How Pete Sodini turned The Pantry into a retail powerhouse

How Pete Sodini turned The Pantry into a retail powerhouse

“I
love the deal,” says Pete Sodini, the retiring chairman and CEO of one of the country’s largest
growth-by-acquisition convenience chains, holding
nothing back in expressing where his passion lies.
With his voice dropping to a register others
would use to describe a triple-fudge brownie or that first
puff of a hand-rolled Cuban cigar, he calls the deal—any
deal—a challenge of people, perception and timing.
“I don’t care what you buy. [There’s a moment] where
people, before they get the final bid, have scrutinized who’s
there. They know what the perceived strengths and weaknesses are and your reaction time in that mode is one where
you can’t really procrastinate too long,” he says. “Therein
lies the challenge … and the interest.”
Over the course of 13 years, Sodini has taken Sanford,
N.C.-based The Pantry from roughly 400 locations to 1,650,
using a textbook, leveraged buyout (LBO) game plan others have employed but few have employed as successfully.
In an exclusive interview with CSP, Sodini reminisced
about his early days at The Pantry, the move from directing
supermarkets to c-stores, and how his role changed, originally built on a short-term growth-and-exit platform to
becoming a long-term investor in a solid c-store brand.
A collector of the eclectic, Sodini shared his thoughts
during a two-hour conversation on an overcast day in May,
about four months before he retires from the company he
doubled in size twice over. The conversation ranged from
Sodini showcasing a tree root carved into a chaotic scene of
wizards and Middle-Earth to sharing his thoughts about
leadership and the “art of the deal.”
The interview is rare; Sodini, 68, generally disdains the
media glow. His sensibilities lie more in the familiarity of
an inner circle, a quality complemented by an acute curiosity that enables him to see beyond the parameters of any
one channel, to understand global concerns and multiple
subtexts. Put more simply, Sodini is that master chess player
able to recalibrate his game to accommodate surprise moves.
And such surprises there have been: events spanning from
9/11 to the price volatility of gasoline turned the company
inward, causing it to seek operational and merchandising
strategies that would augment consolidation and better grow
shareholder value. So deviating from the LBO script, the
company initiated proprietary coffee and beverage programs, private-label lines and brand consolidation, as well
as new customer-service and technology efforts that are
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CSP
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How Pete Sodini
turned The Pantry into
a retail powerhouse
By Angel Abcede & Mitch Morrison
[email protected] | [email protected]
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Photos by Brian Strickland
“I think a big
difference between
[The Pantry and
other chains] was the
character of the
assets we bought.”
turning the pieced-together network
into a unified retailing force.
“This is a shift from where we were
10 years ago,” says Brad Williams, senior vice president of field operations for
The Pantry. “It’s not about a three-year
vision. We’re now looking out for the
longer term and defining what we want
to be when we grow up.”
Williams describes the “future” chain
as one of data-driven choices. “So much
of this industry has been based on emotion, intuition, tradition or what people thought were best practices,” he says.
“The future [Pantry] will be much more
sophisticated and our decisions will be
driven by data, not instinct or emotion.”
To achieve that data-centric environment, the chain has committed
more than $40 million in separate technology projects over a three-year time
frame, covering everything from storelevel point-of-sale (POS) to interde-
“We’re now looking
out for the longer
term and defining
what we want to be
when we grow up.”
BRAD WILLIAMS
The Pantry
partmental software systems.
Sodini describes the growing maturity of the company as a natural course
of change. Sitting in a dark-woodpaneled board room in an office building owned by a chain The Pantry
acquired years ago, Sodini says that in
its initial stages, an LBO is a “cut and
run” environment.
“You make decisions and make
them quick until you build scale,” he
says, citing how many of the purchases made early on are not the kind
of deals the company would consider
today. “Now, you take a longer-term
perspective. You start making investments in systems and technology,
which you certainly wouldn’t do
when you’re starting because those
are long-term payouts.”
The Succession Question
By all indications, Sodini’s formal
The Pantry Timeline
1990
1999
2001
Montrose purchases half of
Proctor’s share of The Pantry.
Initial public
offering and the
acquisition of
Handy Way
c-stores. Acquires
297 stores this year
to reach 1,274.
