This isn’t your father’s Pilot Co. Or even Jimmy Haslam’s father’s.
In fact, for a decade now, Haslam, the second-generation, former CEO of Pilot Co., has been on a quiet mission to make over the company his father established with a first store in Gate City, Va., in 1958.
“[Haslam] was looking for an IT/digital transformation. Pretty much, IT (information technology) was not a focus of the company up to that point,” says Mike Rodgers, chief strategy and information officer for Pilot Co., who joined the company in 2015. “Jimmy … knew that the new age was coming where data, digital technological advances were going to rule the day.”
As a result, the largest fuel retailer in the United States, formerly known as Pilot Flying J, has been working intently to change its spots. Those changes have included:
- Embracing data and technology.
- Investing in store growth.
- Adopting foodservice.
- Changing its name and ownership structure.
- Welcoming a younger leadership team.
CSP talked to several of those new leaders to draw a clear picture of where this new Pilot Co. is flying next.
Flight Time
“The work our team has put into our 60-plus-year legacy has prepared us for what’s ahead as we set out to advance our next phase of growth,” Haslam said in early 2020.
“It was a vastly different company when I joined,” says Jason Nordin, chief operating officer, who came to Pilot in 2011. “I mean, we had a website, but even the website was difficult to try to figure out what the company actually did.”
The signs that Pilot was ready for something different were anything but subtle.
In October 2017, investment holding giant Berkshire Hathaway bought a 38.6% stake in what was then Pilot Flying J for $2.76 billion. Soon after, Berkshire Hathaway Chairman Warren Buffett, known as the Oracle of Omaha, called the acquisition “the one sensible stand-alone purchase” it made that year, noting “the company has a smart growth strategy in place.” While having little involvement in strategy at Pilot Co. thus far, Berkshire Hathaway’s acquisition includes plans to become the majority owner, with an 80% stake, in 2023.
That same year, the company announced a $485 million investment to renovate its existing locations over the next five years, focusing on “replacing our signs and canopies with our new logo and updating site and canopy lighting to all LED, enhancing the exterior look and feel of our stores, including adding stone, tile and stucco to our exteriors, replacing floor tiles, ceilings and lighting where needed.”
Flying High
Pilot Co. ranked No. 12 on CSP’s 2020 Top 202 list of the largest c-store chains in the country and No. 10 on Forbes’ list of America’s largest private companies, with $29.5 billion in revenue. Here’s a collection of other accolades and recognition from the past year.
Also in 2017, Pilot Flying J, already the largest diesel-fuel retailer in the U.S., moved in a new direction strategically, creating an energy division that would focus on midstream fuel infrastructure, such as crude hauling, water disposal and other ancillary businesses.
“We got to the point where we started looking around and saying, what could be the next growth vehicle?” Haslam told Transport Topics News at the time. “We didn’t want to do something that was totally different. So we took a step back and thought, what could we do to leverage our current platform?”
The company brought in commodities ace Shameek Konar to lead the effort, overseeing the petroleum strategic efforts, as well as Pilot Co.’s entire fuel portfolio. In just four years, Konar and his team executed 14 midstream acquisitions, accelerating the company’s growth.
In November 2019, Pilot Flying J launched the One9 Fuel Network, a nationwide fueling network aimed at smaller fleets. The network gives professional drivers and trucking companies access to personalized credit and reward benefits with a variety of travel-center brands. As of the end of 2020, the network includes 241 Pilot and partner locations.
The name change came in January 2020, as the company aimed to bring all of its related brands—travel centers, truck service centers, the fuel network, logistics and more—under one corporate identity.
“With the growth on the energy side of our business, there was just a sense that it was larger than running truck stops,” says Nordin. “From a branding perspective, the business is now broader and we were looking for this umbrella. The simple name and branding just fit.”
Then in July, as Haslam looked to step away from the day-to-day oversight of Pilot Co., he announced that he would become chairman of the company as of Jan. 1, promoting Konar, most recently chief strategy officer, to CEO.
