Good and Rotten
An exclusive look at how Tom Robinson's stores work to be consistently good.
He is best known as a longtime leader of SIGMA and is now chairman of NACS. He has testified before both houses of Congress and state legislatures, and he’s regarded as one of the most politically astute faces in the convenience and retail petroleum industry. But who is Tom Robinson the businessman? In this exclusive report, we look at the man behind Robinson Oil and Rotten Robbie convenience stores.
A San Francisco 49ers helmet sits on the back shelf of Tom Robinson’s office. No, Robinson is not much of a “sports memorabilia guy,” he says. The helmet is personal.
“I remember the 49ers when they weren’t particularly good, and I remember them when they were far and away the top team,” he says. “The helmet was a reminder to me that it is difficult to stay at a high level, and that team sort of epitomized that.”
The helmet is signed by former 49ers Hall of Fame wide receiver Jerry Rice, a player projected as a midtier talent due to a lack of speed or unique gift but who went on to break virtually every record held by an NFL receiver.
“There’s no doubt he’s talented, but there’s probably nobody that worked harder than Jerry Rice,” Robinson says. “You can’t do it without talent, but I think he got a lot more mileage out of it with his work ethic. So that’s the reason that I keep that; that’s what it means to me.”
The Power of Good
Tom Robinson’s entry into the c-store world is not an unfamiliar one. The business was first planted by his grandfather in Watsonville, Calif., then nourished by his father and a close business partner, Herb Richards, who in many ways served as a second father and mentor to Robinson.
Then, in the mid-1970s, Robinson, an economics major from Santa Clara University, joined the business full throttle. And today, his three kids—Reilly, Chris and Erin—are all, to varying degrees, involved in the business.
Rotten Robbie is not a network of vast proportions. Nor will you find the stores on the cover of a glossy lifestyle or design magazine.
What they are is consistent, well-
stocked, clean and efficient. They are, in many respects, a representation of their company president, a congenial man with a modest mien, measured in thought and absent of hyperbole or superlatives.
His essence is perhaps best illustrated by a conversation about the popular business management book “Good to Great” by Jim Collins, whose very thesis sees “good” as the enemy of “great.”
Robinson rejects this point. As he explains, calling somebody a “really, really good man” means no more than calling one a “really good man.”
“It’s like, when’s enough enough?” he says. “I think sometimes it just sort of tires me out.” Illustrating his point, Robinson refers to a eulogist calling the deceased a good man: “Everybody would understand what that was. And I think that to me is sort of a great compliment, if you’re a good person.”
Good is further underscored in Robinson’s vision statement, found on the company’s website:
“The Robinson Oil Corporation/Rotten Robbie vision is to be known as a Good company as measured by our Employees, Customers, Community and Neighbors, Vendors and Owners. We understand that we cannot just say we are a good company, others have to say it about us.”
And even there, the statement acknowledges the goal is not as simple as it might sound: “Some days, quite frankly, we do a better job than others. Generally we take constructive comments well, so please let us know if we have been (or have not been) a Good company in your eyes.”
Sadly, Robinson laments, “good” today is often misinterpreted as “average.”
He wanted his vision statement to be more meaningful than a “the customer is No. 1” statement that can be seen even in the most awful of stores. “The thing I really disagreed with on a mission or vision statement is how it’s really just something that you attempt to put on your wall so that either your employees or your customers think that you are good,” he says.
“You could probably substitute a whole bunch of different words in there, but your actions wouldn’t change. I argue that if we can satisfy all five of those, we will be great, and we don’t have to worry about the hyperboles.”
Knowing Your Stores
A drive through the swath of Rotten Robbie sites reveals a wide swing of store sets, from kiosks and sites of less than 1,000 square feet to more recent locations that near 3,000 square feet.
Were he launching his business today, many of his units would not make the grade, Robinson readily acknowledges. But his challenge echoes the stories of hundreds, if not thousands, of operators who represent the soul of the convenience channel: the multi-generation operator with a checkerboard of stores built over decades under different family members.
“We are playing the hand that was dealt to us,” Robinson says. He is a self-distributed jobber with 34 “good” stores. For decades, gas stations in California could not operate more than a kiosk or snack shop, which left nearly half of his chain without a significant retail presence.
