It was the equivalent of a solid B, a grade many college students might study their hearts out to achieve. But when Sheetz Inc. scored 86.3% in the CSP-Service Intelligence Mystery Shop back in 2005, the company took notice and committed to some serious homework.
This year, Sheetz moved to the head of the class. “The survey really ticked us off; it got us going,” says Travis Sheetz, vice president of operations, of the 2005 experience.
The results six years ago were surprising to the broader c-store community, which for about two decades had consistently ranked Sheetz among the industry’s elite, in large part because of its robust foodservice business and a strong family-run culture.
The Sheetz gang, spanning three generations, saw a hole exposed in the 2005 mystery shop. In short, Sheetz was a great brand with a great motif and product, but with only a good to very good execution of fundamentals.
A grueling six-year effort has changed everything. According to the 2011 CSPService Intelligence Mystery Shop results, Sheetz not only was the only company among 10 major regional chains to top
90%, but it also ranked among the highest in the five major categories—customer service, exterior and interior cleanliness, merchandising and employee appearance. It also finished in the top three or four in virtually all 27 metrics examined in more than 110 specific shopping episodes, covering all time segments. (For a detailed report on the mystery shop, see Samantha Oller’s story on p. 45.)
Yet for the 394-store, Altoona, Pa.- based Sheetz, it’s about more than improving scores. It’s about the passion behind this family-run company’s efforts to better serve its customers.
Customer Care
Ask Travis a question about any Sheetz Inc. strategy—foodservice, cleanliness or stock—and his answer will circle back to one thing: customer service.
Travis’ enthusiasm, echoed by other company executives, resonates on the ground level. During guided and unguided store visits, there’s a communal energy in the air, with regular customers chatting easily with employees about local gossip and town matters.
That friendliness is found throughout Sheetz’s six states of business. “Friendliness, specifically providing greeting and parting remarks, is absolutely critical to a mystery shopper’s indicating a likelihood of recommending a location to others,” says Marie Boucher, market research specialist for Charlotte, N.C.- based Service Intelligence Inc., which conducted the mystery shop in partnership with CSP. “There is just no other single metric in my experience that has a higher correlation with our shoppers’ positive reactions to locations.”
Indeed, on five questions centered on the cashier’s interaction with the consumer and overall professionalism, Sheetz scores 95% to 100%. Only two other chains—Kwik Trip and QuikTrip— achieved such numbers. Not surprisingly, each is a two-time winner of the CSPService Intelligence Mystery Shop.
Smiles and friendly service are just part of the Sheetz equation, though. Back in that 2005 mystery shop, Dan McMahon, executive vice president of operations, took results of the company’s lower placement in speed “very, very heavily,” according to Travis. “That was one of those things that through growth and over time sort of came off our radar.”
First, the company’s IT team coalesced to accelerate credit transactions. “Literally,” says Travis, “by the time you hand [the clerks] the card and they swipe it, that receipt is printing out immediately— and you’re able to get in and out of the store very quickly.”
Next, Sheetz implemented a “3-to- 1” ratio of customers to open registers. “That’s a metric that our employees can identify, and it will tell them when they need to go up front.” Some employees, he explains, initially felt it was a weakness to ask for the help. “So we want to strip that away. That’s been a challenge, too, but we’re much better.” To further usher in a speed-and-service culture, the company now assigns a store manager to the front registers to quickly address any issues that might arise. While there’s some allowance for issues elsewhere inside or outside of the store, Travis says, “Unless there’s something we want them specifically to take care of, we want them front and center.”
To accomplish this, Sheetz took some paperwork and other management tasks away from management responsibilities, and grouped other tasks for the managers to do at the end of the shift. Because the managers are at the front of the store and can see everything that’s going on, they also can direct labor more effi ciently to meet customer needs.
Other areas where Sheetz scored high marks are also tied directly or indirectly to the company’s intense customer focus: exterior cleanliness, in-stocks, merchandising and signage, and offering loyalty card membership.
Outside in. When discussing Sheetz positively, just about all of the mystery shoppers mentioned cleanliness (specifi cally the forecourt) and availability of pumps/forecourt size. “Outside, the parking lot areas were clean,” one shopper said. “The pumps were clean and properly maintained.”
