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    A Company on the Move

    Retailer Executive of the Year Kim Lubel is leading CST Brands?charge across the nation

    By Linda Lisanti, Convenience Store News
    Lubel is most proud of the company culture she’s helped create at CST Brands.

    On May 1, 2013, CST Brands Inc. spun off from Valero Energy Corp. with 1,033 U.S. convenience stores in nine states. Today, just a year and a half later, the San Antonio, Texas-based retailer has a coast-to-coast national network of assets consisting of more than 2,150 U.S. sites ? more than 1,150 company-operated stores and another 1,000-plus dealer/wholesale sites ? in 25 states, plus a strong presence in Canada.

    ?We?re a company on the move,? said Kim Lubel, who has served as chairman, president and CEO of CST Brands since its inception. ?I envisioned us being here eventually, but not so soon.?

    Last month, at the 27th annual Convenience Store News Hall of Fame gala, Lubel was honored as CSNews? inaugural Retailer Executive of the Year award winner. This new award recognizes a current retailer executive who exemplifies leadership, business acumen, dedication to the convenience store industry, and commitment to community service.

    Given how much she?s accomplished already during her tenure, it?s hard to believe that Lubel had very little retailing experience coming into her current role. She worked for Valero since 1997 as corporate counsel, but because retail only accounted for 10 percent of the company?s income pie, her involvement with that side of the business was fairly limited.

    She did, however, have a lot of previous experience working with people and she believes that is one of the reasons she was chosen to lead CST Brands. ?The retail business is so incredibly people focused and over the years, that?s where my skills have seemed to be utilized,? she said.

    Other key reasons for her selection, she believes, are her ability to multitask and guide people along multiple projects at the same time, as well as her background in mergers and acquisitions. She originally joined Valero as a transaction lawyer and before that, worked at a law firm in Fort Worth, Texas, focusing predominantly on M&A work.

    ?I call myself a ?deal junkie? for a reason,? Lubel said. ?When we looked at the retail space and the CST growth potential [before spinning off from Valero], we saw that consolidation in the industry was going to be one of our greatest opportunities.?

    Lubel and the CST Brands team have wasted no time in getting ?their fix? of deals. This August, the company announced its purchase of 100 percent of the membership interests of Lehigh Gas GP LLC, the general partner of Lehigh Gas Partners LP, for approximately$85 million. The transaction closed Oct. 1, at which point Allentown, Pa.-based Lehigh Gas Partners changed its name to CrossAmerica Partners L P.

    This partnership presents many strategic benefits for both parties, including:

    • CST Brands gaining access to capital through a growth-oriented master limited partnership (MLP) vehicle to execute its long-term strategic plan;
    • Drop-down asset sales to CrossAmerica Partners and an expanded set of external opportunities to drive cash flow growth for CST Brands; and
    • CrossAmerica Partners gaining access to a pipeline of drop-down asset acquisitions from CST Brands to drive future fuel distribution increases.

    According to Lubel, CST Brands always knew it wanted to do a MLP, but under its spinoff agreement with Valero, the retailer was going to have to wait until next summer.

    ?We were able to find a different approach with our CrossAmerica partnership. It?s helped us move into a new level of activity and growth,? she said.

    For instance, the recent acquisition of Canastota, N.Y.-based Nice N Easy Grocery Shoppes, which closed Nov. 3, was doable because the CrossAmerica piece was in place. CST Brands and CrossAmerica jointly purchased Nice N Easy, operator of 77 corporate and franchise convenience stores in central New York State.

    Before CrossAmerica, Lubel said her company was also financially limited on how many new store builds (Corner Store locations in the United States and Dépanneur du Coin stores in Canada) it could execute; it was based on a percentage of the prior year?s EBITDA.

    ?You can?t grow fast enough that way,? she remarked.

    Now, with CrossAmerica and the MLP structure, those financial limitations are no longer there. Under the arrangement, CST Brands will sell the real estate and stores to CrossAmerica and then rent them back, with CrossAmerica providing fuel to the sites. CST Brands will use the cash from the real estate sales to build more new stores.

    ?Our growth today is dependent on how much can the organization absorb, how much can we integrate at one time,? Lubel noted. ?There are a lot of states we haven?t touched yet. I could see us doing a third-party acquisition and then a few years later, doing new builds in that area. A little Pac-Man strategy ? buy and build around it, buy and build around it.?

