ROI: Return on Involvement

To the lay observer, it was just a Styrofoam cup jammed between the windshield and dashboard of a working man’s pickup parked outside an Indiana convenience store.

To Jay Ricker, it was testament to the importance of mastering the fundamentals, concrete proof that having a good thing means knowing when you should or shouldn’t mess with it, or you might unwittingly botch it up.

"That Styrofoam cup keeps the integrity of the product," said Ricker, who along with his wife, Nancy, owns and operates the 30-store Ricker’s chain headquartered in Anderson, Ind. "If we changed it, our customers would probably riot."

Maybe it was just a cup of pop Ricker saw in a pickup outside a Ricker’s store, but it was a metaphor for something bigger, too, something like this: Ricker knows tapping into c-store profit margins requires more than offering a great fountain drink program. It means being involved in every conceivable facet of the industry, from microcosmic observations in the c-store parking lot to macrocosmic conversations with state and federal legislators.

On the micro, for instance, Ricker offered this: "You have to have a good-fitting lid on that cup; if you turn the drink over, the lid doesn’t come off."

On the macro, he offered: "You have to be involved in politics if you’re in business, or bad things will happen to you. You can’t jump in at the ninth hour when everything has been done."

In an industry racked by exorbitant credit card fees, uncertain profit margins on cigarettes and horrible margins on gas, involvement has its privileges.

 

It’s Pop, Not Soda

The 32 fountain heads comprising the average Ricker’s convenience store fountain drink program do more than pour soda these days. They gush the lifeblood of a family business.

"That program got a life of its own," Ricker said of his chain’s fountain drink program, which gained wild popularity in Indiana even before it was branded "Ricker’s Pop" in 1995. "It’s been the centerpiece of our stores, and why we’ve prospered.

"Even though we run just 30 stores, our fountain drink is something we’ve done really well," he said. "It’s one of the reasons we exist today as a convenience store chain."

A former Shell Oil jobber in Indiana, Ricker ventured out on his own terms in 1979 when he started Ricker Oil Co. from his Middletown, Ind., home. Nancy managed the books and stayed home with their two-year-old son, Quinn, while Jay drove a tank wagon, delivering home heating oil, fuel and petroleum products to dealers and customers in three Indiana counties.

It was a family business from the word "go." On occasion, their infant son would answer an incoming call and provide his full name as "Quinn Ricker Oil," when a simple "Quinn Ricker" would have done just fine. Now 31, Quinn Ricker has become operations manager for the Ricker’s chain.

"Family businesses are one of the backbones of this industry," Ricker said, firing off names like Rutter’s Farm Stores and Douglass Distributing Co. "Most times, they’re multigenerational operations."

Before joining the family business, Ricker required his son spend five years at another company; Quinn worked for financial services provider Charles Schwab and Bank One, where he gained "a good sense of self" before joining the family business, Ricker said.

"We didn’t run any stores at that time, we just supplied them," Ricker said of his company’s nascent years. "We didn’t start running stores until 1989."

Ricker began with just one store in 1989 and added another four the following year. From 1990 to 1999 the company’s holdings grew by about one to two stores a year; some stores were affiliated with Amoco, some with Marathon. It wasn’t until 1995 the Ricker’s c-store name was born.

The Ricker’s chain almost doubled in size in 2000 when Ricker purchased nine Amoco stores near Fort Wayne, Ind., an area that along with Anderson has become a key market for the Ricker’s name.

From the onset, the fountain drink program was a staple Ricker’s c-store offering. At any given store these days, the "Ricker’s Pop" program consumes an entire wall where mixologist consumers can experiment with dozens of flavors.

"People are convinced that our fountain drinks are superior to anything else," Ricker said.

Case in point: A waterline break in an Indiana town once shut down the fountain drink program at a Ricker’s unit. Customers were told they could snatch a drink from the cold vault for the same price as a fountain drink, but most just shuffled off and said they’d go to a Ricker’s nearby rather than risk it with a packaged beverage.

"They knew what was in the drink from the Ricker’s fountain, but they didn’t know what was in the can," Ricker said. "They were convinced that the quality of drink in the fountain couldn’t be beat by what’s in the cold vault."

Ricker and a group of marketing students from Anderson University conducted a study to determine just how solid a foothold Ricker’s Pop has gained in the Indiana market. "People don’t even call it Pepsi or Coke," Ricker said of the program. "They call it Ricker’s Pop."

