Getting & Staying on Track

How do you acquire 1,245 convenience stores and ensure the transition is so seamless that consumers hardly notice? That’s exactly what Tony Kenney and his Enon, Ohio-based Speedway LLC team did following the company’s purchase of Hess Corp.’s retail assets, which closed Oct. 1, 2014.

The Hess Retail transition is one reason why the president of Speedway was selected as Convenience Store News’ 2015 Retailer Executive of the Year. As of press time, Speedway had converted more than 1,000 Hess sites to its brand name, with the remainder to be done in 2016.

“We had a plan to get all 1,245 stores converted in three years. We will get it done in just over a year,” Kenney proudly reported, noting it is a huge and well-coordinated effort and Speedway’s entire team deserves a tremendous amount of credit.

“We put a construction team in place with a plan to basically convert five stores a day, five days a week. And each of the conversions takes place within 24 hours,” he explained. “So, a Hess store would go down at 6 a.m. one morning and be back up 6 a.m. the next morning as a Speedway. It’s amazing how that plan continues to perform extremely well. There have been very few hiccups.”

The transition is about much more than converting from Hess’ kelly green color scheme to Speedway’s red-colored hues on the outside of the stores, though.

“The secret is what’s going on inside the store. We had to change out all of the point-of-sale [terminals], everything in the back office and technology platforms for inventory management, automatic reordering and labor scheduling, which are all the backbone of running store operations,” Kenney said. “As consumers saw the name change from Hess to Speedway, at the same time we were changing the inside and training people.”

A significant component of both the new technology and employee training involves Speedway’s Speedy Rewards loyalty program, which has been a tremendous success for the c-store retailer.

“This program truly provides great value for our loyal customers,” Kenney noted.

BACK TO THE BASICS

Since he graduated from Miami University in Ohio in 1976, Kenney has served Marathon Oil Corp. and subsequently its spinoff Marathon Petroleum Corp. (MPC) — parent company of Speedway — for more than 39 years. In August 2005, he became president of Speedway SuperAmerica LLC, which subsequently became Speedway LLC in 2011.

Kenney, who also took part in the Executive Program at the University of Michigan Business School in 2000, now presides over the nation’s second-largest company-owned and -operated convenience store chain with approximately 2,760 stores in 22 states.

Looking back on when he became president more than 10 years ago, Kenney acknowledges Speedway had some work to do. “We weren’t performing at the top of our game,” he said. “We realized there were several areas that needed more focus.”

At the time, Kenney took a thorough look at Speedway from top to bottom and realized the employees, including store associates and general managers at the customer level, needed to be his No. 1 priority. So, he started by going back to the basics.

“You have to get customer service right,” he remarked. “Customer service is more than just the way you interact with the customer. There are a lot of elements of service, such as a clean store, clean restrooms, clean foodservice areas, [products] being in stock, and having great values and promotions. All of these elements create what we call the ‘exceptional customer experience.’”

Once Speedway had mastered the basics, Kenney shifted his focus to making the division a profitable business. This took on an even greater emphasis as Speedway became a larger component of its publicly-traded parent company.

“If you are not providing the kinds of returns your parent company is looking for, they can be more reluctant to provide the capital for growth and programs,” he stated. “So, we got to work on the fundamentals of the business from that standpoint.”

To generate stable and growing profitability within MPC, Kenney and his team concentrated on growing in-store merchandise sales and margins, while controlling costs. They still do.

“One metric we’ve really focused on across the organization, from the very beginning, is light-product breakeven,” Kenney revealed. “We had to get that as low as possible. We managed to drive that significantly lower over the years. It has been one of the keys to success in getting Speedway to be a top-tier-performing company in the industry.”

LEADERSHIP TENETS

A self-proclaimed history buff, Kenney said his leadership style has been influenced by many people over the years and not all have served in the business sector. In fact, many of the skills he draws upon today he learned from top military leaders. One can draw many similarities between military leaders and business leaders, he said.

“I’m a big believer in setting goals for the organization, getting the right team in place and making sure we communicate without any misinterpretation,” he relayed. “We need to be clear on what the objectives are.”

Speedway’s president added that a good leader must trust others. “You can’t ever think, even for one minute, that you can drive everything going on in the company sitting where I am,” he stressed. “You must have the right senior leadership team in place, communicate with them and give them autonomy and responsibility to drive your goals and meet objectives. And in turn, you expect accountability. So it’s a two-way street.”

One of Speedway’s greatest strengths is its employees’ ability to work well as a team, Kenney continued. “Knowing what the marketing department wants to do requires the operations team to be able to execute. And our finance, auditing and accounting and all store support areas must understand all areas of the business, whether it’s inside with merchandise or outside with fuel,” he explained. “I only have seven direct reports. It all starts with them. They are given the freedom to run their organizations in line with the company’s goals.”

Unlike some other publicly traded retailers in the c-store space, Marathon Petroleum has decided not to spin off its Speedway retail division. According to Kenney, “We are big believers in a fully integrated downstream model, from refining to retail. Think about refining crude oil into various products, primarily gasoline and diesel. Think about the infrastructure and associated time and costs to move those products to markets and, ultimately, the consumer.”

The synergies MPC realizes by having assured outlets for approximately 70 percent of its refining production through Speedway’s 2,760 locations, as well as through MPC’s brand class of trade, are meaningful. “The assured and ratable volume that retail provides allows MPC to capture efficiencies in scheduling pipeline movements, optimizing terminal and transport operations, and to ultimately be a highly reliable supplier to markets with the right products at the right time,” Kenney said.

PROUDEST MOMENTS

Getting Speedway on track, the success of Speedy Rewards and the Hess Retail acquisition are the three things Kenney is most proud of since he took the reins of the division.

“We’ve really built an opportunity for people to build very nice careers for themselves,” he said. “These are good jobs that Speedway can provide for people who are motivated, want to have a good career and build something nice for themselves and their families.”

Now that Speedway is a well-oiled machine, the Cleveland-area native who still roots hard for his hometown sports teams wants to ensure the company leaves an excellent legacy by giving back to the communities it serves. For years, Speedway has provided unwavering support to Children’s Miracle Network Hospitals, a nonprofit organization that uses donations to support research and training, purchase equipment and pay for uncompensated care.

“Our 36,000 associates at Speedway really embrace this charity,” stated Kenney. “Most communities we are in have local children’s hospitals so the money we raise at the stores goes right to the local hospital. As a company, it’s a charity we’ve been able to rally around. Helping children in need is extremely rewarding. It’s something we embrace and is part of our culture.”

Solidifying the company culture of the “New Speedway,” comprising both legacy Speedway and former Hess locations, is a major focal point these days for Kenney and his team. In fact, the c-store retailer has established a “One Team, One Vision” philosophy.

“It really revolves around all of the values of Speedway,” he concluded. “We truly look at ourselves as one team. We help each other whenever needed.”

“You can’t ever think, even for one minute, that you can drive everything going on in the company sitting where I am. You must have the right senior leadership team in place, communicate with them and give them autonomy and responsibility to drive your goals and meet objectives. And in turn, you expect accountability. So it’s a two-way street.”