Mac's Convenience Stores 50 Year Anniversary Book

Mac’s – The First 50 Years

Acknowledgements

Published and produced for Mac’s Convenience Stores Inc. a subsidiary of Alimentation CoucheTard Inc. by Convenience & Carwash Canada, 543 Borebank St., Winnipeg, MB R3N 1E8 Publish Date June 2012 All rights reserved. No part of this work may be reproduced or used in any form by any means – graphic, electronic, or mechanical, including photocopying, recording, taping or any information storage and retrieval system – without written permission of Alimentation Couche-Tard.

The publisher does not assume any responsibility for the historical accuracy of the information contained in this book. Photographs and artifacts are credited where possible.

Publisher: Brenda Jane Johnstone Written by: Kelly Gray Edited by: Carly Walsh Designed by: Doug Coates, Edge Advertising Production: Keith House Sales: Keith House, J. Cody Johnstone Printed by: Friesens Corporation Printed in Canada.

One-time publication

I would like to extend special thanks to all those who contributed to this project.

Thank you to Alain Bouchard, Founder, President and CEO of Mac’s parent company Alimentation Couche-Tard. His experience has been hugely instrumental as we continue to evolve. The insight he brought to this project has been a tremendous asset.

Next I wish to thank the many past senior executives and staff who provided the company information that served to frame this history of Mac’s over the past 50 years. They are the ones that shaped this story. Special mention needs to go out to Ken McGowen, Founder; Bob Maich, Past President and Board Member; Scott Findlay, Past Senior Vice-President and Joe Lewis, Past Senior VicePresident. In addition, thank you to Dale Pettit, Past Chief Financial Officer and Donald Thain, long time Board Member. Appreciation for contributions of past employees Tom Clermont, Manager of New Business; Paula Murray, AP Clerk and recently retired Kim Trowbridge, VP Special Projects who made himself available numerous times for lengthy interviews.

I wish to call attention to the efforts of publisher Brenda Johnstone who organized the team and offered her expertise to get this project off the ground and into print. Under Brenda’s direction, writer Kelly Gray and editor Carly Peters worked around many schedules to gather the stories and shape them through each decade.

And finally, a big shout out to Kevin Lawrence, Director Business Planning for Mac’s Central Division who was invaluable in providing early photos, contacts and placing it all in context.

Thank you Kevin.

The story of Mac’s is a journey in retail and the story has not ended. Where we go in the next half century is still to be written.

Ron Thompson, Marketing Manager Mac’s Convenience Stores – Western

Forward

50

In life success tends to speak for itself. With this in mind, I approach this introduction to the history of Mac’s Convenience Stores with some interest.

What can be said that the success of this famous retail brand has not already proclaimed within the Canadian market? Over the years Mac’s has offered so many firsts, so many benchmarks and so many milestones in a history that really defines the progress of Canada’s convenience industry.

Here is a company that was founded on the traditions of the small corner store at a time when Sunday shopping was not an issue and life was not so hurried as it is now. Mac’s based itself on being part of the neighbourhood, an aspect that continues today at nearly a 1,000 outlets across the country.

From the beginning the success of the chain was predicated on the power of each of these individual stores. And, within each neighbourhood, Mac’s stores had to stand on their own and they did this well. In fact, for a good many years, Mac’s was the most profitable business unit of its parent Silverwood’s Ltd., a massive food processor that was once a leader among Canada’s blue chip businesses.

Mac’s was also at the forefront of new products and services. For example, the chain offered Canadians their first exposure to in-store bank machines. Mac’s was also the first retailer to get into video rental with kiosks that provided the latest movies, not to mention the equipment to play them. Mac’s experimented with private label branding at a time when it was breathtakingly new. Over the years, Mac’s has maintained its importance to communities by being relevant with products from 45 rpm records that delivered the popular music of the 70s, to chef carved hot roast beef sandwiches, to Frosters and Seattle’s Best coffee. When people needed a product, Mac’s was there with assortment, convenience and the brands people loved and trusted. Mac’s was among the very first to team with foodservice leaders such as A&W, Mr. SUB and others to create more reasons to drop into a location.

This assortment and convenience earned them the respect from customers that helped the company grow. Stores today are in the 3,000 square-foot range, a far cry from the tiny location first opened back in the 60s. Not surprisingly, the modern approach with new store designs and the

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Store (Impact) 2000 program, customer responsive merchandising, and great locations has pushed revenues forward. Over the past 15 or so years Mac’s has seen its per unit sales climb by as much as three fold in some regions.

Mac’s was also a front runner when it came to technology. Back when computers seemed like science fiction, Mac’s invested in systems that would put it well ahead of competitors. The company also invested early in new concepts like EDI (electronic data interchange) and ECR (efficient consumer response) in moves that made it even more responsive to markets. This data collection was all part of getting to know customers, as well as suppliers and making everyone partners in success.

