At a Glance: Rutter’s Farm Stores
Rutter’s enjoys a long, proud history tracing its roots in Central Pennsylvania all the way back to 1747. The company broke ground on its first convenience store in 1967 and today retails more than 100 million gallons of fuel annually throughout Pennsylvania’s York, Lancaster, Adams, Cumberland, Dauphin and Franklin counties. In 2005, Rutter’s Holdings Inc. was formed as a parent company for its three distinct operating companies: Rutter’s Farm Stores, Rutter’s Dairy and M&G Realty. Now in its third generation of management, each division remains family-owned and operated.
Rutter’s Leadership Team:
Superior leadership, remarkable service and a dazzling foodservice menu are the hallmarks of the convenience store industry’s extraordinary chains. Following these guiding principles, Convenience Store Decisions is proud to honor Rutter’s Farm Stores as the 2010 Convenience Store Chain of the Year.
At a time when many industry marketers are struggling with exorbitant credit card fees and remarkable competition, Rutter’s has not only persevered, but pushed forward with an exquisite new convenience store design and invested millions since 2008 to upgrade its entire 55-store network.
Rutter’s, which supplants Nice N Easy Grocery Shoppes as Chain of the Year, is the 21st winner of this prestigious award, considered the gold standard in convenience retailing. Like Nice N Easy, Rutter’s is the second consecutive chain with less than 100 stores to receive the award, emphasizing that it’s not the size of the chain that matters, but, rather, the quality of its offering.
Heading Rutter’s retail operations is Scott Hartman, the third-generation president and CEO of Rutter’s Farm Stores. Under his watch Rutter’s has made enormous strides to firmly cement the family-owned business as one of the industry’s top marketers.
“For us the emphasis has always been on doing things right and meeting the needs of our customers. If we do a good job executing, expansion will take care of itself,” Hartman said. “That’s why the Chain of the Year award is so special to us. Having grown up in the convenience store industry I have long marveled at the successes of past winners. Being mentioned with such stalwarts of the industry is an honor.”
Being nestled in Central Pennsylvania has its advantages. Rutter’s has carved its niche among upscale, time-pressed consumers that value convenience. It also has a downside: some serious competition. Whether it’s other convenience store chains, drug stores—Rite-Aid is based in Harrisburg, Pa.—dollar stores or mass merchandisers, all seem to be targeting convenience store customers.
But even as the economy limps along, Rutter’s has managed to grow its retail portfolio. Rutter’s special talent has been its ability to constantly reinvent itself, from its humble beginnings as a local Pennsylvania dairy to a fleet of convenience stores with fuel operations and foodservice. Along the way, it became an integral part of the local community. The company is wrapping up the most ambitious growth plan in its 40-year history. It is investing more than $55 million to build 10 stores and 11 car washes, which will add 350 new jobs and more than $4.5 million in annual wages and benefits to the area economy.
As part of its capital improvement campaign, Rutter’s currently has three new stores in development, one of which was scheduled to open in late October.
“Convenience stores have the ability to adapt and change their business models better than any other industry I’ve ever seen,” said Hartman, who joined the family business in 1990. “And I’ve consulted in two different industries and traveled around quite a bit. I think we’re an amazingly adaptive, entrepreneurial group that refuses to back down when times get tough. That is a significant reason as to why we’re doing well. Whether it’s adjusting to the economics of what people can spend, to all these changing energy issues and new taxes the government keeps throwing at us, the No. 1 part of our success is that ability to quickly adapt and change.”
Hartman credits the work of NACS and the influence of family-owned businesses for providing the industry with a strong foundation.
While the competition in this market is particularly onerous, convenience store owners have shown a willingness to share information and even benchmark sales data to elevate the industry’s profile with consumers.
“Whether it’s an operator with three stores or a chain with 1,000 stores you still see family members sitting at the top of so many companies across the industry. Even at companies that are heavily franchised like 7-Eleven the people running the stores are entrepreneurial operators who understand what it takes to succeed in a competitive atmosphere, much more so than those that are corporate bound,” Hartman said. “Corporate models can be so rigid that they tend to be slow to change and even come across as being out of touch with consumers. That presents us with an opportunity to be successful. I still consider us a very small company. We’re a small fish in a big pond, but our ability to stay out from underneath the foot of the bigger guys, that’s the way we survive.”
Fast Eating the Slow
Even with a solid foundation, the onus is on each individual marketer to chart its growth and execute. There is a long list of companies with deeper pockets and bigger operating teams that have crumbled because they failed to execute at the store level. This is another area where Rutter’s excels.
“You’ve got to constantly reinvest in the business because the needs of customers are constantly changing,” Hartman said. “That’s also been part of our success through the years. We recognized that to get from the first to the second and third generations you have to keep a lot of money in the business.”
To that end, Rutter’s has lived on the cutting edge when it comes to key operating areas like foodservice, technology, store design, hiring and training and category management.
“Stu Leonard had a great quote during his session at the NACS Show. Retail is not about the big eating the small, but the fast eating is slow,” Hartman said. “That’s a powerful takeaway we all can learn from.”
As part of its evolution, Rutter’s is moving forward with its impressive new store design. The latest model is a far cry from the convenience stores of years past. The prototype boasts a modern design, including open ceilings, extensive use of floor and wall tiles, bathrooms with floating ceilings, music and other upscale accents. The design is environmentally friendly, including a white roof to keep the building cooler while reducing energy demand.
