The Pantry's 5-Year Plan

Execs unveil goals for foodservice, technology, store count

Published in CSP Daily News

By  Steve Holtz, Online News Director & Beverage Editor

CARY, N.C. -- A five-year plan outlined by executives of The Pantry Inc., dba Kangaroo Express convenience stores, underscores the company's desire to improve its data analytics, grow its foodservice program and balance its store count over the next few years.

The plan was developed and presented in preparation for a new chief executive officer [UPDATE: The company announced on February 15 that is has named Dennis G. Hatchell as president and CEO]. The new top exec will fill the shoes of Terry Marks, who resigned in September to take the top spot at Hooters restaurants.

The five-year strategic plan is designed "to provide a foundational view of the company and all the major initiatives planned or currently under way," for the new top executive, interim CEO Edwin J. Holman said on an earnings call with analysts last week.

Store Count

Among those initiatives is the ongoing store disposition program, which so far has meant closing and/or selling more than 120 underperforming sites, many of them remaining assets to The Pantry as dealer locations. About 35 stores and 85 surplus properties are currently for sale.

Foodservice

Regarding foodservice, Holman said the chain will continue to expand its Fresh Initiative, which is bringing better coffee and more fresh foods to the Kangaroo Express stores. "The biggest challenges we have in Fresh today really are margin-related and getting the right balance of product," Holman said. "[We need to] get the profit to a level where we think it should be."

But benefits in stores where the Fresh program is already rolled out have shown the initiative has legs.

"In our most-mature [Fresh] markets--Raleigh, Charlotte, Birmingham--same-store sales in those stores were up about 4.5 points more than the rest of the chain during the first quarter."

"They continue to outpace in terms of traffic by almost two points comparative to a year ago," CFO Mark Bierley said on the earnings call. "Margin in the proprietary foodservice category, which is where we made the lion's share of the investment, improved throughout the quarter."

But Bierley also echoed Holman's concern about getting the overall margin right.

"To Ed's point, we introduced a new element on the bakery side, and we can see some compression of our margins. We're focused on improving that. [Similarly] in the past, we had some challenges in the fresh sandwiches; we changed suppliers on that front and actually improved our margin."

Data Analytics

Finally, on the technology front, Holman said, "We've also stepped back and looked at [the back-office] side of our business, and we really want to highly automate that in terms of how they obtain the pricing, all the way through POS to the electronic signage on the street. We want to take it to a much more scientific level than what we've historically done."

Based in Cary, N.C., The Pantry 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 Feb. 3, 2012, the company operated 1,618 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner.

By Steve Holtz, Online News Director & Beverage Editor
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