Unfavorable market
conditions lead to
streamlining. The Pantry
scales back in acquisitions,
buying only 45 vs. the
planned 150. Convenience
USA declares bankruptcy.
1996
1967
Sam Wornom and
Truby Proctor Jr.
found The Pantry.
Pete Sodini steps into role
as CEO and president of
The Pantry.
1987
1995
Wornom sells his
stake in the
company to
Montrose Capital.
Proctor sells his
remaining stake in
The Pantry to
Freeman, Spogli & Co.
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1997
2000
The Pantry makes
its most significant
purchase to date,
doubling in size to
800 stores with the
purchase of Lil’
Champ.
Buys 143 stores
and expands
into Mississippi.
Develops a
prototype store.
2002
Swifty Serve collapses. The
Pantry focuses on resetting
stores, promotions and the
introduction of scanning at
25% of its stores.
2003
Golden Gallon purchase of 138 stores, the
first sizable acquisition in three years.
Private-label programs start. The new coffee
and candy programs initiate, as does the
consolidation of brands with CITGO and BP
emerging as players. Kangaroo, the
unbranded gasoline banner supplied largely
by CITGO, also comes onto the scene.
departure, set for September, when his
contract ends, comes at a good time.
With $242 million on hand from a
period of higher-than-normal gasoline
margins, The Pantry has returned to its
M&A roots, but this time with a more
discerning palate. The company is
financially strong, having paid down
its debt, opting for a “balanced” growth
strategy that’s more in line with today’s
recession-embattled times.
“We’ve talked in our most recent
earnings calls about keeping leverage
under control while growing the business within our means,” says Frank Paci,
a former Blockbuster executive who at
The Pantry was recently promoted to
executive vice president of business
operations. “As soon as you put the
business model on [newly acquired]
stores, they just add to the cash coming
into your business. As long as you’re
paying a reasonable price [for the new
acquisitions], you’re using cash and
you’re able to grow EBITDA [earnings
before interest, taxes, depreciation and
amortization] without growing debt.”
Debt repayment sits well with creditrating companies such as New Yorkbased Standard & Poor’s, which
upgraded The Pantry to “positive”
from “stable” earlier this year based on
improved gasoline margins. S&P analyst Ana Lai isn’t concerned about a
Pantry that doesn’t bear Sodini’s
unmistakable imprint.
“They’re finding someone to replace
him and that will be key in keeping operations running smoothly,” she says. “But
we don’t expect any major disruption.
There are other members of the management team who are in place. We
expect them to transition smoothly as
the change happens.”
A search committee has been moving to find a successor, interviewing sev-
eral candidates, both from outside and
within The Pantry. If the company hires
from within, the favorite is Paci, according to Ben Brownlow, associate vice
president of equity research for Morgan Keegan & Co. Inc., Memphis, Tenn.
“I do feel Frank has had an increasing role in the operations over the past
year,” Brownlow says. “I feel like he has
been heading up pretty much everything
from a strategic and financial point.”
Paci joined the staff a year and a half
ago, coming from Dallas-based Blockbuster (where he worked for about a
month with incoming Blockbuster head
and former 7-Eleven president Jim
Keyes). He also has experience with
quick-serve restaurants, having worked
for Burger King and Pizza Hut.
Sodini doesn’t hint about his preference, but he does expect the new leader
to embrace the company’s tuck-in
acquisition model as well as have the
2004
2006
2008
Golden Gallon purchase
shows signs of benefiting the
company. Scanning in more
than 900 stores. Private-label
strategy grows to energy
drinks, jerky and motor oil.
Conversions of 242 stores to Kangaroo,
leaving only 200 set for conversion by 2007.
Adds 113 stores including 39 Interstate Food
Stops in Mississippi and Louisiana and 38
stores from the Shop A Snak chain in
Alabama. Builds five new larger-format stores.
Street postings hit $4
per gallon. Company
reduces gross capital
expenditures by $40
million. Acquisition
goal: zero stores.
2005
2007
2009
Bean Street Coffee Co. now in 550 stores with plans
for 200 more. The Chill Zone fountain program
emerges. QSRs reach 211. The Pantry buys 53
Cowboys stores in Georgia and Alabama, 23 Sentry
stores in Virginia and 13 Speedmart stores in
Alabama. Secures a long-term deal with distributor
McLane, Temple, Texas.
