It's just after noon on a cloudy Tuesday in Montreal's Laval suburb, and, like bees drawn to a hive, hungry workers are darting into the Couche-Tard convenience store for snacks.
A burly man steps down from a yellow loader in a corner of the parking lot, the hulking machine as big as his appetite, and lumbers inside. A pickup hauling a trailer full of landscaping equipment parks illegally in front of the store and the driver rushes in, emerging two minutes later with a clutch of candy bars spilling from his hands.
Alain Bouchard, the co-founder and executive chairman of Alimentation Couche-Tard Inc., calls these types of customers "Bubbas"—men and women who work hard and crave calorie-rich food. Think hot dogs and chocolate, skip the spinach.
Couche-Tard's CEO, Brian Hannasch, is a bit of a Bubba himself. Though he spends most of his time these days criss-crossing the planet on one of the company's two jets, his personal vehicle is a Ford F-150. His LinkedIn photo shows him in a plain blue shirt, unbuttoned at the top. He likes hunting and fishing and football and golf. Couche-Tard's $38-billion market value might give it star power, but its CEO remains a no-fuss, blue-collar Iowa boy at heart.
"They made me put on a tie to come see you," he says as he greets me, a pinstriped suit clinging to his athletic frame. "I'm not very formal."
Hannasch joined the company in 2001 and was named CEO in 2014. How he has since steered Couche-Tard on an acquisition blitz that has turned it into one of the largest convenience store operators in the world will be the stuff of MBA case studies for years to come. That he's done so while helping to deliver a nearly 90% gain in the company's share price is even more impressive, and makes him the standout candidate for CEO of the Year.
In an industry where profit is measured in pennies, and the difference between triumph and failure can be something as small as a fountain-drink cup, Hannasch has proven to be an expert operator. He has successfully integrated a vast network that stretches across 24 countries. His latest takeover, a $3.8-billion (U.S.) offer for Texas-based CST Brands Inc. announced in August, is the company's biggest yet, eclipsing the 2012 purchase of Norway-based Statoil Fuel & Retail.
The 50-year-old Hannasch figures there's more consolidation to do, and he knows he can tease more profit from existing stores. Last year, Bouchard gave him the aspirational target of doubling the company's size in coming years—something Bouchard himself has done over and over.
It is no small thing that Couche-Tard's chairman, along with his three co-founders (Jacques D'Amours, Réal Plourde and Richard Fortin) have entrusted the future of their empire to an American with little to no knowledge of French. Hannasch's appointment rankled some in Quebec, and shareholders have brought it up on at least two occasions at recent annual meetings. But Bouchard dismisses the criticism, saying the CEO's role is to deliver returns for investors, not to learn languages. Internally, there's a feeling the founders made the right choice—that Hannasch has become embedded in the DNA of the organization they created 36 years ago.
Early on, Bouchard was frequently given the cold shoulder by members of Quebec Inc. as a small-fry purveyor of beer and smokes. At times, the company has received little love from investors, unless it's consummating big deals. Perhaps they find it too boring. But as D'Amours once put it, in a veiled jab at a certain Montreal manufacturer: "Depanneurs aren't glamorous. We're not building airplanes. But we've always made a profit."
Indeed, Couche-Tard has posted just one quarterly loss in its history, in 1991, when a unique confluence of events nearly destroyed the company: an economic recession, the introduction of the GST, dramatically higher tobacco taxes, and Quebec's decision to let supermarkets open evenings and weekends. But the founders pushed on.
Hannasch has brought some excitement to Couche-Tard, which is now too huge to ignore. When the CST deal closes (it still has to be ratified by CST shareholders), it will have 14,000 stores, up from 12,000. Net income for the year ended April 30 was $1.2 billion (U.S.)—up 48% over 2014, when he became CEO—on revenue of $34 billion (U.S.). The merger could put it on track to be Canada's biggest company by revenue next year. It will soon be selling 64 billion litres of fuel a year, which, as Hannasch points out, is getting close to the likes of BP and Esso.
"You know," he says, betraying a trace of a Midwestern drawl, "I never dreamed that we'd have a company like this."
Hannasch grew up in Carroll, Iowa, a farming community on the banks of the Middle Raccoon River. With no crime and no conceit, it was, as he puts it, the biggest town for 50 miles in every direction. When he was 17, McDonald's moved in, which the locals took to mean that Carroll was finally on the map. "That was big-time," says Hannasch.
