Pilot Flying J Raid Reportedly Stems From Unpaid Rebates

An FBI raid of the Pilot Flying J headquarter offices in Knoxville, Tenn., on Monday reportedly resulted from an issue regarding unpaid customer rebates to some truck lines.

CEO Jimmy Haslam held a press conference Tuesday and said the raid stemmed from what appears to be a “very insignificant number of customers and the application of rebates—that the rebates owed to the customers were not paid.”

“We of course disagree with that,” said Haslam, adding that “we were obviously shocked by the events of (Monday).”

Haslam declined to give a specific number of customers allegedly impacted but said it was an “extremely low percentage, a low number.”

Haslam explained the company’s rebate system like this: if a trucking company buys 50,000 gallons of gas from Pilot Flying J, it would receive so much of a rebate from the business. If it buys 100,000 gallons, it would receive another amount.

Haslam, who is the brother of Tennessee Gov. Bill Haslam and owner of the Cleveland Browns, said the company is cooperating “100 percent” in what he confirmed is a criminal investigation.

The raid by the FBI and IRS Monday was “professional,” Haslam added.

As for why the IRS is involved, Haslam said he isn’t sure but that his company does not believe “it’s related to any tax implication, we feel very confident it does not.”

Haslam revealed that several members of the company’s sales team were subpoenaed in the investigation. No arrests have been made.

All Pilot Flying J locations remain open for business and Haslam thanked Flying J’s trucking company customers. He said their support has been “overwhelming.”

Haslam also noted that, while he doesn’t know how long the investigation will go on, the company is preparing for the long haul.

Pilot Flying J is the largest operator of travel centers in North America.

Go here to view the press conference in its entirety.

Convenience Store Sales Topped $700B In 2012

The convenience store industry had record sales of $700.3 billion in 2012, with in-store sales increasing 2.2 percent to reach a record $199.3 billion and motor fuels sales increasing 2.9 percent to a record $501.0 billion, according to figures released today by NACS. The industry’s 2012 numbers were announced at the NACS State of the Industry Summit, a two-day conference that reviews and analyzes the industry’s key economic indicators.

The industry’s overall sales reflected real growth per store, with sales outpacing the 0.7-percent increase in convenience stores in 2012, according to the NACS/Nielsen Convenience Industry Store Count released in January 2012.

In-store sales growth was driven by double-digit sales gains in several subcategories: alternative snacks, which include meat snacks and health, energy and protein bars (12.2 percent), liquor, a relatively small subcategory (11.6 percent), cold dispensed beverages (11.3 percent) and sweet snacks (10.3 percent).

Beyond sales, convenience stores are an important part of the economy, according to a NACS news release. They employed 1.84 million people and generated $171 billion in federal, state and local taxes in 2012. Overall, convenience stores sales represent 4.5 percent—or one out of every $22—of the entire $15.68 trillion U.S. gross domestic product.

“These numbers demonstrate that Americans turn to us for their daily needs,” said NACS Chairman Dave Carpenter, president and CEO of J.D. Carpenter Companies Inc. “We are a vital part of consumers’ daily lives and the U.S. economy. We also continue to innovate and deliver on our promise of providing fast, one-stop shopping to consumers, whether they are on the road or in their communities.”

Convenience store pre-tax profits reached a record $7.2 billion in 2012, but taken as a percent of total sales, profits only moved from 1.027 percent to 1.028 percent of total sales.

Motor fuels continued to drive sales dollars, but in-store sales drove profit dollars. Overall, 71.5 percent of total sales were motor fuels, but motor fuels only accounted for 35.0 percent of profit dollars. Motor fuels gross margins decreased from 18.2 cents to 17.8 cents per gallon before expenses, and also dipped on a percentage basis, falling from 5.23 percent to 4.94 percent, the lowest that they have been on a percentage basis in decades.

While sales and profits were strong, there are concerns for the convenience retailing industry. Total credit and debit card fees hit a record $11.2 billion and surpassed overall convenience store industry profits for the seventh straight year. Overall, card fees increased 1.5 percent, a much slower pace than the double-digit increases that were routine the past decade. Passage and implementation of new debit card swipe fees limits played a significant role in reducing escalating card fees. However, card fees still were significant. Just looking at motor fuels sales, credit and debit card fees added 5.1 cents to every gallon of gasoline sold at convenience stores in 2012. Beyond card fees, several other expense lines saw increase, led by health insurance costs, which rose 6.3 percent.

