Convenience Store Decisions August 2017 by WTWH Media LLC

Volume 28 19 • Number 8 •6 AUGUST Volume • Number • JUNE 2017 2008

Business Solutions for Retail Decision Makers

® A

HARBOR COMMUNICATIONS

P U B L I C AT I O N

Preparing

Next Generation Leadership In a family business, passing the baton of leadership from one generation to the next isn’t without hurdles, but planning ahead can smooth some bumps in the transition.

Sheetz Named 2017 Chain of the Year ...8 Bakery Drives Local Demand .............38 Cigars Fend Off Challengers ...............56

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Volume 28 19 • Number 8 •6 AUGUST Volume • Number • JUNE 2017 2008

Business Solutions for Retail Decision Makers

® A

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DEPARTMENTS 8 Editor’s Memo: Sheetz Earns 2017 Chain

of the Year Honors

10 Front End Profile: Busy Bee Is Creating a

Buzz

16 Front End: CSD’s Quick Bites 18 Front End: Industry News 20 Convenience Store Solutions: A Red,

White and Blue Tradition

32 Foodservice: Bettering Burgers & Brats 44 Foodservice: Built to Compete 48 Category Management: The Crave for

Confections

52 Category Management: Packaged

AUGUST 2017 • Volume 28 • Issue 8

Beverage Sales Flow

60 Operations Column: Fortify Your Company

InsidethisIssue

Foundation

62 Operations Column: Establishing Supplier

24 Preparing Next Generation Leadership

Guidelines

In a family business, passing the baton of leadership from one generation to the next isn’t without hurdles, but planning ahead can smooth some bumps in the transition.

64 Technology: Prepaid Cards Inspire Change

38 Bakery Drives Local Demand

68 New Stuff!

Through consistency and a focus on local trends, convenience store bakery programs can create savory margins.

72 Quick Stop 73 Ad Index 74 Industry Perspectives: When Counting the

Human Cost

56 Cigars Fend Off Challengers Cigars remain a popular c-store category, but like other tobacco products, are targeted by taxes, community bans and age restrictions pushed by state and local legislators.

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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 Pat Pape 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

ADVERTISING President, Harbor Communications Dan Ramella dramella@csdecisions.com (440) 250-1583

Jim Callahan Fran Duskiewicz Steve Sandman

Group Publisher Tom McIntyre tmcintyre@csdecisions.com (440) 250-1583

PRODUCTION

Publisher John Petersen jpetersen@csdecisions.com (440) 250-1583

Production Manager Barbra Martin bmartin@csdecisions.com Webmaster Dave Miyares dmiyares@csdecisions.com

Vice President, Sales Tony Bolla tbolla@csdecisions.com (773) 267-1897

EDITORIAL ADVISORY BOARD

NATIONAL ADVISORY GROUP BOARD

YEO BOARD OF DIRECTORS

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.

Associate Editor Marilyn Odesser-Torpey mot@csdecisions.com

ART Creative Director Erin Canetta ecanetta@csdecisions.com

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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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.

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EDITOR'SMEMO

Sheetz Earns 2017 Chain of the Year Honors

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

ITH AN UNSURPASSED COMMITMENT to foodservice and technology, a worldclass distribution model and a total commitment to its vast employee base, Sheetz Inc. embodies the very best the convenience store industry has to offer. Over the past year, the 550-store chain was recognized by Fortune as one of the 100 Best Companies to Work For, a Top 12 Best Places to Work for Women and Top 35 Best Workplaces for Millennials—along with announcing plans to hire 3,400 new employees. By fiscal year 2019, Sheetz has plans to grow to 600 stores. For some chains, that would be a full year. At Sheetz, it was just another day at the office. Also in the past year, the company initiated dozens of fundraisers aimed at helping kids, such as its partnerships with Special Olympics and the Make-A-Wish foundation. It overhauled its loyalty card program, professed its ongoing commitment to offering employees sustainable careers built on an inspiring culture and expanded community engagement. For its accomplishments and dedication to convenience retailing, Convenience Store Decisions is proud to name Sheetz as our 2017 Convenience Store Chain of the Year. Sheetz is the 28th Chain of the Year and the first two-time winner. The company first earned top chain honors in 1994. It will be honored on Oct. 18 at The Crystal Gardens at Navy Pier in Chicago. “We are really proud of this award but this recognition truly belongs to our employees and to the customers who have supported us for the past 65 years," Sheetz President and CEO Joe Sheetz told me. "We would not be the company we are today without great people and loyal customers.”

ESTEEMED HISTORY Founded in 1952 in Altoona, Pa., Sheetz is one of the country’s fastest-growing familyowned and operated convenience store chains, with nearly $7 billion in revenue and more than 17,500 employees. The company operates throughout Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina. Sheetz remains a beacon of innovation that every convenience store chain can admire, 8 Convenience Store Decisions

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at a time when big corporations are trying to gain a larger foothold in the convenience store industry. That is not something that should be overlooked. Family businesses made this industry what it is today and as long as outstanding companies like Sheetz continue to thrive, the convenience store industry will continue to reach new heights. Bob Sheetz launched Sheetz 65 years ago when he purchased one of his father’s five dairy stores located in Altoona, Pa. In 1961, Bob hired his brother Steve to work part-time at the store. It was not until 1963 that the second store was opened under the name “Sheetz Kwik Shopper.” In 1969, Steve joined Bob in the business as general manager.The brothers planned to expand at the rate of one store per year with a target of seven stores by 1972. In 1972, the brothers literally doubled the size of the company, expanding to 14 stores. One year later, Sheetz added gasoline pumps and introduced self-serve gasoline to central Pennsylvania. By 1983, Bob and Steve had opened 100 stores. The following year, Bob retired and handed over the leadership of the company to Steve. In 1995, Stan Sheetz, Bob’s son, became president and Steve assumed the position of chairman of the Board. Stan led the company through new periods of growth and innovation. Introducing touchscreen ordering, Sheetz Bros. Coffeez, Made-To-Go and Shweetz Bakery products, while redefining the concept of getting quality food at a convenience store. Continuing the successful transition of family leadership, Joe Sheetz became president and CEO in October 2013. When your name is over the door, your commitment to excellence remains strong. At Sheetz, this is the core of the company. The fact that a family is at the helm together creates an environment where senior management genuinely cares about its employees and customers. Please join us in honoring Sheetz as the 2017 convenience store Chain of the Year.

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FRONTEND PROFILE

Busy Bee Is Creating a Buzz The Florida convenience retailer was recently chosen as the best truck stop in the country based in part because the growing chain specializes in both small-town touches and modern innovations. By David Bennett, Senior Editor

T’S TOO EASY TO compare Johnson & Johnson Inc. to a hive of activity. That’s not to say the Madison, Fla.-based company isn’t busy growing its business. It’s always hectic at the company’s chain of 18 Busy Bee locations. It’s just that the keepers of the Busy Bee brand are diligent in creating bee-related tag lines and sayings. Inside the company’s flagship store in Live Oak, Fla.— above a large cache of cooler doors—it reads “Don’t hurry…Bee happy.” A store promotion isn’t beautiful—it’s ‘bee’autiful. The third-generation family company is striving to make the chain inviting to customers and a good workplace for its employees. With its next growth phase on tap, Busy Bee certainly isn’t a quiet drone but an enterprise flying high. HONEY POT At 20,000 square feet, Busy Bee’s Live Oak location, built three years ago on US 129, is its largest travel plaza so far— about four times the size of the average Busy Bee location. Last year, the annual Trucker Path App survey chose the Busy Bee on US 129 as the best truck stop in the country. The survey looked at 3,500 truck stops that had more than five ratings within the Trucker Path app—a total of some 71,000 ratings nationwide. The 20,000-square-foot travel plaza boasts a full coffee bar, fountain drinks, candy by the pound, fresh yogurt with toppings and gourmet beef jerky. The retailer also sells Buttah Bees, a proprietary snack offering that consists of corn puffs with a butter-toffee coating.

With 20,000 square feet of space, this travel plaza, owned by Floridabased Johnson & Johnson Inc., offers showers, a laundry, food and a host of other amenities. Last year, it was named the best truck stop in the country.

Specialty offerings also include private-label fresh jars of honey, containers of various salt water taffies, a counter featuring homemade fudge and a vast souvenir shop. Collectively, the company’s merchandising strategy helps distinguish Busy Bee from the competition. “To achieve this, we look for items that are not conventionally found in other locations,” said Megan Forcey, Busy’ Bee’s director of advertising & e-commerce. “We are constantly striving to differentiate ourselves outside the industry standard. This is also achieved with the help of our amazing vendors, who understand our high expectations.”

Specialty offerings also include private labels of fresh jars of honey, containers of various salt water taffies and a vast souvenir shop. Collectively, the company’s merchandising strategy helps distinguish Busy Bee from the competition. 10 Convenience Store Decisions

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There are also a Dunkin’ Donuts and a Burger King inside the store. Busy Bee also operates Hardees, Subway and Hunt Brothers Pizza at other locations. All of the franchises on site are owned by the company. “We are always open to expanding into other QSR (quick-service restaurants) franchises and concepts,” said Forcey. “At this time we are working on building our franchises with Burger King and Dunkin’ Donuts. Be on the lookout for something new.” Busy Bee’s unique offerings are part of the c-store’s penchant for good customer service, which has been adopted in various operational areas of the convenience chain. For instance, the company completed Europay, Mastercard and Visa equipment upgrades at all of its locations. In addition, Busy Bee has automatic tank gauge devices now that provide the chain comprehensive fuel site data for advanced fuel asset management as well as company-wide efficiency. To ensure truckers feel this sense of welcome, Busy Bee added showers with marble counter tops at its flagship location. Motorists can also clean clothes in the laundry

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Big, extravagant bathrooms are part of the agenda at Busy Bee. In fact, its spacious restrooms have helped the retailer earn national recognition among travelers. CStoreDecisions ecisions .com

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FRONTEND PROFILE “OUR PARENTS REARED US, WORKING WITHIN THE ORGANIZATION, AND THEY HAVE ALWAYS BEEN VISIONARIES IN THE INDUSTRY. WE ARE PASSIONATE ABOUT OUR TEAMMATES, OUR GUESTS, OUR BUSY BEE BRAND, ALL THE LOCATIONS IN OUR HIVE AND THE GENERATIONS THAT FOLLOW BEHIND US.” –Elizabeth Waring, President, CEO and Co-Owner, Johnson & Johnson Inc.

area or sit in the main section of the shower building and relax while watching the large flat-screen television. Lastly, the retailer is known for large, clean bathrooms. All these amenities helped earn Busy Bee the title of ‘best truck stop in the country.’ Also, Busy Bee has entered a partnership with Tesla at its Live Oak location that will include installing 12 Supercharger electric charging stations in conjunction with the Silicon Valley electric car maker in part of an innovative pilot project that not only services electrical car motorists but broadens the customer’s experience. “The Live Oak location has also expanded this year to include pay at the pump for the trucker diesel area,” said Forcey. “We wanted to make sure to have this option for the truckers to help with the convenience of their visit.” 2017 is also when Busy Bee began remodeling some of its legacy stores Busy Bee has a penchant for in the Lake City, Fla. area. good customer service, which “We have remodeled has been adopted in various two of our locations thus areas of the c-store chain. far making them on trend by adding a cleaner more streamlined concept,” Forcey said. “Almost all of our locations now feature Wi-Fi and a phone-based rewards program.” Busy Bee is looking to expand, adding two additional travel plazas in Florida before the end of the decade. THRIVING COLONY The beginnings of Johnson & Johnson can be traced to 1935 when J.P. Johnson worked as a Sinclair commission agent. With an unwavering dedication to customer service, Jacob Kin Johnson started working in his father’s company at the age of 14. Kin Johnson took over with a strong passion and persistence in growing Johnson & Johnson Inc. This paved 14 Convenience Store Decisions

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the way for the third generation and partnership that Jay Johnson and his sister Elizabeth Johnson Waring—then company vice president—enjoyed for many years. In 2015, the company lost the president of Busy Bee, Jay Johnson, who passed away unexpectedly in June 2015, at 44 years old from an accident. From riding with his father in the gasoline truck delivering fuel, the younger Johnson not only became the company president but an entrepreneur who loved business and saw it as a vehicle to improve the lives of others. After his death, Waring, now company president, CEO and co-owner, has taken up the reins of the growing retail business. She is affectionately known as the ‘Queen Bee.’ Waring began working with her parents helping in the family business at 10 years old, sweeping floors and counting change. She has embraced the guest-oriented culture ever since. “What an honor it is every day to continue our family business. It gives me a great sense of pride to continue the work that my grandparents began, keeping the legacy alive,” said Waring. “Our parents reared us, working within the organization, and they have always been visionaries in the industry. We are passionate about our teammates, our guests, our Busy Bee brand, all the locations in our hive and the generations that follow behind us.” COMMUNITY BUZZ The philosophy of Busy Bee is the company would be nowhere without the community’s support. It feels an obligation to give back and reciprocates throughout the year, said Marshall Beck, director of marketing. “We sponsor Snow Days, Fall Festival fishing tournaments, local runs, and a bevy of other community events,” said Beck. “We have given away Jeeps, four wheelers, money, a Ranger, a truck, and had a heck of a celebration while having the drawing. We had a contest where winners could win groceries for life or a certain time/amount. We always support any civic and school organization that has a need. We are involved in these communities and appreciate what these communities do for us.” CStoreDecisions ecisions .com

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FRONTEND

CSD’S QUICK BITES Tobacco Market Shifts

Amazon Woos Millennials

Millennials are buying from Amazon at a higher rate than other generations: • 63% of all consumers have made a purchase on Amazon in the past month. • 79% of Millennials purchased from Amazon within the past month. • 55% of Millennials choose Amazon for its Prime benefits. •76% of Millennials choose Amazon for its prices. •69% of Gen Xers purchased from Amazon in the past month. Source:“A Marketer’s Guide to Reaching the Source:Marketing Nielsen June 2017 Generations,” Yes Lifecycle Survey

• The cigarette market will record a $7.7 billion loss by 2021, compensated for by the $13.2 billion growth in heated tobacco products sales in the same period. • In 2016 the value of the global cigarettes category as a proportion of total tobacco sales fell below 90% and by 2021 it will reach 86%. • Heated tobacco will be the fastest-growing tobacco category in the next five years to reach $15.4 billion in 2021, up from $2 billion in 2016. Source: Euromonitor International

Paper Towels Vs. Hand Dryers

Ice Cream Sales Dip 10% of U.S. customers report actively 11% of U.S. avoiding healthy versions consumers report because they are “meant to be treats.” cutting back on ice cream or frozen treat consumption due to health concerns. 27% of ice cream buyers agree that, even though they find these treats unhealthy, they buy them anyway.

