A Day in the Life of CST Brands

We pulled into the parking lot of CST Brands Inc’s Corner Store in Boerne, Texas, at around 8 a.m., where we were greeted by the company’s director of communications, Lisa Koenig, and regional operations vice president, Dave Mock.

Convenience Store News was on hand this hot, humid Texas morning to see what for most companies would be an unusual sight: the CEO of a nearly 2,000-store retail colossus working behind the counter side-by-side with hourly employees.

Kim Lubel, chairman, president and CEO of the young convenience store chain that was spun off from Valero Energy Corp. in May 2013, was doing her Corner Store Time, a program in which all office employees have to work in stores twice a year, while leadership executives like Lubel must spend five days a year working in the stores. Corner Store Time helps the office leaders better appreciate the fundamentals of the business and the people at the stores who are critical to the company’s success.

For this year’s CSNews “A Day in the Life” of a c-store retailer series, CST Brands, the second-largest, publicly-traded fuel and convenience retailer in North America, gave CSNews editors unparalleled access to interview and shadow top executives and key managers across all the company’s far-flung divisions: from Montréal, to central New York, to Allentown, Pa., to the retailer’s central service center in San Antonio.

Our day in the life of CST Brands started off with a firsthand look at one of the retailer’s recently introduced core values: servant leadership. We spent the morning with Lubel, watching her interact with associates and customers, and perform such tasks as squirting cream filling into Corner Store’s signature Whoopie Pie Bites dessert cakes, while also talking about the retailer’s growth plans, the company’s spirit of collaboration, and the effort to establish the Corner Store brand across North America.

One of her main goals is to cultivate a separate identity for Corner Store from the Valero fuel legacy. Lubel told CSNews that CST’s recently acquired Timewise convenience stores in Texas — most of which sell Shell fuel — are being rebranded as Corner Stores so the company will see how consumers react to a Corner Store that doesn’t sell Valero fuel. CST purchased the 22 Timewise c-stores in Texas from Landmark Industries in early 2015.

This branding initiative is supported by research initially conducted in the Houston market that unveiled two key conclusions: Corner Store has very low name recognition, but when customers shop Corner Store, they keep coming back more often than to competitors.

“If I can bring more people into the store for their first visit, I know we can retain them for future visits,” Lubel said about the research that revealed Corner Store’s weaker brand recognition but strong customer retention rates and loyalty.

GROWTH & INNOVATION

The current model for CST’s new-to-industry stores dates back to 2006. The Boerne store we visited is 4,650 square feet. The retailer also operates a larger model of 5,500 square feet, and one of its largest stores — across from the University of Texas at San Antonio — is 7,000 square feet and contains a full sit-down Subway franchise. The company also operates more than 800 smaller legacy stores that Lubel insists are still very important to the company.

Growth plans for 2015 include adding 35 to 40 more new-to-industry stores in the United States this year. Across North America, CST expects to open between 45 and 52 stores this year, representing an accelerated expansion from the 60 new stores opened the previous two years and the total of 42 stores opened during the five years prior to that.

The company’s leaders are currently working on what the Corner Store of the future will look like. From top to bottom, everything is under review. They hope to debut their first store of the future in 2016.

“We still have more work to do on building the brand,” said Lubel, but she feels a lot of progress has been made in a short time.

Through the core value of servant leadership, Lubel hopes to accelerate building the brand while spreading best practices and nurturing the spirit of collaboration throughout the retailer’s widespread network from Southwest U.S. to Eastern Canada.

“We’re not taking over; we’re coming together” is the message Lubel emphasizes to each of the companies acquired by CST Brands.

Whether an idea comes from Corner Store Time in the field, from one of the recently acquired companies or from one of the numerous employee roundtables conducted around the continent, CST is learning and enacting numerous changes in an amazingly nimble way for a company its size. For example, Lubel was visiting a store when she saw the food manager make miniatures of Corner Store’s signature Whoopie Pies for customers to sample. Customers loved the small, sample-sized dessert, but some commented that the full-sized item was too big.

