Alimentation Couche-Tard Suspends Foodservice Initiative

A major growth initiative dubbed "Food at Scale" has been suspended at a number of convenience stores operated by Alimentation Couche-Tard until social distancing guidelines can be relaxed. 

The company, which operates 9,799 stores in North America, has been building out and installing the necessary structures and equipment inside stores for its Food at Scale program, which is focused on strengthening foodservice offerings. But the company has now suspended team training sessions related to Food at Scale to respect the social distancing guidelines. The company says it is ready to "turn the switch back on and support the program with sampling and marketing" when safety measures are relaxed.

The addition of food, and prepared food in particular, is a key focus for many c-store operators and represents an emerging competitive challenge for traditional grocers and other food retailers who are also eager to bolster their foodservice offerings. Many food retailers have had to suspend or eliminate their self-service food service offerings during the COVID-19 crisis.

While Couche-Tard has hit pause on Food at Scale, it has pursued a number of other innovations. For example, the company said it has been able to expand many delivery platforms and pull forward enabling technologies that could become key to serving customers beyond the current pandemic. These initiatives include:

• The expansion of home delivery capabilities in North America to more than 620 stores
• Click and collect and curbside delivery in both Europe and North America, with pre-ordering and payment through the Circle K app
• Frictionless payment technology in Norway to accept fuel payments using license plate recognition

Couche-Tard has also put financial and other measures in place to support employees for their efforts during these challenging times, including:

• An Emergency Appreciation Pay Premium of $2.50 per hour in North America for all hourly store and distribution center employees
• An Employee Assistance Program to all North American employees for the duration of the pandemic
• An Emergency Sick Care Plan for hourly employees in North America that included both a bank of sick pay, as well as a pay continuation benefit for anyone that is either diagnosed with COVID-19 or placed under mandatory quarantine
• Access to virtual health care for hourly employees in the United States
• A COVID-19 Assistance Fund to help employees most severely impacted by the pandemic

Couche-Tard has also implemented procedures to protect office employees during the crisis including reducing capacity in offices and adapting spaces to comply with social distancing requirements, limiting participants for in-person meetings, and carrying out detailed technical processes to allow most of the support employees to work remotely.

Couche-Tard also provided a business update on Tuesday, saying that fuel margins overall have benefited from the rapid and steep declines in crude pricing. Other details include:

• From a merchandise perspective, sales benefited from pantry stocking in the early days of the crisis. Starting in mid-March, merchandise sales decreased due to reduced customer traffic, but were mostly stable in their decline week-over-week since then. Overall, a higher average basket helped offset a portion of the lost customer visits.
• From a merchandise category standpoint, demand has been greater for alcohol, tobacco products, basic staples, canned and dry goods, and cleaning and sanitation products. This has helped mitigate the negative impact from lower demand in the prepared food category. Informed by their early learnings, Couche-Tard's teams in Europe recommended adjustments to the in-store assortment, which allowed stores in North America to better anticipate the changes in shopping behavior and the items that could see greater demand.

"Couche-Tard has always been managed with a disciplined mindset and a readiness to face possible rainy days ahead," CFO Claude Tessier said. "We have come into this crisis in a strong position from both a financial standpoint, with a solid balance sheet and well spread debt maturities, and from an operational standpoint, with experience in temporary network shutdowns that permitted us to respond quickly to the changing landscape. We have implemented weekly COVID-19 financial reporting focused on daily cash position summaries, working capital, as well as details on retail sales, volumes and margin trends. We are taking all necessary steps to be ready to reinvest in our business and in the economy when the time comes to exit this crisis."

Laval, Canada-based Alimentation Couche-Tard operates 9,799 c-stores throughout North America. In Europe, Couche-Tard operates 2,697 stores. In addition, under licensing agreements, more than 2,380 stores are operated under the Circle K banner in 15 other countries and territories, bringing the worldwide total network to more than 14,800 stores. The company is No. 10 on The PG 100 list, Progressive Grocer’s 2020 list of the top food retailers in North America.