79-ounce Single $1.69-$1.79 for 3.02-ounce ‘4 to Go.’

For More Information From Mars Chocolate North America

www.jacklinks.com

www.mars.com

SPINACH ARTICHOKE DIP Tyson Convenience is introducing a new product – Kettle Collection Spinach Artichoke Dip. Spinach artichoke dip is a chip’s best friend and a favorite of consumers world-wide. But, that’s not all the condiment can be used for. That’s why Tyson Convenience has introduced its new and versatile Kettle Collection Spinach Artichoke Dip to the convenience channel. Aside from being a classic pairing for whatever chip of choice, Kettle Collection Spinach Artichoke Dip also serves as a flavorful topping for pizza. Made with real spinach, artichoke and milk, this easy to prepare topping adds a unique and fresh taste to every pie it meets. Kettle Collection Spinach Artichoke Dip comes in four-pound pouches with diced spinach, quartered artichokes, shredded parmesan and onions in a creamy blend of real milk, Swiss and American cheeses. Heat and serve convenience delivers greater speed to service, batch consistency and labor savings versus scratch dry mixes. Pouches provide fresher product and reduced waste versus competition.

For More Information From Tyson Convenience www.tysonconvenience.com 62

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WHOLESOME SNACKS Annie’s, purveyor of delicious and wholesome foods, is continuing to clean up the snacking aisle with the brand’s newest launches, Annie’s Organic White Cheddar Bunny Tail Puffs and Annie’s Organic Cheddar Cheesy Puffs. Launching on July 1, just in time for National Picnic Month, these yummy snacks are a great addition to customers’ pantry and picnic basket. Unlike traditional cheese puff snacks, Annie’s Organic White Cheddar Bunny Tail Puffs and Organic Cheddar Cheesy Puffs are certified organic, gluten-free, made without artificial flavors, synthetic colors and preservatives. These crunchy snacks are baked, not fried, and are packed with the goodness of whole grains and real cheese. Annie’s Organic White Cheddar Bunny Tail Puffs and Organic Cheddar Cheesy Puffs are delicious, nostalgic snacks that both kids and adults can get excited about eating.

For More Information From Annie’s www.annies.com

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CHOCOLATE SNACK MIXES

TIC TAC GUM

Hershey’s and Reese’s Popped Snack Mixes debuted last month and provide a delicious blend of creamy and crunchy textures, with sweet and salty flavors. The Popped Snack Mixes launched in three flavors: Hershey’s, Hershey’s Cookies ‘n’ Creme and Reese’s. Hershey’s Popped Snack Mix includes mini Hershey’s Milk Chocolate Bars together with chocolate-drizzled popcorn, almonds and pretzels. Hershey’s Cookies ‘n’ Creme Popped Snack Mixes combines mini Hershey’s Cookies ‘n’ Creme Bars, mini chocolate cookies, pretzels and chocolate-drizzled popcorn. Reese’s Popped Snack Mix blends mini Reese’s Peanut Butter Cups and Reese’s Pieces candy covered peanuts to chocolate-drizzled popcorn and pretzels. Available in 8.5-ounce pouches with an SRP of $4.49.

Coming this January, the Tic Tac brand, known for its iconic mints, is launching Tic Tac Gum. With its delicious flavors, convenient and well-known package, and its iconic shape and size, it’s everything customers love about Tic Tac mints now in a gum. Tic Tac Gum will be available in Freshmint, Spearmint and Cool Watermelon with an SRP of $1.39 per 56-piece pack. Tic Tac Gum Freshmint won the Most Innovative New Product Award in the mint & gum category at the 2017 NCA Sweets & Snacks Expo.

For More Information From Hershey

For More Information From Ferrero

www.hersheys.com/cstore

www.tictacusa.com

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ADD Systems ...................................................5 800.922.0972 / www.addsys.com

Liggett Vector Brands ...............................................21 877.415.4100

AGDC â&#x20AC;&#x201C; Nat Sherman ........................................................2

MasonWays ....................................................63 800.837.2881 / www.masonways.com

Apter Industries ..................................................11 800.441.7146 / www.apterindustries.com Cash Depot .................................................57 800.776.8834 / www.cdlatm.com Coca-Cola ............................................................43 www.CokeSolutions.com/retail Del Monte Fresh ......................................................41 800.950.3683 / www.freshdelmonte.com E-Alternative Solutions ............................................13 800.628.4675 / www.cuevapor.com/business Gulfcoast Software Solutions, Inc. ................................3 727.449.2296 / www.gulfcoastsoftware.com

