Refreshing The Pantry

Remodeling 160 locations a year, with changes possibly affecting entire store

Angel Abcede, Senior Editor/Tobacco, CSP

CARY, N.C. -- Building on its "Fresh Initiative" foodservice program that began over a year and a half ago, The Pantry officials said it will redesign its locations, potentially reworking the entire store in an effort to build inside sales.

In the chain's third-quarter sales call, Dennis Hatchell, president and CEO of the Cary, N.C.-based company, said it will remodel 10% of its network or approximately 160 stores a year until it completes the job.

When asked to clarify what the difference was between its Fresh Initiative program and the remodels, Hatchell said the Fresh Initiative focused on specific offers deemed "fresh," while the remodeling program "addresses all of the merchandise in the store, because we need to have products that are relevant to a specific store site."

He also pointed out that the Fresh Initiative was rolled out over entire markets vs. analyzing what needed to be in each individual store. The remodeling program, he emphasized, will be store specific. He said the chain now has the scan data to execute a more customized store set, noting how they've identified at least eight, possibly 10, distinct demographic types.

"College and university customers are different from beach and lake-resort customers," he said. "Interstate customers are different from rural customers and then you have the more obvious [demographics] like Hispanic customers … we need to [diversify] our merchandise so that we have the product that each of these lifestyles require when they come through the door."

The company is also identifying new impulse items that store associates can upsell, as well as expanding its quick-serve restaurant (QSR) formats. Hatchell said it is pleased with its relationship with sandwich franchisor Subway, Milford, Conn., and hopes to grow that business. The chain currently has 138 Subway locations.

"We do have stores that have plenty of size for us to expand our QSR business," said Berry Epley, vice president and corporate controller for The Pantry. "More importantly, we need to make sure that the site's going to be productive and that the format is going to work. So we're first looking for corners that have the most potential, then we're looking at whether the size is appropriate or not.

The chain is hoping to further develop the synergy between its QSR strategy and its own proprietary foodservice, having had success with bundling drinks with offers like hot dogs. "You can see during the quarter our proprietary foodservice has become positive, 32.4%," he said. "It's been seven straight quarters that we've had increasing [comparable store sales] from proprietary foodservice, so a lot of those programs are working."

In terms of its rollout strategy, Hatchell said it will focus on its highest-performing stores first and work its way back.

(See Related Content below for current financial results.)

The Pantry Inc. is an independently operated c-store chain with 1,589 stores located throughout the southeastern United States. In recent months it has been divesting itself of underperforming locations and expects to have 1,575 by year's end, according to Epley. The stores are in 13 states and operate under select banners, including Kangaroo Express, its primary operating c-store brand.

Angel Abcede, CSP/Winsight By Angel Abcede, Senior Editor/Tobacco, CSP
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