The Pantry Eyes Fresh Expansion to 400 Stores

CARY, N.C. -- On the heels of the early success of its Fresh Initiative, The Pantry is planning to roll out the program to 400 stores by the end of the calendar year.

"We continue to be encouraged by the Fresh Initiative with the Charlotte and Raleigh markets leading the way," said President and Chief Executive Officer Terry Marks during the company's second quarter fiscal 2011 earnings call this morning.

The success is those markets has taught the company a lot, and The Pantry is now in the process of rolling out the program in Birmingham, Ala., he said. In addition to the 400 stores to receive the Fresh Initiative by the end of the year, approximately 75 percent of the stores are being targeted for the new program over the next few years.

The Pantry launched the Fresh Initiative in the Raleigh market in June followed the stores in the Charlotte market by the end of 2010, bringing the total to approximately 100 locations, as Convenience Store News reported in its September 2010 cover story.

In the second quarter, stores in Raleigh and Charlotte saw comp sale growth across all merchandise and the foodservice growth in both markets was significantly higher than in the balance of the company's markets, Marks explained during the call. "We are very pleased with the performance of these two markets," he added.

Mark Bierley, senior vice president and chief financial officer, said The Pantry is still refining some aspects of Fresh Initiative and taking a deep look into what categories it wants to invest in as well. "We are learning from it and incorporating these changes into Birmingham and the [full] roll out," he explained.

For example, the company learned to enhance the flow of its stores. "Our focus is on eliminating non-value or low-value activity," Marks said, adding the remodel design for Birmingham and moving forward revolves around things that require higher touch, like roller grills and pastries so they are easily accessed. The Pantry is also taking this opportunity to significantly improve its cold dispensed, which Marks explained is a critical food accompaniment category.

What will not change is the company's focus on its Bean Street Coffee program. "Our approach to coffee will not change. It is the anchor of our Fresh Initiative," Marks added.

Moving forward with the program, the company made market improvements in its construction department to handle the many projects on tap, Bierley noted. The Pantry also made improvements to field support and category management, and it is now "confident" it has the tools it needs to roll our fresh Initiative on a broad scope.

And while The Pantry is gearing up for a massive roll out of its Fresh Initiative its thoughts are with the company employees who have endured challenging times over the past month as severe weather and tornadoes barreled down on the South. Two of the company's Kangaroo Express locations in Ringgold, Ga. were destroyed by the tornadoes and The Pantry is focused on rebuilding those stores, Marks said.

"Our best wishes [go out] to all our associates in the field who have dealt with difficult [circumstances] over the past month," he said.