Don't Be a Goose Killer

Published in CSP Daily News

Top performers talk about measures of success that guide day-to-day decisions at their companies

CHICAGO -- If you want to grow your business, there is no simple solution. But the good news is that there are a number of ways to do it.

During a session yesterday at the NACS SOI Summit in partnership with CSP in Chicago, participants filled a ballroom to hear how the industry's top-performing companies continually monitor the performance of their companies to ensure that they stay on target. The session, a series of questions posed to a panel of top performers by NACS senior vice president of research and development Teri Richman, began with a question [image-nocss] about the importance of a lean G&A (general and administrave costs).

At San Angelo, Texas-based Town & Country Food Stores, they do a lot of things in-house (such as self-insuring) that some operators pay others to do as a means to control costs, noted President Alvin New. So, while the company may not look lean to others, that strategy contributes a great deal of efficiency overall. To maintain that efficiency and ensure that the strategy continues to deliver on its promise, he said it is important to understand what people are doing as a percent of sales. We push the concept of folks and their role [contributing to the] culture with the same work ethic for everyone, said New. We all know that convenience store managers and supervisors work hard to make money. The people that support these folks also work hard.

Similarly, Family Express Corp., Valparaiso, Ind., looks at operating expenses as a percent of gross margin, revenue and gross profit per labor hour, said president and CEO Gus Olympidis. But, the most important measure, he added, continues to be gasoline margins and the symbolic benchmark of cashflow breakeven point.

Steve Kimmes, who carries the unique title of senior vice president, grow people, of Kum & Go, West Des Moines, Iowa, said a lean G&A revolves around mining employees for good ideas and implementing technology. The company is continually focused on what can be done better through formal sessions called tactical planning sessions designed to challenge participants to bring ideas. One of the ideasto move the corporate campuscreated incredible efficiencies. Also important to keeping costs low is technology. The company just implemented a handheld device designed to facilitate ordering and replenishment activities.

Using the balanced scorecard premise as a guide, New explained the measures that matter most to his operation in each of four areas. In the area of financial performance, he says, cash flow per customer is most important because the company operates in small- to medium-sized markets. He says that metric plays into the larger store, customer-service model and supports a truly professional foodservice offer. In the area of productivity, New reports that gross profit dollars per labor hour is king. In tracking employees as a metric, turnover is most instructive. Finally, to track customers as a metric, he said same-store customer count is tracked at Town & Country.

When asked about the smartest move they had made, Olympidis pointed out that First, you have to make a lot of moves, including some not-so-graceful moves. By focusing on innovation, passion and differentiation, the company has capitalized on ideas such as square donuts. We don't cut corners, Olympidis said, winning a laugh from the crowd. But, on a more serious note, he said that focus stirs intellectual curiosity.

In the area of customer service, Richman asked Kimmes to rank four measures: price-to-value proposition, service, product offer/assortment and brand reputation. What we found through several years of customer intercepts is that customers rank these differently depending on the store type, he said. For example, price and value is most important to customers who shop at stores near universities, while service is most important at interstate stores. But he added, brand and reputation would be at the top of his list overall.

New, responding to a question about the most important thing he had learned in the last three years, referred to a book by Tom Morris called True Success, which espouses the acronym PLANprepare, launch, adjust and network. The key lesson there, he said, is to prepare, but to also launch. In other words, be decisive and action-oriented. Referring to the metaphor of the goose that laid the golden egg, he said, You can do almost anything at this company as long as it's not a goose killer.

The second part of the question, about the most damaging mistake participants had made, New shared that that was hiring and promoting the wrong person. Who you hire and who you promote is very important.

Olympidis said his company's missteps would make a thick book if you wrote it, but the thing that stood out in his mind as the most important mistake was getting the brand promise for the foodservice operation wrong. And, he said, he is still not happy. There is a litany of things we have screwed up, he mused.

Kimmes said learning at his company is also never ending. The most important thing he has learned in the last three years, he said, is, Our company is so geographically diverse, operating in 13 Midwestern states, and we had to leverage that 95% of our workforce that is outside of our building. For example, when the company moved to a self-insurance model, they educated employees systemwide about safety to save millions of dollars on insurance costs.

Nagging problems are the bane of any executive's sleep patterns, and this group was no different. For New, he said the issue that keeps him up nights is people. For a growing employee-owned company, New said that it is important to encourage ownership and for the company to be a part of something special in [employees'] lives. He said he worries about whether they are developing people fast enough, hiring and promoting the right people into the right jobs, setting themselves up to be a growing business and to be proud of associates.

Similarly, Olympidis said people are his primary concern. In the absence of cultural fit, competency loses its value. So, the company tests new employees for aptitude and attitude to ensure the fit is right, he said.

Kimmes also said peopleand bench strength in particularis a top priority for him. The real fear, he said, is of losing entrepreneurial ability by getting bogged down in red tape and bureaucracy as the company pursues an ambitious growth strategy.

The NACS State of the Industry Summit in partnership with CSP began on Monday and ended yesterday. During the three-day Summit, approximately 400 top convenience and petroleum marketing executives, suppliers, and advisorsexamined the industry's operational and financial performance.

The meeting kicked off Tuesday with the release of the most-comprehensive collection of firm-level, store-level and same-store-level data and trends based on the c-store industry's 2004 performance, analyzed for the 2005 NACS State of the Industry report. The conference also featured the latest consumer insights, category metrics and analysis provided by several leading research and data organizations.

For an overview of the numbers, click here.