No 'I' In Team

Dennis Hatchell took the lead at The Pantry Inc. in March 2012, but he says it's teamwork that makes up the fabric of the Southeast retailer

One year ago, Dennis Hatchell took the helm at The Pantry Inc., operator of Kangaroo Express. Today, you can find the president and CEO on Twitter as Chief Roo, but don't expect Hatchell to take credit for the strides the convenience retail chain has taken in the past year. Nor does he take credit for where the Cary, N.C.-based company is headed.

Last month, Convenience Store News visited exclusively with Hatchell and team members Jon Bratta, vice president of merchandising, packaged goods; Treeny Ahmed, category manager, fresh foods; Nancy Clemons, director of marketing services; and Berry Epley, vice president, controller at a Kangaroo Express in Morrisville, N.C. One thing was clear — there's no "I" in team at The Pantry. Here, they talk about the past, present and future in their own words.

CSNews: What did you know about The Pantry before joining the company?

Hatchell: I worked in North Carolina for 32 years and I watched The Pantry grow from a little convenience store chain in Sanford [N.C.]. I still remember what the original ones looked like. I was amazed as I watched them grow, acquire and get bigger. When I had the opportunity to join the team, I was excited to see what we could do with this team and this company.

CSNews: Does your grocery background help you in your new position?

Hatchell: My background is retail grocery, but on the supply side. My old company owned a distribution center. We were one of the main Yum! Brands distributors in the Southeast, and we also supplied thousands of restaurants, which were all very different. That background of food, fresh food, restaurants, the logistics of getting it done, plus all the different formats is very helpful. [The Pantry has] acquired so many stores, and they are all different. We really learned that you have to make your stores fit the neighborhoods they are in and fit the communities they serve.

CSNews: Is this especially true with convenience stores putting more of an emphasis on fresh food as the customers demand it?

Hatchell: Customers want more modern, healthy alternatives, although the basics still have to be there. We need to bend to hit all of them. Each store is a little different.

CSNews: How would you describe your first year?

Hatchell: Busy. I spent the first part of the year visiting stores, meeting people, getting around the offices, and learning the culture and what the people are all about. They were really forthcoming in terms of what they wanted to see the company do and where they wanted to go.

We coupled that with getting the board of director's five-year plan and meeting with management, seeing how they fit in. So I was getting a hold of all that and learning the business — cigarettes, fuel and what the convenience store business calls fresh vs. what I call fresh. Then, it was trying to pull it all together so we have a vision to work from. We also spent a lot of time refinancing and restructuring our debt.

CSNews: Did you get to visit every store?

Hatchell: No, I try. I block off a day and a half to two days a week and do my best to hit them on those days. I hold on to the calendar as best I can to get out to the stores. You can get to 12 to 15 stores a week. If you are going to visit the stores, you have to visit the competitors at the same time. There are a lot of markets I haven't been to yet. There are also some markets I have been to a couple of times because of the action in those markets.

CSNews: What challenges did you face during your first year?

Hatchell: One of the biggest challenges was convincing our people it was OK to start selling. We were running good stores and had terrific people, but there is a big difference between operating stores and selling inside the stores. We need to optimize our store base, and we need to remodel certain stores, replace certain stores and close certain stores. That's all part of the plan.

Sorting through all that and making sure we are taking care of our people is a lot of work. There was some concern that there was a new guy in town and what is he going to want. But really we have been implementing what most of them designed. They had a good structure, and it's just a matter of getting folks to rally around the plan.

CSNews: On the flip side, what's been your biggest accomplishment to date?

Hatchell: [chuckling] I think the team nicknaming me Chief Roo for Twitter. I think it finally meant they were comfortable with me. I like that a lot.

We have made huge strides in selling, how to present the store and how to keep the standards right. The customers are responding well to that. The support centers really started treating the stores like they are customers. The whole teamwork piece is really coming together.

CSNews: Several members of the company's executive team have left over the past year. Have these executive changes made things more difficult?

Hatchell: The chief financial officer [Mark Bierley] leaving right as we were refinancing was a big challenge for us. The operations job was already vacant, but what was more important was that we got the right players in place. It took a long time to find Joe Venezia [senior vice president, operations]. He has a terrific background in store operations and merchandising. Clyde Preslar just joined us as CFO, and he has North Carolina roots and a lot of experience.

CSNews: Now that you opened your first new Kangaroo Express store in four years, how many more new stores are on the drawing board for this year?

