The chief executive of The Kent Cos. dishes on topics central to today’s
convenience channel, including mergers and acquisitions, foodservice and
the need for more workers.
By David Bennett, Senior Editor
Bill Kent, president of Midland, Texas-based The Kent Cos., which operates a chain of 44 Kent Kwik Convenience Stores, recently sat down with Convenience Store Decisions at the annual conference of the National Advisory Group (NAG) to discuss some pressing matters in the industry that the second-generation company is tracking.
Convenience Store Decisions (CSD): In recent years, mergers and acquisitions (M&A) in the convenience sector have become prevalent. What impact do these larger companies have on smaller, independent c-store chains in terms of their ability to compete?
Bill Kent (BK): It doesn’t scare me. It’s good news if someone wants to sell, because the multiples are pretty good. We may see some tough times initially, when those acquiring companies grab some market share at the beginning, but as a general rule we feel we can out-operate them on a one-and-one basis, and I feel most small operators can. I think small operators are more in tune with their communities and their customers, and their employees.
CSD: Bigger convenience retailers use acquisitions to pick up innovative product segments. 7-Eleven’s recent acquisition of the Stripes brand and the concept, Laredo Taco Co. is one example. What’s your take on this ongoing trend?
BK: I don’t know if these acquisitions are as strategic as acquiring companies try make them out to be. They are more about size, getting into the markets. They will tell themselves they want to learn and do that, but very seldom does it ever get any legs and go anywhere. I will tell you as a competitor to Stripes, however, they do a really good job with their foodservice. You can name half a dozen companies that do it right and the rest of the industry is struggling.
CSD: Foodservice is perceived as an imperative to the industry’s future. You allude to the fact that foodservice is a hard thing to do right. What’s a sensible approach for a retailer, looking to commit to a more entailed foodservice program?
BK: There are some good quality vendor supplied products today, so there are some options. I think people waste a lot of corporate money chasing the foodservice concept thing only to find that when you allocate true cost, most of us aren’t making much money. We like that QuikTrip model where you don’t have a massive menu. Most of us sell some things, but it’s not the profit center we like to think it is.
CSD: What main issue do you see that will be especially pressing for c-stores in 2019? Why?
BK: I think the pressing issue we have is finding people. With the economy doing well and unemployment (down), there are serious challenges on the people side. The thing I’m hearing from my fellow operators is it’s a battle to find good people. If we don’t find a way to attract and keep good people, it opens the door for Amazon and delivery retailers to step in and take some of our customers.
CSD: Many retailers would agree that recruiting and retaining good workers remain essential needs. Considering that the cities of Midland and Odessa, where you operate, now lead the state in terms of job growth and low unemployment, what is Kent Kwik doing to ensure its stores are adequately staffed?
BK: What we’re doing is building housing. We’ll probably spend $2 million building housing, where we can house workers. There’s really no entry housing to speak of. Apartments are full so they can keep raising rents. Land costs have escalated so apartment complexes have to charge those kinds of rents, making it unaffordable for entry-level people to live here. So, we’re going to be able supply our people with housing they can afford and hopefully give us a leg up. But, it’s a challenge.
CSD: Speaking of 2019, how is the new year potentially shaping up for Kent Kwik?
BK: I think as long as the oil activity stays good, it’s going to be good for us. We think ’19 will be a good year. 2018 is looking like it will be our best year, we’re hoping.