Managing ‘Fast & Furious’ Growth

Tony Bartys, CST Brands’ senior operations vice president and chief operating officer, spends at least 50 percent of his time in the field. In recent months, much of the travel has involved the integration of the company’s numerous acquired stores from a series of deals consummated over the past 12 months.

Bartys’ day starts early — really early. He rises between 3 and 3:30 a.m. and usually meets CST’s Chief Marketing Officer Hal Adams and Chief Financial Officer Clay Killinger at the CST gym in the central support center, where they work out together. He’s in his office by 6:45 a.m. to go over the morning’s fuel reports, particularly checking out crude oil prices and the direction of the value of the dollar.

“I look to see where the dollar is going because that will tell me what’s going on with the price of crude,” said Bartys. “I try to see where the margin is going to be today and what it’s going to be down the road.”

Bartys pointed out how technology has changed the job. “Store managers used to do the fuel pricing at the store based on surveys of the competition. Now, it’s all done electronically, right here from the office. We can change prices automatically three or four times a day,” said the executive, noting that CST utilizes PriceAdvantage’s fuel pricing software and LED store signs by Skyline Products.

During the day, Bartys will have meetings with the executive team (CEO Lubel and CMO Adams) and two of his regional vice presidents who are based in San Antonio. He keeps tabs on all his regional vice presidents by phone at least once or twice a week.

Out in the field, Bartys gets to as many stores as possible. “I look to see how we are treating the customers,” he said. And he doesn’t give the stores a lot of advance notice of his visit. “I like to see how things really are.”

At the time of our interview, he had just returned from visiting Nice N Easy stores in Syracuse, N.Y. “We’re getting ready to turn them over fully to our CST operations group,” he noted. “I wanted to see them to be sure we preserve all the good and unique things they are doing.”

As part of the executive team of a new public company, Bartys also spends more time than in the past on meetings with investor groups. “I have to schedule my time around earnings calls, disclosure meetings and investor calls,” he explained.

Bartys is quick to add that he actually enjoys these financial meetings. “I used to be an accountant, so I like talking about our company and reviewing P&Ls and category margin reports.”

The executive observed that even with the record fuel margins experienced by CST and many other petroleum retailers last year, “we’re working to move more of our gross profit dollars to the store side. We actually produce more gross profit dollars from store sales than from fuel sales now.”

Bartys is also heavily involved in CST’s Store of the Future meetings. “We’re just starting the journey,” he said about the future store design plans for Corner Store, but he definitely foresees alternative fuels playing a role. “We have 50 to 60 stores selling E-85 now.

“I see alternative fuels growing, especially in new stores off freeways,” continued Bartys. But he’s quick to add that diesel and gasoline are still going to account for 90 percent of CST’s fuel sales for the “foreseeable future.”

An important part of his job is “to make our store people’s jobs as easy as possible.” His mindset is to serve CST’s store employees. “That’s why we focus on technology a lot. The constant improvement with technology takes the burden off the store managers so they can serve our customers better,” he said.

FROM ACCOUNTING TO OPERATIONS

So, how did a former accountant gain such an affinity for the people and operations at store level? Well, according to Bartys, he was born to operate retail stores.

“My personal traits are in line with what this job is all about,” he said in his office during a break in his busy day recently. “I love the interaction with people. I’m in stores as often as I can and I like seeing what the customer is buying.”

After serving in the U.S. Navy and graduating from college with an accounting degree, Bartys went to work for what was then one of the Big Eight accounting firms, Peat Marwick Mitchell (now KPMG). He quickly realized he was not suited for sitting behind a desk working on ledgers. “I thought it would be more fun generating debits and credits than recording them,” he said.

In 1985, he left the accounting firm and got a job as head of operations for a start-up company called Fuelman, a fleet fuel organization in New Orleans, which is now known as FleetCorTechnologies Inc. and listed on the NYSE. While hoping to take the company public after five years, Fuelman was acquired by a private company that decided to grow the business through franchising.

At Fuelman, working with partners who were in the c-store business, Bartys acquired a great appreciation and respect for what a c-store manager has to do. “They have to be experts in so many different disciplines — fuel systems, food, age-restricted products, human resources, management, merchandising. There’s a lot of complexity inherent in the job, as well as dealing with outside regulatory pressures.”

Bartys noted that store managers then were “jacks of all trades,” while today’s newer, bigger and more foodservice-focused stores require greater specialized skills. “That’s one of the biggest changes in the past several years,” he noted.

After seven years with Fuelman, Bartys said he got bored with the franchising routine. In 1991, he joined Ultramar in California, which eventually merged with Diamond Shamrock in 1996 to form UDS. He became a vice president of operations for the Western Region. Diamond Shamrock purchased National Convenience Stores in 1995 and then UDS bought the U.S. assets of Total in 1997. Store counts grew to as many as 2,200 stores before being rationalized down to 900 of the best stores from 1997 through 2007.

In 2002, Valero Energy acquired UDS and Bartys became the VP of retail operations. In 2004, the Diamond Shamrock brand was changed to Valero, while the stores remained Corner Store.

Bartys describes his years working at Valero as “great.”

“While store sales were an important part of our business, we were part of the largest refining company in North America and selling fuel was a priority,” he recalled.

“While we worked very hard to be the best, I feel like I was sleepwalking at Valero compared to the pace we are working at now,” he added. “We may have been financially immaterial to Valero, but that is not the case today. Now, every decision we make at CST matters. It’s like my early days working for a start-up and it is truly, very, very exciting.”

Bartys’ biggest challenges going forward are managing the chain’s expansion and finding the right people to work at the growing company.

“Growth is coming fast and furious,” he said. “We have to look forward, but at the same time, we can’t drop the ball on managing the core stores of our company.”