“I said, ‘Why don’t we sell this smaller-sized item for people who think the full-size Whoopie Pie is just too much.’ So, we created Whoopie Pie Bites, a smaller version of the Whoopie Pie.” Whoopie Pie Bites are baked and filled in-store and have been such a hit with customers that they have surpassed the full-size Whoopie Pies in sales.

Whoopie Pie Bites come in various flavors, the newest being peanut butter-chocolate. Lubel said Corner Store sold more than 2 million Whoopie Pie Bites and Whoopie Pies last year, which is still less than the 5.5 million kolaches (a meat-filled pastry popular in Texas and a Corner Store specialty) that were baked in the stores and sold last year.

One acquisition, Nice N Easy Grocery Shoppes, has proven to be a breeding ground for ideas that Lubel would like to try around the continent. “Jack Cushman from Nice N Easy is leading an effort to build the Nice N Easy kitchen concept into five new-to-industry stores we are building in the San Antonio area. The first is expected to open in October,” Lubel said.

The company is also drawing on Nice N Easy’s experience as it incorporates more of a fill-in grocery mentality into its Corner Stores. The opportunity for bread, milk, edible and non-edible grocery is huge for c-stores, many of which have gotten away from grocery as they focused on improving their foodservice over the past several years. CST wants to meet that need, especially among millennials who shop more often and buy closer to need than older consumers.

Examples of the stepped-up grocery merchandising were on display at the Boerne store. Three full freezer doors of frozen food — consisting of assorted entrees from meatball dinners to pizzas — is new for the retailer. Edible grocery was expanded from a 3-foot section to 9 feet, and a coffin cooler at the front of the store contains assorted packaged luncheon meats, lettuce, sausage links, brisket and cheeses.

Regional Operations Vice President Mock also pointed out that the retailer, which self-distributes the majority of its inventory to its Texas stores from its central distribution center (operated through an agreement with Core-Mark), has also begun to boost its grocery selection with products delivered directly to the stores from local vendors. These include a popular line of jerky from Oma’s Choice, based in Schulenburg, Texas, and other specialty items like packaged habanero peppers, jalapeño eggs, pickled quail eggs and pickled okra.

CULTURAL SHIFTS

Another idea borrowed from Nice N Easy’s late founder, John MacDougall, is reflected on CST’s most recent anniversary T-shirts, which bear MacDougall’s noted business philosophy: “Be Nice, Have Fun, Sell Stuff & Be the Best.” The black tees also sport CST’s four core values of servant leadership, strategic thinking, entrepreneurial spirit and innovation.

Creating a culture across the entire organization has been a key priority from the beginning for Lubel. A change in dress code was an early cultural shift. Under Valero, the dress code was rather formal, especially at the service center. However, now the company feels it must think like a retailer and has loosened the code. In fact, associates are allowed to wear jeans as long as they wear a company-logoed shirt.

“A key piece of our culture change is that we realize that faster is better in retail,” said Lubel. The company’s core values of innovation and entrepreneurial spirit reinforce the need to be nimble and adaptable.

A typical day for Lubel starts at 5 a.m. with a morning workout and school drop-off for her 14-year-old son, arriving at the office at 7:30 a.m. Of course, every day is different for a CEO, but the days when the mother of four is at the San Antonio service center are filled with meetings. There’s usually a daily meeting with her executive team. “There have been a lot of meetings about branding strategy lately, and yesterday we had a meeting on our store of the future,” she said.

She also regularly hosts roundtables with both office and store employees. These meetings usually involve about 10 employees providing feedback to Lubel on what’s working and what’s not. Recently, she began holding monthly new employee breakfasts, dubbed “Kolaches with Kim,” at the home office.

“I wake up excited every day for what’s just around the corner for Corner Store. We’ve got a great team and we’re having fun,” Lubel said.