TravelCenters of America's Reorganization Signals Next Step in Increasing Operational Efficiency

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TravelCenters of America's Reorganization Signals Next Step in Increasing Operational Efficiency

05/01/2020
TravelCenters of America CEO Jonathan Pertchik

WESTLAKE, Ohio — TravelCenters of America Inc. revealed a company-wide restructuring plan that includes a new hospitality department to oversee convenience stores, restaurants and gaming.

The move includes several leadership changes with the addition of new senior vice presidents for the newly created hospitality department as well as in information technology.

TA has also appointed a new senior vice president of corporate development, a new department initially responsible for delivering the company's reorganizational initiatives.

Key among these initiatives is the creation of a centralized procurement group to drive economies of scale in pricing, provide increased leverage in vendor negotiations, and ultimately lead to substantial purchasing savings and a streamlined operation, according to the company.

Other key initiatives are focused in areas of opportunity for realizing both costs savings and increased revenues, including merchandising in the convenience stores, over-the-road delivery, truck repair training and staffing, and IT systems.

They are part of new CEO Jonathan Pertchik's agenda to increase operational efficiencies, as Convenience Store News previously reported. Pertchik took the company lead in late 2019.

Leadership Changes

According to TA, the new leaders bring decades of "valuable experience as well as initiative, critical skills and new visions and approaches to these critical, but underperforming, areas of TA's business."

In addition, as part of its reorganization plan, TA is reducing its corporate headcount by approximately 130 and eliminating certain positions. These changes are expected to generate net annual savings of approximately $13.1 million in selling, general and administrative (SG&A) expense.

"Since joining TA in December, I, together with TA's senior level management, and under the oversight and direction of TA's board of directors, have been focused on developing a plan to cost-effectively optimize the strengths of our organization in order to transform the company," Pertchik said.

"By reorganizing and enhancing our leadership team, we have taken the first formal steps in executing TA's turnaround by repositioning management, redefining management roles and operating focus, and strategically adding new management who bring new and valuable experiences, skills and outlooks to TA, while also focusing on right-sizing historical SG&A growth, which has significantly outpaced revenue growth over the past decade. I am confident that the team that we now have in place is the one to take TA forward," he added.

The personnel moves are:

Kevin Kelly, senior vice president, hospitality — Kelly joins TA from Delaware North, a global foodservice and hospitality company, where he held leadership roles over the past 22 years. His most recent role was as president of travel hospitality, in which he led a subsidiary consisting of more than 250 foodservice and retail locations in 19 airports and oversaw the construction of 120 locations.

Dennis King, senior vice president, corporate development — King was most recently an associate partner at McKinsey & Co. King brings with him more than 15 years of experience leading transformations in retail and consumer companies, with a deep expertise in advanced analytics, strategic evaluation, and cost and revenue synergy realization.

Sandy Rapp, chief information officer (CIO)/senior vice president, information technology — Rapp comes to TA with more than 30 years of experience in software development, consumer products, IT consulting, financial and manufacturing industries. She most recently served as CIO of the Timken Co.

TA expects to see approximately $4.2 million in a one-time cost associated with executing the reorganization plan. That is comprised primarily of severance, outplacement services, stock-based compensation expense associated with the accelerated vesting of previously granted stock awards for certain employees and fees for recruitment of certain executive positions.

Westlake-based TA has more than 21,000 employees serving customers in more than 260 locations in 44 states and Canada, principally under the TA, Petro Stopping Centers and TA Express brands. It operates nearly 650 full-service and quick-service restaurants and 10 proprietary brands, including Quaker Steak and Lube, Iron Skillet and Country Pride.