Source: Mintel, Ice Cream U.S. 2017

To identify which hand drying method is preferred in the U.S., Cintas Corp. commissioned a survey conducted online by Harris Poll, May 19-23, among 2,048 U.S. adults ages 18 and older.The study found that the majority of American’s (69%) prefer to use paper towels over air dryers when drying their hands in public restrooms. Why so? 70% Paper towels dry hands better; 69% Paper towels dry hands faster; 52% Paper towels shield hands from restroom door; 24% Air dryers blow bacteria (e.g., on hands, in the air); and 22% Air dryers are too loud

Assessing the Whole Foods, Amazon Deal A recent survey of U.S. consumers tried to determine their thoughts on Amazon’s $13.7 billion acquisition of Whole Foods Market. Among the findings: • 84% of shoppers have positive feelings about the Amazon-Whole Foods merger. • 16% cited negative feelings about the deal. • 62% of shoppers are more likely to shop at Whole Foods after the Amazon acquisition. • 38% said this does not motivate them to shop at Whole Foods. Also, new features shoppers would like to see Amazon add to Whole Foods stores: 31% prefer cashier-free checkout; 30% hope for lower prices; 19% would like to see Amazon in-store pickup; 10% want improved grocery delivery; 7% prefer wallet-less payment; and 4% would like to see an Amazon electronics section. Source: ChargeItSpot,“Amazon Shopper Sentiment Report,” polled over 900 shoppers via ChargeItSpot kiosks across the country.

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INDUSTRYNEWS GPM Nabs Jiffy Stop Food Marts GP M I nve s t m e n t s L L C has acquired seven Jiffy Stop Food Marts locations. GPM Investments, based in Richmond, Va., operates or supplies fuel to more than 1,100 c-stores in Connecticut, Delaware, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee and Virginia, and with the acquisition of the Jiffy Stop stores they now have a solid retail base in Missouri.

7-Eleven Turns 90

7-Eleven Inc. celebrated its 90th birthday on 7-Eleven Day, also known as July 11. To celebrate its milestone bir thday, 7-Eleven offered a FREE Slurpee party, continuing the tradition that started on the retailer’s 75th birthday in 2002. Participating U.S. stores gave away an estimated 9 million free small Slurpee drinks from 11 a.m. to 7 p.m., on July 11, while supplies lasted. The celebration continued during Slurpee Week, where those who bought seven Slurpees from July 12-18 and scanned the 7-Eleven mobile app gained 11 Slurpee drinks FREE.

BAT/RAI Merger Moves Forward Reynolds American Inc. (RAI) announced that its shareholders have given their approval for the company’s acquisition by British American Tobacco p.l.c. (BAT). The transaction was expected to close on July 25, 2017. Once completed the merged company will be the world’s largest publicly-traded tobacco entity.

Empire Petroleum Partners Appoints New CEO Empire Petroleum Partners LLC’s CEO, Hank Heithaus, has announced plans for retirement, effective Sept. 15. Empire has appointed Rocky Dewbre as the new CEO, who will take over the helm of Empire on Sept. 15. 18 Convenience Store Decisions

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Kwik Trip Acquires PDQ Food Stores Kwik Trip Inc., based in La Crosse, Wis., is acquiring the assets of PDQ Food Stores. PDQ is an employeeowned company based in Middleton. Its assets include 34 company-operated convenience stores located in southeastern Wisconsin. This acquisition allows Kwik Trip to expand its presence in a market that is important to its overall retail growth strategy. PDQ is a 65-year-old business well known for excellent customer service and convenience.

Couche-Tard Buying Holiday Stationstores Alimentation CoucheTard Inc. is acquiring Holiday Stationstores Inc. Holiday is a major convenience store player in the Upper Midwestern U.S., whose assets include over 500 company-operated and franchise locations, a food commissary and a fuel terminal. This acquisition allows Couche-Tard to continue to pursue its journey to become the world’s preferred destination for convenience and fuel. The transaction is anticipated to close in the fourth quarter of CoucheTard’s fiscal year 2018.

Applegreen Enters South Carolina Ireland-based Applegreen Convenience Stores has moved into the U.S. market with the acquisition of Bob Brandi Stations in South Carolina for $5.4 million. Bob Brandi has 42 sites located around the city of Columbia in South Carolina. Some 34 sites are gas stations, and the remainder are standalone Burger King locations. Applegreen is funding $5.4 million from existing resources and entering into a long-term 15-year lease-back agreement with Getty Realty Corp. Getty will obtain interests in 38 fee simple and four leasehold properties for $70.1 million and simultaneously enter into a unitary lease with Applegreen covering all of the properties.The transaction is expected to close before the end of the fourth quarter of 2017. CStoreDecisions ecisions .com

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Convenience Store Solutions

A Red, White and Blue Tradition Fourth of July may be in the books, but there’s always an opportunity to display the flag. By Jim Callahan

URING A RECENT HOLIDAY, I placed two very small American flags in a lone planter on my front porch. After lunch, I headed out on a short shopping expedition. Passing many neighbors and many businesses, I was shocked to see that the act of displaying our Grand Old Flag had been forgotten. Considering how many patriotic holidays we celebrate, history tells us that more flags should be going up.

HISTORICAL MARKER Folklore has Betsy Ross presenting the first flag to Gen. George Washington, the acknowledged Father of our proud country. But the flag, didn’t fully come into the nation’s consciousness until just before the country’s Centennial in 1876. Memorial Day was the first official holiday to embrace the flag on May of 1868, after a speech by Gen. John A. Logan, when more than 20,000 graves of Union and Confederate Soldiers were commemorated and decorated. Memorial Day became a National Holiday in 1971 and garnered a huge wave of rejuvenation in 1986 after a speech by President Ronald Reagan included honoring “fallen heroes.” George M. Cohan wrote songs that buoyed the spirit of American troops, including “You’re a Grand Old Flag.” You can Google Joe Rosenthal’s iconic photograph, showing six U.S. Marines raising the Stars and Stripes atop Mount Suribachi during the Battle of Iwo Jima in World War II. Even isolated incidents underscore what the flag means to citizens. In 1976, a man ran onto the field of the Los Angeles Dodgers during a televised baseball game. He was carrying a large American flag, a can of lighter fluid and matches. As he sprayed the flag with lighter fluid and readied to light it on fire, his efforts were thwarted by Dodger center fielder and former Marine, Rick Monday. The large crowd cheered their approval. Sept. 11, 2001. No American will ever forget where they were on this date. More than 3,000 Americans were lost that day, including 400 rescue workers. Soon an American flag was flying over the wreckage. FLYING HIGH Patriotism and flag waving can be good for business— most of your customers will love it. I’m not just preaching 20 Convenience Store Decisions

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to those born in the U.S., but also to the thousands of new American families who make their living in the convenience store industry. However, what some business owners may not know is that there are rules for how and when the American flag can be flown in front of a commercial business. According to attorney Daniel Taylor: Using a flag pole. There are several rules for flying the flag on a flagpole. If flown in a group of flags with state, local or group flags, the U.S. flag should always be on top and should be raised first and lowered last. If flown with the flag of another nation—Canada for example—the flags should never be flown on the same pole and the flags should be of even height, with the U.S. flag always to the viewer’s left. Window flag displays. If displayed in a window, the American flag can be displayed vertically or horizontally, but always with the Union (the stars representing the states) on the viewer’s upper left. Flying the flag at night. Contrary to what you might have heard, you can fly your flag at night. However, it must be illuminated. Also, the flag should be removed during inclement weather, unless it’s an all-weather flag. Using the flag in advertising. U.S. Code Title 4. “Flag and Seal, Seat of Government, and the States” has clear rules for how the flag is to appear in conjunction with commercial advertising. “The flag should never be used for advertising purposes in any manner whatsoever. It should not be embroidered on such articles as cushions or handkerchiefs and the like, printed or otherwise impressed on paper napkins or boxes or anything that is designed for temporary use and discard.” Displaying the flag is the right of every business. It’s why we celebrate some of the holidays we do. Remember, flying the American flag shouldn’t be done for style points, but for patriotism. My feeling is: fly the flag, wear the colors, celebrate, be proud of your heritage and always honor America. Three cheers for the Red, White and Blue. Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketing executive. His Convenience Store Solutions blog appears regularly on Cstoredecisions.com. He can be reached at (678) 485-4773 or via e-mail at jfcallahan1160@gmail.com. CStoreDecisions ecisions .com

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COVER STORY

Preparing Next Generation Leadership

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In a family business, passing the baton of leadership from one generation to the next isn’t without hurdles, but planning ahead can smooth some bumps in the transition. By Erin Rigik Del Conte, Senior Editor

UCCESSION PLANNING, PARTICULARLY IN a family-

owned business, is a crucial consideration every chain should take seriously. In the event the leader of the company passes on suddenly, tough decisions must be made and implemented sooner than later. Meanwhile, employees need immediate direction and confirmation that the company will continue as before. Other times, older generation executives might be unwilling to move aside, waiting for a clear sign their offspring are ready to lead the company with the same commitment. Arguably, they may wait so long even their children are ready to retire. Creating a written road map—long before it’s needed—for both succession and estate plans, and openly communicating future intentions to both family and company members can be key in easing the eventual transition for all involved. The National Advisory Group’s (NAG) Young Executives Organization (YEO) is designed to help c-store owners address these very issues. “We usually find owners and leadership teams recognize a gap in leadership, management and/or communication styles between the outgoing and incoming generation. Those same style gaps often create a bit of a barrier to initiating an open dialogue,” said Lisa Stewart, president of consulting firm Impact 21. Still, it’s just those conversations that can facilitate cohesion and strength in a company. Finding the ‘right’ time to transition can also be a challenge, not to mention personal and overwhelming to anticipate. A trusted friend, advisor or third party can help facilitate the process. “Don’t wait to do it. The dialogue is healthy for the entire organization,” said Stewart. “It is a unique opportunity to grow people and instill leadership across the organization.” MERGING GENERATIONS Long before discussion of leadership transitions, the next generation needs a chance to become involved in the organization and participate in multiple departments. “This can bring a clear understanding of expectations and help the new leadership understand the impact shifting goals and objectives can have on current policies, procedures and best practices,” Stewart said. As the younger generation learns the ropes, it can be frustrating to wait for the parent to retire. But often, the parent is waiting for signs that the younger generation is ready. “If you are in a family business you generally perceive yourself as young because there’s always an older generation of either your parents or those that are your parents’ age,” said Tom Robinson, CEO of Santa Clara, Calif.-based Robinson Oil, CStoreDecisions .com

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which operates 34 Rotten Robbie locations in California. Whether the next generation is 20 or 60, the older generation is going to reach out to guide them. “Just like the younger generation shouldn’t be surprised when the older generation reaches for their hand, the older generation shouldn’t be surprised when the younger generation doesn’t want them to do it,” Robinson said. If the in-coming generation considers what is important to the elder leaders, it can be helpful in easing the transition. Stewart advises that younger decision-makers should show an interest in and understanding of the history of the company, what it took to bring the company to where it is now, and an appreciation for lessons learned. “Leaders may be looking for a way to bow out gracefully, maintain a role that still adds value or have the new leadership demonstrate the same passion they have shown every day,” said Stewart. Robinson knows first hand the challenges and benefits of growing up in a family business. His grandfather began Mathson Petroleum in 1938 in Watsonville, Calif. and sold it to his son-in-law— Tom Robinson’s father—Don Robinson in the early 1950s. Don Robinson moved the company to San Jose in 1964. In 1971 he partnered with Coast Tom Robinson, CEO of Oil, founded by Herb Richards. Robinson Oil, knows first The partnership lasted 30 years, hand the challenges of until Richards liquidated his transitioning a family busiassets in 2001 and Robinson ness and the importance of Oil took sole ownership of all succession planning. Rotten Robbie stations. Tom Robinson grew up around the business, going on deliveries and station checks with his dad. In 1974, Robinson began working for the company full time as a station manager. In his 30s, he became the vice president, and later became president. Over the years, Tom Robinson gradually bought stock in the company and slowly gained more responsibility and autonomy. In 2008, Don Robinson chose to exit the company, and Tom Robinson bought the remaining shares. As he came up through the business, the younger Robinson was fortunate to work under various leaders in addition to his father. “It’s helpful for kids if their supervisor isn’t their parent. A parent sometimes can be too demanding or can make too many excuses for the kid, so there’s challenges either way,” said Robinson. August 2017 l Convenience Store Decisions 25

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COVER STORY

Lisa Dell’Alba (pictured) took over as CEO of Square One Markets after her father (pictured) passed away in 2009. Her father Gary Dell’Alba prepared Dell’ Alba and her sister, Brenda Dell’Alba Rosado, now chief financial officer, for their future company roles by giving them the chance to make decisions, learn from mistakes and form their own relationships within the business.

