Foodservice Front Burner at The Pantry

Shifting strategy expected to "close gap" created by changing sales patterns, competition

The Pantry Kangaroo Express Convenience Store Foodservice

CARY, N.C. -- For decades, sales of fuel and cigarettes have buoyed sales and generated repeat business at convenience store retailer The Pantry Inc. But with the advent of fuel-efficient vehicles and a decline in the number of smokers, the Cary, N.C.-based chain is looking for new ways to drive customer traffic, reported The Triangle Business Journal.

To make up for declining sales in those categories, the company is focusing more strongly on foodservice. CEO Dennis Hatchell told the newspaper that foodservice accounts for 11% of merchandising sales, while the national average for c-stores is 17%.

That leaves The Pantry with some catching up to do, said the report.

"Our goal is to close this gap over the next several years, and by doing so, will help to offset the declines we are seeing in cigarettes," Hatchell said. "We believe our branded QSRs help differentiate our store from other competitors."

Noting that stores with restaurants are among the best performing, Hatchell said that the company plans to open 70 additional quick-service restaurants over the next two fiscal years and added that "we would like to ramp up the pace at which we add new QSRs over time."

"There are strong competitors that operate within our markets that we are aware of and monitor closely," Hatchell said. "We track new competitive threats, and we are now proactively working to maintain our market share at those locations where new competitors arrive. ... In addition, we want to be sure that not only does The Pantry have to be aware of our competitors, but that they also have to be aware of us."

Foodservice became one of several points of contention during the public company's protracted board of directors battle with a sizeable group of "dissident" investors who objected to the chain's past performance and its strategy and direction, as well as to the existing board's competence. The current management, in turn, disputed the qualifications of the group's board nominees.

The investors staged a "coup" and succeeded in seating its three nominees on the nine-person board, so any new strategy and direction will need the cooperation of a newly constituted board.

In materials presented to shareholders before the election, the investors group favored a plan of more rapid QSR expansion. The existing management favored a more cautions, measured approach. The actual new strategy will likely be influenced by both the traditional and dissident views.

Click here to view CSP Daily News coverage of The Pantry's board battle.

Based in Cary, N.C., The Pantry is a leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country. As of March 13, 2014, the company operated 1,537 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner.

Click here to view the full Triangle Business Journal report.

Part of CSP's 2014 Convenience Top 101 retailers