At higher-volume stores and stores with large exteriors, Sheetz has a dedicated facilities employee, focused on outside and inside cleaning for an entire shift. At lower-volume stores, the duties are split among employees as part of a checklist or “shift walk.”
The company’s emphasis on the exterior, which Travis calls “the front porch,” is driven by a desire to conquer preconceived notions people might have of gas stations. “We just try to look more like a foodservice place, and the outside is as important as the inside,” he says. “And what you see when you fi rst drive up, that fi rst impression—it’s hard to change that.” The company scored a 96.7% on exterior cleanliness, and an also-impressive 95.5% on interior cleanliness. Steve Sheetz, chairman of the board, says that first impression also applies to inside the store for customers on the go—particularly in the restrooms. Signs in the restrooms encourage customers to call the company if they aren’t satisfi ed. “We want that feedback and it’s a constant challenge, because our restrooms are used heavily,” Steve says. “Our restrooms are a big part of why people stop at Sheetz.”
Stocked and ready. Another strategy to enhance the customer’s experience is “focusing heavily on 100% in-stocks.” And that is obviously working, because Sheetz scored 100% on having the fountain drink/slushy area stocked and 100% in having the coffee area stocked. For coffee, the company has implemented a beverage hostess who keeps coffee stocked and fresh for four hours every morning. “They also greet customers, and they’re very recognized by our customers,” Travis says.
The company scored 98.2% in having the cooler doors stocked, a more than 3% difference over the nearest competition. The company’s own customer service shops, which drive employee bonuses, are behind those efforts. “We look at all the slots and how many you have and you get points deducted based on how many empty slots you might have,” Travis says. “We do the same thing with candy.”
Seeing Signs. “Holy Sheetza Pizza” signs at the stores offer a medium pizza and a 2-liter soda for $4.99. Another lifesize sign will “triple dog dare ya’” to try a frozen Sheetz Bros. Coffeez specialty beverage—courtesy of the company’s “highly creative” internal brand team put in place several years ago. The company came in second for merchandising and signage on the mystery shop, with a score of 94.6%. “We have a lot of fl avor and entertainment in our marketing and in our signage,” Travis says.
Lauding Loyalty. At press time, the company was putting the finishing touches on spreading its MySheetz loyalty card companywide (after testing for nearly two years in North Carolina and Ohio). Sheetz also had the highest score (38.74%) of cashiers mentioning loyalty/rewards programs or company credit card, likely driven by the new loyalty program (although Sheetz has both). “Employees really jumped on that,” Travis says. “We incented them in the beginning, and it’s a natural part of their greeting at the register.”
The program’s savings include 3 cents off every gallon of gas, and offers centered on Sheetz Bros. Coffeez and foodservice. When the company launched its Sheetz-branded peanuts about a year ago, it loaded a free bag onto every loyalty customer’s card. “It’s a good way to sample free items you want them to try,” Travis says.
On a side note, the company has been looking more at doing private-label items. “We have with our kitchen the ability to do much more of it, so we’re researching it more than we ever have,” Travis says. “But just because you can put your name on it doesn’t mean you can always do it cheaper. Our primary business is the retail business, not the manufacturing business.”
Food For thought
In 2008, Sheetz opened that 140,000-square-foot kitchen commissary, The Sheetz Bros. Kitchen, in Claysburg, Pa., to deliver fresh foods seven days a week. Again, that effort goes back to customer service. “We had realized that we had our people doing so much more than serving customers in the store,” Travis says. Those duties included baking bread, cookies and other items, and portioning out dressings for foodservice.
“That all went to the kitchen, because we can do all of that in one place and then send those items out to the store—already ready to go,” he says. “That’s a speed benefi t at the store level and a service benefi t, because now our people don’t have to be as much distracted by all that labor.”
The company also in July announced plans to open another commissary in North Carolina, which will serve that state’s stores and also those in southern Virginia and West Virginia.
