Growth Spurt


Thirty-six years after opening its first retail store, Alimentation Couche-Tard Inc. is 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 c-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.

However, that was not the only major deal the company inked during the eventful 12 months of the past year. Also last March, Couche-Tard built up its international presence with the acquisition of Shell’s marketing operations in Denmark. This agreement with A/S Dansk Shell comprised 315 sites, including 225 full-service stations, 75 automated fuel stations and 15 truck stops. Of the 315 sites, 140 were owned by Shell, 115 were leased from third parties, and 60 were dealer-owned.

As the year wound down, Couche-Tard made headlines once again with news it was acquiring the majority share capital of both Topaz Energy Group Ltd. and Resource Property Investment Fund plc, together with the entire share capital of Esso Ireland Ltd. 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. Of these stations, 162 were owned by Topaz and 302 were owned by dealers. This deal officially closed early this year.

And all this growth has come as the company notched another year of record financial results, a testament to the employees, according to Brian Hannasch, president and CEO.

“Our people achieved a lot this year,” he told Convenience Store News. “They continue to focus on executing. Despite us doing acquisitions, integrations and rebranding, the focus on executing with the customer each and every day has been very consistent.”


The Pantry deal and Kangaroo Express stores’ ensuing integration into Couche-Tard’s Circle K family undoubtedly was one of the Top Growth Chain’s most significant achievements of 2015.

Over the years, Couche-Tard 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.

Not all the stores in the network had received the investments they needed over the years to compete effectively and deliver the right experience to the customer. While not all the stores are keepers for Couche-Tard, the overall portfolio was “a very good strategic fit,” the CEO said.

“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.

Interestingly, 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 acquisition made sense to others in the industry, as well. “Couche-Tard’s acquisition of The Pantry did not come as a surprise. They like to find economic opportunities. The Pantry was in trouble; everyone knew they were in trouble,” said Terry Monroe, founder and president of American Business Brokers & Advisors. “They were big enough and Couche-Tard saw a financial opportunity to get in there — and they were very sharp financially — to buy some performing assets at an underperforming price.”

“They’re smart,” Monroe continued. “Look at all the stores they got in one big swoop.”

The acquisition carried a total enterprise value of approximately $1.7 billion, including debt assumed. Time will tell how the deal stacks up.

“First and foremost, it’s about creating shareholder value, and I say history will be the judge of that. We have a track record of being a disciplined acquirer,” Hannasch told CSNews. “Every deal is different based on the performance of the network, the people, and the synergies we think are available. When you combine all these factors in this deal, we believe we paid a fair price for The Pantry.”


With the merger nearing the one-year anniversary of its closing, 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 the 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,” Hannasch detailed.

The retailer has had to make some tough decisions, too, like which stores to keep and which to close. 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 that didn’t have the upside we thought we needed for financial return on the investment,” he said.

“That’s just what we do. It’s not about store count for us — although we may get branded that way a little bit,” the chief executive acknowledged. “It’s about delivering a great customer experience and strong returns for our stakeholders.”


Undoubtedly, Couche-Tard has experienced enormous growth in North America. But that continent is not its only focus. In December, it inked a deal to move into a new country with the Topaz acquisition. The move has been in Couche-Tard’s sights for some time.

According to Hannasch, Couche-Tard 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 its 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.”


Although Couche-Tard shows no signs of slowing down its growth, 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 process of rolling out a new global Circle K brand has been in the works for more than two years and from the start, it has been more than just a capital or sign exercise. 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?”

A global brand does come with some upsides. Branding expert Joe Bona, president of Moseley Bona Retail, said it creates efficiencies in communicating around just one brand, and brings simplicity with one type of signage, one website and one consolidated workforce.

On the other hand, there are several factors that come into play when moving to a global brand. For instance, Bona said questions will now arise, such as: When you buy local or regional companies, what kind of equity do these companies bring to the table? Did you buy a chain with a loyal following that has been in the market for many years?

Even so, Couche-Tard is confident in its decision and 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.

“It’s not about store count for us — although we may get branded that way a little bit. It’s about delivering a great customer experience and strong returns for our stakeholders.”
— President & CEO Brian Hannasch

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