    For 2014, CST Brands committed to opening 38 new-to-industry stores in the U.S. and Canada. By the end of this year, the retailer will have built and opened 60 new-to-industry stores in the last two years alone, 11 more than the total built over the previous five years, Lubel reported during the company?s third-quarter earnings call on Nov. 11.

    As for 2015, the capital budget is still a work in progress, but Lubel anticipates building between 45 and 55 new-to-industry sites in the U.S. and Canada. CST?s new larger-format stores generate almost twice the instore and fuel sales of its core of smaller legacy stores.

    Further growth via acquisitions is also the intent for 2015.

    ?It?s a pretty fragmented industry; there are very few large chains. What we have to offer as a potential acquirer is different from other potential acquirers,? the chief executive said. ?We have a great deep employee culture that?s focused on retail and customer service. We have a really tenured workforce. We?re not just in it for today; we are about retail operations and customer service. And even though we?re big, we have a strong entrepreneurial spirit.?

    To manage the integration of acquired sites ? keeping in mind that each acquisition will be a little different in terms of strengths and weaknesses ? CST Brands has put in place a dedicated team that includes representatives from CST, CrossAmerica and Nice N Easy.

    Spearheaded by Jeremy Bergeron, former vice president and treasurer, this team is separate from the company?s core operations team ?so they can be thoughtful in identifying best practices and have the time and resources to take those learnings and integrate them back into our system,? said Lubel. This approach also allows its core stores to stay strong while integrating the new sites.

    Already, CST Brands is tapping into best practices from Nice N Easy. At four Corner Stores in San Antonio, a heavier grocery category mix similar to what?s offered in a Nice N Easy store is being tested. The company is also working to crack the code on the 60 percent of Corner Stores that cannot accommodate a full kitchen. A central commissary/kitchen is being considered.


    For Lubel, there is so much to be proud of since taking the helm of CST Brands, but if she had to choose just one thing, she?s most proud of the company culture she?s been able to foster and the level of employee engagement she sees throughout the growing organization.

    The CST Brands culture incorporates a focus on servant leadership; the mentality that you take your job seriously, but not yourself; a commitment by senior management to literally walk in store employees? shoes by regularly doing ?Corner Store Time? at the stores; and a laid-back dress code where employees can be comfortable at work while showing their pride in the new company (jeans can be worn every day as long as you wear a Corner Store brand shirt).

    ?People are excited to be here. They understand how their job connects to the business drivers,? Lubel explained, acknowledging this was not the case before the spinoff when instead, the general feeling was that there was a divide between corporate and the stores.

    ?We have improved the communication lines and it has helped us shape our company from a refining company to a retail company,? she added. ?It?s not us vs. them anymore.?

    Today, Lubel sees a more engaged workforce from the top to the bottom, and she believes the retailer?s customers do too. A brand study in the Houston market revealed that while Corner Store still has work to do in building its brand recognition apart from Valero, the chain has a much higher degree of repeat business than its competition. ?And as I told our team, that retention piece is a whole lot harder to crack. The recognition piece is within our control; we can execute programs to improve that. The retention piece, though, has magic to it,? she said.

    ?Delight More Customers Every Day? is the mantra CST Brands lives by, and that means making existing customers happy and making more customers happy every day.

    Since the start of CST Brands, Lubel has championed the idea that separate they could do so much more than they could ever do under Valero. That idea has now become reality.

    ?The spinoff has given us the chance to really break out,? she said, fondly recalling a recent employee awards dinner where the level of energy ?was like a church revival.? Lubel said she looked out at the group and had one thought: ?We?re going to thrive.?

    By Linda Lisanti, Convenience Store News
    • About Linda Lisanti Linda Lisanti is editor-in-chief for Stagnito Business Information's Convenience Store News and Convenience Store News for the Single Store Owner media brands. In this role, she is responsible for content development across all of CSNews' print and online properties, with a specialty in coverage of the foodservice category in convenience stores. Lisanti has more than 13 years of experience in the journalism field. After working as a reporter for several daily newspapers, she joined CSNews as a staff writer in August 2005 and held senior writer, senior editor and executive editor positions before becoming editor-in-chief in August 2014. Lisanti has a bachelor’s degree in communications/journalism from Rowan University.

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