Adds 152 stores, including 66 Petro Express
stores in the busy Charlotte, N.C., market.
In addition, the chain buys 24 stores from
Sun Stop in Tallahassee, Fla., and 16 from
Angler’s Mini Marts in Charleston, S.C.
Cost of crude increases 32%; margins are
down. Cost-cutting measures employed. A
layer of management extracted.
Margins revive as gasoline
prices fall in the final
quarters of 2008 into 2009.
The Pantry announces the
purchase of 40-store
Herndon Oil in Mobile, Ala.
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ability to manage long-term investments
and outlook. When he hires executives
within The Pantry, Sodini says he looks
for three qualities: “One is to be curious.
The second is brains. The third is ethics.
Without those, you cannot lead.”
The reason Sodini’s exit didn’t happen sooner than the expected five to
seven years is that Freeman, Spogli & Co.
of Los Angeles, the majority owner that
brought him in to run The Pantry,
stayed on longer. The original time
frame put the “exit” year in the early
2000s. “Two thousand and two was a
horrible, horrible year,” Sodini recalls.
“There were a lot of [c-store] bankruptcies and shakeouts.”
The idea was that more could be
done to get a return on the investment,
so the firm held on. But eventually,
Freeman Spogli sold its interest
between 2004 and 2005.
M&A Future?
The Pantry shows no signs of deviating
from its M&A history. After a respite in
2008, the chain resumed its acquisition
trajectory with the purchase of Mobile,
Ala.-based Herndon Oil earlier this year.
“We continue to think that it makes
sense to grow by acquisition,” Sodini
says. “Certainly if your mantra is to be
a public company … if you start out
and say, ‘I want to grow 10 to 15 stores
a year,’ in this channel you don’t have
an exciting public story.”
“A big part was growing the store
base through a combination of organic
growth but, more importantly, growth
through acquisition,” says Jon Ralph,
general partner with Freeman Spogli.
“It’s significantly cheaper to buy smaller
chains than it would be to build your
own stores. And there were a lot that
had good locations. We could buy
them, spend money renovating and
enhance their [operations] by putting
them on our systems and procedures.”
Remarkably, despite The Pantry’s
supple appetite for deals, more than
half of the stores in the Southeast are
still owned and operated by independents. “This seemed like a natural channel for consolidation,” says Sodini, “but
you’ve got to do everything right
because you’re rolling the dice when
you acquire.”
In the early to mid-2000s, heavily
leveraged consolidators such as Swifty
Serve, Convenience USA and Clark
Oil grew by amassing a large number
of stores over a short period of time,
only to crumble.
“I think a big difference between
[The Pantry and the other chains] was
the character of the assets we bought,”
Sodini says. “There were others who
got to 600 to 700 stores in a very short
time frame, but they were dispersed all
over. We didn’t see a logical basis for
how they were put together.”
The Pantry’s approach was to enter a
new market by building a critical mass
via acquisition and then—and only
then—to build from the ground up.
Thus, when The Pantry looked to move
into a new market, it considered not just
the immediate acquisition target before
them but also other candidates and properties over the next two to three years that
would help establish a foothold.
The Pantry’s Stores
large number of The Pantry's stores are clustered through East Coast resort towns, leaving
the chain somewhat susceptible to the whims of a vacationing public. (The darker the color,
the higher the concentration of stores in the area.) And while Florida is taking a hit with the
housing crisis, The Pantry’s sites are not in hard-hit areas such as Miami and Dade County.
A
Durham, N.C.
Charlotte, N.C.
Bowling Green, Ky.
Raleigh, N.C.
Nashville, Tenn.
Wilmington, N.C.
Myrtle Beach, S.C.
Atlanta, Ga.
Birmingham, Ala.
Daytona Beach, Fla.
Gulfport, Miss.
Tallahassee, Fla.
Jacksonville, Fla.
Source: The Pantry
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QSR Match
hough The Pantry has numerous QSR partners, it has a decidedly strong relationship
with the Subway brand. Just as the sub-sandwich franchise began its push into
nontraditional sites in the early 1990s, along came the growing c-store chain eager to work
with an open-minded franchise.
Elizabeth Rolfe, director of new business development for Doctor’s Associates Inc.,
Milford Conn., the company that operates the Subway network, says the relationship with
The Pantry began in 1994 and has grown to 109 stores in nine states.