Hatchell: We will open three more this fiscal year, so that will give us four new ones. We have also replaced two — one in Columbia, S.C., and one in Pembroke, N.C., that were damaged by fire. So that will be six brand-new stores this year.

Epley: The new builds are in existing markets. There is the new one in North Carolina, one in South Carolina and two in Florida.

Hatchell: We have a lot of action going on. Our goal is to have an additional 25 quick-service restaurants (QSR) open this year. We really like the QSR/convenience store combination. We are particularly interested in leveraging the knowledge of the restaurant side of the business into the fresh side of the convenience store business. Handling food, portion sizes, food costs — that can all transfer from QSR into convenience.

We also have two types of remodeling going on. We have stores that need work done on the building: parking lot, forecourt, new bathrooms, that sort of stuff. There is a lot more capital involved. We are also doing a "remodel light" where we are simply adding food equipment and products customers want to buy that aren't in our stores.

The total remodel stores are scattered, but the "remodel light" stores are clustered. If we go into a market and there are six or seven stores together, we will do a light remodel all at once. It took us a while to get started, but we are really rolling now. We have between 70 and 80 stores under remodel right now.

CSNews: Do you have a target number for new builds and remodeled stores?

Hatchell: Our stated goal of remodels is 10 percent of the stores, so about 160 remodels a year. I think, as we get going, that's reachable. We may not make it this year, but I think it's reachable in future years. We have a plan for at least four new stores [a year] and that can go up to eight.

We still have a lot of surplus property from an acquisition play in the earlier years we can build on. We'll continue to look for new locations in pretty much our same markets. It's a big footprint.

CSNews: Would you ever build a store without gas?

Hatchell: We have 19 stores without gas; either they never had it or something happened. If we were in a much denser populated area, where we could get a store in but there was no space for gas, then maybe. We don't have that problem where we are, and it's kind of a given that you sell fuel with a convenience offering.

CSNews: Where does The Pantry's Fresh Initiative stand now?

Hatchell: We didn't back off the Fresh Initiative. We're actually accelerating it now with the remodels. What we didn't want to do is focus only on fresh at the expense of the whole store. All we did was redirect the attention from solely fresh. We need to do fresh and we need to do it well, but we also have packaged beverages and cigarettes and a lot of stuff in the store that we need to continue to drive sales. Fresh is a department within the store. We need to grow it as fast as we can, but we want it to help lift the whole productivity of the store.

Ahmed: The updated fresh offerings in the remodel programs include the new coffee urns. The latest innovation we added is the Mixology Station that allows the customers to customize their own cup. The Bean Street Coffee experience has always been about "We Brew It, You Do It." We also launched the free whipped topping in 900 of our highest volume stores. The customers are coming in and asking for it, so the response has been positive.

We also have the benefit of operating over 200 QSRs, so that is expertise we already have. The thought was why not leverage some of that and build some synergies to bring that proprietary food offer into the c-store side. We have a great concept with Aunt M's [fast-food, homestyle cooking restaurant], and we saw a lot of growth potential. It has already gone into some of our remodels this year, and it will be going into some of our other remodels going forward.

CSNews: How is the rollout of your lifestyle merchandising initiative progressing?

Hatchell: We are working to get the stores more in tune with the neighborhood. It's called lifestyle, but with that you also have to use local. You can have a college lifestyle store that depicts what college students want, but once you get a read on the customers around that store, you want to make sure what you have is not only a college lifestyle but what those local customers want as well.

Bratta: We get feedback from our operations team on where we have product opportunities. For example, at this particular store [in Morrisville, N.C.], they asked for Hispanic products. We have other locations where it may be a combination of Hispanic products and another lifestyle.

We look at Spectra data, which tells you not necessarily who comes into the store, but who surrounds the store. We close that loop with our store staff and find out who is actually coming through the door. We try to use a little bit of — for lack of a better word — science and a little bit of art as it relates to having an understanding of what our customer base is, who the actual customer is, and where we have gaps that we can fill through products and merchandise. We call it lifestyle, but at the end of the day, it is about getting the right local product mix for each store.

CSNews: So, looking back over this past year…?

Hatchell: We worked really hard to create an enjoyable workplace. Retailing is hard work, but it should be a lot of fun. If everyone treats each other, the business and the customer right, it should be enjoyable to do. We should focus on making it that way. All the work and training has been focused on that. It gives you momentum; it gives you growth.