That doesn’t mean there aren’t flourishes of great or, better yet, good. There is plenty:
- Exclusive or Near-Exclusive Retail Programs: Robinson is the first c-store chain in his market to debut Coca-Cola’s sleek Freestyle machine, which offers more than 100 beverage choices via touch screen.
- Driving Fuel: Robinson is a skilled tactician in mastering prices and profits at the pump. He not only knows his competition’s prices but also demonstrates an intuitive understanding of how to exploit markets to drive the best margins and volumes on a store-by-store basis.
- Selective IT: Robinson is not the most cutting-edge when it comes to technology. But don’t mistake him for being anachronistic. Robinson uses tools that tie into a conservative yet profitable strategy. It is no surprise that he recently signed on with GasBuddy’s OpenStore fuel app—his first foray into loyalty-oriented marketing.
- Fresh Food: Rotten Robbie is dipping a toe into healthy snacks, including assorted nuts or fruits one might find at a Trader Joe’s. The company has also unveiled a line of healthier on-the-go meal options.
- Aggressive In-Store Marketing: Robinson markets to his base, a largely working-class, ethnic population. The stores run continuous promotions on sports and energy drinks, including Rockstar, Red Bull and Monster, as well as 5-hour Energy.
- Tobacco Focus: In addition to retailing cigarettes at aggressive prices, Rotten Robbie is a dealer of Smoker Friendly, the country’s largest operator of tobacco shops. The stores feature an impressive OTP set that exceeds that of most c-stores, plus a private-label line of Smoker Friendly products.
Despite these significant steps, to the naked eye Rotten Robbie resembles a gas-first operation that only later ventured into c-stores. That’s no surprise, he says, “because the fuel business stayed better, longer in California than most of the country, and as a result, retarded our going to convenience stores.”
That said, he recognizes the challenge he faces against some of the big-box and major oil competition in the greater San Francisco market: “The stores need to be a destination by themselves. I think we were just slow, and it is our challenge to rectify that.”
Robinson is refreshingly candid about both his and his company’s strengths and weaknesses. His methodical temperament limits the company’s exposure to significant risk. At the same time, he admits, it can hinder the company from scoring a major acquisition or being first to market with an emerging trend.
“I came to the conclusion that I liked winning less than I disliked losing,” he says. “The reality with whatever that amount was at any particular time in my life—if I was 21 years old, it might have been $25 or $50—winning $50 wasn’t going to change my life, but losing $50 would have bugged me.
“I’m more numbers-driven. I’m more inclined to be more planning-oriented.”
Robinson recalls a near-deal with Tesoro Corp. in 2002 that would have more than tripled his company’s size: “We looked at that transaction very, very seriously for a couple of different reasons: Those locations were all company operations, they sort of look like our stuff, you knew that the majors weren’t going to go for it.”
His penchant for minimizing untold risk came to the fore. Because it was difficult to determine a precise value for the lot, Robinson says, “We went on the lower side. Basically, the people that really wanted that thing went on the higher side and then dropped their numbers down. There were multiple players in that deal.”
Though he lost on that bid, Robinson took away a deeper understanding about himself and the kind of business model he envisions for the long term.
Can he play with the big boys when it comes to growing his portfolio? Is his model more akin to a five-store family business than a streamlined, 100-store outfit? And, perhaps most important, does Robinson see growth in his future?
“One of the challenges with being a private brander, and one of the positives of being a branded marketer, is that especially with the majors wanting to get out of retail, there are some people that really ended up with some great deals,” he says. “When the majors want to buy, you don’t want to be in their way. But when the majors want to sell, they’ll give it away.”
On the surface, that might spell opportunity for Robinson Oil. But there’s a hitch: “We don’t get those kinds of offers, because we don’t want to be branded. So that’s a negative, and it would be easier in some respects to grow if we were branded, assuming that you still had majors that have stuff to sell, and that’s less now. “So I tend to think that we’re going to see more onesie, twosie types of things that are going to occur. … I’ve got to believe there’s going to be some opportunities going forward with that.”
Whether the growth opportunities in store count happen may be less important for an enterprise such as Rotten Robbie. Robinson describes his style as “more managerial than entrepreneurial.”
“I think it’s a lot more sexy to be entrepreneurial than managerial, but you are what you are,” he says. “I think the classic entrepreneur is aggressive, is fly by the seat of your pants, is willing to take significant risks—probably a few more [characteristics] in there, too. I am certainly more fiscally conservative.”
