MACS Converts to Circle K

Under a unique partnership with Couche-Tard, Mid-Atlantic Convenience Stores is now the exclusive developer of the Circle K brand across the mid-Atlantic.

By Erin Rigik, Associate Editor.

Mid-Atlantic Convenience Stores (MACS) and Alimentation Couche-Tard forged a new partnership in July where MACS will act as the exclusive developer for the Circle K brand in Virginia, Maryland, Delaware and the District of Columbia. MACS has already embarked on extensive remodels to rebrand its 71 company-operated stores to Circle K, complete with a new product array, staff training and uniforms, and special proprietary categories.

Richmond, Va.-based MACS is comprised of approximately 300 locations between its 71 corporate-owned sites and 230 wholesaler dealer-operated sites, which operate under various banners, including Uppy’s, On the Run and Tiger Mart.

Under the agreement with Couche-Tard, MACS will begin growing the Circle K brand in the four regions immediately. While the chain will now go to market touting the Circle K banner, MACS will remain an independent company with complete autonomy to operate, market and merchandise locally in each market.

Fuel branding also will remain unaffected by the deal in the near term. However, MACS plans to continue to evaluate fuel branding opportunities as they arise. Currently, more than three-quarters of its fuel network is made up of Exxon branded fuels, with the rest of its stations branded BP.

MACS began exploring brand development options back in the fourth quarter of 2011, seeking a proprietary brand development solution and a licensed brand strategy.

“Circle K had virtually no presence in this region, so the relationship is ideal as we get to build and operate the brand in our core markets,” said Dan Pastor, CEO of MACS. “The potential is unmatched.”

Store Conversions
At presstime, MACS was entrenched in the pre-construction phase of the multimillion dollar project with remodels planned for the first wave of company-owned stores in the middle of August.

The company plans to have the first group of remodels completed by the second week of September, with grand openings following in the third and fourth weeks of September.

“We’re breaking the stores into groups, each of which is made up of 14 stores,” said Brad Williams, MACS’ senior vice president of operations. “We’re already in the process of planning for the fifth group of stores, so we see this as a continuous process, but we’re starting with our company-operated locations first.”

The five waves will begin in the Northern markets of Virginia and Maryland and move south.

MACS will wait to reach out to its dealers with the option to join the Circle K brand until the fourth quarter of 2012. “We want to get our company-operated stores up and running, so they can see exactly what the value proposition is and by that time we’ll have all the programs very well defined and the plan for what we want to do in 2013,” said Derek Gaskins, senior vice president of marketing and merchandising for MACS.

Rebranding Process
Store exteriors and interiors are being remodeled simultaneously, with locations expected to remain open during the revamps. Inside, stores will feature warm earth tones, cherry wood grains and rock motifs above the cooler sections.

As stores convert to the Circle K brand, they’ll get an array of new category options, cherry picking from different parts of the country for the offerings that best fit the mid-Atlantic market area. The coffee bar, for example, will now offer Circle K Premium coffee, giving customers a more premium coffee experience and showcasing a signature, upscale look.

The addition of Circle K’s proprietary Polar Pop dispensed beverage program is expected to have a big impact on fountain, complete with dynamic graphics that call attention to the new offering. Roller grills will also receive a more prominent footprint, with stores now offering a minimum of two roller grills and some offering as many as four to better meet morning and afternoon daypart demands. Foodservice also will include a chilled prepared and hot to-go program.

“There is going to be a complete new look and feel across our stores, not only from a décor standpoint and an image and merchandising standpoint, but also our associates will be in new uniforms, our new training program is in place,” Williams said. “Combined, these upgrades will dramatically enhance our service level,” Williams said.

Among new products being leveraged by the MACS network is Circle K’s private label Crown tobacco brand introduced to market in the last 90 days. “Private label tobacco is something you need to move forward on in this industry and all these stores will have access to that,” Williams said.

Froster, Circle K’s proprietary iced frozen carbonated beverage product, will be another private label product now available to MACS’ portfolio of stores.

“You’ll see a lot of differences—definitely in the foodservice and frozen beverage categories, and the product assortment will change,” Pastor said. “We like to use the word ‘localize,’ because we like to tailor the stores to the local markets. We look to use either local products or national products that aren’t in our assortment today because we haven’t had the scale or leverage to get those product varieties in the past. This relationship affords us the opportunity to bring new and better products at better prices to our consumers.”

The Perfect Partnership
There are more than 3,400 Circle K’s in the U.S., but this will be the first imprint of the Circle K brand in the mid-Atlantic region of the country, said Dennis Tewell, vice president of franchising for Circle K, a division of Alimentation Couche-Tard.

“The advantages for us our twofold,” Tewell added. “For one, it establishes our footprint in the mid-Atlantic market, and being able to work with a sophisticated retailer that has a strong number of company-operated stores and a number of dealer sites makes this value proposition very compelling.”

MACS also has plans to develop and integrate a proprietary loyalty program within the Circle K branded stores.

Onward And Upward
As for its partnership with Circle K, MACS expects a positive response from dealers. “There are 146,000 stores out there and the largest chain is about 7,000 stores. Even some of the brands in this region may only have 30-40 stores and the whole chain may be 300-400 stores. That fragmentation, that population of stores with independent dealers creates a lot of opportunity for the brand,” Gaskins said.

MACS continues to evaluate acquisition opportunities to grow its infrastructure. “We are financially solid and poised for growth. We have the backing of a well-established private equity group that is focused on growth,” Pastor said.

“If you think through what are the branding options for independent c-store operators, there aren’t a lot in this region, so we think that will be an opportunity as well,” Pastor added. “Our scope will look outside and inside of the development area. We’re looking to grow and part of our strategy is growth through acquisition.”

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