Interview: Couche-Tard CEO Brian Hannasch on why seconds count

“We’re pursuing the same customer everywhere—a working person looking to save a few minutes in their day. We’re selling time”

 
Couche Tard CEO Brian Hannasch

Couche Tard CEO Brian Hannasch. (Portrait by Will Lew)

In mid-March, you closed the acquisition of the Pantry, which operates 1,300 stores across 13 American states. Within two days of finishing that deal, you announced plans to buy 315 service stations in Denmark and a separate plan to acquire 21 stores in the southern U.S. Is your pace of acquisitions accelerating? 

It’s hard to say. We’ve always got a lot of lines in the water. We keep our balance sheet ready for opportunities—that’s a key focus. So after we purchased SFR [Norway’s Statoil Fuel & Retail] in 2012, which was almost US$3 billion, within 24 months we had our debt levels down below where they were before the acquisition. So we were ready for more. We know what we want to pay, we know where we want to be, and sometimes you can have five acquisitions in a year. Sometimes you have zero.

Obviously it’s a very complex decision when you sit down and look at an acquisition, but is there a single question in your head that helps you assess if it’s a good deal?

I think it’s the quality of the asset and the quality of the people first. We’re a lean company—we don’t have a whole bunch of people sitting around waiting to take over a company—so we’re very much concerned about the quality of the people in the business, the quality of management. We’re a people-intensive business.

You’ve said the company is focused on improving in-store experience, which also comes down to your people. But you’re managing multiple brands across several continents. How do you focus on improving in-store experience on such a massive scale?

Fifteen years ago, we were in a single province, and we’re in 23 countries today. But we’re pursuing largely the same customer whether we’re in Russia, Poland, Canada or the U.S. It’s a working person looking to save a few minutes in their day. We’re selling time. So a lot of our processes can look alike. With issues that are close to the customer—like promotions—we want that decision to be more local. The further away from the customer—that’d be our IT, our accounting—we scale that and create efficiencies. Each of our business units has a lot of autonomy around price, promotion and placement. And then we set benchmarks to compare on key areas: How do we allocate labour? How do we clean our pumps? That really drives some real value for us, because it’s not about one way of thinking. There’s a lot of different ways of thinking across our company, but then we force people to come together and share. Our culture is a lot about sharing.

You say you’re in the business of “selling time.” That’s a very poetic way of looking at things. How does that define your strategy? 

It helps us think about the decisions we make. We were just choosing a point-of-sale terminal, a cash register. It’s a large investment—$40 or $50 million—so price was obviously a metric. But it came down to that idea that we’re selling time. Which meant asking, “Which one is faster?” We chose one that is three or four seconds faster. You multiply that by the number of transactions that we do a year, and that’s thousands and thousands and thousands of hours we put back in the customers’ pockets.

You took over from Alain Bouchard, who founded the company. What is that relationship like?

We’ve been working so close together for so many years. He’s a fantastic mentor. He’s a great listener. So in terms of the day I took over, it wasn’t a huge difference. We have clearly defined roles. His passion is development. We build 150 sites each year, and he looks at every proposal. He looks at the leases; he looks at the layouts. He’s got a tremendous skill set, and he’s teaching our organization those skills.

Is there one thing in particular that he’s taught you?

Probably the most powerful thing he ever told me was, “Find people better than you are to do the job.” So that’s where I spend a lot of my time—making sure we have the right people on the management team.

How do you handle talent recruitment when you are, once again, doing it on an international scale?

The majority of our people come up through Couche-Tard. Some companies will go out and do a lot of outside hiring. Most of our new leaders were grown inside the company. I take pride in that.

Are there practices you find work well when developing executive-level talent?

We do exchanges. We’ll take five or six people from North America and put them in Europe, and then take four or five Europeans and bring them back here. That accelerates the cultural and knowledge exchange. And then we push people for geographic diversification. Somebody who grew up in Chicago and comes up through the ranks of the organization needs to go somewhere else. They need to experience a different culture in our company, operate in different environments with different customers and prove they can adapt to that. So we’re very conscious and thoughtful of the succession-planning process.

What kinds of things do you learn by moving people around like that?

Our company is the ultimate melting pot. Most of our management team joined Couche-Tard when we acquired their previous companies. So you have people from Couche-Tard who really know about operating our stores. But the people who came from Statoil, that was a government oil company, so they thought about the fuel business first and the stores second. The beauty is when we brought the two companies together, our European brethren challenged us to realize fuel is not just a commodity. You can make a difference in the experience: How well-lit is the gas station? How clean is it? Do you have the right price at every moment? At the same time, the North Americans taught the Europeans to think about making the store shopping experience better: Can you differentiate yourself by selling more than just a Coca-Cola?

Will there be similar advantages from buying the Pantry?

We know where our costs savings will be and where our revenue opportunities are. But I also challenged our team to come back and say what are five or 10 or 20 things the Pantry is doing better than we are.

How many stores do you visit a year?

I don’t know. It’s certainly around 500 to 600 each year. We have vice-presidents of divisions, and they’ll run 500 to 600 stores, and we challenge them to hit every store once a year. They have to make the contact with their people, the ones who are seeing the customers every day and having challenges and the opportunities.

Is there feedback you’ve gotten from store-level employees that helped the company as a whole?

Certainly around promotions, they are very quick to tell us, “That was the dumbest thing I’ve heard of,” or “That really worked.” Or, we used white grout when we built this store we’re sitting in right now. It was dumb. The manager said, “It’s hard to keep clean.” So now we’ve said grout needs to be darker. It’s a small little thing, but it affects all these people who try to keep the floor clean.

When you walk into a store, can you look at it and say, “This one is really well run”? 

When I go out to visit a manager, it’s not to say, “gotcha!” and find something wrong. But it is a bit of an IQ test: Are you smart enough to have the store looking good when you know I’m coming? But I can see the difference between old dirt and new dirt. They might have straightened stuff out because they know I’m visiting, but when you get into the back room or look at the manager’s office, you can see if it’s organized. You can tell if it was just prettied up for the day.

Many of your employees are young workers, in their first or second jobs. Part-time and college students aren’t always naturally inclined to stick around. How do you encourage them to stay with the company?

Part of it is adapting to the needs of our part-time employees. We get the schedules out early because they often have second jobs, and you need to be flexible. There can be a career path in this industry; you can make a good living in this industry. You can gain management experience at a very young age, which is not the case in a lot of businesses. You deal with suppliers, you’re dealing with customers—it’s maybe not glamorous to everybody, but you can learn very solid business skills at a very early age.

As I was driving to our interview, it was hard not to notice all the gas stations along the way. You operate in a very crowded, competitive field.

Yeah, we’re probably the only industry that puts our price up on a pole on the street.

And that price is often exactly the same as the guy further down the street. What makes a customer walk into a Couche-Tard store as opposed to a competitor?

If you’re looking to have a traditional list of why people stop, the top is having a convenient location. If you look at our newer locations, we have big, easy-to-navigate parking lots. Twenty years ago, our industry was building fairly tight lots where you had to jockey to get your car out. But we know that if people have a choice, they prefer easy in, easy out. Being well-lit is a key factor; women want to feel safe. Then there’s a clean bathroom and good customer service. If we can deliver that list repeatedly across 8,000 stores, we can win.

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