CARY, N.C. — The Pantry Inc., for many years the leading independently operated convenience store chain in the southeastern United States, is growing its quick-service restaurant (QSR) business as it awaits its pending acquisition by Laval, Quebec-based Alimentation Couche-Tard Inc., parent to Circle K convenience stores in the United States.
With more than 1,500 stores in 13 states under various banners, including its primary operating banner Kangaroo Express, The Pantry is a unique QSR franchisee.
In an exclusive interview with CSNews Online, Ross Adkison, vice president of restaurant operations, explained how The Pantry runs its QSR operations differently than most other c-store chains, and how the retailer is positioned to expand its footprint of QSRs to double the current number of almost 200 restaurants in the next five years.
Including its proprietary Aunt M’s Kitchen and Hot From the Oven concepts, The Pantry is home to more than 230 franchised and proprietary foodservice operations. Of that total, 150 are Subway (The Pantry is the fifth largest Subway franchisee in the world), 20 are Little Caesars (two more were due to open by March), 13 are Dairy Queen, six are Hardee’s, five are Krystal, and two are Church’s Chicken.
In 2014, The Pantry opened more than 20 new restaurants, many of them Little Caesars.
“We’ve managed to grow QSR sales 4 percent per year over the past six years,” said Adkison, a restaurant industry professional (with Krystal and Wendy’s) who joined The Pantry in 2009. “We also increased profitability by nearly 30 percent on a store-by-store basis by streamlining brands, choosing the right brand for each location, eliminating underperforming sites and putting together a dedicated restaurant team.”
The QSR operations team operates independently, collaborating with The Pantry’s store operations team when appropriate and serving as a resource for the retailer’s proprietary foodservice options. The QSR team, from its vice president to part-time employees, are fully committed to the restaurant business.
“All our people [in the QSR operation] are fully brand-certified so the brands are confident about our competence in working the brand,” said Adkison. “The fact that we have so many locations is a competitive advantage. It resonates with the customer and supports our company goal to be the consumer’s No. 1 choice for on-the-go meals and snacks.”
Having dedicated personnel to manage the QSR brands is critical for growth and ensuring compliance with each brand’s operating criteria. “Yet, within each location, employees are cross-trained. It’s accepted that situations will arise that necessitate some crossover to the c-store side,” noted Adkison.
FINDING THE RIGHT FIT
With Kangaroo Express locations well established in the communities in which they operate, The Pantry is able to identify the best foodservice solution for each individual location. Based on the area’s customer demographics, including data on overall and daypart store traffic, household income, density and more, the retailer can choose the most appropriate QSR brand for each individual store.
“Because we have so many stores and so much information, we can do significant modeling, examining lots of different attributes at each location,” said Adkison. “For example, we might put a Little Caesars restaurant into a site because we know it offers a strong opportunity for evening sales, and because of other factors based on our market information.”
The Pantry has had a more than 90-percent success rate in its choice of QSRs per location – more than nine out of 10 sites have met or exceeded sales expectations, Adkison told CSNews Online.
Having a QSR at a site doesn’t mean The Pantry wouldn’t also have its own proprietary food offering as well. The retailer wants to satisfy the cravings of both the customer looking for a quick snack at the checkout, as well as the mom seeking a sit-down meal with her children.
“We have both proprietary foodservice and QSR at several locations right now,” said Adkison. “Whether it’s Aunt M’s Kitchen [operated by the QSR team] or Hot From the Oven [operated by The Pantry’s foodservice team led by Jon Bratta], we are trying to ensure that every consumer is confident that their on-the-go meal and snack needs are being met at every location.”
As for the pending acquisition by Canada-based Alimentation Couche-Tard and the integration with that retailer’s Circle K brand, Adkison said it’s too early to discuss specifics about what it will mean to The Pantry’s QSR business.
“For now, we’ll continue down the path we’ve being going, with the goal of doubling the size of our QSR footprint in the next five years,” he said.