sheetz continues reinventing convenience

First to market in Pennsylvania with the convenience restaurant and E-85 fuel, the chain predicts strong growth in the coming years.

When it comes to delivering quality and value,few chains are as highly regarded as SheetzInc. The Altoona, Pa.-based chain has longbeen admired for its superiority in innovationand its diligent commitment to consumer satisfaction.

It’s not just that Sheetz has 326 stores in six states thatmake it a leader in the convenience channel; it is the totalpackage of goods and services, quality and value that is driving the business. Sheetz strives to constantly reinvent itself“and put the Sheetz of today out of business,” said companyPresident and CEO Stan Sheetz.

The privately held retailer generated $3.37 billion in salesfor the fiscal year that ended Sept. 30, ranking 87th on theForbes list of the largest private companies. The chain aims tobecome a more efficient retailer by 2010 so it does not have torely on fuel margins for its overall profitability.

At the Media Trade Show in August, sponsored by theRetail Merchants Association, Sheetz estimated his companyearns a margin of about 3 cents on each dollar of gasolinesold. Eating away at that profit are expenses, includingsalaries, operating costs and maintenance. “It is a high-volumebusiness, but not a high-profit business,” he said. “So we wantto be such strong retailers that we don’t need to rely on anyprofits from gas.”

Among the ways the company is doing that is its self-distribution center in Claysburg, Pa., being the first to market withconcepts like no-fee ATMs and E-85 fuel and its new convenience restaurant concept.

The $22 million distribution center opened in 2002 andconsists of 157,000 square feet allocated for dry storage,41,000 square feet for cooler space, and 26,900 square feet forfreezer space, and 10,500 square feet allocated for administrative office space. The center supplies all company-ownedstores and, by purchasing items in bulk, enables the companyto take advantage of the economies of scale enjoyed by megaretailers like Wal-Mart and Costco.

The convenience restaurant measures 10,000 square feet,about twice the size of an average Sheetz store. The facility hasa substantive food offer. A crisp new logo adorns the entry-way; Sheetz has updated its famous red logo with strips ofgreen and added the tag line, “Fresh Food Made to Order.”The store has two main entrances: one primarily for the restaurant, and another for the convenience store.

Multiple touchscreen order points gives customers theoption of ordering brick-oven pizza, paninis, gourmet saladsand other made-to-order foods. (Each “base” food item on thetouchscreen menu lists the individual sandwich componentsso customers can select exactly what they want on their fooditem.) To the left lies an open atrium equipped with Wi-FiInternet access, several big-screen televisions and an ampleseating area with wood floors, bistro lighting and other designelements typical for fast-casualrestaurants.

A made-to-order Sheetz Bros. Coffeez Espresso bar,manned by baristas trained in the art of crafting specialty coffees, adjoins the restaurant and c-store. Sheetz has raised the bar with its inline coffee station, offeringhigh-quality hot and cold coffees and coffee alternatives.

Sheetz began researching the projectas far back as September 2001. Thecompany certainly considered competitors inside and outside the conveniencechannel in piecing the store together, butno existing retail concept served as amodel for the prototype—the companystarted from scratch based on researchculled from customers, vendors andemployees.

As a whole, the convenience restaurant has an upscale, big city feel, butmanages to maintain many of the designelements Sheetz regulars have come toexpect. The store cost the company $7million to build out of the ground. Itarose from a Sheetz “Creation &Reinvention” project headed by SteveSheetz that involved practically theentire Sheetz executive team and tookthree years to realize from conceptualization to the opening last year. The company expects the convenience restaurantto revolutionize the convenience industry.

“While the Sheetz of today is seen asa gas station that sells good food, theSheetz of tomorrow will be seen as aconvenience restaurant that sells gas andconvenience items,” Steve Sheetz said.

Stan Sheetz provided Convenience StoreDecisions with personalized tours of itsstate-of-the art distribution center inClaysburg, Pa., and one of its new convenience restaurants. He spoke candidlyabout the company’s operations and theenormous success of the family-ownedconvenience chain.

CSD: Sheetz retail offering hasbecome synonymous with excellence.To what do you attribute yoursuccess?

Sheetz: I believe success has beendriven by our corporate culture. Wealways think we can do better or thatgood is never good enough. It is alsoembodied in the vision of our organization, which is to create a company thatwould put Sheetz, as we know it today,out of business. We continuously reinvent ourselves, and that means wealways have to get a little bit better ateverything that we do.

CSD: Are there advantages to being afamily-owned business?

Sheetz: The advantage is that we are aclosely run company, meaning we don’thave to act like a public company. Wedon’t have to make decisions based on aquarterly earnings estimate. I think thatenvironment can sometimes drive poordecisions. Being a private companyallows you to look more toward long-term investments and make decisions toensure the long-term success.

CSD: Clearly you have a large number of employees, and as we walkedthrough your distribution centeryou knew everyone by name. Asyour organization grows, how doyou maintain this family-likeatmosphere?

Sheetz: What you see is a result of hiring good people and treating them theright way. As a result, our employeesstay with us. We staffed the distributioncenter with people from our stores somany people there have been with thecompany for a long time. Whenemployees stay with an organization fora long time, you get to know them. Wehave quite a few company events, andwe make a point of spending time withpeople. Many of our employees havestayed with us for a long time, and Ihope that is a because of us treatingthem well, and them being happy working for us.

CSD: What do you deem your mostinnovative customer program?

Sheetz: Our focus is on the “on-the-go” consumer. It’s hard to put a pin onthe demographic because so many people are on-the-go. We focus on peoplethat value time, and we do not focus onone specific program, but rather createprograms around a large demographicof convenience shoppers. One of thebest things that we did years ago was toadd restrooms to all of our stores andopen them to the public 24 hours a day.This was difficult to execute becausecleaning restrooms is not something thatpeople like to do, but our customersreally appreciated that we thought oftheir needs.

