Spinx Thrives on Innovation

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Spinx Thrives on Innovation

By Barbara Grondin Francella

At Spinx Co. Inc., CEO Stewart Spinks' financial advisers often accuse him of implementing products and services that his customers want, then worrying later about the profitability of those programs.

"I am guilty of that," Spinks told Convenience Store News in an exclusive interview last month. "Sometimes we don't make money off of something our customers should have."

Over the years, the team at Spinx Co. has continually taken risks -- most of which have paid off for the Greenville, S.C.-based c-store chain. The retailer was the first-to-market with products and services such as biodiesel, E85 and offering discounts for paying via cash acceptors at the pump.

Spinx's newest stores, which measure up to 5,600 square feet, now offer a wireless Internet cafe, outside dining patio, proprietary foodservice and state-of-the-art fountain. The stores have double the cooler capacity of older units and feature an iced-down beverage cart that drains directly into the floor. Other amenities include more parking near the entrance, automatic sliding glass doors and DVD rentals via vending machine.

Being innovative, however, isn't without pitfalls. A few years ago, the 87-store chain installed video monitors at the pump, offering customers the local news and weather. To leverage the investment, the retailer's executive team created ads to promote its brand and products.

"I had the ads running for less than 24 hours," Spinks recalled, remembering how an angry gasoline customer approached him the first day. "This guy said to me, 'I will tell you one thing. I have to buy gas, but I don't have to buy it here and listen to your ad.'"

That was the end of the video ads.

"We were prepared for an advertising campaign and had worked with some of our suppliers to do that, but it was the wrong thing to do. So I pulled them," Spinks said.

In other cases, being on the cutting edge of marketing hasn't always translated into big profits. For example, the chain's E85 business, now sold at 20 locations, lost upward of $50,000 last year. "When ethanol prices shot up, I couldn't price E85 above regular gasoline," Spinks noted. "The very customer I am attracting thinks about the alternatives to hydrocarbons and making E85 [price competitive] is important. I ended up selling it at a loss for part of the end of 2007. But when prices of ethanol fell, we made more than 40 cents a gallon and the consumer was still paying 20 cents less than regular gasoline. Like any product, we have to make less return from time to time."

Still, the cutting-edge retailer has never been severely burned by giving customers what they want, he said. "I really believe if we are aware of customer demands we will be successful, and I think right now customers want a choice of something other than petroleum products."

Similarly, Spinks likes to give his wholesale customers alternatives. The company's supply contracts are very flexible by industry standards. "If they don't want to do business with us, they have a choice," he said. "If we make an investment with them and they aren't happy, they can give us our investment back and go someplace else. I don't believe you can control the customer. You have to satisfy the customer."

Four Pillars

Spinks attributes much of the company's success to "four pillars" -- an irresistible offer, superior performers, modern business intelligence and community involvement.

In terms of offer, the chain is often ahead of the curve. Its foodservice program, for instance, started in the early 1990s, when the company became a franchisee for Arby's, Pizza Inn, Subway, Dairy Queen, Krystal and Burger King.

"We had successes and abysmal failures with branded fast food," he noted. "But we learned a whole lot about the delivery of food products that customers want. We know now they truly enjoy the value of one stop to fill the tummy and the tank."

Since then, Spinx sold many of its quick service restaurant (QSR) franchises to someone else who is leasing the space and operating the fast feeder at the c-store site. In other cases, the QSR at the site was closed.

"When a QSR brought in less than $12,000 a week, it didn't offer a decent return on the capital investment," Spinks said. "The average Burger King [rang up] $23,000 a week and we did well. The average Arby's did about $12,000, and it was a break-even deal."

Now, the chain is implementing the best practices of branded QSRs in a way that satisfies Spinx customers, while providing a better return to the company. Stores offer more grab-and-go items and healthier options, including fresh fruit, salads and whole-wheat bread choices.

More than 20 Spinx stores sell a full menu of breakfast biscuits and platters, deli sandwiches, hot sandwiches, fried chicken, salads and specialties such as corn dogs, pizza sticks, egg rolls and livers/gizzards. Integrating the operation and labor into the c-store business and cross-training employees to help their co-workers during a rush at the foodservice counter or store checkout have made the retailer's foodservice profits much healthier.

The goal: $10,000 per week in foodservice sales per store. "If we do less, we're going to be struggling," he said. " We try to choose the sites and put the [foodservice] offer out there that can [bring in] $10,000 a week, and we are having our successes."

There have been some lessons learned the hard way, though. In late 2006, Spinx opened two full-service Spinx Chicken & Biscuit restaurants, connected to the c-stores, complete with drive-thrus.

"We were trying to silo the foodservice -- exactly what Dairy Queen and Burger King demanded, by the way -- instead of integrating it into our stores," the retailer explained. "It took me seven months to pull the plug on them."