Right in the center of a store near Sheetz’s Altoona headquarters, Travis points to a large refrigerated case. There, Sheetz, known for its substantial madeto- order (MTO) selections, showcases “ready to eat” foods premade at the commissary. Introduced about two years ago, RTE (ready to eat) also segues back toward the company’s speed initiative—but the challenge is not to be the stereotypical prepackaged foods of ’70s c-stores. “It’s always a risk,” Travis says, “because you’re going back into time to a business. But I think what we had to do and what helped us do it is that we were proven to be a good freshfood provider, and that gave us license to go back into that kind of world.”
The RTE case also allows the company to sell healthier products, with fresh-cut fruits and vegetables readily visible to customers. While the items are selling well, he says, “from a healthy standpoint, the ready-to-eat case has really helped us, given us a lot of credit in that world.”
Douglas Mills, director of foodservice sales and development, says, “By offering some healthier options, we feel we can better extend ourselves to a clientele that may not always [have been] identified as the ‘typical c-store shopper.’ ”
Sheetz carries staple healthier items such as turkey subs, signature made-toorder salads and steel-cut oatmeal with sliced apples. “But we’ve also recently gotten into more unique items in our ready-to-eat cases, such as melon fruit trays, hummus with crisps and sugar-free gel bites for the more health-conscious, on-the-go consumer,” Mills says. In an industry in which tobacco continues to dominate despite efforts to diversify, Sheetz is the anomaly and perhaps a barometer for where the convenience channels need to pivot. Food and beverages account for close to 50% of company sales. And while having healthier options has enhanced those sales, across from that RTE case is one filled with doughnuts and bakery items, also delivered from the commissary. “We believe that it’s beneficial for our consumer to have a wide selection of choices in both healthy and comfort-food menu options,” says Mills.
Having both signature MTO kitchens and RTE options at the stores, Mills says, “allows customers to choose from either a healthier item or a treat or indulgence if they like, such as chili cheese dogs or an Oreo Cream Smoothie. The same guest may fill either occasion, in some cases depending on time of day, or day of the week—or just the mood they may be in that day.”
The company continuously revamps both offerings, Mills says, rotating seasonal items as well as keeping with current trends in the marketplace. Recently, the company introduced a healthieroption EatShmart! Line, debuting a Tus- can Beef Wrap with less than 400 calories.
Another recent addition was that Sheetza 12-inch pizza for $4.99—an inclusion that is as much defensive as it is to grow sales. “This pizza dinner platform was something that other QSRs have had recent success in. We also thought it may be giving our current regular guests a reason to go elsewhere for their dinner options,” Mills says. “We wanted to make sure we captured that buying opportunity.”
Growing Forward
By the time this issue of CSP is out, Sheetz plans to have 400 stores—opening about one a week throughout the summer. It’s part of a dramatic growth strategy that sees the company hitting 500 around 2015–2016.
The numbers are less about braggadocio than they are to extend the company’s $4.5 billion in sales and retail reach, which currently stretches across Maryland, North Carolina, Ohio, Pennsylvania, Virginia and West Virginia. The company has a $125-million capital budget, which Joe Sheetz, CFO and executive vice president of store development, plans to grow to $150 million in future years.
“We are not driven to hit some ‘magical’ size, and we want to grow only as fast as our ability to continuously execute our mission allows,” Joe says. “We are operators, and our name is on the building. We do not manage the sites as a portfolio of assets; we try to manage each of them like they are our only store.”
And unlike scores of other accomplished companies that are growing through rapid acquisitions, Sheetz will stick with its tried-and-true ground-up model. “We are willing to acquire ‘dirt,’ but not operating stores,” Joe says. Available stores typically don’t fit the company’s foodservice model, which requires substantial room for a kitchen, freezer space and other equipment. “Also,” he says, “our culture is very important to us, so we like to hire our own employees, train them well and promote from within rather than ‘acquire’ these human resources in a transaction.” In total, fiscal 2011 will bring 24 new stores, and he explains what to expect of those: “New stores will typically include seating and larger restrooms. If the site is big enough, you will see a car wash, a rear entrance to access additional parking and a drive-thru.” Some further details:
“Dabbling” in drive-thrus. By the end of 2011, there will be eight Sheetz drive-thrus. Calling it a “proven concept” at QSRs and coffee chains, Travis says it’s more of a challenge at c-stores, because of the gas pumps and the flow of the lot.
