Kum & Go Stayed the Course
CEO describes how convenience retailer survived, grew during hard economic times
WEST DES MOINES, Iowa -- Kyle Krause, CEO of Kum & Go LC, said his company's growth during the financial crisis of the last five years was a little like explorer Roald Amundsen's historic trek to the South Pole 100 years ago.
"You focus on a strategy, and you go 20 miles a day in good times and bad times. We treated our business like a 20-mile march. We want to grow consistently over time," Krause told The Des Moines Register in a Q&A excerpted below.
The company's revenues grew by close to $1 billion from 2008 to 2013 and employee ranks expanded by 934 people in those five years as part of Kum & Go's trek out of the recession, said the report.
Q. How do you account for the company's moderate growth?
A. We had a shift in strategy. We moved toward building new stores and divesting older stores and focusing on food sales. That shift made us better from a sales growth standpoint.
Q. How was Kum & Go's market share affected during this time?
A. There were 10 to 12 cities in Midwest and central United States where we were redeveloping assets and building new stores, so we were certainly gaining share in those markets. We also sold 22 stores to Casey's in back-to-back years. Over the five years, we divested 66 Kum & Go stores in rural areas because we were shifting our focus to building stores in urban markets like Des Moines, Omaha, Colorado Springs and Tulsa. We were not adding stores in rural areas, which is where Casey's is strong.
Q. Are there ways in which Kum & Go benefited from the financial crisis?
A. Yes. In commercial real estate, the good corners (where Kum & Go likes to locate) stopped going up in price. And in the markets we're in, we didn't see a drop in commercial real-estate values. The values there plateaued and stopped going up.
It was also a little easier to build stores. The construction trades were looking for construction to happen because it had dropped off significantly. Cities didn't have as many permits and development activity occurring. During that time, we built as many stores as we've ever built. Last year we had a record year, when we built 43 stores.
Q. Did you have to trim your workforce during the financial crisis?
A. Kum & Go is 54 years old. We've never had a layoff and we continued to give raises and made our 401(k) matches during the five years. We added 1,000 associates to our workforce. We grew from 3,700 to 4,700 people over those five years. You have to manage a business from a long-term standpoint. We want to grow consistently over time. If you're doing that, you're not going to add in good times and take away in bad times.
West Des Moines, Iowa-based Kum & Go has more than 420 c-stores in 11 states (Iowa, Arkansas, Colorado, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Dakota and Wyoming).om