“Since Day One with Pilot in 2017, Shameek has shown his dedication to advancing our company and the industry,” Haslam said at the time. “His knowledge of the energy sector, including expertise in the acquisition, development and operations of infrastructure assets and resources, and his deep appreciation of Pilot’s culture and values are a few of the reasons why we chose him to be our next CEO.”
Industry observers are confident Konar has the character and instinct to drive Pilot Co. to a new level.
“He’s a very sharp guy,” says Ken Shriber, managing director and CEO of Petroleum Equity Group, Chappaqua, N.Y. “With Shameek at the helm, they have a nice, clear trajectory, somebody who’s smart and knows the business and knows how to make money.”
Every Type of Driver
A significant piece of that drive is in technology. Of late, Pilot has focused that innovation on drivers, both professional and recreational—an app for every type of driver, as Rodgers put it. For truckers, innovation means giving them a way to get things done while they’re on the road: enabling mobile fueling, reserving parking, and scheduling and paying for showers, for example.
Other advancements come in loyalty. The Axle Fuel fleet card for professional drivers, for example, was introduced in May, while an updated myRewards card and mobile app for consumers launched in April 2019 with the addition of Push4Points, a promotion that allows customers to increase the number of rewards points they earn at the touch of a button.
“All you have to do is push the button [to boost your points],” Rodgers says. “Then, we can email you targeted offers through our MyRewards platform. That’s good for the guest and very good for us, because now if we’re trying out a new product or service, we can offer buy one, get one free to certain guests,” for example.
But the real innovation for the company is in how it’s using data to better meet its customers’ needs: data to drive things like store design, technology and product set.
“Our digital footprint is really targeted at utility for the professional truck driver. Everything we do is designed to make their life easier and to help them do business with Pilot,” Rodgers says. “So whether it’s offers or loyalty, it’s all driven through our digital properties. That’s the touchpoint.
“We can cater our offerings on a segmented basis, to each population,” he adds. “We’re going to try and target directly to what is most important to our guests. So if you’re engaging with us through our app and our digital properties, it’s going to be beneficial to you, from an economic standpoint and from a utility standpoint.”
People Persons
But the makeover of Pilot truly began with a change of personnel. It was about 10 years ago that the company started a concerted effort to bring in eager experts from other industries who could apply what they knew to the c-store and travel-center channel. That included:
- COO Nordin, who joined the company in 2011 and came to Pilot Co. from Whirlpool Corp.
- Rodgers, who joined Pilot in 2015 after years at Saks Fifth Avenue.
- Brian Ferguson, a veteran of customer experience, who came to Pilot in 2016 after years with The Children’s Place and Abercrombie & Fitch. He is now chief merchant at Pilot, overseeing retail merchandising, food and beverage, brand, marketing and driving inside sales.
“We always say, ‘Right person, right place,’ ” Ferguson says of the executive team’s philosophy. “Bringing experts in from other industries who know what good looks like and are able to quickly solve problems. … We’re just blessed with all this talent from across different industries and have been put into a position to say, ‘Look, go solve it. Go do it now.’ We have the resources; we’ve just never prioritized that work before.”
That culture started with Haslam and carries over to new CEO Konar.
“We joke, there’s no chance to accumulate in a short period of time the knowledge that Jimmy has about our network,” says Nordin. “But as Mike mentioned, it’s all about getting the best people on the team. [Konar] supports us. He pushes a collaborative team-solving, problem-solving perspective.”
He now is building his understanding of the retail side of the business.
“We are a retail company, a technology platform, an energy company, a logistics company, a customer-service provider and an incredible real-estate network that has been meticulously built over 62 years,” Konar tells CSP. “In my new role as CEO, it is my goal is to lead initiatives in all of these areas to continue to build a better, more efficient and innovative company for our team members and guests.”
He adds that the day-to-day retail experience “will always remain a top priority.”