“It just makes things very busy and you’ve got to be careful on how you design it. “It’s also a challenge for us, because of our platform,” he continues, “which means every sandwich that we give you is made to order and we have thousands of combinations. We are committed to our made-to-order platform, and so we’re giving up speed because of that.” Travis says Sheetz drive-thrus are about offering convenience for customers, such as the mother with the car full of kids or the latenight craver out in pajamas. “What we’ve found is that there’s a market out there that really appreciates the convenience in drivethrus, and it has nothing to do with speed.”
Rebuilds. According to Joe, other growth initiatives include “tearing down and starting over” on stores that are less than 4,000 square feet, turning them into stores bigger than 5,000 square feet that emphasize foodservice. The company is doing six to eight of those a year, and Joe estimates it will take five to seven years to complete. “However, it is like painting the Golden Gate Bridge,” he says. “Once we get to that point, we will have other stores that have ‘aged’ and will probably have an entire new crop of rebuild candidates; we plan to always be rebuilding some percentage of the total.”
Remodels. The company is also remodeling some locations from “white block” to the company’s now-standard red brick, and putting in additional foodservice equipment and larger restrooms, at a cost of about $500,000 to $750,000 per site. Joe says the company is on track to complete 10 of those in 2011, with plans to ramp that up to 25 to 30 per year and complete the project in five to six years.
Altogether, the company’s plans annually over the next five years are to build 25 new stores, rebuild six to eight stores and remodel 25 to 30. Plans for growth, of course, don’t stop after those five years.
“Going forward,” Joe says, “I think you will see us continue to build 30 to 35 new sites each year in the six states where we already operate. We are not pushing the boundaries much right now, as much as we are filling in markets where we already operate. …There is still plenty of opportunity in our current markets.”
Inside the Box
Growth will come from both a larger portfolio and stronger year-over-year returns. Anchoring in-store performance and customer service will remain a focus for Sheetz. “Volume is a good thing and, obviously, you don’t want to get cleaner or faster by losing volume,” says Travis. “So the biggest challenge is going to be being able to get faster and still grow volume. And that’s why we’re trying to do things like ready-to-eat sandwiches and why we’re trying to create efficiencies in the kitchen and with the drive-thru. “We have to find a way to serve more people at a faster rate. It’s easy to do one or the other; it’s very difficult to do both, but that’s what we expect of ourselves.”
Working for Sheetz
A sign in the Murrysville, Pa., store says the company is hiring at $8.75 an hour. Pennsylvania’s minimum wage is $7.25. A glance at the Sheetz website shows that the company pays “in the top 10% of all like retailers in the industry,” along with providing many benefi ts, such as college tuition reimbursement, an employee stock-ownership plan, company-matched 401(k) and a bonus program. At press time, the company had 14,500 employees, and turnover was at less than 50%, compared with the 60% industry average reported in CSP’s NACS State of the Industry issue.
And of the six states that Sheetz operates in, it is included as “Best Places to Work” in four. (Maryland and West Virginia do not yet participate in the Best Places to Work program, from the Best Companies Group.) Some of the factors behind Sheetz’s remarkable people culture:
Bonuses and awards. Employee bonuses are based on regular customer service shops and quality assurance (QA) audits that happen twice quarterly—both of which focus on the customer’s experience. “In our internal shops, the focus is on speed up front, as well as service,” says Travis Sheetz, vice president of operations. “Our shop is really an attempt to mimic what a customer might be experiencing when they’re inside your store.” Shops also might include in-stocks, interior and exterior cleanliness, foodservice presentation and accuracy and speed. In addition to bonuses, awards are given to top-scoring stores during a year-end celebration. “So it’s highly competitive within our culture. One thing we do know for a fact is that our customer service shops that we do drive behavior, without question. If we decided we were going to measure anything you could think of in that shop, you would see the next day everything changes in those stores.”
Training. At Sheetz, the standard training program is about 80 hours, consisting of several modules of computer-based and store training to ensure everyone is trained in all aspects of the stores: point of sale, foodservice, making specialty coffee drinks. Employees are assessed by each module before they can work in those areas.
What to Wear. In the mystery shop, the company topped the list in employee appearance. Still, employees are allowed to wear jerseys of their favorite teams on the days they are playing. Travis says, “What we’ve tried to do is balance having a uniformity and having certain standards that we require, and then, on the other hand, letting people feel relaxed in what they wear to work.