Part of a working-class family of six, Hannasch did a lot of farm labour, interspersed with sports and after-school jobs. Though he wouldn't necessarily want to move back to Carroll today, he says it was a great place to spend his youth.
"I kind of grew up with no expectations," he says. "In my family, nobody had ever gone to college—not my uncles, aunts, nieces, nephews, cousins, nobody. So I really didn't even think about that growin' up."
His father informed him that there was no money for college anyway, and suggested he join the military. Hannasch rejected the idea and went to Iowa State University, working at the cafeteria to pay for room and board, and taking out loans for the rest. He went on to complete a master's degree at the University of Chicago's prestigious business school in 1994, finishing at the top of his class.
He landed his first finance job at oil company Amoco Corp—as a credit analyst, scrutinizing the financial statements of its large industrial clients. But Hannasch hated it; 18 months later, he switched to sales to be in the field with customers.
British Petroleum swallowed Amoco in 1998, and by age 30, he was one of its youngest-ever vice-presidents. Each promotion meant moving to a new city, and it took a personal toll. He'd met his wife, Patty Huegerich, a now-retired pharmaceutical sales rep, in high school, and they had two kids, Michael and Taylor (both now in their 20s). Just as Michael was starting kindergarten, BP wanted to transfer Hannasch to London. He was already hesitant to accept—and then his father was diagnosed with cancer. His mind was made up: The family would stay in the Midwest.
"I said 'screw it' and I quit with no plan," he recalls, "which isn't my nature. I just walked away."
Bouchard says that's typical of Hannasch, who tries to put family before career. Similarly, when he gets together with old friends, he doesn't bring up his job unless he's asked about it, according to Jim Wieland, who grew up with Hannasch and still lives in Iowa. Some people crave praise. Not Hannasch. "He has an ego, but it's not oversized," says Bouchard. "It's not about promoting himself."
Hannasch wasn't jobless for long. Dick Johnson, an Indiana businessman whose family owned a small chain of service stations and convenience stores under the name Bigfoot, knew Hannasch and called him right away with an offer to manage the business. Hannasch accepted, and the family moved to Columbus (they still live there today, though Hannasch has a condo in Montreal).
"It's always a little bit hard to take your baby and bring somebody in to help nurse it along," says Dick Johnson's son Rick about putting Hannasch in charge of operations at the family company. "But with Brian, there was never any question in our minds. He had all the strengths, all the values you needed, and the confidence and good decision-making ability."
What Hannasch didn't know was that Couche-Tard, then a Canada-only company, had scoured the U.S. looking for a beachhead into the market. It settled on Bigfoot and struck a takeover agreement with the Johnsons in 2001, just months after Hannasch joined the company.
Couche-Tard's founders heard nothing but good things about him. He still had to prove himself, but as Bouchard says, "At the very start, we saw a man with superior intelligence and incredible energy."
Hannasch, for his part, was unsure about his new masters. Not only had he never heard of them, but he couldn't even pronounce the company's name or understand a word of what the French-Canadians were saying. The only person he could kind of comprehend was Fortin, who didn't seem to care how many mistakes he made speaking in English.
Hannasch figured he would stick around for the transition, then find something else. But the Couche-Tard founders quickly concluded he was one of Bigfoot's most valuable assets. It would be the beginning of a years-long relationship between a small-town American and four French-Canadian empire-builders.
The story of Hannasch's first social outing with Couche-Tard's founders has become the stuff of company lore.
He and a handful of other managers were invited on a weekend fishing trip in Northern Quebec. Among the group were some guys from Silcorp, the Toronto-based operator of the Mac's, Mike's Mart and Becker's chains, which Couche-Tard had acquired in 1999. En route to Musquaro, they told a still-skeptical Hannasch that joining Couche-Tard was the best thing that had ever happened in their careers. Couche-Tard's executives do what they say, they told him, and they give their regional managers a lot of room to run their businesses.
On their first day of fishing, Hannasch ended up in a boat with D'Amours. "He doesn't say a word. And I think, okay, he hates Americans," Hannasch recalls. "Literally four hours, like two words. It was like, what have I done?"
At the end of the day, Hannasch asked Bouchard whether it had been some sort of test. Bouchard assured him it wasn't, that D'Amours just doesn't talk much.
Later that night, Hannasch was ready to drink beer and play cards. "I look around and there's no beer," he says. "There is literally not a can of beer in the camp."
There was plenty of wine, though, which was a good thing, because what happened next was even more bewildering to Hannasch than a June snowfall in Iowa: Someone brought out a stack of choral books and announced that it was time to sing.
