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LAVAL, Quebec — Thirty-six years after opening its first retail store, Alimentation Couche-Tard Inc. and its Circle K banner are poised to take over the convenience channel one country at a time.
Along its storied timeline, 2015 may go down as one of its busiest years.
In March 2015, the Laval, Quebec-based retailer closed on its acquisition of The Pantry Inc. The deal included approximately 1,500 convenience stores that the Cary, N.C.-based parent of Kangaroo Express owned throughout the Southeast. This one move propelled Couche-Tard to the No. 1 spot on this year’s Convenience Store News Top 20 Growth Chains list.
In a rare interview, Couche-Tard President and CEO Brian Hannasch recently chatted with CSNews about the company’s expansion over the past year and its vision for the future.
Here are four things you may not know about Couche-Tard:
1. Couche-Tard was “pleasantly surprised” by The Pantry’s operations.
Over the years, Couche-Tard had looked at The Pantry a number of times, according to Hannasch, who noted it was a fellow public company and "kind of in Circle K's backyard." When The Pantry's board of directors decided to look at alternatives, engaged bankers and began to put out feelers for prospective buyers, Couche-Tard took an even closer look.
"We were happy when we did take a closer look. We were surprised. We found a lot of great people both running and supporting the stores. There had been some periods of distress in The Pantry over the years, so we were very pleasantly surprised at that," Hannasch explained.
Even though both Circle K and The Pantry had a strong presence in the Southeast, there was very little overlap in their footprints. For example, while both had a large number of stores in Florida, Circle K's concentration was in the southwest part of the state, while The Pantry’s locations are in the northern part, like Jacksonville and Gainesville.
"The Sunbelt has been a very strong market for us and The Pantry is a great geographic fit on top of our network," Hannasch added.
2. Still, not all of The Pantry’s stores have been keepers.
While the overall Pantry portfolio was "a very good strategic fit," not all stores made the cut.
Couche-Tard constantly analyzes its mix of sites and their performance. As a result, it did close some of The Pantry locations where "we didn't think we would be willing to invest in the site to give it the consumer experience we needed for the brand, or [sites] that didn't have the upside we thought we needed for financial return on the investment," Hannasch said.
For those Pantry stores that did make the cut, Couche-Tard is making progress on its integration plan. It is infusing key programs from its Circle K brand into the newly acquired stores and ramping up the rebranding of the stores and their fuel offer.
"We'll be rebranding almost 1,100 fuel brands in next six months, and we started on the stores in January. Our intentions are to have that network complete over the next 12 months. A lot of activity, but overall we are right on target with our synergy plans," the chief executive told CSNews.
3. Couche-Tard’s latest acquisition of Ireland’s Topaz was actually years in the making.
The Pantry acquisition was not the only major deal Couche-Tard inked in the past year. Late in 2015, the retailer made headlines once again with news it was acquiring the majority share capital of both Topaz Energy Group Limited and Resource Property Investment Fund plc, together with the entire share capital of Esso Ireland Limited. Topaz is the leading convenience and fuel retailer in Ireland, made up of 464 stations across the country, including its recently acquired Esso station network.
This move had been in Couche-Tard's sights for some time. According to Hannasch, the company actually started looking at Topaz before it even entered Europe with the acquisition of Statoil Fuel & Retail ASA in Norway. Topaz was active in NACS, the Association for Convenience & Fuel Retailing, and Couche-Tard got to know some of Topaz’s management team, talked to some of the owners and toured the sites.
"We had an interest; we expressed that interest. The financial crisis hit, and the Irish economy really took it on the chin and we couldn't get anything done at that point," he recalled. "The Irish people, I think, are really just incredible. They buckled down and made some hard decisions, and their economy is very much on the rebound. We thought it was a good time to approach them and we were fortunate enough to get a deal done with the current owners."
4. The future vision is to turn the Circle K brand into “something more."
Couche-Tard shows no signs of slowing down its growth, yet Hannasch believes now is the right time for the company, which had "a very decentralized model in the past," to launch a new global Circle K brand.
"We were faced with becoming a company of companies, which is a viable alternative. And if we delayed that decision, which we have done in the past, it would continue to be a bigger question for us," he explained as to why the decision was made now.
The efforts behind the global brand are meant to create a strong “preferred brand” over a period of time.
Not only was a new Circle K logo developed, but Couche-Tard also has “laid out a plan guiding our activities, our focus over the next three to five years, and how we turn that brand into something more than it is today," said Hannasch. "How do we get in the heads, the hearts of the consumers and truly make that brand preferred?”
As the retailer moves forward in introducing the world to its new global Circle K brand, it intends to remain focused on delivering three key areas for its continually growing family of Circle K customers: fast and friendly service; easy visits; and products for people on the go, Hannasch said.
For more on Couche-Tard and this year’s other Top 20 Growth Chains, check out the March issue of Convenience Store News.