But there’s the other form of growth: store-over-store sales, leveraging capital, making prudent investments. Indeed, the company recently moved into a new office, which it gutted and rehabbed into a charming facility that is environmentally friendly, sports a generously sized kitchen and features a blend of brick and industrial motif.
“One of the biggest challenges that I think we have … is relative to growth,” he says. “We have access to capital; I think we have a good operation, organization and earnings. We’ve got the components—we need to do better on the growth side.”
Robinson shares that unlike many c-store chains, his is not an LLC but an S corporation. This means that profits must be distributed based on ratio-to-stock ownership, even if the owners would prefer to distribute the profits differently. He is cognizant of a common challenge for many family-run businesses: the thirst for generating high personal income vs. committing the necessary investments to the business even at the expense of individual profit.
Delving into the details of this dialectic, Robinson concludes, “I’d like to be able to accomplish a 10% growth. And if you do that, everything sort of moves along with that.”
To sustain steady growth, many chains have bankrolled their future in foodservice, launching proprietary concepts or embracing prominent branded partners. In fact, when one reviews the annual NACS State of the Industry Survey from the past several years, the wedge between top-quartile players and rank-and-file merchants rests in the ability to capitalize on foodservice.
The flipside is equally true. There are more retailers that fail in foodservice, unable to adequately train their workers or manage inventory or sanitation. Robinson, true to nature, adopts a cautious approach. He cites the hurdles of fielding mostly urban stores surrounded by scores of fast feeders: “There’s food everywhere, and so it makes it a little more problematic to really think that you’re going to come in with a very significant food offering.”
But foodservice, with all its moving parts, fascinates Robinson. “The people that do it well are great, and then there’s the rest. … We recognize that we need to do that better, so that’s our aspiration.”
He refers to the common conundrum surrounding coffee. “If you don’t have enough volume, one of two things happen: You either don’t have any because you don’t want to keep throwing it out, or you have too much waste because you keep making it and throwing it out,” he says.
In a sense, the coffee challenge is a metaphor for the broader foodservice category: “The challenge with food, whether you’re talking about fountain and coffee or prepared foods or commissary-type stuff, is the critical mass.
“When you get to a particular point that you’ve got enough volume,” he continues, “now you can be successful. If you’re below that, you end up with either not a good product because either you kept it too long or it’s not hot or whatever, or you’ve got waste problems. So you’ve really got to be able to get that thing ramped up to a critical mass.”
Where Robinson’s confidence pushes beyond his conservatism is at the forecourt. Here, Robinson finds his inner maverick.
Rotten Robbie moves roughly 100 million gallons annually, maximizing each site’s six multiple-grade dispensers, a strong private-label program, and a virtual real-time inventory drawn from two nearby terminals.
Pricing fuel, he says, is both captivating and confusing, vulnerable to the whims of ever-changing markets and global events. Instead of acceding to fuel-pricing software, Robinson goes by instinct and institutional knowledge.
“It’s part science and it’s part art,” he says. To fully leverage his knowhow, he prices on a per-store basis.
“What we see, being a private brander and, in particular, being on the West Coast, is that invariably in an upmarket, the independent wholesale prices always move up quicker,” he says. “We move to inversion very quickly.” On the other hand, there is risk of sacrificing margin in trying to be too far below the majors. “You’ve got to make a decision whether you try to lead a market up or how you want to do something. My point is that my rules keep changing.”
And then some. You can’t just go by the street price anymore. There are loyalty discounts tied to grocery stores, club pricing and cash-or-credit pricing tiers.
“What we’re constantly trying to do is maximize volume and maximize margin, and we try to be consistent in our pricing,” he says. “Generally, we think that we should be below the majors. But the question is: Do we need to be below the majors’ cash price? Because obviously it’s an expensive transaction when you’re paying for the credit.” About 60% to 70% of Robinson’s stores’ transactions are in plastic.
“The reality is you need a margin, you need gross-profit dollars out of fuel,” he says. “We are more fuel-dependent certainly than what you’re seeing out of the NACS or CSX data. We are much higher in fuel and gross-profit dollars, and less dependent on stores.”
And that’s the way it will be. Much like Jerry Rice, the legendary 49ers receiver whose autographed helmet sits arm’s length from his desk, Robinson knows his skills and plays to his strengths.
A Company History
1930s: Robinson Oil Corp. starts as Mathson Petroleum Co., founded by William L. Mathson Sr., in Watsonville, Calif.