The industry’s bifurcation also continues, with a considerable difference between top quartile and bottom quartile performers. Top quartile performers had hot dispensed profits that were 4.4 times greater than those of the bottom quartile, prepared food profits 2.4 times greater than the bottom quartile, cold dispensed profits 2.3 times greater than the bottom quartile and packaged beverage sales that were 2.3 times greater than the bottom quartile.

Of greater concern to all retailers, there was a major difference in sales and profits by quarter. First quarter sales and profits were considerably better than those of any other quarter, while fourth quarter sales and profits lagged behind the other quarters. Weather likely was a major factor in the sales and profits variations, the release says. The first quarter of 2012 was unusually warm and dry, which is conductive to growing on-the-go sales, while the fourth quarter had much poorer weather and significant storms in densely populated areas, most notably Hurricane Sandy.

Here’s how in-store sales were broken down in 2012:

• Tobacco (cigarettes and OTP): 40.7 percent of in-store sales;

• Foodservice (prepared and commissary food; hot, cold and dispensed beverages): 15.8 percent;

• Packaged beverages (soda, alternative beverages, sports drinks, juices, water, teas, etc.): 14.7 percent;

• Center of the store (candy; sweet, salty and alternative snacks): 10.4 percent;

• Beer: 7.6 percent; and

• Other: 10.8 percent.

Meanwhile, foodservice was the category that drove profits, accounting for 27.1 percent of gross profit dollars. While tobacco products constituted 40.7 percent of in-store revenue dollars, they accounted for only 21.0 percent of gross margin dollars. Packaged beverages were third, accounting for 18.8 percent of gross profit dollars.

Gattsek Joins NACS As Data Services Manager

Gwen Gattsek has joined NACS as its full-time data services manager.

Previoulsy, Gattsek served as temporary help to NACS’ marketing department since July 2012, helping enhance the association’s data management capabilities, especially related to e-mail communications to members, a news release says. She also worked as a consultant to NACS in 2009 and 2010, supervising the data management of NACS’ record-setting petition drives against swipe fees.

Additionally, Gattsek has experience as a business owner, serving as a manager and later as owner of The Flower Market, a retail floral business serving a number of national accounts. More recently, she was building manager and fresh flower buyer for Middle Atlantic Wholesale Florist.

Gattsek earned a bachelor of arts degree in biology with a concentration in psychology from the University of Virginia. She is a resident of Alexandria.

Founded in 1961 as the National Association of Convenience Stores, NACS is the international association for convenience and fuel retailing. The U.S. convenience store industry, with more than 149,000 stores across the country, posted $681 billion in total sales in 2011, of which $486 billion were motor fuels sales. NACS has 2,200 retail and 1,600 supplier member companies that do business in nearly 50 countries.

Oh Boy! Oberto All Natural Bacon Jerky Hits Retail Shelves Nationwide

Oh Boy! Oberto has taken bacon out of the frying pan and put All Natural Bacon Jerky in the bag. The new product launched Thursday at Oberto.com and on grocery, convenience, mass and club store shelves nationwide.

All Natural Bacon Jerky, the latest innovation from 95-year-old meat snack maker Oberto Brands, is made from 100 percent real strips of bacon that are naturally seasoned and applewood smoked. Only lean, large strips of bacon are used, in addition to water, sea salt and sugar; no added preservatives or artificial ingredients. And the jerky has 20 percent less fat than traditionally prepared pan-fried bacon.

“The bacon craze isn’t new, but bacon cravings are still going strong and consumers do not have a way to enjoy good quality bacon outside their home or without the messy preparation. Oberto is rising to consumer demand with a true bacon snack that can travel anywhere and needs no preparation,” said Tom Ennis, CEO of Oberto Brands, parent company of the Oh Boy! Oberto brand. “While there have been a lot of gimmicky products with bacon flavoring, Oberto’s new bacon jerky is make of real, hearty, premium strips of bacon. Based on our early retail orders, All Natural Bacon Jerky is already on track to be one of Oberto’s fastest selling products.”

From sandwiches, to salad toppers, crumbled on ice cream or served up in a Bloody Mary, Oberto Bacon Jerky “opens up new doors for savory culinary combos,” the company says.

As with all Oberto’s products sold in the United States, All Natural Bacon Jerky is made in the U.S.A. at Oberto’s headquarters in Kent, Wash. A second plant is being added in Nashville, Tenn., to help keep pace with the company’s growth as the jerky category continues to steadily climb.

All Natural Bacon Jerky is available in 2.5-oz. packages; $5.99 MSRP. For more information, visit www.facebook.com/obertobeefjerky or www.oberto.com.