McLane Company ................................................7 www.mclanecokitchen.com North American Bancard .....................................................64 866.481.4604 / www.nynab.com POSA Tech ........................................................65 888.491.4006 x203 / www.posatech.com R.J. Reynolds ...........................................................67 www.EngageTradePartners.com Subway ...............................................................33 203.877.4281 / www.subway.com

Hoshizaki ................................................................45 www.hoshizakiamerica.com

Swisher International 800.874.9720 www.experienceacid.com .........................................................9 www.swishersweets.com .......................................................68

Inline Plastics ........................................................37 800.826.5567 / www.inlineplasticsinc.com

Tillamook Country Smoker ................................................49 800.325.2220 / www.tcsjerky.com

KT&G ..............................................................15,17 www.ktngusa.com

Tyson ....................................................................19 www.tysonconvenience.com

Life Support ..............................................................29 888.550.5392 / www.lifesupport.com

Whitecastle .........................................................39 614.559.2473 / www.whitecastle.com

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INDUSTRYPERSPECTIVES

Attracting, Retaining Top-Notch Talent John Matthews

Carrie Luxem

By John Matthews and Carrie Luxem

OP QUARTILE CONVENIENCE STORE chains have recruiting and retention habits that give them a leg up on the competition. However, attracting and retaining top-notch talent does not happen overnight. It is critical for team managers to set the stage and let people excel in their roles. The manager’s role isn’t to do the job of the team, but create an environment that enables each member to contribute to the overall success of the team. Attracting talent that can become vital contributors to the productivity of the convenience store organization should be paramount.

STEPS FOR SUCCESS Before a team can best be constructed though, several areas need to be addressed in advance: First, Write Your Story. Think about the amount of time, energy and money spent on marketing campaigns to attract new customers. What if you put that same effort—essentially building a marketing campaign—into finding c-store talent? Hiring top-notch talent comes down to brand storytelling. Tell your company’s story in your own voice. Find your unique selling proposition— the characteristics that set you apart from your competitors—and then create your story around that. Find that special “thing” that sets your company apart and use it to tell your story. Work with your marketing department, or if you need to, hire a creative agency to help you roll out this project. It will be money well spent. Ultimately, the goal is to attract 66 Convenience Store Decisions

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active and non-active job seekers by connecting on an emotional level. Know Your Management Style. One of the most important abilities of a manager is to know their own management style. Knowing how you manage others will often dictate the personalities of the people you hire. Hiring smart, passionate candidates ensures that the team is constantly being fed new, fresh ideas. Hiring the smartest people enables your team to constantly challenge the status quo and combining that with a passion for excellence, fosters a team environment that is second-to-none. The key to success in that scenario, however, resides with the confidence and willingness of the manager to encourage continual strength of the team. Not all managers are that confident and insecure managers are a “governor” to the upside of the team. Once the team is in place, the manager is charged with holding each of the team members accountable for delivering on their respective content. Cultural Fit Vs. Qualifications. When you put too much weight on a candidate's qualifications, you might overlook other key personality traits. Personality is the better indicator of whether an employee will mesh with the existing company culture, mission, core values and beliefs. Qualifications are still important, though they may be more of the icing on the cake. Research has shown that employees are more satisfied and likely to stay with the company when their personality complements the job's requirements and the company's organizational

and managerial style. Screen candidates for cultural fit from the start. Communicate Vision, Goals, Expectations and Time Lines. Once the team is in place, weaving together a well thought through, strategic business plan should be a top priority. The strategic plan should outline the vision, communicate goals, create expectations and choreograph the deliverables in a timely fashion. The Cost of Hiring. Hiring smart and passionate people ensure company expectations will be met while excelling the upside of both the manager and high growth employees. The old adage applies—you are only as strong as your weakest link. Constantly re-evaluating the talent pool of the team should be expected of management. When you need to fill an open position, you might be inclined to quickly select the candidate with the most impressive resume and move on. But in doing so, you may incur even greater expense. The Society for Human Resource Management estimates that turnover may cost a company anywhere from 50-60% of an employee's annual salary, on up to 90-200%.

John Matthews (john.matthews@graycatenterprises.com, www.graycatenterprises. com) is the founder and president of consulting firm Gray Cat Enterprises Inc. Carrie Luxem (carrie@restauranthrgroup. com, www.restauranthrgroup.com) is the founder and CEO of the Restaurant HR Group Inc. She also specializes in designing and delivering customized HR and leadership training programs. CStoreDecisions ecisions .com

6/27/17 8:09 AM

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