“From the very beginning, [The Pantry] was working with a lot of different QSR chains
and they saw that Subway fit into [their format] well,” she says. “We do look at individual
floor plans for each location and we do what makes sense.”
Subway officials understood that with The Pantry and its acquisition model, the stores
would not have the same footprint. So instead of its usual 1,500-square-foot format, Subway
made its menu work in an 800-square-foot space.
A combination of flexibility and brand recognition keeps The Pantry working with big
national or regional names, says Brad Williams, senior vice president of field operations
for the c-store chain. “In markets in the Southeast, there’s a large concentration of QSRs,”
he says. “We’re better suited with national
brands. There’s great name recognition and
it’s a good fit for our locations. We can
incorporate them into 800 to 1,200 square feet
and don’t have the logistics problems we
would have if we were to have a commissary.
That’s something we talked about in strategic
planning, but right now the focus is to
SUB-TLE PAIRING: Subway’s
continue to expand branded restaurants,
growth in nontraditional sites
primarily Subway, until we’ve fully saturated
parallels its partnership with The
markets that we operate.”
Pantry.
T
The other quality The Pantry placed
above all else was, as Sodini likes to call
it, the dirt. Whether the store was small
or large, antiquated or updated, most
important in the late 1990s and turn of
the century was the quality of the location and the size of the parcel.
Failed M&A rivals, he says, demonstrated a different attitude: “They said,
‘Give me two over here and three over
there,’ and when you try to manage
that kind of a dispersed, smaller base,
it gets very expensive and, ultimately,
they didn’t do a very good job at it.”
Sodini says the industry would be
much more consolidated today had
those players acquired with a thoughtful discipline. “Look at what happened
after [Swifty Serve filed for] Chapter
11,” he says. “No one bought it. After
they consolidate the 600 or 700 stores,
the whole entity deconsolidated. No
one was willing to buy it. We certainly
weren’t. It’s because they weren’t put
together in a rational way.”
Gasoline Bugaboo
Though able to survive numerous economic speed bumps, including the
bursting of the dot-com bubble and
the financial troubles that followed the
terrorist attacks of 9/11, the yoke of
gasoline would burden The Pantry on
numerous fronts and threaten the
company with delisting once its stock
fell below $1.
“I learn from gasoline every day,”
says Sodini. “I learn humility.”
It wasn’t always that way. Through
the 1990s, gasoline stood as the bedrock
of The Pantry’s investment. Margins
were consistent, big brand was its preference. Then, price fluctuations typically meant a few pennies to the gallon.
The hard knocks kept coming with
9/11, then Iraq, and now a global recession. The once smooth-paved road
became bumpy, and today the commodity known as fuel is frequently
compared to a roller coaster, one
moment boosting sales with wide-eyed
margins, only to suddenly plunge, taking with it total earnings.
The fluctuation of The Pantry’s
stock was due in large part to the
volatility of gasoline margins.
“It’s like a narcotic,” Sodini says. “It’s
easy to get into. You get a terrific surge
but then you also have to consider what
happens when it goes the other way. …
It’s not as alluring.
“And if you pump enough gas, as
Costco does, it screws up your reporting numbers.”
The Pantry even ventured into
hedging but did a “lousy” job, Sodini
admits. The weak dollar last year drove
OPEC to bump up the cost of crude,
which torpedoed The Pantry’s profits.
Despite spending three years modeling
its hedging strategy, after just two weeks
of actually venturing into the process,
“it was obvious,” Sodini says. “This was
a different market.”
Today, the chain is more attuned to
the commodity’s new volatility, changing its forecasting, for instance, to identify a range of cents per gallon.
“Nobody has that level of knowledge
and sophistication to predict prices,”
says Sodini. “So we’ve gone to a range.”
The company now uses Houstonbased CITGO for its unbranded Kangaroo supply, and it employs the Exxon,
Shell, CITGO, BP and Chevron brands
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in certain markets.
Lai of Standard & Poor’s says the
company downgraded The Pantry in
December 2007 because of volatility
and The Pantry’s struggles to manage
that uncertainty. “Margins were pressured back then, and we recognized
[that],” she says. “All the c-store operators are heavily reliant on fuel, though
they try to balance that. ... A good
chunk [of revenue] is still from fuel.
