CARY, N.C. -- The Pantry's foodservice plan, the Fresh Initiative, is one of the first company strategies to receive a thorough review under new president and CEO Dennis Hatchell, the executive said during his first quarterly earnings call since assuming the top slot in early March.
Hatchell comes to The Pantry after several years in the grocery business, mostly in the Southeast. "While I am new to the convenience store industry, I'm very familiar with both the demographic and economic trends in this area," he said.
As part of his new role, Hatchell has been "fully engaged in getting acquainted with the company," especially its stores and employees, but also its five-year strategic plan.
He shared some of the insights gleaned during his first four months at The Pantry.
"In order to be effective, I firmly believe that management needs to spend quality time in the stores," Hatchell said. He has been visiting the company's stores in all markets, as well as competitors' stores "to better understand [The Pantry's] relative position."
He has spent time getting a better understanding the retailer's five-year strategic plan. "I have reviewed this plan with the management team and had dialog with the board. We're working to establish short-term goals that will enable us to achieve a longer-term plan," he said.
Describing the strategic agenda, Hatchell hit on these key elements:
- "We need to create an enjoyable work place while developing the best and most energized people."
- "We need to deliver store standards that consistently produce a store that is pleasing to customers."
- "We will become an organization focused on selling."
- "We need to improve our product offering, as well as our focus on the customer."
- "We will fine-tune our marketing skills around the Kangaroo brand."
- "We will use information technology to improve our productivity, our profitability and especially our top-line growth."
To illustrate, Hatchell described the change in strategy for the company's foodservice program, the two-year-old Fresh Initiative, under which approximately 340 stores have been remodeled in several major markets, the first being Raleigh, N.C., followed by Charlotte, N.C., and Birmingham, Ala.
The Fresh Initiative provides stores with The Pantry's Bean Street Coffee offering and a broader assortment of fresh foods and on-the-go meal and snack items, such as fresh pastries, breakfast and lunch sandwiches, salads and fruits. An associated store redesign includes fewer gondolas, wider aisles and fewer signs in store windows. Stores with the Bean Street Coffee offer also include a fulltime coffee host.
(Click here for previous CSP Daily News coverage of the Fresh initiative.)
"It appears that the effectiveness of 'Fresh' can be improved if it is more store-focused than market driven, which is how we will approach our store reinvestment program going forward," he said.
The company did not open any new stores sporting the Fresh Initiative in its fiscal second-quarter 2012 (see story in this issue of CSP Daily News concerning The Pantry's quarterly results). But "the Raleigh market continues to outperform the entire chain ... and the other markets are in line with the rest of the chain," in terms of Fresh Initiative performance, said chairman Ed Holman. "Dennis ... wants to take a little more holistic view of the components of Fresh and look at how we drive overall store condition improvement. ... So [we'll] incorporate proprietary foodservice into a broader remodel strategy as it relates to Fresh.
In response to an analyst's question asking if The Pantry's strategy going forward, instead of taking a "universal cookie-cutter view," will be to do more local-store marketing, Hatchell answered, "You're very close to what we're going to be doing. We aren't going to remodel by market in the future." He added that the new plan will look at remodeling about 10% of the stores each year.
The Pantry will de-emphasize the Fresh Initiative because while "foodservice is an important part of our stores, so are all the other categories. We need a total-store lift, and Fresh seems to be confused between both products as well as store operations and the actual remodel of the store. We need to focus those stores on providing exactly what is needed at the specific locations. ... So were going to work on them store by store, rather than market."
Meanwhile, Hatchell has also taken a crash course in the fuel business. "It is also very important that we improve our pump-store interaction," he said.
And he has met with key suppliers. "Our overall goal here is to improve our cost of goods," he said.
Headquartered in Cary, N.C., The Pantry Inc. is the leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country. As of May 7, 2012, it operated 1,607 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner.
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