But Spinx found that it couldn't silo its own foodservice offering from the c-store. "We don't have the national presence and couldn't execute foodservice that way. But sometimes you need to take risks to be a market leader," Spinks said.

The company went on to lease the two restaurants to Dunkin' Donuts, which serves as those stores' foodservice offer.

"We haven't seen any decline in our coffee or snack business in those stores," he said. "We have recovered financially from that full-service restaurant blunder. Sometimes you have to retreat to what works financially."

As with its QSR experience, outside at the pump, the chain took on the best practices of the Big Oil companies, none of which hit the mark for Spinx customers, and developed its own gasoline brand in 2001.

Sometimes, though, the success or failure of any program rests on the whims of a sometimes-fickle customer base. "What they want this year, that I've geared up to deliver, isn't what they may want next year," he said. "I try my best."

Superior Performers

Spinks wants the company's employees to try their best too, and considers them the second pillar of success. After trying a number of employee screening devices, Spinx uses one that helps management find the right person for the job being filled. A foodservice employee, for example, needs to be very detail-oriented, able to precisely follow the menu and correctly make a sandwich, consistently, he noted.

"But if you are in front of the customer, you can't be so rigid," Spinks said. "If someone comes in and says he lost 50 cents in the vacuum and is frustrated, you need someone to give them the 50 cents, apologize and offer them something else to make them happy. You can't have the same personality in front of the customer that you have in the back room doing food prep."

One key to Spinx employee performance: teaching them why something is done, not just how it is done. "It's important to keep paper in the receipt printer at the pump, for example, because the customer will be disappointed and get angry, then spend their money somewhere else," Spinks said.

"Unfortunately, many in our industry default to not even trying something that customers want, because they can't execute it."

To ensure superior performance, no employee is allowed to wait on a customer before going through a three-day orientation, during which random drug testing takes place.

Associates who want to move up in the company can apply -- with a written essay on why they want to be considered -- to Spinx's five-day CAMP (Customers Are My Priority) training. Those who complete the CAMP program wear a different shirt and name tag, and are held to a higher standard and different expectations.

Also popular among employees: A Christmas Club savings program. Employees may start by having $5 a week for 50 weeks deducted into the Christmas Club. At Thanksgiving, when the funds are distributed, Spinx matches the amount. The company will match $7.50 per week during the second year of participation and $10 a week in the third year. "You wouldn't believe how $1,000 at Christmastime is appreciated," Spinks noted.

Business Intel

Supporting store operations is another Spinx pillar: modern business intelligence and technology. In 1979, the retailer began polling store data. "It was a very primitive version of gathering the daily numbers compared to today's technology," Spinks noted.

A few years later, the chain installed the then-new pay-at-the-pump technology. Despite industry concern that the payment method would lead to lower store sales, Spinx customers responded by shopping more often.

Beginning in 2006, a team of employees researched new point-of-sale options, ultimately selecting Radiant's touchscreen system."This has improved labor efficiency, reporting time and [quality and level of] data," Spinks said.

At the same time, customer self-ordering kiosks were installed in several full-service food locations. The touchscreens allow customers to select standard food preparations or customize sandwiches and meals.

"The ease of use of these touchscreens for customers and employees translates into employees spending more time doing what is most important -- getting the right products to the customers in a timely manner with super service," he said.

Last year, the c-store chain implemented scanning and is looking now at replenishment programs to fine-tune inventories.

The latest business intelligence effort is an electronic loyalty program the company hopes to launch early this fall, in partnership with a major local supermarket chain. Participating customers will accumulate cents-off-per-gallon discounts based on the amount of groceries purchased at the chain, redeemable at Spinx stores. "It's a way for us to partner with someone who doesn't want to compete with us for gasoline sales and benefit from consumers' loyalty," Spinks said.

In another area of store operations, the company continues to evaluate lighting options with every new build or remodel. "Lighting remains one of the best ways to retain customer appeal," Spinks noted. "We're also challenging designers and architects to come up with 'green' options.We want to reduce our carbon footprint. We want to meet consumer demands while balancing our responsibility to the environment."

The last pillar of Spinx's success, according to its executive team, is the company's strong ties to its market. Among the organizations the retailer works with are the Muscular Dystrophy Association, American Red Cross, Salvation Army and The Red Ribbon Campaign, the nation's oldest and largest drug prevention program.

"Our charitable mission is 'Spinx and Kids: Mind, Body and Spirit, growing healthy kids where we live and work,'" Spinks said.

"The community has been good to us," he said. "Our boys were raised here and we want to make the community a better place for our grandkids. Community leadership is important for Greenville to keep its momentum, and Spinx has an obligation to help make that happen."

For comments, contact Barbara Grondin Francella, Senior Editor, at [email protected].