Riddle of the Spinx
Published in CSP Daily News
Reading shifting sands of time, retailer changing growth pattern, refocusing from fuels to food
GREENVILLE, S.C. -- In Greek mythology, the Sphinx was said to have guarded the entrance to the city of Thebes and to have asked a riddle of travelers, hoping they got it wrong so it could devour them: "Which creature in the morning goes on four legs, at mid-day on two and in the evening upon three, and the more legs it has, the weaker it be?" Convenience store operator The Spinx Co., Greenville, S.C., is now asking modern travelers to answer a different kind of riddle, and hoping they as the retailer get it right. The riddle is...food or fuel?
Spinx changed its growth [image-nocss] mode as the economic climate changed a couple of years ago, moving from building its own stores to acquiring existing retail convenience stores. It has also changed from a focus on fuel sales to a focus on food sales. "We're still very entrepreneurial," Stan Storti, CFO and marketing officer for Spinx, told The Greenville News. But "when the economy turned, we waited to see what would happen."
He said, "2008 was a pretty good year for us," adding the recession really hit Spinx in the latter part of the year. "And 2009 was a time when we held fast."
Prior to the economic downturn, plans were to build about three new stores annually, he said. Debt had been restructured, and growth money was available. In 2008, it built three new stores in Spartanburg, S.C., along with two others elsewhere; however, building new stores, with a new design and marketing strategy, is expensive.
So a change in strategy was put into place, said the report.
The company recently bought 10 stores from Enmark Stations in Greenville, Anderson, Williamston, Belton, Greenwood, Fountain Inn, Newberry, Lexington and Moncks Corner, S.C. One of the stores in Anderson has been sold again, said Storti, and six will be immediately rebranded and re-imaged to the Spinx name." (Click here for previous CSP Daily News coverage of the acquisition.)
"These stores are a great addition to our company and will allow Spinx to expand its product and brand offers to customers in some new areas while filling in important existing markets," Stewart Spinks, CEO of Spinx, told the newspaper.
Although Storti, who joined Spinx five years ago, did not release the acquisition investment, he said plans are to invest about $200,000 at the various sites to make them "look more like a Spinx."
"This acquisition made sense," he told the paper. The stores "are in places where we want to be."
Currently, Moncks Corner is as far east as the company goes, he said. "Our desire is to go through the Carolinas. Tennessee and Georgia are not out of the question."
Spinx, with 73 stores, plans to again build rather than buy "when the market is not providing enough strong acquisition opportunities," Storti said, whenever that might be.
Despite the tough economy, Spinx is "investing a lot in...existing locations," he said. "Our priority is to fix what we've got and look for strong acquisitions."
When Storti came to Spinx with about 16 years of experience in the c-store industry, "we were a much more diversified company," with real estate, c-store, transportation and wholesale interests, he said. The company owned several fast-food restaurant franchises, all of which have been sold or closed.
At that time, company officials looked at what they wanted Spinx to become, he said, and "we really wanted to be world-class operators in convenience. Real estate also was important to us."
That philosophical decision forced the company to "slim down and focus," he told the News.
Spinx has never considered itself just a gas station company, he said, but the public often perceives it that way. "We are aspiring to be much more than a gas station," he said. "Gas profits are important to us, but over the past five years, we decided to make them irrelevant. We believe the right approach is to build irresistible offerings in the store and break dependence on fuel profits."
He added, "Gasoline fuels our economy, but coffee, food and snacks fuel our economy, too."
Spinx is less dependent on its fuel profits than it was in 2005, he said, although he added that the company is not considering dropping the sale of gasoline, diesel or biodiesel fuels; however, a major Spinx focus to bring people into the store to buy more is now Spinx-brand food, with more resources devoted to it. Currently, 22 stores provide food, with a goal of eventually providing Spinx food in all its stores, he said. Food provides about 17% of revenues, according to the report.
The goal is to generate $7,000 a week per store in food sales, he said, adding the stores are about 30% below that goal now.
"Food is a unique opportunity for us," Storti said. "That meant fried chicken up to four or five years ago. Last year, we piloted Fresh on the Go," which includes salads, cut fruit and other healthy food options.
"We want to offer choices to our customers. The more choices, the better," he said.
Because Spinx wants customers to find what they want in all stores, the company is experimenting with taking Fresh on the Go foods and even some hot food to stores that do not have a kitchen, he said.
Despite the move to break a dependence on fuel profits, gasoline and other fuels are important to the company, he said. "We believe alternative fuels are important. We've talked about putting hydrogen in some locations. We've talking about putting electric into some locations," but the demand is not there yet.
The company does provide E-85, diesel and biodiesel seasonally at numerous stores, the report said. Spinx is the biggest E-85 provider in South Carolina, with 32 locations, it added. Biodiesel is at more than 40 locations, but that is a seasonal fuel. In addition, the company has partnered with Clemson University on a project studying biodiesel from switchgrass.
[Editor's Note: By the way, Oedipus solved the original Sphinx's riddle by answering: "Manwho crawls on all fours as a baby, then walks on two feet as an adult and then walks with a cane in old age."]