Thorntons Honored as 2011 Convenience Store Chain of the Year

Outstanding service, a sincere dedication to its team members and an ongoing commitment to convenience retailing earn the Louisville, Ky. chain the industry’s oldest and most prestigious award.

By John Lofstock, Editor.

The late Steve Jobs, CEO of Apple Inc., once said, “A lot of companies have chosen to downsize. We chose a different path. Our belief was that if we kept putting great products and great service in front of customers, they would continue to open their wallets.”

Thorntons Inc. is the kind of company Jobs would appreciate.

While the convenience store industry has experienced quite a bit of merger and acquisition activity over the past two decades, Thorntons has gained a reputation as a special company that cares about its team members, customers and the communities it serves. Even during the recessionary climate of the past two years, the Louisville, Ky. chain has never missed an opportunity to delight its customers, honor its team members and grow the business.

For its hard work, outstanding customer service and its commitment to retailing excellence, Convenience Store Decisions is proud name Thorntons the 2011 Convenience Store Chain of the Year.

Thorntons is a most deserving winner. The chain operates 162 stores and exhibits outstanding leadership that begins with President and CEO Matt Thornton. The family-owned business, co-founded in 1971 by Matt’s father, James Thornton, is also celebrating its 40th anniversary this year.

“As a company, Thorntons is focused on being the best—the best employer to our team members who offer the best service to our customers in the best stores in the industry,” said Matt Thornton. “We are extremely honored to receive the Chain of the Year award because it offers recognition of the hard work everyone in the company puts forth every day. It’s a total team effort, and I’m proud of each and every team member that helped us earn this achievement.”

Culture of Convenience
During our due diligence phase in selecting this year’s award winner, the one thing that stuck out both in talking with the folks from Thorntons and others in the industry is the contagious culture the company has created internally that quite literally permeates out to the customers it serves.

“The success of our team members is critical to the success of our company,” Thornton said. “One of our missions is to recognize and reward the outstanding team members serving our customers. As our team members are satisfied they take pride in serving customers. This drives new business, but it also builds a contagious culture that allows us to connect with our customers.”

The proof of Thorntons’ achievements lies in the numbers. Thorntons’ annual revenues have surpassed $1.7 billion and the company in 2010 ranked No. 250 among Forbes 500 largest privately held companies.

Among its key plans to grow the convenience store business over the next 12 months are:
• To expand E-85 fuel were viable. In 2010, Thorntons expanded the availability of E-85 to 20 locations from seven.
• Continue refining the category management process.
• Expand the fresh food offering following the successful implementation of a roller grill program with Sara Lee and new fresh food offerings in 2010.
• Focus on hot, cold and frozen dispensed beverages to improve the offering and meet consumer demand for unique products.
• Develop an annual general manager conference to recognize key team members and suppliers.
• Implement a general manager compensation program to closer align and reward general managers for profit growth.

Providing Leadership
As the business grows, Thorntons is spending a great deal of time on becoming an employer of choice throughout its five Midwestern states. As the company has grown, it has also matured in key operating areas like recruiting and retaining top employees.

“Over the years we began to hold ourselves to a higher level of leadership, meaning that we recognized that we had to have our employees’ interest at hand at all times and dedicate a good amount of time toward developing the leaders of tomorrow,” said Tony Harris, Thorntons’ vice president of operations, who has been with the company for 17 years. “It is very much our belief that if we serve our team members the right way, they in turn will serve our customers well.”

As part of this strategy, Thorntons has instituted a comprehensive hiring process that includes the addition of regional human resources managers that oversee employee relations. “Historically, when we had a leader that wanted to make staffing changes they had the liberty to do that without seeking an opinion from others,” Harris said. “They weren’t doing their part to develop a team. They may have just been turning people over and hoping that the next team members would be better. Today, we take a team approach to make sure everyone is doing their part in the development process to turn out great team members.”

Thorntons’ leaders follow the process very closely. If a district manager comes across a team member that needs to improve, they are provided extra training. “We take an active interest in making them get better,” Harris said. “It may not always work out, but it has helped our turnover numbers get significantly better.”

The numbers tell the story. As training and responsibility has improved so has employee retention. At its worst five years ago Thorntons suffered from turnover of 157% for front counter personnel.  Today, it comes in at just below 80%. For general managers—the folks who are responsible for running the convenience stores—turnover is an impressive 13%. Store manager turnover is just 24%.

Servicing Customers
As a company, Thorntons has always spent a lot of time in the field conducting regular store visits. “But during these visits all we really did was point out the opportunities for improvement and not celebrate the things we do really well,” Harris said.

To rectify this oversight, Thorntons instituted Plan to Win (PTW) visits, a focused team member rewards system that gives team members an opportunity to earn PTW points that can be redeemed for prizes, such as gift cards and other prizes.

For example, if a store scores 100% on a surprise visit, every team member in the store earns 100 PTW points. If there are some issues that need to be resolved and a store earns a score of 82%, team members still earn 82 PTW points. Individuals can earn additional points during these surprise visits for things like being the top suggestive seller or displaying outstanding service.