Early 1950s: Mathson sells the company to his son-in-law, Don Robinson.
1964: Don Robinson moves the company to San Jose and changes the company’s name to Robinson Oil.
1971: Robinson Oil forms a partnership with another San Jose business, Coast Oil Co., which was founded by Herb Richards.
1973: The company begins selling gasoline under the Rotten Robbie name. “The ‘Rotten Robbie’ moniker was a fun (and inexpensive) way to have a name customers would remember and associate with the company’s competitive fuel prices and well-run stores,” Tom Robinson says on the company’s website.
1974: Tom Robinson joins the family business.
2001: The Robinsons buy out their partner.
2008: Tom Robinson buys out his father.
SIGMA, 1997-2004: Robinson served two years as first vice president and then president, and three years as immediate past president.
About Robinson, Bill Shipley, former SIGMA president and president of York, Pa.-based Shipley Energy, says: “Tom’s leadership style is particularly inspiring in that he puts the needs of the organization ahead of his own and his business’ needs. He is a good listener and, of course, a good talker. The combination of both qualities is rare. As a leader with SIGMA, Tom was energetic in the attention he gave to each member and strategic in how he structured governance to capitalize on strengths. SIGMA has been blessed with many caring leaders over the years. Tom is definitely one in that excellent tradition. And, oh yes, he married very well, too.”
NACS, 2006-present: Since joining the NACS board of directors, Robinson has served as vice chairman of government relations and vice chairman-treasurer, and he was elected board chairman for 2011-2012.
About Robinson, Jeff Lenard, NACS’ vice president of industry advocacy, says, “Tom is really a great ambassador for our industry, and he has really put a lot of heart into everything he does with NACS. If you know anything about Tom, he likes to take a step back and consider the entire situation when discussing an issue. It’s really wonderful to see him think big picture—unless you are looking for sound bites for a media interview or speech. But Tom has really added a new dynamic in having a new persona—abridged Tom—where he now also offers up short sound bites when needed. He did a great job at the NACS Show doing just that.”
On FDA Oversight of Tobacco:
“It always fascinates me when the stated purpose for something is ‘X.’ But what you really want to do is much more than that. … This legislation had to do with [preventing minors from smoking]. I believe their agenda is much broader. Reality is they believe smoking is bad, and if they have their druthers, prohibition is not a stretch, but how do you get there without having all the other problems associated with it?”
On Business Style:
“I really thought I was going to be a much bigger gambler type, craps tables, all that kind of stuff. And sometimes it’s fun, but I came to the conclusion that I liked winning less than I disliked losing.”
On Running a Family Business:
“The dynamics of family businesses fascinate me. They are absolutely the best and the worst. My favorite saying: All family businesses are dysfunctional—some just more so.
“To me, it’s fascinating to see how people do these different family businesses. Hitting on all cylinders, they’re great businesses. They could spiral out of control and get pretty ugly.”
On Deal with GasBuddy’s OpenStore:
“I’ve always believed that point of purchase is the best place for us to advertise. The smartphones have changed that. I think that is a paradigm shift.
“I’m excited about some of the things that I think that’s going to do for us. I think it will make it easier for customers to communicate with us, bad or good, and to be able to handle that and track that. I’m really interested in the customer’s standpoint.”
Who Is Tom Robinson?
Education: Bachelor’s degree in economics from Santa Clara University.
Business: Joined his family business in 1974, working with his father, Don Robinson, and the late Herb Richards.
Organizations: Robinson has served on the boards of the California Independent Oil Marketers Association (CIOMA), SIGMA and NACS.
Hobbies: Skiing, fly fishing, surfing.
Family: Married to Lynn and has three children: Reilly, Chris and Erin.
Fun Fact: Robinson is only the second person to serve as both chairman of NACS and president of SIGMA. The other is Carl Bolsch Jr., president of RaceTrac.
Fun Quote from Jeff Lenard of NACS: “[Tom] loves skiing, but his first love was surfing. He took the money he made from his first job to buy a surfboard. He took the money from his second job to buy a motorcycle. So the ways to have fun are different, but he’s very much the same guy.”
Company Robinson Loves: Southwest Airlines. He likes the company’s “no frills” approach that doesn’t overpromise: “We’re trying to deliver on our promise. We’re trying to be friendly, have some fun, trying to be clean and well-maintained, trying to be those basic things.”