Cold beverages and a friendly staff have made Plaid Pantry a fixture in Portland.
Long-serving employees get to know regular customers like family. “The store they work in is their store. The customers will say exactly the same thing. It’s their store,” said Jonathan Polonsky, chief executive of the 106-location convenience-store chain based in Portland, Oregon. “We have managers who have been in the same store for 15 or 20 years. They take ownership of it,” he said.
- Plaid Pantry is No. 71 on CSP's 2023 Top 202 list of convenience-store chains by store count.
Plaid Pantry is many things to many people who shop at its c-stores regularly, but the urban market doesn’t attempt to deliver everything customers might want.
In fact, it doesn’t do delivery at all. It offers an inexpensive cup of coffee but doesn’t try to compete with Starbucks, Peet’s Coffee & Tea or gourmet coffee shops.
It simplifies labor needs by skipping foodservice. It tried and failed at roller grills and yogurt machines in the 1980s, when ampm owned Plaid Pantry. In about nine months, it went bankrupt, and it took years for the chain to regain stable footing, he says. Now the company is owned by management and a few investors who helped with the company’s recovery, but Polonsky still remembers what went wrong.
“I’m not trying to compete with QSRs [quick service restaurants],” he said. A grab-and-go deli cooler stocks sandwiches, burritos and breakfast sandwiches, and the stores stock plenty of candy, chips and snack items.
Amazon.com lockers at Plaid Pantry locations draw e-commerce customers to the stores to pick up ordered goods from other merchants. Polonsky also is testing an electric-vehicle (EV) charging stall at one location. If the experiment works and the charger pays for itself and lures customers to the site, he might install 30 or 40 more, said Polonsky, who joined Plaid Pantry in 2012 as executive vice president and became CEO in 2018 after serving as chief operating officer and president. While he hasn’t jumped on the EV bandwagon personally, he’s willing to give chargers a try for business reasons.
14 Cooler Doors
For now, Plaid Pantry’s 14 cooler doors and four freezer doors are what keep customers coming in the doors of the urban retail company’s 97 nonfuel sites. “People use us as their refrigerator. We see the same people two and three times a day,” he said. Besides 92 Portland-area neighborhood sites, Plaid Pantry has a legacy store in Seattle and other locations in Salem, Oregon, and Vancouver, Washington.
“Our calling card is our cooler doors. That allows us to merchandise way more SKUs (stock-keeping-units) of non-alcoholic beverages and wine and beers,” Polonsky said. Plaid Pantry stocks two or three times the number of cold beverages as 7-Eleven stores, he says. Butter, eggs and other refrigerated staples are located in part of one cooler.
The urban markets’ beverage variety includes Coke and Pepsi products, bottled water, flavored and sparkling waters, energy drinks galore, Kombucha and other natural drinks, lemonades, and a good selection of beer and wine, he said. “That’s our calling card—that selection.”
As Polonsky considers properties suitable for new stores, he knows what to look for, but he’ll only commit to a five-year lease to start. “We’ll know in five years if we’re going to keep it for 40 or 50 years, or I screwed up, I was wrong,” he said.
Site Criteria
For a 2,600-square-foot site located in an area with residential traffic, he wants average daily traffic of at least 25,000 at an intersection with a traffic signal and 600 or more double-income households living within a half mile of the site. If a competitor is located nearby, he’ll need 1,200 dedicated households in a growth area—or he might keep looking. “A lot of our folks get to us on foot or on bike. They walk to our stores way more than other convenience stores you might talk to,” he said.
A classic 1970s-style 2,400-square-foot nonfuel location in a strip center will work if the cost is low and competition is lacking. “We don’t do as well in affluent areas typically. C-stores generally, we thrive best in underserved communities for banking, food, groceries. A lot of our customers get public assistance,” he said.
He also knows what to watch out for: supermarkets, drug stores or mass merchandisers on an opposing corner or within a mile if they offer fuel, and a Costco or Walmart with fuel within three miles. A contaminated site also will kill the deal, unless it has received a “no further action” letter.
Operating a convenience-store chain isn’t the simplest business, and Polonsky, who began his retail career at the May Co. and joined Plaid Pantry about 12 years ago, is a believer in testing the waters before diving into a long-term lease. Fortunately, many Plaid Pantry markets already sit on prime retail sites. “We have stores that literally have been in place for 50 or 60 years on the exact same corner that you would never be able to replace the real estate,” he said, because of permitting.
Without foodservice, Plaid Pantry’s labor needs are more manageable. While all but two locations are open 24 hours, single coverage at night is sufficient. “We try to schedule deliveries at night so those people are utilized and there’s traffic in the stores and from a security standpoint at all hours,” he said.
Security Stance
Shoplifting and robberies rose during COVID-19, he said. So did basket sizes, while customer counts stayed about the same.
Security is always a concern, Polonsky said. A robust surveillance camera system helps law enforcement, he said. “I think it is somewhat of a deterrent. It helps with petty shoplifting,” he said. “We make sure to keep cash low so at night there’s never more than $50 in the till.”
Employees receive recurring training in security every six months. “We train our folks to de-escalate an issue. We preach there’s nothing in the store worth anybody getting hurt over. If someone even hints at wanting to steal something, we let them do it. We pay a price for that from the standpointof shrink, but I’m willing to take that as opposed to someone getting hurt,” he said.