They can try to mitigate it, but it’s not
going away.”
Sodini himself concedes, “There’s
nothing on the 10- to 15-year horizon that will materially diminish the
importance of gasoline.”
Reacting Well
Many of The Pantry’s latest moves—
and lack of moves—have been
rewarded. The Pantry consciously
chose to put away its wallet in 2008,
instead focusing on paring down debt,
streamlining management and unifying multiple POS systems tracking
the many stores, QSRs and fuel
brands.
There was also 2007 to consider. If
2008 was a period of digestion, the
year before was one of strategic bingeing. Paci, who directs business operations, says the chain experienced an
unusual period of heavy acquisition,
151 stores, when typically the number is about 100. In addition, the company bought Charlotte, N.C.-based
Petro Express, a dominant player in
that market with larger, higher-volume stores. The purchase price was
also higher, akin to buying 100 stores,
Paci says.
But The Pantry officials decided it
was worth the cost to enter what they
felt was a key market. At the same time,
the purchase encouraged the chain to
refinance its debt. Paci says the company hit a peak of favorable situations,
financing light covenants and finding
an attractive price for the debt. “Three
to four months later, you would not
have been able to get a deal like that,”
he says. The work had occurred just
prior to his arrival, and it was a happy
inheritance, he says.
Then in April of last year, the price of
gasoline started to rise. By summer, crude
hit $147 a barrel and retail prices crossed
$4. The Pantry’s stock price fell into the
high $8 range and concerns were mounting that margins would collapse and that
the company would potentially violate
debt covenants.
The company implemented costcutting measures that included curbing capital spending, as well as putting
a halt to new acquisitions. In hindsight,
the timing of everything couldn’t have
been better.
“[High gasoline prices] impacted
our consumer before the economic
recession impacted consumers in gen-
FOUNTAIN OF YOUTH: A graphics package
and an updated selection give The Pantry’s
fountain program a youthful look.
Sodini’s Book Club
side from running a multibillion-dollar operation, Pete Sodini is a voracious reader,
tracking books on a wide range of topics, often buying several copies and passing them
around the office. Several executives have a shelf dedicated to Sodini’s selections, many
of which have nothing to do with the business world.
“What does Lincoln have to do with business?” Sodini says. “If anything else, knowing
more about your world and history makes us more competent people.”
What follows are a few titles that have made Sodini’s list:
䊳 “American Lion: Andrew Jackson in the White House” by John
Meacham
䊳 “Outliers: The Story of Success” by Malcolm Gladwell
䊳 “Showing Up for Life: Thoughts on the Gifts of a Lifetime”
by Bill Gates Sr.
䊳 “Team of Rivals: The Political Genius of Abraham Lincoln” and “No
Ordinary Time: Franklin and Eleanor Roosevelt” by Doris Kearns
Goodwin
A
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HEATING UP DAY-PARTS: The Pantry’s
Grill Depot roller grill program emphasizes
both breakfast and lunch day-parts.
eral,” Paci says. “If you look at us, we
were running negative comps in merchandise, negative comps in gas all
before the economy tanked in October,
November of last year. We reacted to
that and tightened up. So when oil
markets turned around and came
down, we were in a position to restore
our profitability.”
Unified Whole
Though recent events have played
out well for The Pantry, its evolution
has no doubt been the product of
reaction and the LBO mantras of
scale and efficiencies. At one point in
time, the company operated as 20
different c-store names, and gasoline
was largely branded. The mindset
began to change, Sodini says, as the
company sensed that supporting so
many store brands was becoming an
administrative headache.
In addition, Sodini held onto the
belief that scale would offer him better buying power in the gasoline cat50
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egory. This proved true, eventually.
That and the move to use the
“cutesy” Kangaroo moniker as an
unbranded gasoline option as well as
the name for the store brought on a
clear transition.
The move away from branded gasoline may have ruffled feathers, but as
one vendor, speaking on condition of
anonymity, put it, “I see these big
[c-store] guys doing big contracts with
Big Oil. It may not be branded [contracts], but they’re guaranteeing big
contracts. The oil company is still willing to provide pricing.”
By the 2005 time frame, more initiatives inside the store started to penetrate the network:
䊳 Bean Street Coffee Co. The
Pantry’s coffee bar program is furnished with Downers Grove, Ill.-based
Sara Lee coffee and Montebello, Calif.based Wilbur Curtis equipment.
