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Sheetz: putting community into convenience

From a single store in Altoona, Western Pennsylvania, the Sheetz family has grown the business into a $3 billion concern with more than 350 locations around the US. Bruce Love finds out how they did it

Recently, a hardworking family man from the US state of Pennsylvania found his name on a very important list. The "Retail Power 25" lists the most influential retailers in the world, and his name appeared surrounded by internationally recognised personalities, such as Apple founder Steve Jobs, Walmart CEO Lee Scott, Amazon creator Jeffery Bezos and eBay's Margaret Whitman. Ultimately, it was a keen business acumen and phenomenal growth of his family's chain of convenience stores and gas stations that put Stan Sheetz in such impressive company.

From a single store in Altoona, Western Pennsylvania, the Sheetz family has grown the business to more than 350 locations in the northeast of the US. Since taking the helm in 1995, Stan has increased the company's footprint across a further five states, refined its service offering to include a range of ecological fuels and barista-manned espresso bars and made Sheetz a household name.

But Stan is restrained when he talks about the "Retail Power 25" accolade conferred on him, explaining recognition should go to his executive team and the Sheetz family: "I think our entire organisation deserves the credit because there's very few individuals that can have that much influence in the market."

"If you look at the fundamentals of retail, there are only two things you should do: drive more customers into your store or sell more products to the customers you have," Stan says. "Whatever your strategies are, or whatever your fantasies or dreams are, you should revolve around those two things because if you drive your top line you will drive yourself to success. A lot of people in business say 'cut expenses, cut expenses' and I don't look at it that way. I say 'drive the top line and manage the expenses'."

In a tightly contested market that includes international operators, regional heavyweights and "ma and pa" outfits, Sheetz has billed itself as a "kicked-up convenience store and a Mecca for people on the go". Its clear brand message and consistency of service appeals to road warriors, construction workers and soccer moms alike. Over the past 20 years, it has differentiated itself with a popular range of "Made-To-Order" foods, specialty coffee, quality gasoline at low prices, and the "lowest priced cigarettes/tobacco allowed by law".

Stan is a firm believer that having your own name on the door focuses your attention on the quality of the service you offer. "The level of care you have is so magnified compared to if you're just working for another company," he explains. "It goes back to the reputation and integrity of the brand because the last thing you want is to make a stupid decision that has a negative impact. It becomes part of your goal for life in just about everything you do."

His surname encapsulates a brand that Stan has grown up with his entire life. When he was a child, his father owned a single store where Stan began working part time at eight-years-old. "It was always a part of our life but the changes were very incremental," he remembers. "I'm not a person to look backwards – I like to look forwards – but unless you stop to look back you don't realise what the result has been or what the impact may have been."

And this sense of care seems to permeate throughout the organisation and its 12,000 staff. Stan says he tries to foster a sense of belonging within the company, believing that if you take care of your employees they're more likely to take care of your customers for you: "Like it or not, when you have 350 stores, what you end up with is 350 different micro-cultures throughout the organisation, so we try to encourage the sort of manager who can foster the culture in their store and nurture and develop the employees that they have. If you can make your employees happy, that goes right across the checkout counter to the customer. This is one way we can differentiate ourselves from our competitors."

Business plus philanthropy
This sense of community and belonging is supported by the Sheetz family's philanthropic efforts, which are tied closely to the business itself. The company is the largest supporter in Pennsylvania of the Special Olympics, with total support breaking the $2 million mark. Stan has managed to recruit the help of national sporting personalities, such as American football legend, Joe Paterno, who has coached the Penn State University team since 1966 to two national championships and five undefeated seasons.

In 1992, Sheetz also established an initiative called Sheetz Family Christmas, which has raised more than $3.9 million and helped over 29,000 underprivileged children experience a better Christmas. Each year, Sheetz employees embark on fundraising and then take over 3,000 children Christmas shopping. "We also hold about 25 Christmas parties at different locations throughout the company, for anywhere from 50 children to 300 children at each event," explains Stan.