Robinson recommends that the in-coming generation get involved in industry organizations where they can learn new skills and spread their wings beyond the family company. “The younger generation has two choices. You can wait for somebody to ask you to take on more responsibility, or you can push for it,” Robinson said. Either way, challenges can arise. The older generation may still enjoy handing specific responsibilities or the younger generation may not be capable of handling the tasks. SHARE, SHARE ALIKE In families with multiple children or siblings, whether all or some are in the business, creating a fair system can be complicated. One common problem is when one child is involved in operations and one owns a share but doesn’t work in the business, and concerns such as ‘why is he getting a check if I do all the work,’ can appear. “My philosophy is there are shareholders and managers,” said Robinson. Those family members owning shares should expect returns as shareholders, while presidents should be reasonably compensated as they would be if they were hired from outside the company, he said. Estate planning is another important consideration, and is often easier than succession planning because an attorney can guide the process. Succession planning is more complicated. The younger generation may not be prepared to lead, or the older generation may want to sell the company to an outside party who can pay more. There is also a host of reasons the older generation may not want to let go. Today, Robinson’s adult daughters hold key positions in the company: Reilly Musser, an active member of YEO, is the vice president of marketing and merchandising, and Erin Graziosi is vice president of retail, supply & trasportation. Robinson has thought ahead to how he will someday handle the transition. 26 Convenience Store Decisions

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He believes the hardest transition is from the first to second generation, as some first generation owners can be so consumed with creating a thriving business that they are not always focused on preparing the next generation. Lisa Dell’Alba is the second generation to run her family business. In 2009, she became president and CEO of Bethlehem, Pa.-based Square One Markets, after her father, founder of the company, Gary Dell’Alba, passed away suddenly. Her older sister, Brenda Dell’Alba Rosado, took on the role of chief financial officer (CFO). Growing up, Dell’Alba didn’t work in the family business. She originally pursued a career as a dance therapist, before joining the company in 2004 at the age of 24. Dell’Alba began by managing human resources and learning the operations end of the business. Two years later, Rosado, who had previously worked for Morgan Stanley, came on board. Dell’Alba found joining a family company is not without challenges. Long-term company members may have preconceived notions about what the incoming generation will be like, for example. “We had a few folks who were directly involved with our operations that didn’t necessarily see the same future for themselves in the company,” said Dell’Alba. “So they moved on.” Two years into her tenure, Dell’Alba took over the role of vice president of operations when the position came open. FUTURE ENDEAVOR When a family member and head of the company passes away, the family must make important business decisions in the middle of deep grief. “I remember the day after my father passed away I was at work because I was very concerned about the leadership of our company and making sure our team knew they still had jobs and that we were very much interested in CStoreDecisions .com

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COVER STORY continuing my father’s legacy,” she said. Dell’Alba promoted a manager to an operations supervisory position to help run things while the family collected themselves. “This is why I’m passionate about succession planning because there wasn’t necessarily a written formal plan in place for all that was going to happen when my father passed,” said Dell’Alba. Her father had, however, shared his vision for the future of the company with his wife, who became the primary shareholder when he passed away. Dell’Alba and Rosado were fortunate in that they had different interests and skills. “My sister was very strong on the analytical and numbers side, and I liked to be in the stores,” Dell’Alba said. “So we had a really good partnership.” As their mother was grieving, naming Dell’Alba as CEO and Rosado as CFO took some time, and in the interim, they had to be careful not to accidentally step on each other’s toes at work. When siblings don’t have such clear-cut areas of expertise, this type of transition can be even harder without a clear, written succession plan. Gary Dell’Alba had done much to pave the way for an easy transition, including looping Dell’Alba and Rosado into conversations with third parties that pertained to their areas of expertise. As a result, many of the relationships,

such as with vendors, were able to continue smoothly. He had also subtly stepped back and allowed Dell’Alba the chance to make decisions, learn from mistakes and form her own relationships within the business. Despite laying the groundwork, the next generation should be prepared that not everyone is going to mesh the same way with you as they did with your predecessor. “In a family shift, there is typically such pride in the hand-off to the next generation, and an appreciation for the generation of the past,” said Impact 21’s Stewart. “That is exactly what makes it the hardest to shift. Culture comes from one seat in the house—the top seat. That shift in culture can take people to a breaking point at times and they cannot move with the next generation.” The going can be trying. “When you’re a family member, and especially as a female, there are certain (negative) things people (will assume) about you until you work hard to prove otherwise. There’s always going to be people that just still won’t come along for the ride,” Dell’Alba said. Her advice for the outgoing generation is to create opportunities for the next generation to succeed and for people to gain confidence in their leadership abilities. Because Dell’Alba and Rosado are both parents, they’ve

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COVER STORY worked to bring a more flexible work culture to the company. The third generation is still a long way from deciding if they want to join the company. “My niece is 12, my nephew is seven and my son is six,” she said. Following in their father’s footsteps, Dell’Alba and Rosado plan to let their kids pursue whatever they are passionate about. Dell’Alba’s mother passed away last year. “It’s a reality check and you realize you have to begin thinking about (succession planning, yourself).” FAMILY PARTNERSHIP Giselle Diaz Eastlack, general manager of Diaz Markets, didn’t grow up in a family business. Her parents started Diaz Markets in 1996 with the purchase of a mechanic bay store when she was already in college. Her mother, Maria Diaz, worked as the cashier, and her father, Mauricio Diaz, as the mechanic. As time went on, they expanded into convenience stores. Today the chain has more than 18 c-store locations throughout Louisiana. After college, Eastlack worked in banking for a couple years before coming to work for the family business in 2003; something she hadn’t expected to do. “The day I started we had a manager who was running three sites resign unexpectedly, so that’s where I stepped in,” Eastlack said. She called it “baptism by fire,” i.e. learning to juggle multiple responsibilities at once. Eastlack is the general manager, but like most members of a family business, she wears many hats, from managing the corporate office to working in business development and with the marketing and advertising teams. After Hurricane Katrina in 2005, the chain’s 85-person team was displaced. “We needed boots on the ground, basically. We needed to reopen and quickly,” said Eastlack. Her brother, Mo Diaz, began flying back and forth from his home in Arizona to help, eventually joining the company in 2007. Like Dell’Alba and Rosado, Eastlack and Mo Diaz find they have strengths in different areas, something that may someday make transitioning easier. “We like to say it would take two of us to take over for dad’s position,” Eastlack said. Mo Diaz spends more time in the field, handling multiple roles from IT to maintenance issues in the stores. “He knows everything about pumps, fueling equipment and register equipment and he also helps with site selection,” Eastlack said. When Eastlack joined the company, it was transitioning from a mechanic shop to a traditional c-store and from there the company began to grow—joining Shell MSO (multi-site operators), a program by Shell to run multiple sites—and moving from four to 23 stores in a year. This unique situation allowed Eastlack to learn the new business alongside Mauricio Diaz, who included her in the process. Because the business was new, Mauricio Diaz, company 30 Convenience Store Decisions

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Giselle Diaz Eastlack and her brother Mo Diaz are prepared to helm their family business one day. Eastlack works in the corporate office as general manager while Diaz is out in the field handling IT, maintenance and site selection. Their opposite areas of expertise make them a solid team.

president, CEO and “ultimate decision maker,” often said they were wearing training wheels. “I was wearing those training wheels with him,” said Eastlack. “I very much felt like I was at the table for those major growth (initiatives). My parents have been very supportive and inclusive. While they’re my parents, they’re also my business partners. So it’s an interesting dynamic, a family business.” Eastlack and her brother will eventually run the business when her father decides to step down; something he’s prepared them to do. “He has always brought us to the table on the decision making, so we are prepped and ready to go,” said Eastlack. “The transition is going to be very slow, and it’s going to depend on my father, but our plan is in place. We’ve been taking steps for about a decade.” The company, for example, worked with an attorney to create an estate plan and continues to work together on planning the future of the company. Eastlack and her brother’s children are still quite young. “We don’t know yet if it’s going to go further down the generations,” she said. For now, they are doing a lot right, in keeping the dialogue open, preparing plans and maintaining transparency. “We all work in conjunction on where we see this company going and as we acquire new projects, we take into account the future,” Eastlack said. “We have a lot of dialogue about it as a family, recognizing where our strengths are, and where we want to be. It’s important to us to get together and talk about where we want this company to go, and our commitment to the company moving forward.” CSD CStoreDecisions .com

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FOODSERVICE

Bettering

Burgers & Brats Burgers, brats and sausages may be traditional convenience store foodservice items, but that doesn’t mean they have to play second fiddle to fancier fare. Retailers tell how they have turned what could be ‘been there, ate that’ foods into meals customers return for again and again. Marilyn Odesser-Torpey, Associate Editor

every day from never-frozen certified Angus ground chuck with a family secret seasoning blend, has helped to make the stores a mealtime destination. Last year, Y-Not Stop sold around 85,000 Y-Notta Burgers across nine of its stores, said Zachary St. Romain, chief operation officer for St. Romain Oil Co. The burgers are available in four- and eight-ounce sizes. The eight-ounce outsells the four-ounce by a ratio of 7:5. All of the signature burgers are char-grilled over an open flame. “The burgers are the same as those we love to cook at home,” St. Romain pointed out. “We made many batches of the seasoning blend and made many adjustments before we settled on the recipe we currently use.” Y-Not Stop currently operates a total of 10 stores. One, in Marksville, La., does not yet sell burgers, but is set to do so after it is razed and rebuilt in the future. Two additional stores are also set to open in 2018. In addition to its company-operated stores, BURGER APPEAL At Y-Not Stop stores in central Louisiana, two licensed Y-Not Stop locations opened this customers know they won’t be getting any old year. While these stores are individually owned burger. The Y-Notta Burger, made in the stores and operated, they feature the Y-Notta Burger

MERICANS EAT MORE THAN 13 billion burgers each year, according to the Cattlemen’s Beef Board and National Cattlemen’s Beef Association. Nearly half (48%) of consumers eat a burger at least twice a week. In a convenience store study published in July 2016, Datassential research firm found that 64% of respondents were interested in purchasing burgers from c-stores. When Datassential did the same study in 2012, that number was 56%, said Brian Darr, the firm’s managing director. A study just on burgers conducted by Datassential in early 2016 showed that consumers respond to appetizing menu descriptors such as “Angus beef” or “100% ground beef.” Darr suggested that even using a popular brand of fresh bun or applying a descriptor such as “baked in house” can also bolster burger sales.

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and other proprietary company recipes. Customers build their own burger creations at kiosks in the stores. Standard condiments include lettuce, tomato, pickle, onion, mayonnaise, mustard and ketchup. Bread choices are toast or a white or wheat bun. About 90% of customers add another topping, mostly cheese which costs an extra 50 cents. Customers can also top their burgers with bacon, guacamole, ham or turkey or a fried egg for $1. Additional “premium” toppings—grilled or fried onions, sautéed mushrooms, jalapeños, BBQ sauce, ranch, honey mustard, sweet and sour and a local favorite Wow Wee and Spicy Wow Wee sauces—cost 35 cents each. St. Romain said that approximately 60% of customers choose more than one extra topping. • Burgers, brats and sausages With the purchase of a burger, cusare the perfect foods for ontomers can add a small side of potato the-go customers. wedges, fries, Cajun fries or shredded • Offering different varieties of hash browns, usually priced at $1.49 or brats and sausages can drive $1.20. St. Romain said that about 80% sales. of burger buyers choose this option. • Customers will choose For an extra cost of between 35 cents premium toppings and sides if to $1, customers can top their smallthey’re available. size side with anything from grilled • Bundles and multi-buys can or raw onions to bacon or shredded increase ring. cheese to nacho cheese or chili. We’ve been offering this for only about a year and, so far, between 5-10% of customers are choosing to top their Gearhart explained that made to order sides,” he explained. “We had all of the is the more popular option. “Customers also like that they can ingredients already so there was no cost of entry. That means every order that has watch their burgers being cooked in the stores’ kitchens,” she said. extra toppings is an incremental sale.” For grab-and-go burgers the stores set out a variety of condiment packets. PRODUCT IN PA Burgers also bring lots of incremenBurgers are also big sellers—second only to chicken—at Nittany Oil Co.’s tal sales, Gearhart noted. About half of 25 Nittany MinitMart stores, located in the customers who purchase a burger also buy at least one side such as fries, western Pennsylvania. “They’re not little one-quarter pound breaded provolone sticks, onion rings burgers; they are about one-third pound or battered mushrooms. Staffers are pub steak burgers,” said Angela Gearhart, trained to suggest the purchase of a the MinitMart’s foodservice category side to burger buyers. While not all stores can support a manager. “People really like that they get cooked-on-site program for burgers a good-size, high-quality burger.” The store offers burgers, cheese- and use a heat-and-serve product, they burgers and bacon cheeseburgers can increase the appeal of the product made to order or ready for grab and go. by putting it on a fresh bun, said Nancy