“We will keep focusing on providing safe, clean, convenient and friendly places to stop with more options and more value for our guests. From new technology—like contactless payments, in-app utility, the fuels of the future—to food, beverage and product innovation, we will continue to adapt to the changing market and to meet the evolving needs of our guests.”
Konar’s challenges, observers say, are going to be keeping volume and margins up and figuring out a way to tie in sales inside the stores. “A truck driver spends $300 or $400 on fuel at a pop; so you want to keep them coming back,” says Shriber. “Improving services and food offerings inside the stores and marketing to drivers around that would generate loyalty and sales uplift.”
On Konar’s side in that challenge is longtime retail President Ken Parent.
A familiar face in representing Pilot Co. in the c-store industry, Parent is moving away from day-to-day responsibilities but remains a constant in the company, serving as senior adviser to Konar and Haslam, providing guidance on strategy and key priorities for the company.
“Ken is famous for [saying], ‘Don’t get bogged down by small opportunities. Focus on the biggest opportunities,’ ” Ferguson says. “In food and beverage, we launched an incredible [chicken] wings and tenders program this past year, and a burrito and taco program, as well. … It’s Ken’s drive to say, ‘Listen, I think you can double or triple that number, and I think you can move two or three times faster than you’re currently planning on.’”
Parent says he’ll continue to offer such sage advice.
“As we start this new chapter at the company with Shameek as CEO, I look forward to serving as a special senior adviser to Shameek and our leadership team,” Parent told CSP, “providing coaching and guidance on strategy and high-level projects to support the sustained growth of the business.”
Coffee, Tea or …
One key focus for the team will be “new innovation within our box to maximize our business,” Ferguson says.
Pilot’s current store prototype, for example, very much makes foodservice and beverages top priorities. The exterior of a 6-month-old store in Rochelle, Ill., is adorned with 4- to 8-foot-high images of pizza, salads and sandwiches, sending the message that the store is more than just gasoline and coffee. On the pole sign, the PJ Fresh Marketplace signage stands just as boldly as the Pilot fuel signage.
Inside the vaulted-roofed store, a Fresh & Delicious foodservice counter to the left serves up pizza, chicken wings, burritos and more in a quick-serve environment. These made-to-order options are supported by packaged sandwiches, salads and snacks in a large open-air cooler front and center in the store. While there is counter space and equipment for self-serve roller-grill and soup, they currently go unused in observance of pandemic precautions.
To the right of the entrance are familiar center-store snack and candy aisles, as well as two aisles dedicated to trucker and travel products. Up front is a multihead soda fountain with 32 drink options, plus flavor shots. Other dispensed beverage options include six frozen drinks, four bubbler juices and three iced teas, as well as a 360-degree coffee counter stocked with four brewed coffees, bean-to-cup options, cold-brew dispenser and cappuccino.
The back and far-right wall of the store houses a cold vault of 12 nonalcohol doors and three stocked with beer.
With truck traffic directed to diesel pumps at the rear of the store, a back entrance provides access to a laundry room, showers and a TV/game room (currently closed because of the pandemic).
“We’re focused on providing the newest, most innovative products and being first to market,” Ferguson says, referring to the chain’s new reliance on data. “We have the ability to go fast and go bigger on major product launches.”
In today’s culture of technology and always being available, even when on the road, Ferguson points out that many historically trucker-specific products increasingly have a more commercial use for all consumers.
“There’s no reason why you shouldn’t be able to find at a Pilot everything you’d be able to find at a Costco or Sam’s Club, or a Walmart, CVS, Walgreens,” Ferguson says. “We have the ability to bring those things, whether it’s toys or clothing or novelties, cell accessories, electronics. There’s just tremendous ability to bring in newness that would compete with any of those retailers. … So we’re really focused on newness, innovation, competing with those retailers and going bigger than everybody else.
“That’s super important,” he continues, “to really differentiate our assortments and our promotions and our pricing.”