䊳 The Chill Zone. A full array of dispensed fountain drinks that comes with
a modern, quirky graphics package.
䊳 Grill Depot. An expanded roller
grill program that features a noticeably
strong breakfast offering and solid
lunch core.
䊳 Candy Lane. A designated aisle
with signage highlighting the candy category.
䊳 Private label. Water, energy
drinks, sports drinks, candy, jerky and
other items are part of The Pantry’s private-label strategy.
䊳 QSRs. The plan is to have 30 to
40 new branded QSRs built every year.
(See story on p. 47.)
In addition to the in-store profit centers, the company is also implement-
Uniquely Sodini
very great leader has those one or two quirks that help personalize him or her beyond
career roles. Some of those unique personality traits came up in interviews for this story.
E
“I’ve yet to see somebody else simultaneously smoke a cigarette, a cigar and a pipe, one
after the other. He’d just rotate between the three like I have seen him do. I’m not sure if
he still enjoys [tobacco]. There’s a little bit of a driven, hard-charging, intense personality.
Or maybe he was thinking, ‘I can’t remember which one I had lit.’ I don’t know. I think it
was more that than having somewhat of a manic [personality].”
—Jon Ralph, general partner with Freeman, Spogli & Co.
“A visit to Pete’s office is always lively and interesting as he is a very knowledgeable student
of the petroleum industry. The conversation would move rapidly, often ranging from such
diverse topics as the details of their latest acquisition to the impact of economic expansion
in China.”
—Alan Flagg, general manager of
light oils marketing for CITGO
”I remember listening to Pete Sodini and Steve Forbes at a CSP event, and Forbes asks
Peter what he thinks about the Sarbanes-Oxley legislation, and Sodini says, ‘I’d like to shoot
Sarbanes-Oxley.’ The room reacted with astonishment, amusement and applause.”
—James Stroud, vice president of program management for EchoSat
The Pantry Numbers
ey numbers tell The Pantry’s story from late last September through mid-March, while
last year’s annual report and other reported numbers shows the chain’s breadth.
K
Financial category
2008*
2009*
Percentage change
EBITDA**
$93.7 million $161.6 million 72.6%
Cash flow from operations
$31.2 million $106.9 million 242.6%
* Figures are from comparable six-month time periods.
** Earnings before interest, taxes, depreciation and amortization
$242.8
million
The Pantry 11
by the Num-
$145
million
Available under
revolving credit
facility
$1.6
billion
1,653
Store count as of
September 2008
$991,300
Cash on hand
The number of states
The Pantry operates in
bers
Merchandise sales for
fiscal 2008
Average merchandise
sales per store for fiscal
2008
Source: The Pantry
ing a number of operational programs:
䊳 Labor scheduling. A software
program will be used to identify efficiencies that will eventually tailor
schedules to store size and even daypart.
䊳 Wide-area network. Digital links
to 900 stores are currently in place.
䊳 POS. Registers from Retalix,
Ra’anana, Israel, are now being installed
at stores, with 300 already set up.
䊳 Enterprise software. A product
from PDI, Temple, Texas, will act as a
cross-departmental link to all of the
KANGA RULES: Many of The Pantry’s stores will be unified under both the Kangaroo store
brand and Kangaroo gasoline.
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company’s automated systems.
As data-driven decisions become
more a part of The Pantry’s daily
operations, expect change, Williams
says. “When we set our stores in 2009,
we didn’t have the benefit of technology to guide our decisions. Our focus
for 2010 agreements with major suppliers will be to concentrate more on
incorporating movement data and
market trends. It will become increasingly important that we look at allocating space to sales along with
inventory turns using our data. By
working collectively with our suppliers and sharing these statistics, we can
more efficiently design our store sets
and layouts to serve our customers.
We certainly don’t need sections of
our stores dedicated to something that
is not moving.”
The Pantry Effect
As Williams and Paci speak of change,
the sheer effort of getting a massive and
still-growing company onto a new technology platform or a new scheduling
model is daunting. However, many
agree that once the chain achieves that
internal critical mass, size will begin to
work for The Pantry.