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FOODSERVICE favorites. A report published last year “sausages in buns” (bratwurst, polish for The National Hot Dog & Sausage sausage, etc.), up 11% from 2012. At Milwaukee-based Jetz Council revealed that nearly nine in 10 Americans (89%) said they enjoy sau- Convenience Centers, the JetzGrill sage. In Datassential’s convenience store roller grill brats and Italian sausage are BRAT BUSINESS C-stores can also score big sales on report, 48% of consumers surveyed major draws from morning until night. “In Wisconsin, brats are a prized brats and sausages, two other American said they were interested in purchasing commodity,” said Robert O’Connor, the four-store company’s president. “Even the major national fast feeder chains in this area include this local staple on their menus.” All of that competition for this brisk brat business means stores have to work hard to stand out. “In addition to always having the basics, we are constantly rotating different varieties in and out on the grill to keep things interesting,” said O’Connor. “We promote these new varieties as limited time offers and if they sell we give them a permanent place on the grill.” The stores also rotate condiments on their bars. “When our wholesaler brings us something new, we put it out there for our customers to try,” said O’Connor. “All together we feature 12 different condiments at any given time.” O’Connor recommended keeping a close eye on the toppings bar to make sure that you know what your customers are using. Caldarola suggested that retailers can easily turn their brats and sausages into more substantial and appeal➤ Low investment ing offerings by marketing them with caramelized onions, peppers and, per➤ Simple operation haps, cheese sauce. Stores in suburban ➤ Floor plan flexibility areas can also increase their sales by ➤ Portable made-to-order sandwiches & salads featuring some of the many gourmet ➤ Great fresh food options for all day-parts varieties like chicken-apple sausages ➤ Proven operational & control systems or beer brats that are available from suppliers, she said. Whether you are looking to own and operate a SUBWAY® To add more value to brats and saurestaurant yourself or lease space to an existing SUBWAY® sage purchases, the Jetz stores always franchisee and earn rental income, the SUBWAY® restaurant offer a special deal. That deal is either a chain can offer a formula that works. bundle with chips and soda or a multibuy offering a second or third brat or sausage at a discounted price. www.subway.com “Having a good brat and sausage call Allison Morrow 800.888.4848 x1736 or 203.877.4281 x1736 program can also help c-store retailers e-mail: morrow_a@subway.com SUBWAY® is a Registered Trademark of Subway IP Inc. ©2016 Subway IP Inc. sell more beer,” said Caldarola. CSD

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Bakery Drives Local Demand

Through consistency and a focus on local trends, convenience store bakery programs can create savory margins.

year I thought, ‘Why don’t we give our trade, climate and cooking traditions of the area’s early residents. customers funnel cakes every day?’” Another local treat available As a result, Rutter ’s now sells mountains of crispy funnel cakes that from Rutter ’s is the whoopie pie, a are cooked on demand in the stores’ Pennsylvania Amish tradition of chocfryers. These delicacies are not round olate sponge cake filled with whipped By Pat Pape, Contributing Editor and flat like the traditional version. cream. In western Pennsylvania, the Instead, they are shaped much like a popular, hand-held cake is known as a “gob.” French fry. Regional breads and pastries attract “They can go into a cup and are very HEN IT COMES TO creating a successful baked goods portable,” Krebs said. “We add pow- local customers to the c-store bakery program, inspiration is dered sugar and offer other toppings cases, spurring daily sales. “Those items are just as successful found in the most unlikely like cinnamon, chocolate sauce, carplaces. Just ask Ryan Krebs, director of amel sauce and maple syrup. Funnel in other areas, because at the end of foodservice for Rutter’s Farm Stores, cakes can be a sweet, indulgent snack the day, they’re delicious,” said Krebs. “They draw us back to our heritage, yet or an after-dinner dessert.” based in York, Pa. P e n n s y l v a n i a D u t c h s e t - they’re still a saleable item outside our The annual York Fair, the oldest fair in America, attracts thousands of visi- tlers, Germans who migrated to [original] market.” Rutter’s operates nearly 70 stores in tors annually. It was there that Krebs Pennsylvania before the 19th cenwas inspired to create what is now one tury, are credited with inventing the Pennsylvania. of Rutter’s most popular baked treats. first funnel cakes. Like other nostalgic “Every time I go to the fair, the lon- regional dishes that people associate LOCAL PREFERENCES Regional pastries have been a gest line is always people waiting to with home and hearth, funnel cakes buy funnel cakes,” said Krebs. “One were the result of food availability, windfall for many bakeries. In West,

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CStoreDecisions ecisions .com

7/25/17 7:33 AM

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-pagerJL.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: Vice President of Retail Operations, Energy North Group

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 Alternative Fuels, RIN’s and Declining Gallon Sales. The Renewable Fuel Standard (RFS) is changing fuel economics across the country and not necessarily for the better. Credits for renewable identiﬁcation numbers (RINs) can be an obstacle for small chains who don’t fully understand them. Combined with new regulatory requirements, enhanced fuel-efﬁcient vehicles and alternative power sources are muddying gasoline’s future and threatening trips to the convenience store. Learn what convenience stores can do to protect fuel sales and store visits 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 6:30 – 9:00 pm: NAG Conference Dinner & Awards Ceremony

SPEAKERS: • William Baine, CEO, Git’N Go Market • Hannah Holt, Marketing and Operations Director, Holt Oil Co. • Mario Spina, CEO, The PRIDE Stores Inc. Moderator: Matt Lally, Manager, Analytics & Insights, Nielsen Perishables Group

Wednesday, September 13, 2017

10:30 - 10:45 am: Break

8:00 – 9 am: Breakfast

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.

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: • 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

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9:00 – 12:00 am: NAG Hospitality Room

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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7/25/17 12:11 PM

The Editors and Editorial Advisory Board of Convenience Store Decisions are proud to honor Sheetz as the 2017 Chain of the Year! Donâ&#x20AC;&#x2122;t miss the opportunity to be a part of the oldest and most prestigous award event for c-store retailing on October 18th, 6pm-9pm at The Crystal Gardens at Navy Pier in Chicago during the NACS Show.

We are proud to reveal Sheetz as the 2017 Chain of the Year!

To register, please visit: https://2017sheetz.eventbrite.com

Sponsorship opportunties are available!

For more information contact Tom McIntyre tmcintyre@csdecisions.com or 440-250-1583

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FOODSERVICE Texas, a small town on a major highway between Dallas-Fort Worth and Austin, Slovacek’s whips up hundreds of baked goods daily. This includes the versatile kolache, which arrived in central Texas with Czech immigrants, who settled there in the mid-1800s. Slovacek’s robust menu features 19 kolaches filled with various fruits or cottage cheese and 19 other versions made with assorted meats. “We started out as a meat wholesaler and sausage maker,” said Ray Rabroker, general manager of the store. “We sell over 7 million pounds of meat a year to various grocery stores, and we put every type of sausage we make into our kolaches. You can have a kolache with sausages, with sausage and cheese, with sausage and jalapeño or with sauerkraut or pepper jack.” Patrons can order the “Big Boy” kolache, a three-ounce piece of dough filled with three ounces of meat and topped with a one-ounce slice of cheese. PORTABILITY COUNTS When Solvacek’s first opened in 2014, the plan was to feature whole cakes and kolaches in a cold case, but about 75% of Solvacek’s customers are highway travelers stopping for a rest break. The convenience retailer operates a second location in Snook, Texas. “We found out that for the all the time and effort that goes into making nice cakes, people driving between Dallas and Austin aren’t going to stop half way there to pick up a cake,” said Rabroker. “We’ll make you one if you order two days ahead of time, but we’ve just about phased out of cakes.” Currently, the store sells single slices of cake and pie packaged in plastic shells that shoppers can take on their journey. They also have their choice of fresh loaves of bread, cookies, strudels, fudge, twists, lemon bars and other items. But kolaches is the offering that draws the most customer traffic. “We have people who will buy a dozen or three dozen at a time to carry to a party or take home to freeze, but 40 Convenience Store Decisions

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the majority right now are people buying two or three items. They go down the road and eat them while driving,” said Rabroker. REPEAT BUSINESS The best way to keep customers returning is to have the products they want. “Let customers know you’re a destination,” said Sarah Schmansky, director of Fresh Growth and Strategy at Nielsen, the consumer research group. “Have breakfast options avail-

Rutter’s offers four varieties of fresh-baked cookies: chocolate chip, oatmeal raisin and peanut butter, plus a new seasonal flavor every quarter. Customers may purchase cookies at the counter and near the coffee bar.

able during the early evening rush hours for the next day, including doughnuts, bagels and yogurt parfaits, so consumers don’t have to stop on their way in to work. Ensure a large bakery breakfast display bright and early during the weekend.” Because baked goods are visual items and often an impulse purchase, glass bakery cases greet Rutter’s customers as soon as they step inside. “You have to make sure that it’s visible and that customers walk by it,”

Krebs said. “People see a doughnut and say, ‘Well, I wasn’t going to get a doughnut but that looks delicious.’ We also make sure that employees are checking the case, pushing things to the front and changing the paper. If six cookies are gone and chocolate is smeared around on the paper, it doesn’t look appealing. So, we stay on top of that.” Rutter ’s offers four varieties of fresh-baked cookies: chocolate chip, oatmeal raisin and peanut butter, plus a new seasonal flavor every quarter. Customers may purchase cookies in any quantity, but the chain sells pre-packaged trios and locates them throughout the store, including at the counter and near the coffee bar. “That’s where we get large volume sales,” said Krebs. “People like the three-pack because they can eat one now and another one two hours from now. Cookies are a snacking item, and certainly, the peak time is the morning when people are going to work, but it’s not just a morning grab-and-go item. Customers get them with their lunch or as a dessert item with dinner.” Sales soar when the aroma of freshly-baked cookies wafts through the store, so Rutter’s cools hot cookies near the counter. “People smell them and sometimes they say, ‘Can you pack them for me right off the rack?’” said Krebs. “Because of our open-kitchen concept, they also see us working, and customers really buy into that.” Krebs is always on the lookout for new bakery items and researches changes in taste trends. Currently, he is investigating salty-sweet taste profiles. “Chocolate peanut butter is big in our area,” Krebs said. He also wants Rutter ’s diners to have a good selection of desserts. Currently, they can select from cheesecake, cannolis or tiramisu. “We don’t want to give our customers dinner but let them go across the street for a piece of cake or pie because we don’t have a full offering beyond cookies,” said Krebs. “People in our market still have a sweet tooth.” CSD CStoreDecisions ecisions .com

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FOODSERVICE

Built to Compete More convenience retailers are becoming foodservice destinations rather than just pit stops. Moreover, savvy c-stores are learning that as they refine their fresh food businesses, adding the right equipment is an essential part of the equation. By David Bennett, Senior Editor

Arlene Spiegel, founder and president of Arlene Spiegel chains as well as smaller operators—are committing to & Associates, said while the acceptance has been slowequipping their kitchens with the final pieces for con- moving in terms of Americans embracing the legitimacy of foodservice programs in the convenience channel, the tide tinued success. Ashleigh Michaels, RaceTrac’s corporate executive is changing and convenience retailers can equip themselves research and development (R&D) chef, said staying cur- for success. “The right cooking equipment is critical to a successful rent with both consumer tastes and the equipment market has been an important component to shaping the chain’s program,” said Spiegel. “First, the food is properly prefoodservice program, which has evolved into a robust pared, and secondly, and as important, the guests see that the food is fresh and not being platform, comprising a stronmicrowaved.” ger deli program, customizable sandwiches, pizzas and specialty TURNING THE TABLE beverages that include everyRetailers today have more thing from milkshakes made with choices of cooking/foodservice real, hand-scooped ice cream to equipment that will accommoespresso-based lattes, mochas and date smaller store footprints. cappuccinos. “There is a wide range of “Staying on top of both technocooking equipment available logical trends and food and flavor that does not require ventilation, trends is very important for us in including ovens, fryers and cook this industry. How we capitalize and hold units,” said Spiegel. on trends may vary depending Well before the first oven or on the category and RaceTrac’s microwave is installed, there need from that particular piece of are five questions c-store operaequipment.” tors should ask, said Spiegel, the RaceTrac operates more than 700 stores in 12 states, some under its RaceWay dealer brand. former director of the global food and beverage practice at PricewaterhouseCoopers. Essentially: 1. What role will food and beverage play in the overall COOKING TO THE FUTURE operation? Like any category, the availability of equipment on 2. Will it bring in new customers or just add incrementhe market is as diverse as c-store foodservice stratetal sales? gies: countertop ovens, air jet ovens, rack ovens and pizza 3. Can I commit to a ‘new’ business and ‘integrate’ it ovens—including models that rotate to ensure even baking with my current operations? of the whole pie. 4. What real estate in the store am I willing to give up to “As our store count continues to grow, being able to coninstall a fresh food program? nect to our equipment remotely is becoming more and 5. What other choices do my customers have? Will my more important,” Michaels said. “This allows our maintefoodservice be a solution for them? nance teams to run error reports and guarantee they have Spiegel explained that making an investment in the right the proper parts when they arrive at the store for a repair. It also allows us to update menu offers, settings and/or cook foodservice equipment is another component—and one of the final steps—of a solid fresh foodservice platform, which times for a quarterly LTO (limited time offer).” The technology has helped to drive faster cook times and should also comprise strategic planning, trends, operations better food. Perhaps more importantly, adaptable equip- analysis, concept progressions, menu development, financial modeling and brand positioning. CSD ment solutions often equate to lower labor costs. N THIS NEW FOODSERVICE era, c-stores—both marquee

