TravelCenters of America Focuses on Increasing Operating Efficiency
WESTLAKE, Ohio — TravelCenters of America Inc. (TA) intends for 2020 to be a transformative year, as new CEO Jonathan Pertchik has placed several site-level and corporate-level initiatives at the top of the company's agenda.
Site-level moves include expanding TA's franchisee network, enhancing its truck services program, and offering a consistent retail experience at the company's convenience stores, as Convenience Store News previously reported.
In detailing TA's areas of opportunity during the company's fourth-quarter and full-year 2019 earnings call, held Feb. 25, Pertchick also revealed that the retailer is "highly focused" on increasing operating efficiency through a greater emphasis and cultural focus on financial performance and cost control.
"These disciplines will allow the company to get more leverage out of its size and scale; they'll provide better visibility and accountability; and they will provide opportunities to improve the bottom line," he explained.
TA's selling, general and administrative expenses have "grown at an unsustainable annual growth rate of 7 percent" since 2012, according to Pertchik. At the same time, nonfuel sales have grown at a 4.6 percent compound annual growth rate and overall fuel volumes have declined by 2.8 percent
"The company is evaluating ways to reverse this historical trend. The process of effecting change is focused on creating an efficient and adaptable operation, and then designing the organization around that operation," the CEO said. "By focusing on process and operational efficiency, we intend to create a better-running organization with improved visibility and accountability, as well as improved financial performance."
As part of this initiative, TA is establishing a broad cultural focus on managing to budget at all levels. It is creating key performance indicators for each department. The process will streamline reporting and increase focus on the things that matter — "all tying into the mission, vision and values work the company is undertaking," said Pertchik.
Additionally, the company plans to create a centralized procurement function to drive economies of scale and pricing, provide more leverage in vendor negotiation, increase consistency, save time for operators and functional leaders to carry out their primary functions, and ultimately lead to substantial purchasing savings and a streamlined operation.
"Capital spending will be managed carefully and judiciously, with an initial focus on investment in the highest return in the capital-intensive areas of the business, including areas of opportunity within the IT department and more efficient inventory management," Pertchik explained.
"Low-cost, high-impact site improvements to key customer-facing areas like removing outdated loyalty program redemption kiosks, reprogramming the professional driver TV rooms, and improving the retail experience through better merchandising and pricing, as well as more efficient lighting, will also be priorities in 2020," he added.
At the same time, TA is evaluating nonperforming assets by site and by unit to determine non-strategic or unprofitable areas to potentially exit.
"I believe by continuing to pursue the growth initiatives that are underway, increasing efficiency and accountability in the overall organization, creating a financially centric and focused culture, and implementing stringent cost controls that we will be able to increase the profitability of the company as we move through 2020," Pertchik concluded.
Westlake-based TravelCenters of America has more than 260 locations in 44 states and Canada, principally under the TA, Petro Stopping Centers and TA Express brands. The company also operates nearly 650 full-service and quick-service restaurants and 10 proprietary restaurant brands, including Quaker Steak and Lube, Iron Skillet and Country Pride.