A Day in the Life of Kum & Go

8/17/2013

The Midwest chain forges ahead, building on the past while creating a new tomorrow

Kum & Go LC’s late co-founder W.A. “Bill” Krause had a favorite saying: “Don’t look back…we’re not going that way.”

Today, under the leadership of his son and current CEO Kyle Krause, the 423-store convenience retailer based in West Des Moines, Iowa, appears to be forging full speed ahead, while keeping its feet grounded firmly in the values and disciplines instilled by the elder Krause.

The execution and consistency that have been hallmarks of the family-owned convenience store chain are still clearly evident, as are the company’s and founding family’s dedication to philanthropy and serving the communities in which the retailer operates.

Bill Krause’s legendary appreciation for his associates — it was common for him to ask store associates about family members by name when he made store visits — also continues to this day, but with a more professional touch befitting a larger, geographically diverse organization.

In an interview at Kum & Go’s Store Support Center as part of Convenience Store News’ annual “A Day in the Life” special report series, Kyle Krause said the company is moving ahead with new strategies and tactics that differentiate the c-store retailer from its competition and put it on course to meet the company’s goal to be “No. 1 in ’21.”

Being No. 1 in ’21 doesn’t mean being the biggest, most profitable or highest volume c-store chain in the nation, Krause explained. “We want to be the best in the industry. We are doing a lot of things well, but we have to keep improving to get to where we want to be,” he said. “We want to be a great company — doing the right thing for our communities, our customers and our associates.”

To achieve that goal, the company is continuing its shift from an acquisition growth model to a new-build model. “We built 43 stores last year — twice as many as in any other year in our history,” said the chief executive. Krause explained that the retailer’s growth going forward will be focused on opening newly built, 5,000-square-foot stores in metropolitan markets. These “5K” stores will feature the retailer’s new foodservice concept, “Go Fresh Market.” Stores that cannot accommodate the most important features of the 5K concept will continue to be divested.

In 2004, Kum & Go set a goal of building 20 to 30 stores per year. Last year, along with the 31 new-build stores and 12 rebuilt stores, the retailer sold 31 units that didn’t fit its new growth strategy. This year, Kum & Go expects to build 12 new stores and rebuild nine stores, while other stores that don’t fit the strategy continue to be evaluated.

However, since the 5K stores are much bigger than the ones being closed, Kum & Go has been adding tons of new store space over the past several years. Since Jan. 1, 2012, the company has added 122,670 net new square feet of retail space, after subtracting for divestitures.

The 5K stores also enable the retailer to take foodservice to a whole new level. “We’ve sold pizza for 27 years,” Krause pointed out, “but now we’re doing it with consistency and diligence.”

In addition to the growth in sales generated by the 5K new-builds, Kum & Go is reaping the benefits of installing the Go Fresh Market foodservice program in existing stores. New foodservice menu items, such as chipotle wraps and hash brown sticks, continue to be added as Kum & Go raises the bar on what consumers expect from convenience foodservice.

SUSTAINABLE STORES

Kum & Go is also building on old strengths with new programs like its sustainability efforts.

“Sustainable stores tie into our spirit of philanthropy,” said Krause, whose own list of charitable activities with his wife Sharon is lengthy (see page 46). “Philanthropy is part of what we do and who we are,” he said about both his family’s and the company’s philosophy of giving back.

Being a good neighbor is of critical importance as Kum & Go’s expansion strategy takes it to new markets. “When you’re new to a market, you gain credibility and acceptance by immediately being a good neighbor,” the CEO said.

Citing the retailer’s successful entry into Little Rock, Ark., Krause noted that Kum & Go entered the market with LEED-certified (Leadership in Energy and Environmental Design) stores and, as in other markets, contributed immediately to local charities. (For more on Kum & Go’s sustainability efforts, see page 43.)

“Being a good local citizen starts by differentiating yourself with great people,” said Krause.

