Pacific Profile, Pt. 3 PC&F Gets With the Program

New West Coast giant embraces Circle K while blazing own foodservice trail
[Editor's Note: This is the final story in a three-part series highlighting Pacific Convenience & Fuels, San Ramon, Calif., the one-year-old convenience store giant that purchased nearly 600 stores from ConocoPhillips in 2008.] SAN RAMON, Calif. -- When Pacific Convenience & Fuels LLC, San Ramon, Calif., took over ConocoPhillips' nearly 600 convenience stores in January 2009, it assumed not only the major oil's store network, but also the legacy of its conventional retail approach.

While the ConocoPhillips stores indexed high in some categoriestobacco generated [image-nocss] more than 40% of in-store salesthey left other, higher-margin categories, such as snacks, candy and foodservice, somewhat underdeveloped. Foodservice, for example, contributed only 4% of sales.

It wasn't for lack of a good model. ConocoPhillips was a major Circle K licensee. But according to Charlene Kovacsik, director of marketing for Pacific Convenience & Fuels (PC&F), the oil company did notfully participate in the franchise's programs. For its part, PC&F plans to take full advantage.

"We've taken the Circle K model and built with those particular categories, and applied them to our locations," said Kovacsik in an exclusive interview with CSP Daily News. "We're embracing the contracts, doing all of those programs, to really grow those incremental categories."

PC&F, which became a licensee with its acquisition of ConocoPhillips' retail assets, has 234 Circle K sites in California, Washington, Oregon and Colorado, and represents about 25% of the total franchise network.

Kovacsik said that with its sheer number of Circle K locations, PC&F wields a particular degree of influence on the development of the franchise. "I think we have the ability to influence some of the decisions in the marketing plans," she said. "Because we're so large, we can offer suggestions and direction we'd like to go. If you're a smaller chain or piece of the pie, you don't have that influence."

Mike Rials, director of area licensees in North America for Circle K Stores Inc., Tempe, Ariz., said that all franchisees have a say in program development and implementation. However, he recognized the import of PC&F's role within the franchise.

"PC&F is a sophisticated convenience and fuel retailer, having done business for many years," he wrote to CSP Daily News via e-mail. "Our experience with PC&F's retail expertise and participation in Circle K's overall marketing plan has been outstanding. PC&F has a well-established operating organization staffed with very talented people."

These include two former Circle K execs, both with more than 15 years experience at the franchiseKovacsik and Chris Wilson, PC&F general manager of operations.

The relationship benefits Circle K as well: PC&F contributes a large number of stores to Circle K's West Coast business unit, which increases the franchise's negotiating leverage.

Kovacsik said the flexibility of the Circle K franchise is one of its greatest strengths. While PC&F follows the majority of the franchise's programs, it has differentiated itself through its focus on categories that will deliver long-term growthnamely, foodservice.

PC&F's foodservice program currently includes packaged sandwiches from its distributor, Core-Mark International, as well as salads and fruit cups. This has helped push foodservice's contribution to in-store sales close to 10%, but PC&F would like to see this figure at 20% and beyond. An upcoming deal with quick-service-restaurant chain Quiznos, which will provide both packaged sandwiches in the c-store and restaurants adjacent to PC&F stores, is part of the means to this end.

"We believe in order to grow long-term, we really have to embrace foodservice and do something different with foodservice than the traditional store," said Kovacsik. "Convincing customers you have something they want to consume is very difficult in a c-store, and so part of that, we believe, is branding. We have the right brands in our stores. With that, we can encompass more offerings and improve our store sales, as well as our margins."

Read more about Pacific Convenience & Fuels' retail empire in the January issue of CSP magazine.

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