He says Sheetz created a 501(c)3 – a US charitable organisation – about 20 years ago so that the family, company and executives could individually contribute to selected philanthropic efforts. He believes by focusing philanthropy in this way, it produces better results for the community while providing a useful structure for family members and the business "We get bombarded with requests on a daily basis, so we sat down and said 'okay we've got to figure this out because we can't say "yes" to everybody'," he explains.

"We can't say 'no' to everybody either. Through that process we decided to focus our efforts on youth and youth athletics, which is where we felt we wanted to contribute. The structure gives us focus and, quite frankly, a reason to say 'no' to causes outside of our philanthropic goals. I don't think there's any right or wrong when you're being philanthropic or trying to help others," Stan continues. "The fact that you're doing it is what's important and the satisfaction that your people get out of doing it is the best part of it."

True meritocracy
Fairness, merit and a united front are particular traits in the Sheetz family that are reflected by the company's governance practices. The current company structure originates in a leveraged buyout conducted by Stan and his uncle Steve in 1987. Up until then his father owned the whole company. After the buyout they distributed the ownership across a lot more family members and crafted a shareholders agreement whereby the votes for everybody who participated in the buyout were pledged to Steve (who was serving as president) until 1995. Thereafter, they agreed to pledge their vote to Stan when he became president.

"The point was to make sure that somebody had the ultimate decision-making authority because there are a million different problems that can come up in a family-run business," says Stan. "We made sure that there is absolutely no doubt about who has final say."

Stan believes that the desire for a formal governance structure partially originates from adverse experiences the family had, predating the creation of Sheetz. Since 1905, his grandfather and great-grandfather had run a large dairy in Altoona which had no governance structure: "Most of us grew up in the 60s and 70s seeing some of the in-fighting that went on with that company and we all learned that this type of behaviour is non-productive."

Stan says a plan is in place to keep Sheetz moving forward long after he relinquishes his tenure as president – which he says will be no time soon: "We have created partnership entities for the senior executives and we have been transferring stock slowly over time into those entities. We've got 14 senior people here and right now five of them have a last name of Sheetz. But that may not always be the case, so over the long run we'll have in place an ownership plan as well."

His belief is that the company should be run as a meritocracy rather than providing room at the top for family members if they don't "cut the mustard". His intentions are to keep people at the top who have merit to be there rather than give the positions to people just because they are family members: "We don't have any family members that just collect a pay cheque. They all work and we've set up a fairly formal management structure. I sit down every year and do evaluations on my relatives."

"My uncle Louis (executive vice president of marketing) and I are in our 50s, Steve (now Chairman) is in his 60s and my father is in his 70s, and there's more young ones that we expect to come back and try their hand," says Stan. "But none of us would allow our offspring or relatives to come back here without spending some quality time with another organisation."

Stan's belief in the need for family members to learn business outside the organisation stems from his own life experience. After attending Pace University in New York, he worked at distributor Colt Industries and then Citibank and Swedish industrial equipment manufacturer Alpha Lavalle. "My intention was to learn as much as I could as quickly as I could," he explains.

His son graduated three years ago from Penn State and is at Lehman Brothers in New York. Stan says his son is already building a successful career at Lehman but that if he chose to – with solid financial experience and a proven track record in investment banking – there could be a place for him at Sheetz. But there are no promises.

If and when his son joins the business, it will be one that may be a lot bigger than it is presently. Although he has no intentions to grow the company outside its six-state geographical spread, Stan believes he can double the number of units within that footprint: "But it's really not about how many stores you build, it's about doing things right and taking care of the customer. You do that by developing the brand, which is hopefully built on consistency of offer, service, and perceived value by the customer."

Sheetz is presently embarking on a $30 million per annum rebuild of some of the older stores and a rebranding exercise to freshen up the look of its outlets: "We're doing some more tests this summer, trying to find the most cost effective manner before we go out and invest in 200 stores."

He jokes that at Sheetz, they are real "control freaks" when it comes to the brand: "When your name is on the door, you want to make sure that everything's done right. We market ourselves as the opposite of a faceless corporation, so it's important that we adhere to the reputation that we have created for ourselves." 

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