Kum & Go has many long-time associates who can attest to the company’s dedication and interest in helping them build their careers with the retailer. Some employees, like Charley Campbell, general counsel and corporate secretary, started as an intern. In 2011, after 11 years with the chain, Campbell became part of the company’s senior leadership team, overseeing Kum & Go’s legal government affairs and risk management activities.

“This is a company and an industry where a young person can rise to a position with a lot of responsibility in a relatively short time,” noted Krause, who estimated that the retailer has created approximately 700 new jobs in just the past year alone.

“As we add these jobs, we want people to contribute to our culture. We want them to understand what the opportunities are,” he continued. “It’s fun to join a growing company, but if we want to be a great company, we need great people.”

GROW PEOPLE

When Krause took over as CEO, he knew that if Kum & Go was to become a great company and attract great people, its human resources strategy needed to change. What worked in a smaller company, where his father knew everyone and their family members by their first names, couldn’t work for an 11-state and growing retail enterprise.

“Shortly after I became CEO, I looked around and asked, ‘What do we need to keep growing?’” he recalled. “I created the HR department because I felt we needed more structure around what we were doing. And we’re still building what we call our ‘Grow People’ department.”

The company continues to layer in systems and structure to identify outstanding associates, track their progress and provide advancement opportunities throughout the organization.

“It used to be a point of pride that we didn’t need a formal HR department,” said Krause. But today, Kum & Go’s Grow People department is bringing a more disciplined approach to human resources and helping the retailer focus on nurturing talent and succession planning (see page 38).

“I was 9 years old when I first started working for Kum & Go,” Krause reflected. “And I directly reported to my dad for 17 years. So I’ve lived this company my entire life.”

Krause said he shared a unique relationship with his dad, who passed away June 19 at the age of 78. Business often overlapped with their personal lives. The elder Krause was also involved in banking. “He’d pull me out of class in junior high school to go meet someone about buying a bank. He exposed me to all facets of business through my life,” he said, reflecting on the legacy of his father, an industry legend who was inducted into the CSNews Hall of Fame in 2006. “The beauty of it was being able to learn things that kids don’t typically get exposed to.”

Krause praised his father for being a great people person. “He loved Kum & Go and he loved Kum & Go’s people. He especially loved the associates in the stores. He had a knack with people. He’d visit a store and while talking to the general manager, he’d remember to ask about her daughter who was playing high school basketball,” he added. “Those are the things you want to uphold. We want to maintain that personal touch with associates, even while growing into a bigger company.”

The convenience store industry is filled with family businesses like Kum & Go. Because they are not public companies, they tend to be more focused on the long term rather than quarterly statements.

“We’ve never had a layoff,” said Krause. “Even during the recession, we kept adding jobs and building stores. We’ve made all our 401(k) matches. We continued to run our company according to plan.”

The junior Krause has five children. Each of them, like him, worked in the stores at an early age. “My policy, though, is that they must work somewhere else for at least three years before they are allowed to rejoin the company,” the proud father said. In fact, Tanner, his second oldest son, recently rejoined Kum & Go after spending three years in the management development program at Gallo Wines.

Of course, working for the family business is not mandatory. Oldest son Ryan received his master’s degree in classical music composition, while his third son Elliott is in his final year of a master’s degree program in non-fiction writing. His youngest son Oliver is currently a senior at the University of Colorado Boulder, and his daughter Emily graduates high school next year.

It is Kum & Go’s focus on people that makes the company such a good subject for CSNews’ “A Day in the Life” report — a series designed to raise the visibility and perception of careers in convenience retailing. CSNews editors spent two days in West Des Moines visiting stores as well as Kum & Go’s Store Support Center and interviewing key people about their everyday challenges and successes.

On the following pages you’ll see how Kum & Go’s strategies are being executed throughout the organization as it seeks to achieve its goal of being No. 1 in ’21.

And what happens after 2021?

“Well there’s always the best in the world!” said Krause with a twinkle in his eye.

“We want to be the best in the industry. We are doing a lot of things well, but we have to keep improving to get to where we want to be.”
— Kyle Krause, CEO, Kum & Go

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