"It's a major culture change for a company like ours that has not been focused on foodservice," he said during the William Blair & Co. 30th annual Growth Stock Conference yesterday. "If we don't have a fast, friendly, clean environment, [image-nocss] the shopper is not going to give us permission to sell them anything to eat on the spot.
"You will not have a fast, friendly, clean environment if your people aren't passionate about it, if they're not trained on how to deliver it. So there is a very significant cultural transformation process, a people-readiness process, a training process that's going on at The Pantry right now to help people understand what it's all about."
This retraining and re-acculturation is taking place as The Pantry begins reimaging its stores with a larger, designated foodservice area and an improved coffee bar, dubbed Bean Street, which Marks said puts coffee "front and center" in the stores.
"We're changing everything about coffee," he said. "If you don't win in coffee, you're not going to win in foodservice in convenience retailperiod. And we intend to win in coffee."
Among the changes The Pantry is making: The Product. "We have reduced the number of products that we had before down to the most important items. We have changed the roast. We have changed the throw weight. We are putting filtration systems into all of our stores [to improve the water]." Marks, an admitted "coffee snob," said the new brew is better than his previous favorite Starbucks. The Cup. "We've gone away from the white Styrofoam cup because consumers said they didn't like it. We've done a lot of focus groups; we studied the winners in the category. The Lid. The chain will now provide plastic tops with a resealable flap. The Coffee Pot. "We are moving out of glass pots.... We're moving to an urn dispensing system [because] consumers prefer it [and] it's less labor-intensive." Pricing. "We're changing our pricing strategy. We are going to be offering an opening price point [99 cents] that is more competitive in the market. Cup Sizes. "We are going into this with a four-cup set that we believe, based upon a lot of [research], will provide us with the right margin mix. But it's important for us to communicate that we have a 99-cent price point every day." Beyond the physical offer, Marks said upkeep of the coffee bar will be paramount.
"We have hospitality associates in some of our larger stores that will be able to hop back and forth between different responsibilities throughout the store, but during peak hours, they have Bean Street Coffee smocks on and they are taking care of that coffee area," he said, "because it doesn't take very long in the morning for a coffee area to get pretty worn."
Along with this will come an expanded foodservice offer focused on the breakfast, lunch and snack dayparts. (Click here to read more about The Pantry's "Fresh Initiative" into foodservice).
Promotions and sampling will help The Pantry get the ball rolling, Marks said.
"Every pumptopper right now says we have 99-cent coffee," he said. "The strategy is to deal them in with the offer on the coffee, and then trade them up with a bundling offer by combining with a breakfast sandwich or a fresh pastry, and then bring them back with some sort of a bounce-back offer. That's what we're going to be doing all summer long as we roll that out."
The rollout began in May with the reimaging of stores in the Raleigh-Durham, N.C., market and will move on to Charlotte next. "We'll have about 100 stores done by the end of 2010, and we will be through at least 25% of our stores by the end of 2011," Marks said.
The cost of the effort: "We anticipate an average investment of about $30,000 to $35,000 per store," he said. "We expect that this will contribute 2 to 3 points of total merchandise comp growth store by store."
Based in Cary, N.C., The Pantry Inc. is the leading independently operated convenience-store chain in the southeastern United States and one of the largest independently operated convenience-store chains in the country. The company operates more than 1,650 stores in 11 states.
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