The founders had started the tradition years before. Whenever they welcomed a new executive, they'd sing. It was an initiation of sorts, a way to break the ice. At first, the repertoire contained mostly French folk songs, but they'd added some anglo ones after buying Silcorp.
And so they sang, Hannasch repeating the words for the French songs and leading on some English ones: Mon Pays. Alouette. My Way. "Brian didn't believe his ears," Bouchard says. "And he has no voice."
Plourde, who was COO at the time, became Hannasch's mentor over nearly a decade. From him, he absorbed Couche-Tard's basic principles of convenience store retailing and applied them to the often-neglected chains they would go on to purchase. As a biography of Bouchard published this past October explains, that meant "a clear, well-laid-out interior, proper lighting, nice colour and general cleanliness, no lineups, well-trained and welcoming employees, and the elimination of useless jobs in the administrative offices," since all the money was made in-store.
From Bouchard, he learned the art of acquisitions. In the 2002 Dairy Mart takeover, which at first seemed like a bargain, Bouchard agreed to pay only for the best stores and take the rest conditionally. With the $800-million (U.S.) Circle K transaction, which cemented Couche-Tard's U.S. presence, Hannasch watched the founders dig into massive amounts of data during the due diligence process, while other potential buyers dispatched lawyers and accountants. And there was always one essential procedure before striking any agreement: Visit as many outlets as possible.
"They were all over the stores—hundreds of them, literally, to see if what they were buying was what they needed," says Dennis Hatchell, former CEO of The Pantry, one of the largest independently operated U.S. chains before it was bought by Couche-Tard in 2015. It was the first of four significant deals Couche-Tard has done since Hannasch became CEO two years ago. "And that was a huge difference from the other [bidders]."
When the founders started planning their succession in the early 2000s, Bouchard says they quickly identified two key individuals, including Hannasch. Initially, they hoped he and the other contender would run the business like Bouchard and Plourde did—as a tight CEO-COO tandem. But the other guy left the company, and by the time Bouchard was ready to let go of the CEO role in 2014, Hannasch was the clear heir.
Bouchard was the last of the founders to relinquish a management role. As executive chairman, the 67-year-old would still have an active hand in acquisitions and new openings. But Hannasch would run the show. "I think Alain realized he had to, to some extent, let go of the day-to-day controls," says Greg Dean of Cambridge Global Asset Management, a long-time shareholder. "The company had grown to where he couldn't be the judge, jury and executioner any more."
The reasons the founders picked Hannasch as Bouchard's successor are tough to debate. He has helped steer a vast expansion in the U.S. and a new push into Europe—during his 15 years at the company, it has grown by 10 times its size. He's also leading the rebranding of almost the entire network under its best-known brand, Circle K. (The founders refused to surrender the Couche-Tard name in Quebec, however, arguing that it would wipe out part of their own history.)
"Brian is a numbers machine," Bouchard says. "It's instinctive." His style, he adds, is based on objectives, a plan and results.
Plourde—affectionately known by employees as "mother hen"—talks about Hannasch's discipline. "We travelled a lot in the United States together over several years, and it always impressed me that he would go to the gym to exercise, and at 6 a.m. he was always at breakfast with the rest of us."
But people who understand the company best say there is another, more intangible reason that the founders placed their trust in Hannasch. They say the four men who created Couche-Tard recognized much of themselves in his modest upbringing and aw-shucks manner. And through careful nurturing by Plourde in particular, who helped him hone his ability to connect with staff, Hannasch has simply become one of them.
"I feel like this is my company as much as it's Alain's or Richard's, Réal's or Jacques's," Hannasch told author Guy Gendron for the Bouchard bio. During our interview, he chokes up when asked about his relationship with the founders, who came into his life just as his own father died.
"These guys were like my uncles," Hannasch says. "They've really treated me like family, and that's kind of how we tried to run the company. I'll miss them. Being promoted has been nice, but losing those guys day to day has been a big negative."
Over nearly constant dings as customers enter and leave the Couche-Tard store in Laval, Hannasch is talking coffee. More specifically, the $15,000 (U.S.) silver coffeemaker he sees as a traffic driver for Couche-Tard.
Under development when the company bought Statoil Fuel & Retail four years ago, the Swiss-made machine has proven so popular that Couche-Tard stores in one Baltic country now sell as many as 400 cups per store per day. That's big volume compared to North America, where the industry average is less than 100. The machine has since been rolled out in all of Couche-Tard's European markets. Another 2,000 stores will get it over the next year.