“We use the points system as a way to balance the good with the bad in terms of where opportunities still exist for improvement,” Harris said. “It has driven the team at each store to want to earn 100% on every visit and, by way of this strategy, they are focused on what is most important and that is to serve our customers.”

This focus has been protracted to hone in on the company’s top five in-store priorities that employees have the most control over in order to provide a top-notch shopping experience. They include:

1 Serving customers. Speed of service is a top priority. “Customers want to be able to get in and out quickly,” Harris said. “We measure that and constantly try to improve service times.”
2 Value pricing. Gas prices are guaranteed to be posted accurately.
3Sparkling restrooms. Each Thorntons’ store features an elegant restroom open and available 24 hours a day.
4 Spotless foodservice areas. Whether it’s the beverage area or the food counter, stores are clean and inviting.
5 Superior merchandising. All items on the shelves are fronted, faced and 100% in-stock at all times. Suggestive selling is a big part of this strategy.

“Team members are trained to always try to sell the customer one more thing,” Harris said.

Foodservice Focused
As the industry evolves, Thorntons is placing greater emphasis on foodservice. Cigarettes still account for a high percentage of in-store sales, a number the company looks to offset with a more expansive foodservice menu.

Stores have a heavy focus on dispensed beverages and fresh foods. The Thorntons distribution center in Louisville produces the proprietary Quick Café line of doughnuts, sandwiches and wraps, salads and fresh fruits for 44 stores daily, said John Zikias, Thorntons’ vice president of sales and marketing.

The company also operates a Dunkin’ Donuts franchise that operates in 32 locations in Kentucky and Indiana.

Over the past year, Thorntons worked with a number of its supplier partners to review all of its commissary products, which led to the development of more than 15 new sandwiches, 20 snack items and five new salads. After the first three months, Zikias said, commissary sales in units increased 125%.

“We are learning a lot about what we need to do better and where the opportunities exist,” Zikias said. “For example, we are analyzing each of our markets to make sure we have the right product mix. As we evolve the fresh food offering we are very focused on quality and consistency. We understand where we need to go with foodservice, but we have to take the time to get it right.”

Continued Growth
To drive impulse sales on food and other items, Thorntons also developed a store clustering program to identify each store by consumer demographics and location type—such as whether it was located in an industrial, commercial or residential neighborhood—then marketed each unit appropriately. Plus, it introduced the sales counter bump out program, which allows each store to easily introduce new products and fast-selling impulse items near the point of purchase.

Despite the economy’s struggles, Thorntons is thriving and investing in its infrastructure. After building about 10 new stores in 2010, Thorntons—contingent upon the permitting process—is planning to build 8-12 new units a year for the foreseeable future. With regard to rebuilds and remodels, the company expects to upgrade 10-12 stores a year as well. Growth markets Thorntons is focusing on include Nashville and Chicago.

“Those have been pretty consistent numbers for us year after year, and I don’t expect them to change anytime soon,” Thornton said. “We have every reason to be optimistic. Over the past 12 months our in-store same sales growth jumped above our targets, fuel gallons sold also came in well above our targets and margins were stable. Business has been good at Thorntons.”

Giving Back
As business has picked up, so has Thorntons’ charitable efforts. The company supports dozens of local and national charities like The Salvation Army, United Way, Girl Scouts and Big Brothers Big Sisters of America.

In 2010 Thorntons also created its first internal charitable organization, Champ Cares, to allow team members to contribute to their co-workers who have been directly impacted by a severe hardship, crisis or a catastrophic incident that was beyond their control. The charity is just one more way Thorntons is taking care of its people.

“When you look at our company and you see the tenure that we have on our team and the culture that we have created, you will see that people love working here and they love serving others. That’s what makes us truly unique in this industry,” Harris said. “Without having a good group of people, you can have the best real estate and the best marketing plan in the world, but if the customer doesn’t have a delightful shopping experience, they are going to find someplace else to shop. From top to bottom, we have the best group of people all of whom share a common purpose, which is to be the customers’ favorite place to shop when they are on the go.”

Thorntons Inc.  At a Glance

Thorntons was founded in 1971 by James Thornton in Louisville, Ky. His son, Matt Thornton, was named president and CEO of the 162-store chain in 2001, while James remains chairman of the family business.
Headquarters: Louisville, Ky.
Annual revenues: More than $1.7 billion
Markets of operation: Kentucky, Illinois, Indiana, Ohio and Tennessee
Growth Markets: Chicago, Nashville, Tenn.
Fuel Brand: Thorntons
Food brands: Thorntons Quick Café, Dunkin’ Donuts
Honors: 2011 Convenience Store Chain of the Year, ranks No. 250 among Forbes 500 largest privately held companies, Finalist for Republic Bank’s “We Care Awards in 2010 and 2011, Finalist for Business First (Louisville) Business of the Year in 2011
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