By Erin Rigik, Senior Editor
After 17 years as president and CEO of Open Pantry Food Marts of Wisconsin Inc., Robert Buhler at the beginning of the year turned the corporate reins over to his longtime, right-hand man Jim Schutz, and Bryan West, former Open Pantry regional sales leader.
Buhler is turning his attention more fully to private investments via his Family Office business—a private company that manages its own investments.
With Buhler’s investment support behind them, Schutz and West have big plans to grow the Open Pantry brand.
Since Nov. 1, 2014, Schutz and West have been handling operations, preparing for the official changeover at the start of this year. Schutz and West formed S&W Retail Consultants LLC to make the transition smoother.
“That way we are not employees of Open Pantry, but a separate entity with real ownership buy-in and entrepreneurship,” Schutz said.
The agreement is quite different than a normal franchise deal. S&W Consultants is renting the Open Pantry name and making all operations decisions, while all accounting continues to run through Open Pantry. “Open Pantry still pays the bills, handling all invoices from vendors,” Schutz said.
Still the arrangement is decidedly unique.
“You don’t hear many operators having an agreement with someone else to run their stores. It gives us a great opportunity to pursue entrepreneurship without having to go through the process of buying stores,” West said. “And Robert, whose father started the Open Pantry brand in 1966, is able to feel comfortable that his brand is in good hands because we’ve both helped build this brand.”
Schutz has been with Open Pantry since 2002.
“I’ve enjoyed a number of different roles at Open Pantry; I started with Open Pantry as a field manager, overseeing up to 15 sites. During that time I also took the lead in our growing food category as food development manager,” Schutz said. “In 2008, I was promoted to vice president of operations and human resources. While the operations side and the human resources side are kind of polar from each other at most companies, we brought the two together and it worked out quite well.”
West, in turn, began working for Open Pantry in 2008 as a regional sales manager—the equivalent of a district manager at most chains.
“I was with Open Pantry for five years when it sold some of the stores to 7-Eleven, and I went with the sale,” West said. In total, Open Pantry sold 19 stores to 7-Eleven in 2012, which left it with eight locations. It later divested another location, for the grand total of seven stores it operates today.
In 2014, Buhler had decided to turn over operating control of the company, freeing his time to manage investments, but was concerned about whom he would hand the reins to.
“Fortunately I was right in front of him,” said Schutz. “I said, ‘I would love to do this, to form an agreement with you where I run the Open Pantry name as a business and really tackle this from an entrepreneurial standpoint, but I’m not sure I can do this on my own.’ So we contacted Bryan, who was always highly regarded at Open Pantry as well as within the industry and at 7-Eleven. We presented what we were thinking, and he left his position as field consultant at 7-Eleven and came on board, thrilled to step into an ownership role.”
Although several other companies have offered to outright purchase the Open Pantry package, Buhler said this agreement with S&W Retail Consultants works well for the family-owned company and its goals of growing as an investment company, going forward.
“We have a good portfolio of real estate and have a strong residual income group with the Open Pantry brands, which we’re proud of and took a long time to build,” Buhler said.
The CEO noted that after Open Pantry sold stores to 7-Eleven in 2012 it continued operating under the framework of a large company even though it was now a smaller entity, which wasn’t as efficient.
“I wanted to move on from just a retail investment, with a new interest to focus more on additional real estate and other private equity opportunities. This will allow me to reach back to my investment banking roots,” Buhler said. “To do so, I really needed to turn the reins over to Jim and let him manage Open Pantry, but without hierarchical layers. He needs to be on the front line with managers while also making executive decisions and touching customers very actively.”
As Schutz and West began assuming control of operations, they did exactly that—reorganizing management at the company and each taking on a store to lead.
“I am for lack of a better term, a store manager, as is Bryan,” Schutz said. “We each operate a store on a daily basis. Consequently, we see what is going on at the ground level, but then we also have complete control over the entire company, and every operating decision that is made goes through us. We said that if we are going to grow a company, and have a high level of professionalism for our customers, then we need to understand what our people struggle with each day so our business becomes flawless.”
After many hours a day spent stocking shelves, making coffee, assisting customers and ordering inventory, Schutz and West take time out to step back into their executive positions and use that frontline knowledge to positively impact the entire chain.