Among the Ricker’s devotees is Anderson, Ind., resident and Grammy Award-winning gospel music artist Sandy Patti. A five-time Grammy Award winner and platinum-selling musician, Patti and her husband are regulars at Ricker’s c-stores, and Jay Ricker has taken to providing the artist with soda syrups on her tour buses when she travels for shows.

"She said she can’t get Ricker’s Pop on the road, so we gave her two gallons of flavorings to take with her," Ricker said.

 

Participating at Every Level

Success for Ricker’s c-stores didn’t spring up overnight. It’s no mere coincidence, for example, that Ricker Oil has found itself headquartered in one of the most cherished historic buildings in Anderson, Ind.

Space constraints in its old office put the company on the hunt for a new home. As a former chairman of the Madison County Chamber of Commerce, Ricker learned that the local school district spent $3 million restoring a historic building it received as a donation, but it simply couldn’t afford to keep it. Long story short, the newly restored building was auctioned off and Ricker Oil purchased it for a mere $264,000. In 2002, Ricker moved his corporate staff into the new headquarters, sharing the top floor with an architectural firm that helped renovate the building.

The 35,000-square-foot headquarters would make even the most prosperous corporation envious. The place sports 22-foot ceilings, original terrazzo and marble floors in the lobby, maple floors, palladium windows and untold enviable features one would expect in an early 20th-century masterpiece. It was secured foremost through Ricker being tapped into his local community.

It’s a theme that permeates every aspect of Ricker’s handbook on business and on life: Be involved.

Nancy Ricker chairs the Anderson community’s local Habitat for Humanity chapter, for which Ricker Oil has funded 14 new homes. The company is on track to build a new house in every community where a Ricker’s c-store is located.

Jay Ricker is a chairman for his area’s Community Hospital and treasurer for the Anderson/Madison County Community Foundation, where he’s also a past president. The company as a whole is heavily involved in the Anderson and Madison County communities, donating resources to organizations like Alternatives Inc., a Madison County group that provides assistance to women and children who are domestic violence victims.

Company employees are encouraged to participate in community organizations, and at Christmas a group from the corporate office heads up a program to crochet Afghans for residents at a local nursing home.

Ricker’s civic involvement seems endless, but his schedule doesn’t stop with community groups or institutions within the Anderson or Madison County limits. It extends deep into c-store territory nationwide.

He is treasurer for NACS and is a former vice chairman for NACS’ Membership Committee. He also chairs NACS’ Convention and Events Committee and serves on the NACS Coca-Cola Leadership Council. He is a past chairman for BP Amoco Marketers Association (BPAMA) and is a former chairman for Indiana Petroleum Marketers and Convenience Store Association (IPCA).

Ricker was in attendance at a recent NACS event when an industry analyst lambasted credit card companies for the $7.5 billion they collected in credit card fees from c-stores in 2007. Said the analyst: "We cannot outspend them, but we can outwork them."

That said, NACS officials are urging c-store industry leaders to push their local politicos in the fight against profit-gobbling credit card fees. It’s old hat to Ricker, who has a strong ally in local Congressman Mike Pence, (R-Ind.).

"He’s a huge supporter of our industry," Ricker said. "We know our congressmen. They know who we are when we walk through the door."

In fact, the chain has sent Ricker’s Pop products to Pence’s staffers (vanilla- and cherry-flavored syrup packs) and has held fundraisers for the congressman at its headquarters. "It gets you access," Ricker said of his involvement with legislators and decision makers. "It doesn’t get you your way, it just gets you in the door to tell your story."

 

Involvement from the Inside

There’s nary a nook or cranny of the c-store world that Jay and Nancy Ricker haven’t examined to some degree.

"Being involved in the industry, I’m able to meet other people that a company of my size wouldn’t get to interact with," Ricker said. "Those companies may have great ideas, but a company of our size brings some good ideas to the table as well."

In professional organizations and in information-sharing study groups formed by Western Washington University economics professor Dr. David Nelson, Ricker and other c-store owners have formed symbiotic relationships where ideas for best practices and profit drivers are traded like baseball cards among schoolboys.