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CATEGORYMANAGER’S NOTEBOOK

The Crave for Confections For a category that’s always straightforward, the intricacies of non-chocolate candy are becoming more refined. By Jeffrey Steele, Contributing Editor

sets,” said Cote. “Peg bags are generally in a superior secsumers from coast to coast look to convenience tion to king and standard.” Plaid Pantry buys “a bunch” of shippers, he added, notretailers to satisfy their sweet tooth. For smart c-store operators, that phenomenon ing it offers many price promotions, “often enhanced with coupons. Most of the non-chocolate shippers are peg bag. means large and growing sales and profits. Health concerns over the intake of refined sugar didn’t The product is very impulsive. We work hard to drag it out appear to impede confectionery sales in 2016. Sales of of the customer.” While schoolyard buzz is important to offering the right sugar confections were the swiftest-growing segment last year, according to research by Euromonitor International, mix of brands, Cote feels it would be an error to assume non-chocolate candy translates directly to just younger increasing 4% to $11.3 billion. Propelling the growth were a number of developments, customers. “Non-chocolate has lower fat content, [and] appears to including the unveiling of innovative new products and the be simpler to make in a way to [advance] health claims like surging preferences for sour flavors and chewy candy. Convenience stores increased their sugar confectionery organic or GMO free,” Cote said. channel shares in 2016, attaining a combined total of 22% PROVIDING SELECTION last year. Pastilles, gums, jellies and chews were top performers in In reporting these findings, Euromonitor noted that falling fuel prices have provided c-store patrons with greater the past year. Euromonitor credited a parade of innovative disposable income to indulge their sweet tooth. And prices product launches in 2016 for fueling a 5% growth in the catpaid by consumers in c-stores were higher than elsewhere, egory. They included Skittles America Mix, Trilli Sour Brite driving average unit prices across the industry more than Weird Beards, Ring Pop Gummies Chains and Haribo Twin Snakes in the spring and Starburst Gummies in early sum3%, Euromonitor reported. Headquartered in Beaverton, Ore., Plaid Pantry operates mer, as among the most noteworthy debuts. Sour flavors are accounting for a disproportionate pora chain of 110 c-stores located in Oregon and Washington. Non-chocolate and confectionery accounts for about 20% tion of the growth of chews, leading well-known brands of the chain’s standard and count bulk candy goods, and like Ferrara to roll out sour product launches in 2016. some 80% of peg bags, which sell better than smaller, non- Ferrara’s Now and Later Extreme Sour Fruit Chews in three peg packages. Tim Cote, vice president of marketing said fruit flavors was among the best examples. Sours also demthe stores offer 150-200 SKUs in the category, a number onstrated a lot of pucker power in the hard candy segment, expanded this year. Skittles, Starburst, Sour Patch, Sathers leading Topps Co. to launch Ring Top Sours in February 2016. and Haribo are among favorites. In keeping with rising interest in clean labeling, organic “King and standard are in the basic king and standard HEN IT COMES TO non-chocolate candy, con-

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CATEGORYMANAGER’S NOTEBOOK sugar confectionery is commandeering a larger—though today are evaluating testing and utilizing self-facing pusher admittedly still small—share of consumer confection spend- trays because they essentially automate a manual process,” ing. Early last year, Ferrara and Jelly Belly both unveiled Bishop said. Balvor’s work shows such pusher automation will proorganic versions of their Black Forest and Jelly Belly brands respectively. Torie & Howard and Hillside Candy were duce sales lifts while alleviating burdensome facing duties, Bishop said. among organic brands adding items. “Balvor has documented that fact by analysis through conNot to be outdone, Wholesome Sweeteners acquired organic maker TruSweets to ensure its presence in the segment. venience retailers. With bag candy, we’ve seen dollar sales increase by nearly 7%, and the number of units sold by almost 10%,” said Bishop. The pusher systems “are not currently widely used, but most of the progressive retailers focused on improving the shopping experience are in the early stages of testing or have implemented those in their stores.” Whether it’s pusher systems or under-shelf LED lighting to improve product appearance— another innovation Bishop said has been shown to improve confectionery sales—the result is an edge for progressive retailers in capturing just a bit more of the share of wallet. “Candy is something of a commodity item, in that all these brands are available in many stores,” Bishop said. “So the competitive advantage doesn’t rest with offering Brand A versus Brand B. The competitive advantage lies in how the retailer showcases these items. And that is merchandising in a nutshell.” 1. Organic confections are a viable option for more con-

3 CONFECTIONERY TIPS

sumers. 2. Bulk candy displays are a solid emerging choice for convenience stores. 3. Stores can enhance product facing with pusher systems.

EFFECTIVE MERCHANDISING To stay top of mind with consumers, makers and retailers of confections must ensure brands are effectively marketed and merchandised, according to Euromonitor. Hershey created a memorable marketing campaign for its Jolly Rancher, built around situations that “suck” but “suck more” when Jolly Rancher hard candies are consumed. Among problems c-stores face with products like bagged confections is “visual or false out-of-stocks,” where products are actually in stock but shoppers can’t clearly see them. So said David Bishop, managing partner with sales and marketing firm Balvor LLC, based in Barrington, Ill. “If they’re quickly glancing right or left and that product is not readily visible, they may not go the extra step to confirm the product is further back,” Bishop said. Balvor found that actual out-of-stock rates for center-ofstore items liked bagged confections was 3.7%, while the visual out-of-stock rate was 1.6%. The 5.3% total comprised of actual and visible out-of-stocks lowers convenience retailers’ sales and negatively impacts customer satisfaction, Bishop said. Because re-facing shelves is a manual issue in an era where labor is increasingly expensive, “more retailers 50 Convenience Store Decisions l August 2017

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SOUR SALES SWEETEN C-store retailers confirm that sours are among the public’s favorite confections. Among those retailers is West Bend, Wis.-based Mad Max Convenience Stores, with a dozen locations in the southeastern part of the Badger State. His customers crave “anything that is gummy, sour or tart,” said Steve Magestro, Mad Max president. His stores carry 100-160 different SKUs of non-chocolates and confections—depending on the size of which respective Mad Max. Moreover, non-chocolates and confectionery may comprise 25-50% of stores’ candy set. Generally offered in the center of stores with other bagged candies, non-chocolates and confectionery when promoted are given a sales impetus through means of twofor-one deals, Magestro said. His advice to other retailers? “Promote the items with two-for promotions and have the newest items,” said Magestro. It remains true that confection makers place more marketing firepower behind chocolate than non-chocolate items. But that is changing, Cote said. “This is still a problem, but a number of manufacturers are starting to loosen up a bit. Going forward I expect the trend toward more promotional availability to increase.” In Oregon, what are Plain Pantry’s secret to success for grander candy sales? “Carry plenty of assortment, get it off the shelf regularly, and get it priced not too much higher than grocery or mass,” Cote said. CSD CStoreDecisions ecisions .com

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CATEGORYMANAGER’S NOTEBOOK

Packaged Beverage Sales Flow As traditional carbonated soft drink sales continue to lag, the convenience store channel is proving a hot bed for new beverage options sought by younger consumers, including healthier craft sodas and cold brew coffee. By David Bennett, Senior Editor

their product portfolios with beverages with less sugar and escape from mass produced, over-processed and over- what are considered “better-for-you” ingredients. For instance, Monster Mutant ‘super soda’ is an extenpackaged foods with a demand for real, healthier ingredients. The same can be said for U.S. packaged sion of a strategic partnership between Monster and Coke. beverages, according to Gary Hemphill, managing direc- Coke in 2015 acquired a minority stake in Monster and tor of research for Beverage Marketing Corp. (BMC), who became “preferred global distribution partner” for Monster explains the marketplace is being reshaped by consumer energy drinks. However, Mutant isn’t marketed as an demand for variety and healthier refreshment. Due to this, energy offering, but is being peddled as a CSD alternative. Meanwhile, the new Monster Hydro will target active retailers are likely to continue to see more category and consumers and be positioned as an alternative to enhanced product innovation. “It is fair to say that Millennials are leading the charge waters and sports drinks. The better-for-you movement is right in step with the toward healthier refreshment beverages with products that are more natural and simple with a straight-forward list of convenience chain Maverik Inc., which touts the great outdoors in much of its promotional campaigns. Based in ingredients,” said Hemphill. If that push from younger U.S. beverage consumers is North Salt Lake, Utah, Maverik operates more than 270 growing, it’s reflective in the mixed sets and product lines stores across 10 western states. Mark Keller, Maverik’s category manager, packaged displayed in c-store cold vault spaces throughout the beverages, said the c-store’s evolving packaged beverage country. The packaged beverage category is a perennial performer offerings seem to reflect such demand for diverse and natin terms of positive gross profit dollar growth. In 2016, ural offerings. “We are seeing growth in water, functional, tea, CSD and packaged beverages (non-alcohol) accounted for 18.5% of gross profit dollars. Within the category, enhanced water energy. CSD and energy are having to move to this space, (12.3% increase in sales), sports drinks (4.5%) and bottled while other sub categories are growing as consumers look water (3.9%) led sales growth from the cooler, according to for a more natural hydrating and beverage experience,” data from the National Association of Convenience Stores said Keller. For health-conscious Millennials monitoring their calorie (NACS). For the first time in 2016, bottled waters surpassed intake and looking more closely at nutritional labels, craft carbonated soft drinks to become the No. 1 beverage by vol- sodas are helping entice more consumers back to the soft ume. The BMC projects sparkling water sales will increase drink category. As result, demand is driving more product diversity. more than 20% in 2017. “As manufacturers continue to develop craft sodas and more natural drinks, customers gravitate to these brands,” DRINK REVOLUTION As U.S. consumers shun traditional carbonated soft Keller said. “For example, while we continue to grow the drinks (CSD) in an effort to live healthier lives, Coca-Cola, core Mountain Dew brand share, we have seen some of PepsiCo and other drink manufacturers are pushing to pad that growth shift to the Kickstart, the Label series as well as NDUSTRY EXPERTS SAY MILLENNIALS are leading the

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CATEGORYMANAGER’S NOTEBOOK

U.S. LIQUID REFRESHMENT BEVERAGE MARKET Change in Volume Segment 2015-2016

Segment

% Change

Value-Added Water

12.30%

Ready-to-Drink Coffee

11.00%

Bottled Water

8.60%

Energy Drinks

4.80%

Sports Drinks

3.90%

Ready-to-Drink Tea

3.10%

Fruit Beverages

0.40%

Carbonated Soft Drinks

-0.80%

Source: Beverage Marketing Corp., April 2017

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Spiked. I believe this is due to the ‘craft’ nature and marketing of these more natural brands.” Craft sodas are also grabbing more market share in c-stores, slowly but surely. Chet Cox is president of Henderson, Nev.-based Get N Go—a burgeoning convenience chain that sells a lot of packaged beverages. “We continue to see small declines in traditional CSD offerings,” Cox said. “Companies are using more ‘all natural’ ingredients to lure consumers back and some of them are working. Craft sodas are increasing, but very slowly. They are starting from near zero, so the percentage increase is huge...but the case count increase is minimal.” When the weather turns hot, packaged beverage sales in the convenience channel can go off in different directions, depending partly on demographics. CONSUMER CHILL Cold brew coffee has grown in popularity over the last several years, and 2017 should be no different. Cold brew sales rose an astounding 580% between 2011 and 2016, according to Mintel’s 2016 U.S. Coffee Report.

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The cold brewing process uses time, rather than heat— soaking beans in water for 12 hours or more in order to turn water into coffee. Some of the brands growing in popularity include Califia Farms Cold Brew Coffee, High Brew Coffee and Stumptown Cold Brew Coffee. Because cold brew coffee is a smoother, less acidic product than traditional ready-to-drink coffee, Hemphill said the BMC feels the segment is likely to continue to grow along with the overall ready-to-drink coffee segment. It might take some time, however. “We recently brought in the cold brew from Starbucks,” said Cox. “It’s performing decently. It’s not a home run, but it’s been a good complementary addition to their line.” At Team Oil Travel Center in Spring Valley, Wis., cold brew coffee isn’t new, nor does it do gangbusters. “Cold brew coffee hasn’t really taken off and I don’t know if it will,” said Tony Huppert, Team Oil CEO. “I believe in the convenience store business staying with the basics; seems to generate the greatest overall return. We do carry the cold brew and have in the past, but it was never a big moneymaker. It is kind of like food at a wedding or funeral—have plenty of the basics and don’t run out.”

