As part of its strategic, long-term plan to improve its operational efficiency and profitability, TravelCenters of America (TA) has begun a companywide reorganization, which includes the addition new senior vice presidents for a newly created hospitality department, under which the areas of restaurants, gaming and convenience stores will be consolidated, as well as in information technology (IT).
In addition, TA is reducing its corporate headcount by a total of approximately 130 and eliminating certain positions. These changes are expected to generate net annual savings of approximately $13.1 million in selling, general and administrative (SG&A) expense.
The one-time cost associated with executing the reorganization plan are expected to be approximately $4.2 million, comprised primarily of severance, outplacement services, stock-based compensation expense associated with the accelerated vesting of previously granted stock awards for certain employees and fees for recruitment of certain executive positions. During the 2020 first quarter, TA recognized $0.4 million of executive recruitment fees and expects to recognize the remainder of the costs during the 2020 second quarter.
TA has also appointed a new senior vice president of corporate development, a new department initially tasked with delivering on the company’s reorganizational initiatives. Key among these initiatives is the creation of a centralized procurement group to drive economies of scale in pricing, provide increased leverage in vendor negotiations, and ultimately lead to substantial purchasing savings and a streamlined operation.
Other key initiatives are focused in areas of opportunity for realizing both costs savings and increased revenues, including merchandising in the convenience stores, over-the-road delivery, truck repair training and staffing and IT systems.
These new leaders bring decades of experience as well as initiative, critical skills and new visions and approaches to these critical, but underperforming, areas of TA’s business.
“Since joining TA in December, I, together with TA’s senior level management, and under the oversight and direction of TA’s Board of Directors, have been focused on developing a plan to cost-effectively optimize the strengths of our organization in order to transform the company,” said Jon Pertchik, Chief Executive Officer of TA. “By reorganizing and enhancing our leadership team, we have taken the first formal steps in executing TA’s turnaround by repositioning management, redefining management roles and operating focus, and strategically adding new management who bring new and valuable experiences, skills and outlooks to TA, while also focusing on right-sizing historical SG&A growth, which has significantly outpaced revenue growth over the past decade. I am confident that the team that we now have in place is the one to take TA forward. We have worked hard on planning and developing the reorganization and transition plan announced today. I believe that this plan will result in major changes in efficiencies and improvements to TA’s business and position it well for future success.”
Senior leaders joining TA include:
Kevin Kelly – Senior Vice President, Hospitality (Retail, Restaurant, Gaming)
Kelly is joining TA from Delaware North, a global food service and hospitality company, where he held progressive leadership roles over the past 22 years. His most recent role was as President of Travel Hospitality, in which he led a subsidiary consisting of over 250 food service and retail locations in 19 airports and oversaw the construction of 120 locations.
Dennis King – Senior Vice President, Corporate Development
An experienced commercial and strategy leader with a proven record of building high performing teams and executing transformative change, King was most recently an Associate Partner at McKinsey & Company. King has over 15 years of experience leading transformations in retail and consumer companies, with a deep expertise in advanced analytics, strategic evaluation, and cost and revenue synergy realization.
Sandy Rapp – Chief Information Officer / Senior Vice President, Information Technology
Rapp is an information systems and business executive with over 30 years of experience in software development, consumer products, IT consulting, financial and manufacturing industries. Most recently serving as Chief Information Officer at the Timken Company, Rapp has been recognized in her prior roles for solving large, complex enterprise-wide business challenges with innovative solutions and improving business productivity.
