In July, Beck Suppliers, owner of FriendShip Stores, announced that it had transitioned to a 100% employee-owned model after 75 years of Beck family ownership. The decision, according to Greg Ehrlich, president of Beck Suppliers, had been in the works for well over a year.
“This isn’t something that we did on a whim,” said Ehrlich, mentioning that the company initially started looking at an Employee Stock Ownership Plan (ESOP) several years ago.
Commitment to Employees
The move supports FriendShip’s overall vision and mission, which is to be “an award-winning convenience retailer offering restaurant quality food, wicked awesome customer service and recognized as a great place to work,” Ehrlich continued.
The shift to an employee-owned model also supports the company’s commitment to and trust in its employees, which is a key point of focus as the company continues to evolve and grow. Each year, Ehrlich said, Beck Suppliers and FriendShip make investments into its employees “to the tune of millions of dollars on an annual basis,” through vacation and retirement enrichment, 401k match increases and health insurance cost reductions.
“We launched a company-wide profit sharing (program) a few years ago,” he continued. “Last year, we introduced Project Beck-cellence, a multi-year business transformation project where we invested over a million dollars in store compensation — that was year one. It goes up every year from that to make sure that everybody on our store teams have what they need financially to pay their bills and to be more comfortable financially than they had been in the past.”
The ESOP is an extension of the Beck Family’s trust in its employees, and another way the company is going the extra mile to take care of its team. One of the main benefits of the ESOP is that it gives the company the opportunity to directly fund employees’ retirements without them having to pay for it, offering them a way to plan for a more secure future.
Leading the ESOP Charge
FriendShip currently operates 31 stores across Ohio, which uniquely positions the chain as one of the few regional retailers that have adopted an ESOP model. While this distinguishes Beck and FriendShip in the c-store space, it also provided some hurdles in the planning process.
“I don’t think I’ve ever read anything, certainly not in the last 20 years, about a smaller chain becoming an ESOP,” said Ehrlich. “And so, because of that, it was one of those things that took us a long time to get our arms around.”
But while ownership takes on a new look, the company’s objectives remain the same. The company still prioritizes culture first, brand second and data analytics third, according to Ehrlich.
“There’s nothing more important than building a great place to work culture,” he said. “And this is another way to say thank you to everybody for their role in building this company.”
Plans For The Future
Going forward, much of FriendShip’s operational strategy remains unchanged. The immediate focus is to continue running the business in a strategic way to pay back the Beck family and honor their prolific 75-year legacy.
One benefit that could alter future plans, however, is that an ESOP provides federal and state income tax exemptions. Therefore, FriendShip will be able to allocate more funds towards paying back the owners quicker, and once the company is debt- and tax-free in the coming years, it will have the opportunity to pursue unprecedented growth.
“Think about what happens when we’re done paying the debt in 10 or 11 years,” said Ehrlich. “We’re now a tax-free company. It will be a bigger, more valuable company than we are now, and we will be poised for accelerated growth.”
Ehrlich urged other regional and smaller-scale retailers to consider adopting an ESOP program, however daunting it may seem at first. While it may not be right for every company, there are clear benefits that can come from a well-thought-out employee-owned management structure.
“At the end of the day, the Beck family basically gifted their business to all the employees and to the community, so that the support that we provide for the financial wellbeing of people in the communities stays here for generations to come,” said Ehrlich. “We feel humbled, honored and very grateful for the generosity of the Beck family.”
