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(Mona Ødegård)
(Mona Ødegård)

ROB Magazine

Couche-Tard: Can Canada’s convenience-store king take Europe? Add to ...

You head out of town on a wide-open highway that cuts through picturesque pine-covered hills. After about 80 kilometres, there’s a turnoff near a small town. You pull in to what, at first blush, looks like a typical gas station. As always, you want to get the dreary business of the pit stop over as quickly as humanly possible.

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But wait. A hot-food counter beckons, offering complete breakfast, lunch and dinner menus, prepared on site by a chef. Next to a full salad bar is a rack of fresh bread, chocolate buns and muffins. Along a giant window there’s seating for up to a dozen people, with free WiFi and a microwave. Nearby there’s a kids’ playroom, a shower, even a washer and dryer.

As unfamiliar as this convenience store seems, it belongs to Canada’s king of the business, Alimentation Couche-Tard. But don’t count on enjoying its offerings so long as you’re on Canadian pavement. The model location just described is north of Oslo, the Norwegian capital. It represents the future of Couche-Tard, a company that has enjoyed a nearly unblemished 30-year run as a leading consolidator in the North American C-store business, boasting banners such as Mac’s, Becker’s and Circle K.

The station outside Oslo is one of 2,300 across Northern Europe that Couche-Tard owns thanks to its $2.6-billion purchase last year of Statoil Fuel and Retail, an arm of Norway’s giant state oil company, Statoil ASA. The deal has turned Couche-Tard into one of Canada’s largest companies, on track to earn $37 billion in revenues annually.

But as Couche-Tard begins its march across the Old World, another seismic shift is taking place back home. The company is going through its first ever generational shift, prompted by the retirement of the band of friends that created this self-defining company three decades ago. Alain Bouchard—Couche-Tard’s chief executive officer, top shareholder and driving force—turned 64 earlier this year. He is the last of four co-founders, who together control the company, to retain an active daily role. Within the next two years, he too plans to step back, relinquishing the CEO title. Thus begins a hand-off from a close-knit all-Québécois management group to a new crop of leaders spread across two continents. “I’m a strong believer in new blood and having younger people at the helm,” Bouchard says. “I think it would be good for the company that I move to a different role.”

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Couche-Tard might never have been had Bouchard not received a cold shoulder in the 1970s.

Back then, he was a mid-level executive with grocer Provigo’s convenience store operation, Provi-Soir—and, at one point, a franchisee himself, with two stores.

While Provi-Soir had opened nearly 100 stores in Quebec and was growing fast, Bouchard figured it should be growing a lot faster—not just by opening stores, but also by buying out family-owned shops that were little more than converted grocery stores, lacking the wherewithal to become focused convenience retailers. Brimming with ambition, Bouchard presented a binder of his ideas to a Provigo executive.

The boss wasn’t interested. So Bouchard set out on his own with a single store in Laval. In short order, he put the consolidation plan tucked in his binder—the foundation for his life’s work—into action.

Bouchard started to buy up other operations, including the one that gives his company its name (which roughly translates as “Night Owl Foods”). By the time he filed to take his 34-store chain public in 1986, Bouchard’s core team was in place. Richard Fortin, a banker friend, handled the finances; Jacques D’Amours, a former employee of Bouchard’s, took care of real estate. Réal Plourde was an engineer whom Bouchard had met while running a side venture refurbishing phones; he was the operations expert. “I discovered early in my career as an entrepreneur that I’m not good at many things, and I said ‘I need help,’” Bouchard says. With his friends at his side, he was able to focus on development and store-level operations.

Convenience retailing was—and is— about catering to instant gratification, and more particularly to satisfying two unshakeable consumer addictions: driving and smoking. Fuel accounts for about two-thirds of overall industry sales in North America. Tobacco drives in-store traffic, generating a fairly stable $2 of every $5 in revenue inside the store. Impulse consumables like chips, chocolate, pop and pizza slices account for close to a third of in-store sales, while alcohol, staple groceries like milk and eggs, lottery tickets and magazines make up most of the rest.

Tobacco, in fact, accounted for the company’s only real crisis. In the early 1990s, a spike in smuggling of Canadian cigarettes from the United States hit sales hard, exacerbating the effect of a recession and the recently introduced GST. The partners each took a 30% pay cut, and froze hiring and salaries. On the political front, Bouchard played a key role in persuading the federal and Quebec governments to slash tobacco taxes.

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