Reliability, a word thatall retailers strive to achievenowadays, is the first wordthat comes to mind whenFast Phil’s is mentioned to local residentsin southern North Carolina. Thechain, which has 12 stores spread outover Troutman, Mooresville, Yadkinvilleand Statesville, N.C., is known for itssteadfast pricing and a subtle streak ofbusiness ingenuity.

Incorporating technology used bymajor retailers, Fast Phil’s has its handin proprietary and check cashing cards,rewards programs and the latest inventorymanagement tools. These investments arehelping the small company thrive in theface of extremely formidable—and ubiquitous—competition including The Pantryand Wal-Mart.

Employees who have been with FastPhil’s for years recognize the company’sefforts to provide them with an amplebonus program and consistent job rewards,and pass on their satisfied and sunny attitudesto customers.

Walter Herring, Fast Phil’s vice presidentand general manager, has kept thechain profitable while larger chains havecontinued to expand around them.

“We’ve created a destination stop forour customers while maintaining lowoperating costs and low prices,” saidHerring. “How do we survive down here?It’s simple. Stop that guy on the street andask him who has the best price on bread,and he’s not going to say Food Lion. He’sgoing to say ‘Fast Phil’s.’ When it comesto competition, all the great prices are ofno use unless you give great customer service,and that’s what our employees arebest at.”

Price Wars
For example, it’s not everyday youwalk into a convenience store and findlittle old ladies stock piling bread andeggs. These are the same customers who,ten minutes earlier, were spending theirweekly food allowance at the supermarket,purposely avoiding the bread andegg sections. After they load up their carsthere, they zip over to a Fast Phil’s, wherethey know bread and eggs will never fluctuatein price. Satisfied customers are thechain’s best advertisement.

“Down here, the people do the talkingfor us,” said Herring. “We’re making astatement with our low prices. You can’tbuy that kind of advertising.”

Fast Phil’s stores are all within a 30-mile drive from the Statesville, N.C.-basedheadquarters, many located within walkingdistance to each other. Larger chainswill change prices by area and demographics,while Fast Phil’s customerswill notice that prices are the same fromone site to the next, whether it’s on sodas,tobacco products or snacks. Herring keepsan unwavering hand in making sureprices for the most popular items remainthe same, no matter which Fast Phil’s acustomer walks into.

“We eliminate the price confusion.Everyone that sets foot in here knowswhat they will be paying, and that peaceof mind doesn’t come easy for big chains,”said Herring.

Pumptoppers are used to let customersknow about the low prices inside thestore, and the word spreads quickly. FastPhil’s moves about as much brand namebread per week as some supermarkets do,keeping its prices between 40 and 60 cents below supermarket prices. The same goesfor eggs—the chain moves about 90 to 120dozen eggs a week at just $1.19.

“It’s vital to our success to entrenchthat repeat business with our customers,”said Herring. “We need those peoplecoming back everyday. When I’m doingmy rounds, I sometimes see the samecustomer stop by three or four differentlocations in a single day. That right therespeaks volumes to me. Prices and greatemployees help make that possible.”

Competing to Thrive
To help offset the high cost of leasing,Kivett Oil, co-owned by Wayne Martinand Jim Lawton, owns the land and facilitiesfor eight of the Fast Phil’s stores, whilethe other four are leased from another oilcompany. The decision to acquire or opena new store is a long and thorough processfor upper management encompassing realestate costs, lease terms and nearby competition.For a small company, one wronginvestment could be a serious financialdisaster.

“We have to be meticulous when lookingto expand,” said Herring. “It’s onething to expand and be successful, anda whole other thing to buy into someoneelse’s problems. You’ve got to ensureprofitability and get a decent return onyour investment to survive. Sometimeswe’ve di scovered that big i sn’ talways better.”

At one time, the chain had 16 stores,with some sites well out-performing others.When Herring came on board, hesat down with the owners and analyzedeach location and leased out a few due tomarginal performance—it was the kindof move savvy chains make to maximizeoverall profitability.

“We do everything we can to keepevery store up to speed,” said Herring.“Sometimes locations just can’t perform.As a small chain, the best solutionfor us is to cut our losses and focus onthe stores that have more potential andconstant results.”

The past year marked a period of renovationsfor the chain. Some of the storeswere old and in need of repair, so they weregutted and remodeled with new flooring,Corian counters and shelving, as well asthe introduction of lottery machines. Theaddition of walk-in beer coolers has provideda significant increase in sales andhas become a sparkling interior centerpiece,with 12 to 14 cooler doors.

One of the remodeled stores inMooresville operates a full-service deliand serves made-to-order food. The storeaccommodates large breakfast and lunchrushes, supplying customers with customsandwiches, pizza, chicken wings andbiscuits. Fast Phil’s used to offer brandedfoodservice programs, but opted for inhousefoodservice because of fees androyalty costs.

Fee-Friendly
While the 12 convenience stores operateunder the Fast Phil’s name, all but oneof the stores sells CITGO gasoline, withthe other offering BP fuel. As credit cardprocessing fees continue to cripple theindustry, Fast Phil’s joined the growingranks of merchants to offer a proprietaryfuel card for local businesses, which helpsthe company avoid the costly processingfees associated with the likes of Visa andMasterCard. Since one of the owners runsa separate fuel jobber, they issue the cardto other merchants who purchase fuelthrough Kivett. The company also providesall the local government agencieswith their fuel.