"We share our figures internally in those groups," Ricker said, figuring he and other c-store leaders across the U.S. meet at least three times a year for the popular study groups. "Other people are going to have some aspects of their business where they do a better job."

New trends and ideas often emerge in those small groups first, and only later are introduced into the industry’s dominant discourse. It was through a small group years ago that Ricker learned about operating his own ATM.

Prior to group involvement, Ricker never considered operating his own cash machines, and he fleshed out plenty of other new ideas from his colleagues over the years. "That’s one of the reasons people need to attend industry events and listen to people in those workshops," he said. "They see what’s new in the industry and what to do to change their business."

Some examples of just a few ideas Ricker has exchanged with others at industry events:

• Leaders at Sheetz Inc. in Altoona, Pa., visit Sheetz stores each month to buy lunch for the employee of the month and the store manager. Ricker culled the idea at a NACS event. "It’s just to say, ‘Hey, thank you for being the employee of the month," Ricker said. "I thought, ‘If Stan and Louie and Steve (Sheetz) can do that, I ought to be able to do that easily.’"

• After starting the monthly lunch visit with outstanding employees and managers, Ricker has tapped into a fruitful bottom-up exchange of ideas. At one store consistently producing an employee of the month, the store manager regularly offers up new ideas. Those exchanges birthed a promotional program where customers receive Ricker’s Pop cards to get a free fountain drink after purchasing 10 drinks.

Ricker’s involvement in his c-store chain isn’t dictated by a top-down mentality. He attends new employee training sessions every Thursday where he drives home his c-stores’ core values: cleanliness, friendliness and customer service. The result from these practices has been higher employee retention rates throughout the Ricker’s chain as compared to the industry as a whole, particularly among store managers.

"When the owner of the company is there in front of you … I think that resonates with them," Ricker said. "They have to see you be an average person, which is what we are."

 

Embracing the Competition

For small- and mid-sized c-store chains, leveraging resources against bigger chains can be difficult if not impossible when tackled alone.

Five years ago, Ricker and his team moved to level the playing field by creating a co-op marketing program with Johnson Junction Inc., a four-store chain in Indiana. The epiphany has since fomented a regional marketing powerhouse encompassing at least nine companies operating 55 c-stores in Indiana, and it continues to add new players to the mix.

The co-op offers these small businesses a chance to pool buying power and tap into ready-made marketing and promotional programming, said Keith Broviak, Ricker’s marketing director.

"Basically, the whole thing works around trying to increase buying power," Broviak said. "Any programs we negotiate, they get to be a part of."

The rules are simple: For a fee, Ricker’s co-op stores secure access to promotional signage, product placement, improved pricing and litany of other benefits they’d be unlikely to attain with their own resources. Ricker’s also has an in-house print shop at its headquarters where signage and other materials are produced at a low cost with breakneck turnaround.

"We put it as we’re doing a lot of stuff for you and bringing stuff to the table," Broviak said. "The only stipulation is you have to follow the planogram and activities as we’ve mentioned. This doesn’t mean they can’t go off and do things their own way or vary what they’re doing. But they do have to (maintain) certain components."

Ricker’s co-op also requires participating stores to restrict their buying to Ricker’s wholesalers, since Ricker’s secures negotiated prices from those individual suppliers rather than haggling over tailor-made programs from a slew of companies.

The end result is the c-stores in the co-op don’t have to chase down vendors and suppliers to negotiate prices, and the marketing programs are dropped ready-made into their hands. The only category where Ricker’s co-op can’t negotiate prices is cigarettes.

"We do all the leg work and negotiate the prices then they automatically reap the benefits of the promotional activity," Broviak said.

The program has been a success, and it comes with a new twist: Reaping the benefits of involvement means encouraging involvement among competitors and suppliers.

The co-op may be one of the newest forays for Ricker’s, but it certainly isn’t the last.

 

Entertaining the Sales Pitch

Others are watching as well. In an industry that routinely sees waves of merger and acquisition activity, the Ricker’s chain would easily be the crown jewel for a larger corporation. But don’t bother calling.

"Many of us have inquiries to sell all the time," Ricker said when asked if Ricker Oil has ever been approached by bigger chains looking to slurp up the competition. ""We have a successful business that we enjoy running so it’s not something we’re interested in or something that’s on our radar at this point."

Spend a few minutes in some his new stores or talking to his customers and you’ll understand why.

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