They have also brought both store managers and assistant managers into their meetings.
“We were able to all talk about issues from either the doughnuts are coming in late or this doughnut doesn’t sell to the high level, 30,000-foot issues in the same conversation,” West said. “We can’t ask someone to do something we don’t do every day, and they all understand that and I think that’s really driving this forward.”
The result has been employees who are engaged and feel more empowered. It also gives the team a chance to fix issues that otherwise wouldn’t have been brought to the attention of the executive-level.
“We have some highly intelligent assistant store managers that are value-added at our P&L meetings, and they go back to the part-time employees and share what they’ve learned,” Schutz said. “They also feel more comfortable bringing the small oddities to us because now we understand them and can correct them.”
Buhler noted that Schutz and West make a strong team and complement each other well.
“They both want to directly run stores and build some equity. With them working together they have slashed costs. They are doing repairs in a different way than they would do,” Buhler said. “They are hiring differently than they would in the past. I’ve known Jim and Bryan in prior management capacities and they have always been excellent in what they do, but now they are doing something they can directly control. They are ignited like I’ve never seen before. It helps me and it helps them.”
So far the results show their efforts are paying off. Sales are up 7-8% year over year for 2015. In 2014, sales were up with help from record purchases in hats, gloves, salt and windshield wash after snow pummeled the region.
“We looked at peeling back the sales projection for first quarter for 2015 because we had such an exceptional sales performance in those areas in 2014 and believed we’d find it difficult to meet last year’s numbers,” Schutz said.
But even with sales down in that particular category this year, overall sales soared. “That’s a tribute to the staff at Open Pantry,” Schutz said. “I would put the Open Pantry c-store staff up against any company in the industry.”
As for the stores themselves, no big changes are scheduled at this time since they were upgraded in 2013.
“There are no big changes coming brand-wise, as a big part of this agreement is we will keep the brand,” Schutz said. “At this point we are not looking at reimaging stores, but just continuing to grow the brand at the seven stores we do operate.”
S&W Retail Consultants is also turning its attention to possible store growth.
“If Bryan and I ran across an opportunity to buy a store we would bring that to Robert (Buhler), who as our investor would then have the final say in whether or not this store would be an Open Pantry store. Robert has said many times he supports us growing the brand,” Schutz said. “In order for a site to be an Open Pantry, however, it would have to pass a standards test. If the store doesn’t seem like a fit for the Open Pantry brand, he might give us the OK to open that particular store under a private label banner with him still backing us as an investor. Aside from acting as our investor, he’s a tremendous resource to us in the success of our company.”
Buhler also has his sights set on growth. Since launching the Family Office, Buhler is focusing his attention on other deals, including with 7-Eleven.
“When we chose to spin out 19 sites to 7-Eleven, as opposed to sell our entire 28 store package, it was because I liked the idea of keeping 7-Eleven as a tenant and receiving the rent income,” Buhler said. “We required 7-Eleven to lease our properties, and purchase only the business value. We wanted to keep our real estate because it is exceptional property. It works for me to have 7-Eleven as a large income source on a number of properties. Today, we’re looking at additional real estate investments, and balancing our asset class mix, in order to diversify our investments. We are also investing in other private equity opportunities both in and outside of the c-store channel.”
These include technology, environmental opportunities and food private equity investment.
Buhler said the c-store industry is rife with extraordinarily talented men and women who lose their jobs when their companies are sold off.
“I think there are plenty of opportunities out there where past owners of companies have some residual properties. Why not give talented middle management the opportunity to run with it, get passionate and build their own dream.”
He added if such senior executives are willing to step onto the frontline, managing a store (from the cash register to attending tradeshows to hiring talent) moving away from the previous corporate structure on to their own entrepreneur corporation, they have a solid avenue for success.
Stronger Than Ever
Open Pantry is more alive today than it has ever been, Schutz said.
“The opportunities we have to grow this chain are better today than they have ever been,” Schutz said. “It’s because the leadership of this new company is now right down at the ground level, in that fox hole and seeing the opportunities first hand, and we understand the opportunities and we work those opportunities every single day.”