TravelCenters of America Inc. CEO Jonathan Pertchik
WESTLAKE, Ohio — In the closing days of 2019, Jonathan Pertchik took on the role of CEO of TravelCenters of America Inc. (TA). As the calendar changed to 2020, leading the company's transformation was at the top of his agenda. Three months later, the COVID-19 pandemic started sweeping across the country.
"I expected something crazy in a good way, meaning lots of opportunity to improve and change. I came in with that mindset. Then, three months later, this 100-year storm of COVID comes along and no one could have expected that," Pertchik told Convenience Store News following the company's second-quarter 2021 earnings call, held on Aug. 3.
When COVID hit, TA had just started the investigative and evaluative phases of its transformation journey — trying to sort out what was broken and what could be better. Just weeks before the global health crisis took its grip on the United States, Chief Financial Officer Peter J. Crage joined the TA executive leadership team and the company's plan to move forward began to take shape. However, soon after, the retailer was faced with "the gut-wrenching decision to furlough some 4,000 people," according to Pertchik.
"That is a really hard thing to think hard about. If we hadn't, we would have been in bad shape. We took that short-term step and continued marching down the path making various changes," the chief executive recounted.
In May 2020, two months into COVID, TA undertook a corporate restructuring. "Imagine trying to find, let alone onboard, new SVPs [senior vice presidents] and upper-level leaders at a time when you couldn’t be near each other," he said. "It's amazing if you think about it; the challenge of finding and onboarding people, and getting everything to come together."
And it is coming together, as evidenced by TA's most recent earnings. Compared to its prior-year second quarter, TA reported adjusted net income of $29.7 million for Q2 2021, a 176-percent improvement; adjusted EBITDA of $73.5 million, a 61-percent improvement; and adjusted EBITDAR of $137.1 million, a 26-percent improvement, as CSNews previously reported. Results also ticked up compared to the same period in 2019.
"Last year was really just a year of planning and preparation, getting the right team in place, getting our balance sheet sorted out, raising some liquidity, getting some improvements to how we operate, getting a centralized procurement function. Those were just some of the basic, foundational things. In many ways, we got things ready as opposed to [making] a lot of changes," the CEO explained.
This year, TA is switching gears and executing on its plans.
The retailer strives to evaluate its business processes to find ways to better serve the needs of its guests. One of the key pillars is knowing who the guest is and making sure the guest — whether it's a professional driver or a motorist — is at the center of everything it does. As guests' shopping needs change, TA will adapt as well to serve their needs. As part of this, TA is focusing on the guest journey at its stores, and this has led to a new reflow initiative.
Additionally, TA has identified diesel fuel as a high-margin opportunity. The company created a commercial division to combine its fleet, fuel and truck service into one operating unit.
Although new issues have cropped up as the pandemic continues — such as labor pressures and supply chain disruptions, which were happening all along but are now exacerbated — Pertchik remains optimistic about the company's future. He says TA is still only in the early innings of its transformation journey.
"We fight those good fights every single day. It just goes into the bucket of blocking and tackling. But it's not hurting us financially, it's not hurting us operationally. It's slowed some things down, but it's really slowing down the speed at which we are able to harvest the opportunities. But it's not hurting our performance because we have so many fundamental changes afoot that are starting to bear fruit," he told CSNews.
Westlake-based TA has more than 270 locations in 44 states and Canada, principally under the TA, Petro Stopping Centers and TA Express brands. The company is committed to sustainability, with its specialized business unit, eTA, focused on sustainable energy options for professional drivers and motorists, while leveraging alternative energy to support its own operations. TA also operates more than 600 full-service and quick-service restaurants and nine proprietary brands, including Iron Skillet and Country Pride.