Herring is currently working on arewards program for Fast Phil’s. He is concernedthat customers may be reluctantto add another card to their overstuffedwallets, but adding a rewa rdsprogram may help level the playingfield between Fast Phil’s andlarger chains.

Fast Phil’s does have a leg up on thecompetition by accepting personal checks.Risk is one of the reasons other chainshave stopped accepting checks, but FastPhil’s gave itself a safety net. The chainoffers a unique, courtesy check cashingcard, which is basically a pre-validatedcard the customer presents with theircheck. A customer fills out the card applicationwith their bank account informationand everything is verified before the firstcheck is ever written, allowing a fraudulent check to be discovered at the momentof purchase.

“We have about 900 cards out there andonly average three or four bad checks ayear,” said Herring. “When customersfill out the check card application, we getinformation that the banks cannot give us.This gives us another layer to protect ourbusiness and still gives a personalized serviceto our customers.”

As a CITGO-branded retailer, FastPhil’s sells CITGO Cash Cards, whichhave proven to be a big seller, especiallyfor gift giving. The card can be purchasedin amounts from $5 to $300, and automaticallyslashes three cents off the gallonwhen used for gas. One local hospital buys$1,000 worth of Cash Cards from FastPhil’s several times a year to give to hospitalemployees as a thank you. Herringsays the cards are one of the biggest marketingtools working in Fast Phil’s favor.

Calling on the Past
Every few years, several distributorscome in and bid for Fast Phil’s fuel business.About five years ago when a FastPhil’s location was being rebuilt, WayneMartin decided to give M.R. Williams, awholesale distributor for the mid-Atlanticstates, a shot at a piece of business.

Although Herring had a history withone of the other distributors, he agreedwith the decision because M.R. Williamsbrought new technology and tried andtrue business practices to the table.

As a result, Fast Phil’s is now usingthe C-Tech 21 Palm Technology, a handhelddevice developed by M.R. Williams,which provides fingertip inventory andprofit management programs to managers.The device has completely overhauledhow Fast Phil’s does its inventory management.Managers now do planogramsand view bookings directly from the portabletechnology, and can also see eachstore’s specific data including historicalpurchases, weekly movement and suggestedfuture orders.

“We love that the C-Tech 21 gives usso much store-level information in oneplace,” said Herring. “It eliminates hoursof paperwork and allows us to minimizeunnecessary inventory.”

We are Family
Averaging between 60 and 70 employees,store-level management is the first torespond to any situation among customersand clerks. In the event that the storemanager can’t be reached, employeesknow they can turn to Herring when theyneed someone to help resolve the issuesat hand. All store employees have his personalpager and cell phone number, wherehe can be reached anytime, day or night.

“Of course we’ve got procedures andpolicies that are followed, but anyonein the company can call on me,” saidHerring. “You can’t leave your employeesfeeling helpless because they feel like noone cares.”

To increase employee loyalty, the companystarted a program called “Fast PhilBucks,” which are awarded to employeesin $5 increments for going aboveand beyond. The bucks are popular withemployees and have become a soughtafter perk, especially since the card can beused for fuel purchases. The reward cardsare also given for strong store inspectionsand sacrificing a day off to work anextra shift.

All store-level employees start on atemporary basis for the first 90 days. Aftera three-month performance review, theyare offered a part-time or full-time position.This trial period allows both thecompany and the employee to see if thejob is a good fit. Full-time employees areeligible for medical benefits after 60 days,with the managers being put on KivettOil’s major health plan.

To help deal with the high cost of insurance,non-manager positions are coveredunder Fast Phil’s mini medical program,which requires employees to pay about $5a week for coverage, while the store coversthe rest. The company separates thetwo groups because of increased premiumcosts due to some younger employees optingout of insurance because they don’tfeel they need it.

“No matter what happens, when dealingwith employees, it’s not about money.It’s about loyalty and treating peopleright,” Herring said. “We have a bonusprogram that extends down to part-timeemployees. It’s important that everyoneshare in the success of the company.”

Herring credits the company’s ownerswith giving him lead way in trying newand innovative approaches that continuallystrive to grow the business, somethingwhere he can take great pride in being apart of the Fast Phil’s family.

Also in the works for store employeesis the new shift leader position, which fallsbetween the assistant manager and storeclerk. If a person is not ready to move upto management, they can assume a shiftleader position to begin learning necessarymanagerial skills. This intermediateposition allows the employee to test thewaters of management without throwingsomeone into a job they are unpreparedfor, while tapping into hidden potential ofpart-time and full-time employees.

All management positions are givenon a 90-day trial period, during whichemployees can decide if they want to goback to their original position or continuewith the process of becoming a manager.“Our goal is not to lose our employeesjust because a certain position maynot be a perfect fit,” said Herring. “Theyhave 90 days to try the new job, and theyhave the comfort of returning back to theiroriginal post if they choose, knowing thatnothing will be held against them. Theycan always get another opportunity whenthey are ready.”