The ultimate convenience consumer,“the road warrior,” knows that theycome to us for a clean restroom, fuel fortheir car and something for their belly aswell. That’s who we are catering to,that’s the customer that we want toattract and the one we want to keep.

CSD: Your distribution center is anexample of technological innovation.What technological advancementhad the greatest impact on yourbusiness?

Sheetz: There isn’t one advancementin technology that stands out more thanthe others. Rather, it was really ouremployees’ ability to integrate sevenmajor software systems that make thewhole process work from the store tothe distribution center then back to thestore—the ability to make that systemwork from beginning to end is reallywhere the biggest ban
g comes from.We’re to the point now where the technology at the store automatically creates the order; the order is processed by the distribution center andthen delivered to the stores. All of this is done electronically;all the invoicing is done electronically, and when the productsarrive at the store, we don’t even need to check them in. Thatcreates so much efficiency.

Over time, we’ve gained so much confidence in the systembecause it really works, but it can’t work without human intervention. This innovation frees up our management frompaperwork and allows them to spend time on what’s important—their customers and their employees.

CSD: The Sheetz convenience store has been in existence for 54 years givingyour company a great dealof history and experience.What recent experiencehad a significant impact onyour organization?

Sheetz: One of the largestimpacts occurred about sevenyears ago, when we institutedour employee stock ownership plan. Every employee that has been with the companyfor more than a year becomes a stockholder automatically.We do not ask our employees to contribute or pay for thestock in anyway. Rather, we give them the stock as part oftheir compensation and incentive plan to foster a vested interest in growing the organization. It’s a really great thing, as itgives people a sense of ownership because they actually haveownership. But more than that, it gives them a sense of pridein delivering the Sheetz brand to our customers.

The only way to increase the value of the organization isthrough taking care of your customers and your employees.

CSD: What advice do you have for the next generation ofc-store operators?

Sheetz: Any advice I would give relates to entering the retailmarket in general. I think the long-term horizon of retail is thatwhatever you are doing today will not be good enough fortomorrow. You’ve got to be willing to change in order to bereally successful; you’ve got to drive change. If you do notdrive the change then the market will. If you let the marketdictate, then you will always be behind the 8-ball. Somebodyis out there working hard to do it better, faster and cheaper.That is the biggest challenge in retail market.

CSD: What are some of the hottest selling products inyour store?

Sheetz: Cigarettes are still king, but the changes we are trying to drive revolve around foodservice. The change that thesupplier community is driving involves new products lineextensions, and it’s most pronounced in the beverage category. Hot and cold packaged beverages seem to be where theaction is, and there is a major shift occurring in carbonatedsoft drinks. The cold beverage market is going through somemajor changes. New nutraceutical beverages are receivinghigh customer demand and the bottled water category isincredible. Twenty years ago you couldn’t find bottled water,and now it’s one of the fastest growing beverages that we sell.

Our channel owns the single-serve beverage market, and Ithink some of the fast feeders are starting to wake up to thedemand. Recently, McDonalds announced it is going to startcarrying packaged beverages as opposed to forcing consumersto purchase a fountain beverage. This drives the point thatcustomers are demanding options. They want their beveragesand they are willing to pay forwhat they want.

CSD: Your company’s missionincludes the phrase “TotalCustomer Focus.” Can youprovide an example of whatthis means to you?

Sheetz: It’s a mindset that weask our employees to embrace. Itmeans the reason that we arehere is for the customer, and ifyou’re going to hustle for something, the reason to hustle is to satisfy the customer. For example, if there is a line at the checkout counter, then open another register and service the customer. It’s about being attentiveto what’s really important. I don’t mean to downplay our supplier partners, but when there is a vendor in the store and acustomer in the store at the same time, the priority is to servicethe customer.

CSD: Sheetz is involved with numerous charities. Doesyour company have a history of philanthropic endeavorsor was there a specific reason for your involvement inthese charities?

Sheetz: It’s always been part of our family culture to try andgive something back to the community. A long time ago, wedecided that our charitable efforts would be centered on children. As a result, we focus on children’s charities such as theSheetz Family Christmas or the Special Olympics. Ourresources go toward children and youth athletics. We havedecided to try and make a difference in the lives of children.

CSD: What do you want the industry to know about theSheetz company?

Sheetz: We just try to have fun and, if we’re lucky, make alittle money. We have been very active with NACS and shareour experiences. We’re proud to help. It’s a great organizationthat helped my father [company founder Bob Sheetz] makethe contacts that he needed in the industry that helped ourcompany develop and grow over the years. We would be adifferent organization had we not been involved with NACS along time ago. Through the association you get to know otherpeople in the industry. No one has a monopoly on great ideas.You get know people, see them and copy them. There is nothing wrong with copying a great idea. CSD

  • gracesoldier44

    Well, as much as I appreciate Sheetz I have a serious Gripe: I live near Downtown Altoona. They are starting to build a Sheetz just a few blocks from my home, and frankly I am not too happy about it!! There is a gas station down the street at Martin’s Gas Station. This new Sheetz is going to Cause my Neighborhood BUSY, and Many Folks I have asked have said they are NOT TOO HAPPY about it getting busier than it already has gotten near Downtown Altoona, Pa. The Other Sheetz gas station I heard is going up near the Logan Town Center: you guessed it: just around the corner there is a Get Go Gas Station which is Giant Eagle’s gas station. Sheetz is becoming the Walmart bully of Gas Stations I think!~ I rarely go to Sheetz, and for this reason I will Do my Business Elsewhere!!

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