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NOT SO SWEET Major cities that are running low on municipal services seem to be gravitating to tax proposals on sugary beverages. The Seattle City Council recently approved a 1.75 cents per ounce tax on soda and other sugary beverages that are most popular in that city’s c-stores. The tax does exclude diet drinks. Businesses and labor groups have spoken out against the tax, saying it would hurt small businesses and cost jobs in Seattle. Other major cities that approved taxes on sugary beverages include Philadelphia, San Francisco and Oakland. Analysis from Nielsen Product Insider, via Label Insight, shows the beverage tax in Philadelphia has resulted in a 25.7% year-to-date (YTD) decline of taxable beverage sales since the tax went into effect on Jan. 1, 2017. On the other hand, tax-exempt beverage products in Philadelphia saw sales rise 6.1% in the same period. Soft drinks have been impacted, with share declining 5.7 points compared to the previous YTD period in 2016 (down from 23.6% to 17.9%). Water, however, has gained 5.3 share points (up from 18.8% to 24.1%) during the period. CSD

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CATEGORYMANAGER’S NOTEBOOK

Cigars

Fend Off Challengers

Cigars remain a popular c-store category, but like other tobacco products, are targeted by taxes, community bans and age restrictions pushed by state and local legislators. By Howard Riell, Associate Editor

CCORDING TO MARKET RESEARCH firm Information Resources Inc. (IRI), convenience store sales of cigars totaled $2.9 billion for the 52-week period ending June 11, 2017, a 10.7% increase over the corresponding year. Savvy c-store operators continue to do well with smaller, less expensive cigars by maintaining strong sets, using promotions, knowing what consumers want and remaining confident that the popularity from consumers will continue. “The U.S. cigars and cigarillos category remained highly concentrated in 2016, with the leading four players together accounting for a 78% share of volume sales,” said Eric Penicka, a research analyst at Euromonitor International. However, public smoking bans across the country may have an adverse impact on demand for cigars as it becomes increasingly difficult and inconvenient to smoke them, he added. “It is more likely that these bans, which are being extended to outdoor public areas like beaches and parks, will have a strong negative impact on mass-market cigars,” said Penicka. “Many of the public smoking bans include exemptions for tobacconists and cigar bars, which are mostly frequented by enthusiasts who prefer premium cigars.”

REMAINING NIMBLE The impact that taxes, bans and restrictions have on cigar sales are often difficult to measure. The effect of a flavor ban can prove devastating for retailers that bump against another jurisdiction that does not have a ban. The same goes for taxes. In some markets, such as Cook County, Ill., which has much higher taxes than surrounding counties, the levies hurt lawabiding retailers at the same time others procure product from outside the county. “Selling is the concern,” said Amer Hawatmeh, president of St. George Oil Inc. in St. Louis, Mo., “and the fact that the 56 Convenience Store Decisions

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naturally un-sweet F O R M O R E I N F O R M AT I O N C O N TAC T YO U R S W E D I S H M AT C H R E P R E S E N TAT I V E 800-367-3677 • CUSTOMERSERVICE@SMNA.COM

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CATEGORYMANAGER’S NOTEBOOK “THE U.S. CIGARS AND CIGARILLOS CATEGORY REMAINED HIGHLY CONCENTRATED IN 2016, WITH THE LEADING FOUR PLAYERS TOGETHER ACCOUNTING FOR A 78% SHARE OF VOLUME SALES.” -ERIC PENICKA, RESEARCH ANALYST, EUROMONITOR INTERNATIONAL.

industry is allowing government to determine their fate in a product and business they created is crazy.” Tax hikes certainly impact sales, of course, but not necessarily permanently. “Here in Utah we’re kind of behind on the tax scene,” said Randy Needs, director of marketing for Holiday Oil Co., based in Salt Lake City. “About five years ago we were not really taxing our customers. The state wasn’t given that revenue that other states were getting, so they kind of stepped up to the market.” The rise of Utah’s tax rate, which Needs characterized as gradual, seriously hurt cigarette sales for about a year, he continued. “They have gone up, but not anything large. But customers kind of became numb to it and growth came back, and I think the same thing happens with cigars, and now with e-cigarettes. Everybody kind of gets numb to it and they go back to their normal way.” The first and most direct step a retailer can take is to fight against any ban or tax increase. This can be accomplished using their state retail association, and by sending letters to their representatives. Hawatmeh is convinced that a petition should go out with the signature of every employee, manager and owner in the industry. “It would have millions of names sent to the regulatory (agencies) and White House. It would show that we the people have spoken.” More conventional steps, of course, should also be taken. A retailer in proximity to a market without these types of bans or taxes needs to create a point of difference to encourage consumers to shop at their stores. Increasing, and advertising, a large assortment or manufacturer specials will also improve the perception that the retailer is a destination for cigar purchases. Another strategy is investing in or advertising a beer cave or a pizza program, which can attract customers who are more likely to also purchase cigars. Some retailers can also promote their cigars bundling them with another purchase in many cases. Eventually, said a top industry executive, this practice, along with other promotions, will likely be banned by the U.S. Food and Drug Administration, as has already occurred in some instances. PACKS AND PROMOTIONS Holiday Oil, which operates 56 convenience stores throughout Utah, ultimately decided to go with a cigar set 58 Convenience Store Decisions l August 2017

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consisting of three brands: Altria’s Black & Mild, Swisher and Prime Time. Each offers a strong promotional program. “Prime Time has single-stick shippers; little countertop units for cigars priced at 59 cents per stick. They’ve got four flavors, and we purchase and promote those pretty regularly.” At the same time, he continued, Swisher has put a major emphasis on the two-pack foils, supported once again by a promotional strategy. “We buy into some of those counter-top two-pack promotions,” said Needs. “That’s where Swisher is going—not the singles, but really driving more of the two-packs, and so there is great growth there. Of course, it is a different cigar than Prime Time.” Needs reported that Black & Mild is easing up on its emphasis on the 99-cent price point. “For a good year they were promoting 99 cents, and of course they were introducing a bunch of seasonal flavors, as well.” The packaging of cigars is finding a wider consumer acceptance. “I think that’s really the biggest thing manufacturers have spread out into those categories,” said Needs. “In our market, Prime Time has always been the dominant cigar/ cigarette product. We have seen Swisher and Altria, with the Black & Mild brand, really make a push into that singlestick market. That has expanded the business.” A broadening of the offerings has been just what consumers are looking for, Needs continued. “Obviously there are more varieties; Altria’s Black & Mild cigars have plastic and wood tips, so they are a little bit more upscale. Swisher Sweets has got some flavors that I think a probably a little bit bolder than some of the Prime Times, so those things have expanded the market all together. We still do well with some of the 10- and 20-packs from Prime Time; they have always been stable, nothing great. But the singles have really proliferated and made that category real interesting.” All told, Holiday is doing well with its cigar set, which includes about 60 SKUs. Last year saw sales rise by 25-26%, said Needs, who handles the buying chores for all of Holiday’s product categories. “We were probably under-categorized in that category going into 2016. But with the extensions of some of those lines from some of those manufacturers we went back in and redid our sets, expanded them, made them more of a destination store for that product,” said Needs. “And we saw some great growth from that.” CSD CStoreDecisions ecisions .com

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COLUMN OPERATIONS

Fortify Your Company Foundation Compensation, good hiring and leadership are important parts to building a solid retention program. By Linda McKenna

ETENTION IN THE CONVENIENCE store industry has employers. Create a master company log to capture this always been a burning issue, but more so in the last data from all managers. When you hire people, do a deep few years. dive and learn more about your competition. You are comThere are endless ideas to improve retention peting for talent after all. from welcome letters to bonuses. Many retailers have 2. Ask managers and company staff when they see a implemented different strategies yet still suffer from turn- “now hiring” sign at any retail business to inquire about the over. The key to a robust workplace is a strong foundation. starting pay. Ask the employees if they like working there Implementing bells and whistles on top of a poor founda- and why. You’ll be surprised at how much information you tion will never improve retention. can gather from informal conversations as a customer. There are three common bricks in the foundation of You don’t have to be the highest in the market but you retention. The first is compensation. Some retailers really have to play to win. don’t know if their offer is competitive to retain a good The second brick in the retention foundation is hiring the employee while others want to improve retention, but right people at the beginning. This sounds obvious, but too don’t want to admit they’re not competitive. many managers hire based on experience and availability versus attitude and job fit. Rather than provide managers WAGING WAR the skills on how to effectively interview, the ongoing trend All the news the last few years on minimum wage has has been to do personality assessments of candidates. In left employees more discerning than ever when it comes to fact, such assessments provide an excuse for managers to pay and hours. Many retailers have bumped up wages in conduct a “15-minute gut feel” interview, which is partly advance of new state laws. Others have done so without a factor for the industry’s high turnover rate. I spend my facing changes in the law as an effort to expand their pool days in all-day seminars with managers across the country and countless managers have admitted this to me. I stress to get better quality candidates. To win the battle of talent and retention retailers must you simply cannot replace a quality, 45-minute interview. gauge where they stand against the competition on comManagers should hire their own team so they have an interpensation. How can you win if you don’t know the score? est in the success of that person. Set your team up for success and train them “how” to interview, observe real interviews, Here are two easy ways to get this data. 1. During initial interviews, ask candidates about wages, measure their effectiveness and analyze their selection thought raise amounts, raise frequency and bonuses from previous process. Interviewing is a skill that can be developed and one of the best investments you can make in your team. The third brick in the foundation is leadership. People often join a company, but quit a boss. If you have a competitive offer and managers are trained, but you still suffer from turnover, chances are you have a leadership issue. There are certain interview and training questions to use to asPeople leave because of the manager or the store culture. sess your organization, according to industry expert Linda Kennedy. Management is not the same as leadership. 1. Have you trained your managers on "how" to effectively interview? Remember, managers do paperwork—leaders do the . Do your managers know what to look for besides experience in 2 a candidate? people work. 3. If you have trained them, how do you know whether those However, even the best leader will struggle to retain talmanagers can execute what’s been trained? ent if the first two bricks are faulty. A retailer can’t become the 4. Do you observe your managers conducting interviews? brand of choice without first becoming the employer of choice. 5. Do you hold managers accountable in developing the skills to

ASKING THE RIGHT QUESTIONS

properly interview?

6. Do you hold supervisors accountable for developing managers in this area?

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Linda McKenna is a co-founder and principal of Convenience Store Coaches Inc., an Alexandria, Va. consulting practice, specializing in the petroleum/convenience industry. CStoreDecisions ecisions .com

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COLUMN OPERATIONS

Establishing Supplier Guidelines When it comes to supply contracts, retailers should always keep an eye out for their best interests. By Steve Sandman

HE LAST TIME I bought a house it was pretty clear that benefit from another retailer. This is a big cause of friction the world we live is entangled in contracts, agree- because the assumption is often that the suppliers offered ments, understandings and any other sort of written it to competitor and not to them; however, maybe the comdocument that either we or the other side thinks is nec- petitor asked for something that was easily satisfied by the essary to guide our business or aspects of our personal life. supplier and you just failed to ask. It’s no different in the c-store industry. Another key element of establishing a mutually-beneRetailers have two distinct types of agreements: the ficial agreement is to deal with all of your suppliers in a kind that are negotiated and the kind that aren’t negotia- specific category at one time. While some retailers will do ble such as cigarette contracts. The negotiable agreements this as a negotiating tactic, it’s more important for estabare those retailers have various levels of control over. The lishing a good working relationship in the form of an key elements that can be negotiated include price, duration, agreement. Too many times, suppliers will promise somedeliverables, fill rates, compliance, supplier support, adver- thing in a negotiation because that supplier has their “sales tising requirements and distribution. hat” on, but what will those promises look like when they The elements of an agreement can be overwhelming and are put into writing? A good idea it take your list of what downright exhausting, but the adherence to all a retailer agreed you want to achieve from your supplier, and build a checkto can be an even worse experience, and much more costly. list spreadsheet that shows which elements are satisfied When dealing with any agreement, there are some key by each different supplier, whether it’s a wholesale supply elements that are universal, and if the retailer follows the agreement or a makeover of your snack section. proper steps and is disciplined, adherence to the agreement Once you’ve narrowed down your choices, ask for somewill be easy and future disputes can be avoided. thing in writing and compare that against your checklist to The first element is to do your homework and lay out determine if everything you thought you negotiated and on paper exactly what you want to achieve from your agreed to is actually in your agreement. supplier. Many disputes arise from “Monday Morning The most important thing in developing a solid supQuarterbacking” when the retailer realizes they failed to plier agreement and avoiding any future disputes is to do ask for something or failed to clearly spell out what their the work in advance. Too many times the supplier agreeexpectations will be. If you agree on a level of advertising ment is based on a timetable from your supplier and not support of $1,000 per store per year, does that include the the retailer, and that’s a big cause of having to rush through supplier’s cost of signage, of labor, placing signs or ship- an agreement. ping the signs? Or did the retailer think they were getting a Buyers are busy people and the desire sometimes is to just check of $1,000? get through the process, but by investing the time up front in making your list and discussing it with multiple suppliCLEAR EXPECTATIONS ers, you can avoid the regrets and disputes that are bound to If you start with a list of what you expect, you will be arise when a contract is rushed into. able to clearly define how each of those wishes is being If we all looked at supplier contracts like buying a house, addressed. Additionally, it’s important to get all of your we would probably find ourselves living in pretty good expectations on the table up front; this list will help you place, all the time. accomplish that. Too often, a retailer can have buyer’s remorse months Steve Sandman has worked in the tobacco industry for after making an agreement because they didn’t receive more than 30 years, most recently as president of Rea benefit from a supplier and they see or hear about that public Tobacco. His extensive experience includes product management. He can be reached at (812) 569-1388.