“It’s a new world out there. These aren’t the days where people were wearing the ties and the aprons to work anymore,” says Travis, who at 41 is a refl ection of the company’s generation change and the stores’ evolving customer base “It’s important for them to express themselves through what they wear, and so we try to allow some of that.”
The Road Warrior
It evolved from my conversation with a gentleman on the plane to Pittsburgh. Being from the Midwest and never having experienced a Sheetz, I was curious about what he thought of Sheetz stores.
“I have one friend who goes there all the time for their sandwiches; he thinks they’re the greatest,” he said. “For me, they have a clean bathroom and a good cup of coffee.”
When I told him I was driving two hours east from Pittsburgh to Altoona, and hoped to stop at one, he laughed and said, “You’ll see plenty of them along the way.
” The “game” I invented for myself from there was simple enough: Stop at every Sheetz location on my journey, to see fi rsthand what made this company this year’s CSP-Service Intelligence Mystery Shop winner. I approach my fi rst Sheetz ever in Murrysville. I’m struck by how many people are hanging out at the tables outside. The mood is festive, like an ice-cream social, rather than a parking lot. I realize I have no cash on me, and notice the “surcharge-free” cash station. Now, that’s just nice. Later, Travis Sheetz, vice president of operations, explains to me that they do that as a traffi c generator. “People would come here as a destination to get money, and then spend some while they’re in here,” he says.
And as if to prove that point, after getting my cash, I apprehensively approach the ordering kiosk I have heard so much about. As I scan through the plethora of items (many such as fryz, sliderz, saladz and fl atbreadz), the man at the kiosk next to me is in and out in seconds; he’s clearly done this before.
I get nervous and quickly add macaroni and cheese as a side, and close out my order. Macaroni and cheese? “What kind of road warrior eats macaroni and cheese?” I chide myself. (To my delight, it fi ts neatly in the rental car cup holder—although I fi nish it before I get going, because it is piping hot and good.) In front of me is a middle-aged man in a long ponytail and leather vest (there is a unique collection of families, biker types and teenagers, all who seem to just somehow blend together as a “Sheetz community”), and there are many ahead of him. He teases the lady behind the foodservice counter. “Denise, how about No. 780?” She laughs, and asks him how he’s doing tonight. It is now my turn to pay. The fellow behind the counter is young, probably in his 20s. He smiles and is polite, but moves along at a steady pace because the store is full at the late-ish hour.
I spot three other Sheetz locations along the way on my 111-mile journey, and stop to fulfi ll the responsibilities of the game. And the experience is pretty much the same at each. A jovial atmosphere in the outside seating, customers joking with the clerks, a substantial product and clientele mix—and smiling politeness for me, the Sheetz newbie.
On the Grow
Sheetz plans to grow to 500 stores by 2016. The heaviest growth is planned for North Carolina and West Virginia, although about 40% will fill in the other four states, according to Joe Sheetz, CFO and executive vice president of store development. At press time, the current store count was:
211 Pennsylvania
58 Virginia
35 West Virginia
31 Ohio
31 North Carolina
28 Maryland
Total 394
Talking ‘bout My Generation
There are three generations in management at the Sheetz family business. Louie Sheetz, vice president of marketing, says Sheetz is in “very private” discussions about succession plans throughout the organization. “We have made it a much more conscious effort to think about what it takes in every position in the company, from director position up to the front-line leadership team,” which includes about 40 people, he says. Current efforts include looking at job qualities and skills that each position involves. Of Adam and Ryan, the two latest family members to jump on board, Louie says, “There’s two potential leaders for our company.” But just because your last name is Sheetz doesn’t mean you work there. “Although they’re encouraged to learn and work for the company, they’re encouraged to fi nd a career path that fi ts them; that’s not necessarily going to be a fi t for everyone,” Louie says. Growing up Sheetz also doesn’t mean you won’t work hard. “People in the organization might think you’ve got it easy. But there is a healthy pressure to work harder than anyone else, and prove your contribution with your work,” Louie says. “We don’t dwell on the fact that we’re a family business; we’re a business and we love what we’re doing.”
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