In Laval, $2.75 with tax buys a medium latte, which gets spit out at the touch of a button. Espresso, Americano, cappuccino, mochaccino and regular brewed coffee are also available. It's cheap, fast and surprisingly good. Couche-Tard is betting it can win over people tired of waiting in line at Starbucks with a product that bears no resemblance to the watered-down sludge historically served by your local corner store.
"I think the machine does a good job," Hannasch says. "It should—it costs as much as my first car."
Improving Couche-Tard's food and drink products, especially in North America, is a pivotal part of Hannasch's plan. While fresh food is its No. 1 profit category in Europe, after gasoline—it bakes pastries and other goods in many of its stores—that's not the case here. The CEO wants to change that. Key to that effort, he says, is technology, which now allows chains like Couche-Tard to assemble high-quality food that's largely premade. As Hannasch points out, that's exactly what Tim Hortons does.
Hundreds of Couche-Tard stores in North America have already adopted the fresher-food credo. Southern U.S. locations offer tacos; the North prefers sandwiches. Quebec and other Canadian sites, Hannasch says, are still developing their own local offerings.
The strategy extends to selling more private-label products to boost profit margins and win more clout with suppliers like Coca-Cola and Nestlé. The company has an entire troop of employees developing its own brands. Buoyed by the success of Sloche, the frozen ice drink it created specifically for Quebec, Couche-Tard has since spawned an energy drink, Joker, and a soda that comes in cola and lemon-lime flavours.
As the traditional advantage of convenience stores—namely, longer opening hours—has disappeared, the industry has had to find ways to stay relevant. Retailers like Costco sell gasoline. Pharmacies like Shoppers Drug Mart sell milk. The reasons for going to your local corner store appear to be dwindling as quickly as the retail lines blur.
When asked how Couche-Tard will compete, Hannasch doesn't hesitate. He's said it before and he repeats it now: His company sells time. People go to a Couche-Tard because they know they can buy things quicker than anywhere else. It's why the company, when recently replacing its point-of-sale terminals, chose the fastest cash registers on the market, shaving three to four seconds off each transaction. It's why they train their employees never to be far from the checkout. And it's why new locations typically have big, easy-to-navigate parking lots.
Driving organic growth doesn't mean Hannasch will stop gobbling up other companies. After four sizable deals in a row, though, many investors are betting Couche-Tard will gear down and pay off debt while still remaining open to any prospects that pop up. The biggest deals, however, are becoming more difficult to pull off thanks to anti-trust issues—with CST, Couche-Tard had to sell a chunk of its Canadian stores to appease regulators.
The year-long courtship of CST appears to have tired Hannasch out. Couche-Tard emerged as the winner after a lengthy public auction, but that was after CST repeatedly rejected its overtures. "I really thought we could get a one-on-one deal done," he says. "We offered very fair value. I think their board made a mistake in going with a public process."
Mexico could be the next leg of growth for Couche-Tard. The country's middle class has grown significantly over the past 15 years, and that's set to continue, meaning more people will have money to buy cars and discretionary goods. The country has started deregulating its fuel industry, which could dramatically change the landscape of gasoline retailing, according to GMP analyst Martin Landry. He estimates that Mexico has one convenience store for every 6,800 people, versus one for every 2,100 people in the United States, suggesting the country could support another 20,000 locations.
"It's something we're certainly looking at," Hannasch admits.
In many ways, the Couche-Tard Hannasch is leading is vastly different from the one Bouchard built. Its scale has given it stronger purchasing power in merchandise and fuel. As Landry notes, it has boosted The Pantry's EBITDA by more than 30% versus pre-acquisition levels, and there's no reason it couldn't create similar value with future deals.
Straddling two continents (four, if you count licensees in Asia and Africa) also helps, says Dean of Global Asset. "There's a lot less that could derail this company today than 10 years ago, because they're not beholden to any one geography, any one political climate, any one tax jurisdiction."
The thing that worries Hannasch most? Preserving the unique and decentralized culture the founders forged. As he puts it: treating people right, being honest, being open, not being political, not being bureaucratic, limiting formal meetings. Making sure you don't get finger-pointing and slow decision-making and a head office that thinks it knows everything. The company has a no-jerks policy it calls "Light of Day," where employees are asked to refrain from any behaviour they wouldn't want exposed on the morning news.
"Our culture has been about letting people do the right thing," says Hannasch. "And I worry a lot about screwing that up as we get bigger and cross different countries and take on new people and all that. If we can keep that intact, I think we can continue to thrive."