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TECHNOLOGY

Prepaid Cards Inspire Change

New rules could give gift card packaging a new look, while retailers consider bumping up financial services to complement the prepaid segment. By Erin Rigik Del Conte, Senior Editor

HE PREPAID CATEGORY COULD be getting a makeover trend toward digital products. In March, the chain finenext spring due to new rules by the Consumer Financial tuned and then relaunched the ability to load and reload Protection Bureau (CFPB) that require, among other gift cards through the Racetrack app. RaceTrac is also revisthings, expanded disclosures on gift card packaging. ing its business-to-business (B2B) card program. Currently Meanwhile, convenience store retailers are looking to finan- RaceTrac gift cards are available at Publix and Kroger. If companies want to place orders for RaceTrac gift cards, the cial services opportunities to increase their offerings. “The convenience of financial services-related prod- process used to involve sending a fax for a bulk order. “As our technology needs increase, we are looking into ucts like money transfers and bill pay are a value-add to our guests, particularly as compared to more traditional third parties to manage our B2B and business-to-consumer products, like prepaid (cards),” said Anna Kjerrumgaard, (B2C) programs,” said Kjerrumgaard. “We’re also updating category manager of services for Atlanta-based RaceTrac our website so you can order or request gift cards through a Racetrack scanned website and then through a third party Petroleum. Kjerrumgaard oversees new products and offerings that will ship either physical cards or digital cards, which entering the prepaid category, and RaceTrac’s financial we didn’t have the capability to do in the past.” She expected the prepaid category to be flat or down for services programs, including bill pay, money transfer and check to card services, at RaceTrac Petroleum’s more than the first quarter with the transition to accepting cash only on certain prepaid items, but was optimistic about the remain700 RaceTrac and RaceWay stores in 12 southern states. “At RaceTrac, our prepaid and financial services cate- der of the year. “We are in the process of rolling out new fixtures to all of gories are closely related as more prepaid companies are expanding their offerings to include financial services like our stores and through the update in merchandising and shopability, I expect to end the year strong with those new bill pay,” Kjerrumgaard said. When it comes to gift cards, RaceTrac is watching the fixtures,” Kjerrumgaard said. 64 Convenience Store Decisions

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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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Matt Iris (left), Mechanical Engineer, Avista Sean Hurley (center), Maintenance Supervisor, Cenex Zip Trip Ann Carey (right), Regional Account Executive, Avista

that when Avista again approached Zip Trip four years later, offering new rebates on the most recent advances in LED technology, Zip Trip was more than willing to do a second upgrade. It was estimated that the new LED lights would cut Zip Trip’s energy use by nearly 600,000 kilowatt hours, qualifying for over $50,000 in rebates. “Avista’s rebate program offset much of the cost for newer LED technology,” said Hurley.

Avista helped us save over $ 150,000 in energy costs. H

eadquarterd in Spokane, WA, Cenex Zip Trip is among this region’s leaders in fuel-stop convenience stores with 70 locations across Washington, Idaho, Montana, Wyoming, North Dakota, South Dakota and Minnesota. The chain is a subsidiary of CHS Inc., a leading global agribusiness owned by farmers, ranchers and cooperatives across the United States. Zip Trip focuses on setting itself apart by providing great service and offering customers the convenience items they want most, such as fresh grab & go sandwiches and salads and high-quality coffees. Nonetheless, competition in their markets is growing. To improve its brand positioning, the chain has been updating the interior of their stores, while continually working to cut operating costs, energy use being one of the biggest. That’s why Zip Trip partners with Avista for ways to make their stores more energy efficient.

has provided Zip Trip with more than $280,000 in energy efficiency rebates.

“Avista comes to us regularly with ideas and recommendations of how we can save energy,” said Zip Trip maintenance manager Sean Hurley. “And their rebates have enabled us to make these improvements in a costeffective manner.” Since 2011, Avista

About a year after completing refrigeration upgrades, Zip Trip took advantage of Avista’s energy efficiency rebates to change out the interior lighting at area stores and their main office. They swapped T-12 bulbs for T-8s, cutting energy consumption by more than 198,000 kilowatt hours. The energy-cost savings were so remarkable

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“Their upgrades have so far resulted in Zip Trip saving more than 1.9 million kilowatt hours of electricity and over $150,000 in energy costs,” said Avista regional account executive Ann Carey. About five years ago, Avista began by helping Zip Trip complete a project to upgrade cooler fan motors in its refrigerated beverage and sandwich cases. Old evaporator motors were replaced with electronically commutated motors that feature blades made of lightweight plastic vs. metal. Zip Trip also received rebates to replace cooler-door gaskets for a tighter seal and add anti-sweat heat controls in the doors to prevent condensation of the glass and door frames. The changes not only save energy, they put less strain on the refrigeration compressors.

In this second phase, Zip Trip also updated the lights inside their refrigerator cases with brighter, low-heat LEDs. “All of our stores now have a cleaner, brighter look inside as well as outside,” said Hurley. “That not only gets customers to stop for gas, it’s more inviting for them to come inside. That’s a good thing, as industry statistics say only 35% of convenience store customers venture inside.” The brighter lighting over the gas pump islands is good for security, too, and will also save on maintenance because they last so much longer. “We were always getting service orders for individual canopy lights being out,” Hurley added, ”we were changing bulbs on a weekly basis… but we have not had any of these issues at the sites that have been upgraded.” Zip Trip also installed new LED lighting inside their warehouse and its accompanying parking lot. Avista helped pay for these upgrades, as well as for motion sensors that automatically turn off lights whenever work areas become unoccupied. Since completing the entire project, Zip Trip has seen their sales volume increase. The company is so pleased with the overall changes that they plan to make the same updates at other Zip Trip locations, even those outside Avista’s service territory.

For more information on Avista’s energy efficiency programs for commercial and industrial customers, visit myavista.com/bizrebates or email accountexecs@avistacorp.com.

7/24/17 5:31 PM

TECHNOLOGY MERCHANDISING FOR SUCCESS RaceTrac is moving away from rotating standalone units and is instead moving toward a universal gift card fixture that works well in all RaceTrac store types. “Where we formerly had four feet of space, we’re moving down to two feet of space, but we’re maintaining our facings,” said Kjerrumgaard. “And, I would say that it’s an improvement in look and shopability. By decreasing our space in about half of our stores, we’ve opened up room for an alternative product offering and we’re still expecting to see a lift on those gift card items.” The new fixtures will features a range of open loop cards, such as Visa and Mastercard products, as well as closed loop cards for restaurants, stores and telecommunications, as well as RaceTrac gift cards. RaceTrac does not currently offer general purpose reloadable (GPR) cards as it does not currently have the ability to do reloads via swiping the card. “We really believe that swipe reload is the best way to launch those products. We’re actively looking into it and hoping to add that capability,” she said. RaceTrac runs two gift card-focused promotions a year with “moms, dads and grads” in May and June and then a holiday promotion in December. “These promotions provide us significant sales lift each year,” Kjerrumgaard said. Going forward, Kjerrumgaard expects bill pay and other financial services to play a large role in shaping the category. PENDING RULES On June 15, 2017, the Consumer Financial Protection Bureau (CFPB) released proposed revisions to its final Prepaid Accounts Rule that was published in November 2016, and noted implementation has now been delayed until April 1, 2018 (from the original date of October 2017). The CFPB is seeking comments on proposed revisions. According to the CFPB, “the rule requires financial institutions to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, give consumers free and easy access to account information and provide protections if credit is offered. The proposal would adjust requirements for resolving errors on unregistered accounts and provide greater flexibility for credit cards linked to digital wallets.” Convenience stores should expect that prepaid card owners may replace many of the cards in the racks as the implementation date draws near. “Providers will want to make sure that the cards with the latest disclosures and packaging are the only ones for sale,” said Ben Jackson, director of prepaid advisory service at Mercator Advisory Group, a research and advisory services firm focused on the payments industry. Even in the event the rules are overturned, “There will probably be a gradual replacement of prepaid cards because many have already redesigned their packaging and have begun printing them.” 66 Convenience Store Decisions

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WEIGHING GIFT CARD FRAUD ONLINE GIFT CARD SALES are growing by 29% per year, and by 2018 the U.S. gift card market is expected to be worth $160 billion, driven by a surge in digital gift card sales, according to a report by Riskified on card-not-present (CNP) fraud in gift cards. Among the findings: • Digital gift card orders carry a significantly higher risk of fraud for all sellers. • There are three major spikes in online gift card sales throughout the year. While the rate of fraud decreases during the holiday season, on Valentine’s Day fraud attempts increase at a greater rate than legitimate gift card orders. • Closed-loop cards are safer. Digital open-loop gift cards are nearly 20 times more likely to be targeted by fraudsters than plastic closed-loop cards. The exception is closed-loop gift cards for megastores like Amazon and Best Buy, which often behave more like open-loop cards in terms of fraud rates. • Digital gift card orders with an email that matches the shopper’s name are five times safer. To download the report, visit https://pages.riskified.com/ gift-card-fraud-report Source: Riskified

The prepaid industry continues to seek a delay of one year from the original October 2017 implementation date to October 2018, noted Jackson. “They want more time to update terms and conditions and disclosures and get the old cards off the shelves.” While CFPB doesn’t require prepaid card companies to remove and replace old cards, Jackson noted contract law would still make it necessary. “Once the new rules come into effect, if the old cards were still out there, people would be looking at an outdated contract, as far as the terms of the conditions,” said Jackson. “So that would be a big concern.” Convenience store consumers won’t see a direct cost change due to the rules. As far as how it impacts c-store operators, Jackson said some providers may decide to make changes to the displays in the store to either indicate places where a shopper could get more disclosures or else include longer disclosures for particular programs. “Nobody has proposed that yet, but it’s one of the things that could happen,” said Jackson. “This is going to be an evolving situation,” Jackson added. “Retailers should keep their eye on what’s going on. Retailers should make it a point to check in every so often with the distribution companies that do their displays or with prepaid companies that they have close contact with to see what is going on.” Regardless of the CFPB rules, Jackson said, “prepaid will continue to be an important part of the product mix in the future.” CSD CStoreDecisions ecisions .com

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CStoreDecisions.com is geared toward C-Store retailers, convenience store suppliers, and distributors looking to stay abreast of industry trends, new product offerings and category management best practices. We use the latest media technology, delivering content the way you want it: print issues, digital issues, enewsletters, and videos.

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7/24/17 5:36 PM

NEWSTUFF Creations & Innovations to Convenience Products and Services

CANDY WITH A SURPRISE

JELLY BEANS EMOTE FUN

The Kinder brand is set to launch in the U.S. with Kinder Joy in January 2018. Kinder Joy is a treat that combines the delicious taste of Kinder chocolate on one side, with a surprise toy on the other. Kinder Joy provides twice the joy in every experience. Kinder Joy comes in a plastic egg-shaped packaging that is comprised of two sealed halves. One half contains two soft creamy layers, one milk-crème flavored and one cocoa flavored. Nestled into the creamy layers are two round, chocolate-covered wafer bites that are filled with sweet cocoa cream. This is all eaten with the included spoon. The other half of the egg contains a surprise toy.

Jelly Belly’s new Mixed Emotions Collection pairs favorite flavors of Jelly Belly beans with an emotion and the imprint of a corresponding face to show off those feelings. Five flavors in all are now available, giving candy lovers everywhere a new way to express themselves. Traditionally, Jelly Belly jelly beans are stamped with the Jelly Belly name in white food coloring. In the Mixed Emotions Collection, instead of the logo, the Jelly Belly beans are stamped with a matching face to represent one of five feelings: Happy tastes like refreshing Lemon on a sunny day; playful teases the taste buds with Sour Apple; grumpy sears like Sizzling Cinnamon; sad envelops you in Berry Blue; Love warms the soul with Orange Crush. Available in a range of package sizes starting with a one-ounce bag for snacking.

For More Information From Kinder Joy

For More Information From Jelly Belly Candy Co. (800) 323-9380

www.kinderusa.com

www.jellybelly.com

BUFFALO RANCH PORK RINDS Rudolph Foods Co. Inc.’s Southern Recipe brand has released a new pork rind flavor that gives fans a new way to enjoy this traditional Southern snack. Launching for a limited time in convenience stores across the U.S., Southern Recipe’s Buffalo Ranch pork rinds offer the signature flavor pairing of savory buffalo wing sauce with tangy ranch dressing. Now available, crisp pork rinds deliver this unique flavor to consumers at an SRP of $1.09 for each 1.75-ounce bag. Alongside Southern Recipe’s signature pork rind snacks, including such low carb, protein-packed classics as Original, Hot & Spicy, Bar-B-Que and Salt & Vinegar, new Buffalo Ranch pork rinds are the ideal way to introduce a new variety to the brand’s consumers.

For More Information From Rudolph Foods Co. Inc. www.southernrecipe.com 68

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BLENDED SAUSAGE GRAVY Sausage gravy has always been the loyal companion to breakfast biscuits, and now Tyson Convenience is ready to carry on that tradition and break bold new ground with its Jimmy Dean Sausage Gravy. Aside from completing the classic breakfast duo of biscuits and gravy, Jimmy Dean Sausage Gravy can do so much more. Culinary adventurers or retailers may find that Jimmy Dean Sausage Gravy makes for a savory topping on a breakfast pizza. This signature blend of hearty sausage and creamy gravy makes pizza an ideal and convenient meal for breakfast, lunch or dinner. The product arrives in three-pound pouches, which provide fresher product and reduced waste versus competition. Hand and serve delivers greater speed to service, batch consistency and labor savings versus scratch prepared/ dry mixes.

