CARY, N.C. -- The Pantry continues to build, remodel and close convenience stores as part of a store portfolio optimization strategy that it hopes will result in greater overall sales and growth.
"We completed 31 remodels during the third quarter, bringing the year-to-date total of 41," president and CEO Dennis Hatchell said during an earnings conference call Tuesday. "We currently have more than 50 projects under way, including remodels, QSR additions, new stores and a rebuild."
Since 2011, the chain of Kangaroo Express c-stores has closed 140 sites. "Typically these are stores that are at the end of their lease and no longer meet our profitability targets or just simply not a good strategic fit." Hatchell said.
Meanwhile, the company will put the bulk of its expected $95 million in capital spending for fiscal year 2014 into remodeling stores and building new sites.
"I'm encouraged by the results of our remodel program. ... We remain on track for 70 to 80 remodels during the fiscal year," Hatchell said. "We monitor each store and continue to refine our process as we push for the maximum impact from these investments."
On average, the chain is aiming for a 5% to 10% lift in sales in its remodeled stores, Hatchell said. "I would say of the 31 that we completed in quarter three, we are pretty pleased with that performance," he said. "We have stores that obviously way outperform what we are looking for and we have a few that are still missing, but we're on every one of them and making adjustments to pull them along. All in all, we're meeting the targets."
Regarding future growth, The Pantry is "actively evaluating new-store and remodel opportunities, and we are interested in acquiring both individual stores, as well as chains," Hatchell said.
On July 18, the company acquired a 5,500-square-foot store in Conway, S.C., the second store acquisition of the year. "It's a modern and large-format store [with] strong foodservice offerings that will further strengthen our position in the Myrtle Beach market," Hatchell said.
Here are some other store-development statistics from the third-quarter earnings call (read "No Rain on The Pantry's Parade"):
- Year-to-date, The Pantry has completed six new quick-service restaurants, bringing its total amount to 221. It currently has 13 QSRs under construction or in the planning stage and is on track to add 15 new QSRs for this fiscal year.
- The retailer has two stores under construction and expects them to open before the end of the year. "They will be similar in design and product offerings to our recently opened store in Charlotte," Hatchell said. That store "has been open since February. It features a Subway with a drive-thru, indoor/outdoor seating, as well our Aunt M's proprietary QSR brand."
- Regarding acquisition targets, "the stores will need to be at least 2,500 square feet or larger or have the ability for us to expand them," Hatchell said. "That would give us the ability to put in QSRs as discussed."
Based in Cary, N.C., The Pantry Inc. 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 Aug. 6, 2013, the company operated 1,559 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner.
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