Pantry’s new owner plans to remodel many of its Kangaroo Express stores

Alimentation Couche-Tard, the Canadian company that acquired the convenience store chain The Pantry in March, says it has commenced with an aggressive plan to remodel many of the Cary company’s Kangaroo Express stores over the next three years.

The Kangaroo Express stores being remodeled will be converted to Circle K stores, said Darrell Davis, senior vice president of operations for Couche-Tard. Although Couche-Tard’s ultimate goal is to operate its portfolio of stores under one brand, Davis said the Kangaroo Express brand isn’t going away anytime soon.

The store remodels will take time, and Couche-Tard plans to continue operating a number of stores under the Kangaroo Express brand as it evaluates whether those properties are worth reinvesting in and converting.

“We’ll just see how the performance of those stores do,” Davis said.

Couche-Tard operates about 5,150 Circle K and Kangaroo Express stores in the U.S., including 428 locations in North Carolina and about 60 in the Triangle. The company acquired about 1,500 Kangaroo Express stores in the Southeast when it acquired The Pantry in a deal valued at $1.7 billion.

The Pantry had been closing under-performing stores before its acquisition, and Davis said about 100 such stores have been shuttered since March.

A typical remodel involves investing anywhere from $250,000 to $350,000 in a store, Davis said. Couche-Tard also plans to build about 200 new stores a year in the U.S., including about 80 in the markets where The Pantry had a presence.

Davis said identifying the exact number of Kangaroo Express stores that will be remodeled and rebranded is difficult because the number is constantly changing. Kangaroo Express and Circle K operate in some of the same neighborhoods, and Couche-Tard is still evaluating how it will move forward in areas where it has multiple stores.

Couche-Tard announced plans to lay off 250 people at The Pantry’s corporate offices in Cary and Sanford the day after the acquisition was completed in March. The company now employs 115 in Cary and 144 in Sanford.

Davis said Couche-Tard will maintain a regional office in the Triangle to provide back-office support and other services for some of the company’s stores. The layoffs involved eliminating jobs that were already being done by others, and Davis said that is now mostly complete.

“We’re been very, very happy with the talent both in [The Pantry] offices and in the stores,” he said.

Couche-Tard is aggressively expanding even as the convenience store industry faces challenges. Chief among them is that the two main drivers of traffic to such stores – sales of fuel and cigarettes – have been stagnating, forcing stores to seek other ways to lure in consumers.

Couche-Tard is focusing on improving its offering of cold beverages, coffee and hot dogs and expects to experiment with other food options in the future. Davis said Couche-Tard, which has been a serial acquirer of other chains in recent years, has the balance sheet to modernize its stores to meet consumers’ changing demands.

“I think the customer experience, and I think the food offerings and still selling convenience,” Davis said of what’s most important to customers. “So as time goes on, what quick, convenient offerings do people want? We’ve got to be able to change with that.”

This story was originally published September 28, 2015 at 2:53 PM with the headline "Pantry’s new owner plans to remodel many of its Kangaroo Express stores."