The store features Rutter’s latest foodservice offerings, including custom stir fry, fajitas and fresh-baked breads. Customers can design their own “oriental bowls” by choosing from chicken, beef and pork; fried rice, white rice, noodles and veggies; and various toppings and dressings. Customers can mix and match ingredients to create custom steak, chicken and veggie fajitas. The sub and cibatta rolls also come in seven varieties.
“This is one of the most impressive floor plans I’ve ever worked on,” said Jeff Leedy, senior vice president of marketing for Rutter’s. “In some older stores, you walk around displays that you either see or trip over. Our focus was to open things up a little bit so customers can walk around the store and get what they need, not dance around obstacles.”
The impressive store design has the look and feel of a high-end restaurant, without sacrificing a single element of convenience. In fact, wide aisles and the open floor design make it easier not only to navigate the many offerings, but to see them from afar, a feature that will speed up service for customers looking to get in and out quickly. Plus, it offers 20 cold and frozen display doors neatly marketed in the background that offer everything from national brands to locally-produced and proprietary dairy items.
“We’ve positioned ourselves to compete against restaurants as well as convenience stores,” said Jerry Weiner, Rutter’s vice president of foodservice. &ldqu
o;And yet we’ve retained the ‘fast’ aspect as every item on our menu can be prepared in less than four minutes from the time one of our team members starts to work on it.”
Additionally, a chilled grab-and-go gondola offers a variety of sandwiches and local delicacies, such as red beet eggs, right in the center of the store. Within arm’s distance is the fountain and frozen programs. For customers looking to dine in, there is seating for up to 12.
Developing a Foodservice Culture
Finding the right food programs, perfecting the menu and portion controls and mastering the economics of foodservice are child’s play compared to the daunting task of changing the perception consumers have about eating fresh food in convenience stores.
What Rutter’s learned is that you cannot simply force a foodservice program on consumers. The food program quite literally begins with the design of the store, the hiring of employees and a firm commitment from the highest levels of management in order to do it right.
“Overcoming the industry’s perception has literally taken years, and justifiably so in many cases” Weiner said. “The chains that have staying power excel in the areas of execution, training and developing a foodservice culture throughout their organization. They are starting to reap the rewards of their investment, but it’s something that has to be worked at every single day. It is a 24-hour job. No exceptions.”
Weiner has been instrumental in creating Rutter’s foodservice culture. For example, the company has gone as far as changing its hiring practices to target employees with restaurant management experience.
“The volumes produced at our new stores are very much like freestanding restaurants,” Weiner said. “We’ve learned that it is much easier to take a restaurant manager and teach them how to use their knowledge of food to deliver speed of service than it is to teach a convenience store employee how to execute foodservice.”
As a result of bringing these talented restaurateurs aboard Rutter’s has changed the culture at its stores which, in turn, has helped make the company a preferred destination for foodservice customers. “This practice has proven so successful that our deli managers are now bidding on store manager jobs, which means that we’ll expand our foodservice culture into new stores. It’s constantly perpetuating itself.”
As with foodservice, Rutter’s has proven track record of embracing new technology and social media platforms to reach today’s younger generation, whom Robert Perkins, Rutter’s director of marketing, fondly refers to as “the customers of tomorrow.” Rutter’s holds the distinction of developing the second Web site ever in the convenience store industry, www.rutters.com. A Facebook fan page, hundreds of followers on Twitter and dozens of mayors on Foursquare are now part of Rutter’s growing online presence.
“Social media is just another way we can connect with customers to let them know what we have to offer and how much we value them,” Perkins said. “Customers see social media as an added benefit and it’s not something they necessarily expect so our job is to use these tools to ‘wow’ them and make them feel that much more special.”
More importantly, social media and the growing Rutter’s Rewards loyalty program enable the company to gather crucial data on the customers it serves like email addresses, likes and dislikes, what time of day they like to shop and what they are buying. This allows the chain develop targeted promotions based on real-time trending data.
“Our major focus is to increase the basket size our customers currently have with the offers that they want,” Perkins said.
Last year, Rutter’s also introduced mobile couponing through an iPhone application, and recently introduced a similar app for BlackBerry and Droid smart phones. The new apps, downloadable on the Rutter’s Web site, help customers find the nearest Rutter’s, check current gas prices and also send coupons directly to their cell phones. Customers can also register their Rutter’s Rewards cards using the app, and then click the on “Rutter’s Rewards” icon to access their member number and bar code, which can be used instead of the rewards card for in-store transactions.
When used on purchases of more than 1,600 everyday items customers can earn a discount on fuel purchases. The card has proved to be extremely popular with customers. To date, more than 160,000 consumers have saved money on gasoline since the card debuted earlier this year.
As it has embraced foodservice and technology, Rutter’s continues to be a pillar of the community when it come to charitable contributions, which are focused heavily on children’s charities and local food banks. The chain’s contributions of $260,000 in 2009 pushed the company’s giving for the past seven years to more than $2 million.
“It’s never easy for nonprofit organizations to raise the money they need to provide important community services, but it’s especially difficult in this economy,” Hartman said. “We feel it’s more important than ever to do our part to ensure that these organizations can continue their important work.”