For More Information From Tyson Convenience www.tysonconvenience.com

CStoreDecisions ecisions .com

7/25/17 7:45 AM

HIGH ABV MALT ORGANIC CIGARETTE BEVERAGES Seagram’s Escapes is turning up the PAPERS color in the flavored malt beverage (FMB) category with a new line of high alcohol by volume (ABV) premium malt beverages: Seagram’s Escapes Spiked. As the No. 2 progressive adult beverage (PAB) growth brand, Seagram’s Escapes is doubling down in a higher growth segment of the FMB category and rolling out “Spiked” at 8% alcohol by volume. Along with the higher ABV, Seagram’s Escapes will excite a passionate following by releasing “Spiked” in its top two flavors —Jamaican Me Happy and Strawberry Daiquiri. The new line will launch in October and will be available in convenient 23.5-ounce cans. The brand will be supporting the launch with an integrated marketing plan that includes digital/social marketing, retail marketing and promotions, sampling and public relations.

For More Information From Seagram’s Escapes www.seagramsescapes.com

The nation’s largest roll-your-own (RYO)/ make-your-own distributor, Republic Tobacco L.P. has introduced JOB Organic Hemp Cigarette Papers. JOB is an iconic brand and the No. 1 selling premium cigarette paper brand in the U.S. The innovative new Organic Hemp range represents the brand’s dedication to serving the highend consumer of today, by appealing to their desire to follow an eco-friendly, environmentally-conscious lifestyle. Today’s RYO smoker seeks a cigarette paper that is grown organically, with sustainable practices, but which also enhances their smoking experience. JOB Organic Hemp is tailored to meet these needs. Made from organically-farmed hemp, grown free from pesticides and fertilizers, the papers are unbleached, and gummed with vegetarian/GMO-free acacia. Available in 1-1/2, Single Wide, 1-1/4 and Slim sizes, and packed 40 boxes per case. A four-box counter display is available for merchandising, and various point of purchase materials are available to support the brand.

For More Information From Republic Tobacco L.P. (800) 288-8888

ROOT BEER FLOAT F’real foods has introduced a new limited time offering, Root Beer Float Milkshake. Customers can now captivate their childhood memories with a taste sensation worthy of a trip down memory lane. High on “Sip Nostalgia,” the creamy vanilla ice cream with the nostalgic flavors of a root beer float will whisk customers back to childhood in one fell sip. Available for order now.

For More Information From f’real foods jvierra@freal.com www.freal.com CStoreDecisions ecisions .com

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NEW WHITE MEAT Brakebush Thigh BoneZ are fully-cooked, whole muscle, bone-in, skinless chicken thighs seasoned with a smoky rub, then oven roasted. They’re meaty, hand-cut “Chicken that eats like a Rib.” In fact, they’re so meaty that four Thigh BoneZ typically provide more meat than eight chicken wings. Serve as an appetizer or entrée—they’re great either way.

For More Information From Brakebush (800) 933-2121

August 2017

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NEWSTUFF Creations & Innovations to Convenience Products and Services

EXCELLENCE IN DESIGN

COUNTERTOP LID ORGANIZER

Hatco Corp.’s Rapide Cuisine IRNGPC1-18 Countertop Induction Range has been recognized by appliance DESIGN magazine’s 30th annual Excellence in Design Awards. It was awarded the Excellence in Design Silver Award in the 2017 competition. It was selected by an independent panel of design experts from a variety of industry associations based on creativity, ease of use and visual appeal. Built for commercial foodservice use, the contemporary, low-profile Rapide Cuisine Countertop Induction Range takes induction cooking to a new level. The range uses a Magnetic Power System that delivers the highest power in its class. Safety and convenience features are included for operators, such as an energy-saving automatic shut-off to prevent overheating and Pan Sense Technology to turn on the unit only when a compatible pan is detected on the ceramic glass top. It also features an advanced programmable mode, where users can create up to six preset cooking profiles for consistent cooking of popular items.

Tomlinson Industries introduces the new Countertop Lid Organizer to its Modular Dispensing Systems product line. Tomlinson’s new lid organizer features a durable stainless-steel welded frame construction and a sturdy plastic insert with three rows for lids and a bottom row for condiments and straws. Removable plastic insert allows for easy cleaning. Available in large and small designs to suit various countertop footprints. The Large Lid Organizer measures 12-1/4-inches wide and 16-3/4-inches deep. The Small Lid Organizer measures 8-1/4-inches wide and 16-3/4-inches deep.

For More Information From Tomlinson Industries (216) 587-3400, ext. 112

For More Information From Hatco Corp. www.hatcocorp.com

TROPICAL ICE CIGARILLOS Swisher Sweets has introduced Limited Edition Tropical Ice cigarillos. The icy tropical fusion is the perfect blend of coconut and pineapple with an icy blast to get you through any sizzling summer day. Swisher Sweets Tropical Ice cigarillos are available in the popular pricing options of “2 for 99 cents”, “2 for $1.49” and “Save on 2.” As a continued Swisher Sweets promise, the resealable foil pouches have the “Sealed Fresh” guarantee. Swisher Sweets Tropical Ice is available now.

For More Information From Swisher International (800) 874-9720

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WHEY PROTEIN COOKIES Oatmega best is known for its line of grass-fed whey protein bars. Now, Oatmega’s grass-fed whey protein cookies offer consumers a fun new way to mix up their protein routine. Just like the brand’s protein bars, Oatmega Cookie is made with grass-fed whey, a premium, high-quality, complete protein that comes from happy, grazing New Zealand cows that are pastureraised and antibiotic-free. Each cookie contains 12–13 grams of protein, a daily dose (250 milligrams) of DHA & EPA Omega-3s, and is certified gluten free and non-GMO. Oatmega Cookie is available in three flavors including Chocolate Chip, Peanut Butter and White Chocolate Macadamia.

For More Information From Amplify Snack Brands www.amplifysnackbrands.com

CStoreDecisions ecisions .com

7/25/17 7:46 AM

NATURAL REFRESHMENT Delivering a refreshing, naturallyflavored taste with only 50-60 calories per eight-ounce serving, Barrilitos aguas frescas are lightlysweetened, flavor-enhanced water beverages available in seven flavors, including fruit fusions and authentic Mexican flavors like Horchata and Tamarind. All are flavored with real fruit juices, purees and/or spices— perfect for the consumers who want less sugar without sacrificing taste.

For More Information From Coca-Cola www.coca-cola.com

TACO-FLAVORED SNACK STICK Wenzel’s Farm has introduced the new Taco Flavored stick, which combines rich smoked quality cuts of beef with taco seasoning for a snack stick that provides just the right hint of the classic taco. Like all Wenzel snack sticks, the new Taco sticks are hand crafted in small batches, using quality cuts of beef that are perfectly seasoned and naturally smoked. And because Wenzel’s has nothing to hide in the creation of these protein rich snacks, they use clear casing—no needless use of artificial colors in Wenzel’s Farm snack sticks.Taco sticks are available in eight-ounce packages and are available at convenience stores and grocers throughout the Midwest.

For More Information From Wenzel’s Farm www.wenzelfarms.com

nnage Racks u D • ts c u d Pro s • Forecourt e s a B y la p is rs • Storage D Merchandise

ys.com www.masonwa 800-837-2881 CStoreDecisions ecisions .com

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Altria Group Distribution Company/ Philip Morris USA ............................2 Apter Industries ...........................11 800.441.7146 / www.apterindustries.com

Avista (specific regions) ....................65 www.myavista.com/bizrates

Bay Valley Foods ...........................55

Gulfcoast Software Solutions, Inc. ......3

727.449.2296 / www.gulfcoastsoftware.com

Home Market Foods ..........................17

800.367.8325 x529 / www.rollerbites.com

Hoshizaki ................................45

800.338.5122 / www.pcbakery.com

R.J. Reynolds ...............................75

Spark Industries ..............................5

ITG Brands ..............................7,61

800.776.8834 / www.cdlatm.com

Prairie City Bakery ...........................12

Hunt Brothers Pizza .........................37

Brakebush ..............................42-43

Cash Depot ...................................54

888.491.4006 x203 / www.posatech.com

www.EngageTradePartners.com

www.HuntBrothersPizza.com/CSD

800.933.2121 / www.brakebush.com/talkchicken

POSA Tech .....................................73

www.hoshizakiamerica.com

800.558.4700 / www.steep18.com

800.280.8089 / www.sparkvaporbrands.com

Subway ....................................36

www.ITGBrands.com

203.877.4281 / www.subway.com

Johnsonville

Swedish Match ........................22-23,57

......................34-35

800.837.5391 / www.cstore.johnsonville.com

800.367.3677 / www.swedishmatch.com

Kretek ..................................9

Swisher International

Krispy Krunchy ......................46-47

800.874.9720 www.experienceacid.com ....................59 www.swishersweets.com ......................76

KT&G ...................................13,15

Texas Pete ...................................19

Mars Chocolate N.A. .........................51

Tillamook Country Smoker .................27

CB Distributors ...................................53

www.djarumcigar.com

Core-Mark .................................63

800.790.6097 / www.KrispyKrunchyCash.com

Del Monte Fresh ................................41

www.ktngusa.com

www.TexasPeteFoodservice.com

888.824.3256 / www.cbprices.com www.core-mark.com

800.950.3683 / www.freshdelmonte.com

E&J Gallo ........................................31 Fini Sweets ....................................49

866.314.3464 / www.finisweetsusa.com

Fri-Jado .............................................29

www.usa.frijado.com

MasonWays .............................71 800.837.2881 / www.masonways.com

McLane Company ................................21 www.mclanekitchen.com

ClassifiedAds

ADVERTISER INDEX

800.325.2220 / www.tcsjerky.com

Tyson ....................................33 www.tysonconvenience.com

Wenzelâ&#x20AC;&#x2122;s Farm, LLC ........................28 800.336.6328 / www.wenzelsfarm.com

North American Bancard ....................72 866.481.4604 / www.nynab.com

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August 2017

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7/25/17 11:16 AM

INDUSTRYPERSPECTIVES

When Counting the Human Cost By Fran Duskiewicz

N THE MIDDLE OF June, I traveled CST and one that was very important to central New York. I hadn’t been to John MacDougall that is being lost back since I relocated to Naples, in the sale to Couche-Tard. Fla. more than a year ago. There were a number of reasons COME AND GONE Let me say this. I’m not sorry the for the visit, most of them prosaic, but what was very much center of mind signs are coming down. Without for me was checking on the feelings founder John MacDougall and Peter of those who had worked for Nice N Tamburro and I, it wasn’t the same Easy Grocery Shoppes through one company. Everyone who stayed and company sale and who were now worked so hard to preserve the spirit facing another corporate deal— we instilled in the company should be complimented and thanked procomplete with loss of jobs. I was ready to write a rip-snorter of a fusely. They carried on the best they column before I left, tearing everyone could, providing excellent customer involved in the sale to shreds. I came service and honoring the brand. But it’s over, and it might have back to Naples with a different feeling. There are many feelings, actually, and I been a misguided plan from the start. What made our company special haven’t totally sorted them out. Before the trip, I had read many was the care it received from those of sad posts on Facebook, complete us who actually lived in the commuwith teary-faced icons, from former nity. Everything received immediate employees and colleagues, stating attention. Without that, and with the they had been told by Alimentation senior leadership missing, the true Couche-Tard that they were “day sense of who we were was running one” employees—gone the day the on centrifugal force and, eventually, sale was complete. This, after every- would come to a halt. People I talked to in the stores and thing we had done to protect these people and their positions during the in what was left of our office were resigned to what would be occursale to CST Brands. To clarify, San Antonio-based ring in a couple weeks, but they felt CST Brands, which acquired my old they had been treated fairly. Most company, Nice N Easy, is now being were anxious to move on, having worked in what felt like a state of susacquired by Couche-Tard. Another concern was that the pended animation for the better part last of the stores carrying the Nice N of a year. Rumors swirled about CST Easy name—the original corporate from almost the day they finalized our stores—would have those signs with purchase. The sense of disquiet was that locally-venerated name taken palpable for a group of people used down. Again, another concession by to stability for 35 years. 74 Convenience Store Decisions

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I sometimes wonder if those who buy and sell companies and those who report the rumors behind the news understand the emotional toll that takes on people who work in the management of those companies. I sense they do not. I do know that it was time to put this to an end and allow these people and the communities, themselves, to move on with new stores, new management, and a new sense of purpose, however different that might be from ‘Be Nice, Sell Stuff, Have Fun and Be the Best.’ I want to thank Kim Lubel, CEO and president, and the folks at CST for keeping their word to the MacDougall family and for trying something that could have worked well and provided a new way for developing a best practices company if only given more time. My advice to Couche-Tard would be to remember that our stores were built in some very small towns, where we were both the grocery store and local restaurant. We saved our customers many miles of travel, hours of time and actual dollars by building our stores to suit their needs. If you replace them with a corporate “one size fits all” Circle K concept, you will be doing them a disservice. I hope that still means something. I think I’ve learned something here, also. It’s time to let this all go. We all did the best we could. Remember it fondly, but move on to something new. Who knows, it could be better. CStoreDecisions ecisions .com

7/25/17 7:48 AM

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7/24/17 4:29 PM

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