The Pantry: A Legacy of Growth and Transformation

Founded in 1967 by businessmen Sam Wornom and Truby Proctor, Jr., The Pantry is the second largest convenience store operator in the US and boasted revenues for fiscal year 2008 of $9 billion. This year, the company reported the total number of operating locations to be more than 1,670 stores.

Many of its locations are located near tourist attractions such as Disneyland and Myrtle Beach and across the Carolinas and Florida, but it also has locations in Indiana, Kentucky, Tennessee, Virginia, Alabama, Mississippi, Louisiana, and Georgia.

In addition to a rebranding project, in the past four years, The Pantry has continued to “fine-tune” its merchandise and upgrade its store layouts. Some of the new merchandise initiatives focused on private label, such as the addition of Celeste private-label water, soft drinks, sports and energy drinks; “power aisles” featuring Celeste private label candy; and Kangaroo private-label motor oil, film, lighters, batteries, and road atlas.

Other merchandising initiatives include Bean Street Coffee company coffee service, The Chill Zone beverage and frozen beverage stations, franchised quick-service restaurant concepts, and enhanced prepaid wireless service offerings. With all these changes, the company continued to stick to its mission of “Making the lives of our customers easier.”

New management

When Wornom and Proctor founded The Pantry more than 40 years ago, they focused on spreading throughout North and South Carolina, Kentucky, Tennessee, and Indiana. Successful throughout the ’60s and ’70s, Wornom sold his stake of the business to Montrose Capital in 1987, which had shareholders such as Dave Thomas, founder of Wendy’s, and Wayne Rogers, Trapper John on the TV show “M*A*S*H.”

Proctor kept his place as CEO, even after Montrose purchased half of his shares. In 1995, Proctor sold the other half of his shares to Freeman Spogli & Co., a Los Angeles-based investment firm. Chase Manhattan Capital then acquired the rest of the company from Montrose. In 1996, Peter Sodini took the position of president and CEO of The Pantry.

After stepping in as president of The Pantry, Sodini decided to focus less on food and more on the sale of gas and tobacco. “We like to focus on what we think we do well, which is to run a basic convenience store selling gasoline and the usual amenities you find in the store,” he explained at the time.

He restructured the company’s management team with executives from the Purity Supreme Grocery Store chain, giving the following explanation to Convenience Store News: “Although they didn’t have gasoline experience, what they brought in terms of being able to further enhance the merchandise side of their business was significant.”

Using his supermarket experience, which in part came from Purity Supreme Grocery Store, he put 25% more merchandise into the stores than normally found in convenience stores. Although this strategy worked, he didn’t overlook the fact that gasoline was still a major part of the company’s sales. An analyst in Investor’s Business Daily commented on Sodini’s strategy by saying, “Most of the top convenience store operators are owned by oil companies, whose focus is to sell more gas. But to Sodini, pumping gas is like selling milk. It’s a commodity that has to be competitively priced.”

A time to grow

In 1997, The Pantry acquired the 479-location Lil’ Champ convenience store chain for $132.7 million, expanding its footprint to include Northern Florida with 430 stores and Southeastern Georgia with 49 stores. In 1998, The Pantry acquired approximately 155 stores by purchasing smaller chains, including Quick Stop, a 75-store chain in the Carolinas, and 41 Zip mart stores in North Carolina and Eastern Virginia.

In 1999, the company acquired 126 Handy Way stores in Central Florida. That same year, The Pantry acquired 28 Food Chief stores, which were primarily located in high-traffic tourist markets, as well as 49 convenience stores under the names Kangaroo and Kangaroo, Inc.

These acquisitions pushed The Pantry into a position as the 10th largest chain, according to Convenience Store News, from its previous position as number 33. The change was a result of the acquisitions made by Sodini and his new management team, which grew the company from approximately 400 stores to more than 1,200, raising revenues from $427 million to $985 million.

The Pantry went public in June 1999 and sold 6.25 million shares of common stock, raising $75.6 million in net proceeds. With any debts now under control, the company again began expanding through acquisitions, including 12 On-the-Way Foods stores; 14 MiniMart stores, which gave The Pantry the position of the largest convenience store operator in South Carolina; 19 stores from Tip Top Convenience Stores, Inc., which operated under the name Big K and were located throughout Mississippi and Alabama; five-store Market Express convenient store chain; and an Amoco station in Hilton Head, SC.

Looking ahead

With Sodini’s retirement eminent, The Pantry announced the appointment of Terrance Marks to the position of president and CEO. Previously the EVP of Coca-Cola Enterprises and president of Coca-Cola Enterprises North American Group, Marks brings years of experience to the table.

“I am excited about joining The Pantry and the opportunity to lead this business,” said Marks in August. “The Pantry is already one of the largest chains in the industry and has tremendous potential to continue to grow and become a best-in-class operator. My initial focus will be to work with the board and the management team to refine our strategic vision and prioritize our investments to drive shareholder value.”

Thomas Murnane, lead director and chairman of the search committee, said choosing Marks after an extensive process was easy given his dynamic leadership skills and blend of operating experience, strategic vision, and brand-building expertise. “His broad industry knowledge, coupled with his extensive background as a professional manager, make him ideally suited to lead the company as it continues to grow and evolve,” said Murnane.

“The board is very appreciative of the leadership that Pete Sodini has provided in building this business into what it is today and is confident in Terry’s ability to lead us into the future,” Murnane concluded.