Similarly, to meet consumer needs, Pilot partnered with Uber Eats long before the pandemic to make its products available to consumers without them coming into the store.
“We have great food and great beverages, awesome pizza and wings. So why shouldn’t we be able to serve our guests when they’re at home, or folks who might not visit a travel center that often?” Ferguson says. “The collaboration has gone really well. We continue to look at opportunities to smartly expand the platform.”
In fact, in 2018, speaking at CSP’s Outlook Leadership Conference, Parent hinted that if delivery continued to gain traction among consumers, Pilot might consider flipping some stores into fulfillment centers for delivery.
That hasn’t happened yet, but Ferguson says delivery “has been a hit in some geographies and has not in others. No different with any new capability or any new line of business. So we continue to tweak.”
With so many avenues opening to the chain, one challenge is finding the right place to invest time and money, Ferguson says.
“For the total company, we have a tremendous amount of priorities and demands on our time, especially with the pandemic,” he says. “So we want to implement delivery where it’s smart and where it’s a value-added activity, not just for our guests, but also for our store operators.”
For all the investment in store remodels and the growth in its energy division in recent years, the retail side of the business has been slower to grow. The company’s last major acquisition was of the Flying J chain in 2010. That deal grew the company to about 550 stores. In 2020, Pilot Flying J ranked No. 13 on CSP’s Top 202 list with about 750 stores. Currently, Pilot Co. owns and operates 724 retail locations and supplies more than 11 billion gallons of fuel per year through a network of nearly 1,079 retail and fueling locations, including dealers, licensees and cardlocks, in 44 states and six Canadian provinces.
Ferguson says that slow but steady growth pace will continue in coming years.
“As the largest network of travel centers in North America, we will be focusing on strategically growing our footprint across both the Pilot Flying J and the One9 Fuel Network and upgrading several of our existing locations for a more consistent experience,” he says. “Over the next few years, we are planning to build a select number of new locations and will look to bring in partners to offer a growing variety of stops to our network.”
It’s the continuation of a steady growth formula that should keep Pilot Co. on top of the travel-center industry for years to come.
Solving Its 'Biggest Crisis'
The success of a company is measured not only by how it operates in good times, but how it faces adversity. In his recent book “Co-Piloting: Luck, Leadership and Learning That It’s All About Others,” Pilot founder James Haslam II called the diesel fuel rebate scandal that rocked the travel center chain in 2013 “the most difficult event we have ever faced” and “the biggest crisis of our company.”
Echoing others in the company, Haslam says the FBI raid on Pilot’s Knoxville, Tenn., headquarters on April 15, 2013, took him completely by surprise. “The FBI had been investigating a group of Pilot Co. sales executives regarding an alleged practice sometimes called ‘jacking the discount,’ ” he wrote.
The FBI served the company with a federal affidavit charging it with negligence regarding rebates that sales executives promised but did not give to trucking companies that had partnered with Pilot as their exclusive fuel provider.
Pilot cooperated with the authorities, investigated the allegations and conducted an internal audit, putting measures in place to prevent the abuse from happening again, including restructuring the sales team, electronically automating rebates and establishing the position of chief compliance officer.
It settled a class-action lawsuit filed by several trucking companies for $85 million. It paid back what the firms had been shorted, plus 6% interest. And it settled with the Justice Department, pleading guilty to all the charges and agreeing to pay a $92 million fine. Nineteen employees admitted to participating in the scheme; 14 pled guilty, three were convicted and two were found not guilty. In October, the U.S. Court of Appeals for the Sixth Circuit in Cincinnati overturned the three convictions and in late December reaffirmed that ruling.
Pilot learned from the experience, Haslam said, and the corrections put in place have made it a better company. “Our customer base has increased tremendously since the incident,” Haslam said. “It was not the path I would have chosen, but I know beyond a shadow of a doubt that we are a much better company because of it.” —Greg Lindenberg