Taking the technologies as an
example, Cathy Duncan, executive
director of marketer solutions for
DTN, Omaha, Neb., says that going
back at least two years, The Pantry has
prioritized making a “technology road
map” and has determined what pieces
it needs to be a truly automated
organization.
“I have seen it happen in almost 1,000
customers we do this for. Time and time
again, if you don’t have people managing paperwork, if the majority of your
[business is] electronic, you don’t need
Stacking Up the Pantry
With other public companies reporting earnings this spring, here’s how The Pantry stacks up.
Gasoline
volume
Company
Quarter
Merchandise (same store,
Gross
No. of Stock price
revenue
not including
profit
diesel)
stores (as of late May) (same store)
merchandise
Gross
profit
gasoline
The Pantry
Q2
1,653
$19.88
+$1.3%
–4.4%
Alimentation
Couche-Tard
Q3
4,370
$11.68*
+0.5% (U.S.)
–6.2% (U.S.)
N/A
N/A
Casey’s
Q3
1,474
$25.72
+6.5**
+2.1%
+11.1%
N/A
Delek/MAPCO
Q1
500
$9.22
–4.5%
–2.1%
N/A
N/A
Susser
Q1
500
$11.09
N/A
+4.5%
+6% ($181.9 million) +6%***
+1.6%
+18.1%
($144.8 million) ($55.4 million)
* Alimentation Couche-Tard trades on the Toronto Stock Exchange. The figure shown has been converted to U.S. dollars from a Canadian dollar posting of $13.10.
** Casey’s merchandise numbers do not include prepared food and fountain.
*** Susser’s gasoline calculation is not a same-store figure.
Sources: Company reports
to add more accounting staff to double
in size,” Duncan says. “The Pantry, once
they’ve completed the process, could
double or triple in size without adding
very much administrative overhead.”
Consolidation and the building of
larger, better-run entities seem to be in
the best interest of many suppliers. Joe
Vonder Haar, vice president of convenience sales for Anheuser-Busch Inc., St.
Louis, believes The Pantry is running
counter to the larger and continued
fragmentation of the channel.
“[The Pantry] is a chain that’s growing significantly. For us and the beer
category, it’s been good,” Vonder Haar
says. “They bring a strong focus in beer,
so when they make acquisitions, they
are focused on the category. We look at
that as very positive.”
Even those who count themselves
among the little fish gobbled up by this
whale see a certain amount of good
coming out of The Pantry’s ambitions.
Ben Willard of Willard Oil Co., Spartanburg, S.C., sold 11 units to The
Pantry a couple of years ago.
“[The stores] are more full of merchandise than they were before,” Willard
says. “I think they are a good merchan54
CSP
J u n e
2 0 0 9
dising company—and obviously, they’re
way bigger than me. We were just a drop
in the bucket. But we were overall happy
with the transaction—still are.”
The Fraternity
As the fall approaches and the leadership of Sodini becomes another chapter in the industry’s history, Ralph of
Freeman Spogli says part of Sodini’s
legacy will center on bringing a level of
executive professionalism to an industry of smaller, fragmented operations.
“Pete brought in outside talent that
had more professional food retailing
vs. what we saw in the c-store [channel
at the time],” he says. “They were small
entrepreneurs, smaller regional businesses, not terribly sophisticated management teams or strategies. Some did
reasonably well. We tried to bring a level
of experience and professionalism that
was somewhat unique at the time.”
As for Sodini, he says what he’ll miss
most is the kind of “locker room” mentality that comes from building something of substance. He likened the
feeling to “the fraternity of people who
had participated in the highest level of
sports, the professional level,” he says.
“For people who don’t play, they don’t
understand the fraternity.”
His actual plans for retirement are
vague. His first is to take a month to
travel to Italy and Spain with his wife,
Brenda. Beyond that, he’ll see.
“I don’t know what retirement is
anymore,” he says. “People have different definitions. The term’s pejorative. If that means you’ve earned the
right to what, sit in the backyard to do
what? I think the definition varies by
person. I’ll spend the month abroad.
And figure out what I think it means
and maybe I’ll change it three or four
times before I get it right.”
—Abbey Lewis and Samantha Oller
contributed to this report.
■
MORE FROM
THE PANTRY
Watch Angel Abcede’s exclusive
interview with executives from The
Pantry at cspnet.com/pantry09.