Certainly a challenge of running a successful company is also knowing your competition. At Alimentation Couche-Tard (ACT) we had kept our eyes on Mac’s from our earliest days. Important to us was to learn why they were able to win in their markets and how they were able to maximize operating revenues. When you have a strong competitor there is much to learn and our relationship with Mac’s gave us a lot to think about over the years.

Our close understanding of Mac’s allowed us to move quickly when the group had trouble in the early 90s following a too rapid expansion and found itself under CCAA protection. At that time Alimentation Couche-Tard was able to acquire Mac’s’ Quebec stores in a move that worked to enhance our penetration in our home market. This purchase also allowed us to get even closer to Mac’s and develop the linkages that would finally permit us to completely acquire the group in 1999.

We saw at the time that it would be a perfect fit for us. Our philosophy has been to empower people to succeed. We let people work hard and make their own decisions and this is Mac’s from the decentralized management team to the dealer network. From the beginning, Mac’s has helped CoucheTard grow to what we have become today –a true global leader in convenience with nearly $20 billion in revenue and nearly 6,000 stores. Yes, it was a good fit.

Alain Bouchard, President and CEO Alimentation Couche-Tard

Forward | 3

Table of Content

1960s In The Beginning – The Earliest Years 7 1970s Even More Convenience – Second Decade, Second Phase 25 1980s Gains Continue Through the 80s 49 1990s – 2010 A Perfect Fit 79

1960s

In The Beginning – The Earliest Years

Above: Ken McGowen – Mac’s Milk Founder

In 1961, Elvis was on the radio hit parade and the National Hockey League had only six teams. This was a time of mountainous bouffants and slick ducktail hairdos. Dad’s car sported fins and wide whitewalls and mom stayed home to bake ham and scalloped potatoes while waiting for the kids to rush in from school. Indeed, the 60s represented a simpler time when a couple of brothers could build on the success of a single, small milk store in a suburban Toronto strip plaza, based on a combination of hard work, vision, collaboration and ethics. Now after 50 years, this first little 13-foot wide Mac’s Milk operation spawned what is today’s Mac’s Convenience Stores, a 856-unit division of Alimentation Couche-Tard, Canada’s leader in convenience retailing.

Like so many great entrepreneurs, Mac’s Milk Founder, Ken McGowen, was flying by the seat of his pants when he started the fledging chain back in December 1961. He admits it wasn’t until the week before the doors opened they even considered a name.

Just 26-years-old, McGowen had a young family, including a newborn son and needed to start something to keep them in diapers and pot roast. He admits to no experience in the c-store sector then. A self-made man who quit school at age 13 to sell snacks and papers for Canada Railway News on the Toronto-to-Winnipeg run for CN, his businesses to this point had included car sales and adventures in airplane deals where he and a friend with World War II Ferry Command experience travelled to the U.S. buying secondhand models from farmers in the Midwest.

“We bought a ‘39 Taylor Craft for $1,700 and flew her up here where we turned that into $2,500. We took that money and bought a 1946 Aeronca Chief and suddenly we were in the airplane business. I didn’t have a license or anything and would just fly them back. When you are young you have confidence and energy,” says McGowen, adding it was this type of initiative that got him into the c-store trade. “With the new store I would be just buying and selling as I had been doing. It didn’t seem to matter that I had never sold groceries. To me it was just more of the same.”

McGowen recalls visiting his lawyer’s office to finalize details to get the new business up and running. The lawyer, Max Brown, asked him the nature of the enterprise and McGowen told him it would be a “milk store.”

“What do you know about stores and milk?” asked Brown.

“Not much now, but give me a week,” replied McGowen.

“What is this business supposed to be called?” the lawyer asked.

“I don’t know. It has to be something familiar and friendly with a name like Joe, Bill or maybe Mac,” said McGowen, remembering he sought a handle both moms and their

The Sixties | 7

Ken McGowen kept these ledgers to track daily sales at the earliest Mac’s locations. As long as sales were improving, he knew he was on the right track.

kids would find neighbourly when they needed to purchase last minute items.

The lawyer looked up and said he didn’t think much of the idea but liked the name Max, his name. “Not Max,” said McGowen. “I like Mac’s with a ‘c’ and an apostrophe. Let’s call it Mac’s Milk.”

And with that, one of the most iconic names in c-stores was born. Even today, years after the marquee changed to Mac’s Convenience Stores, many still call the chain “Mac’s Milk.”

The first location was at 20 Levendale Road, a small strip plaza in Richmond Hill, just north of Toronto. Attracted by affordable rent, McGowen paid $150 a month for what was once a dress shop in a unit that measured close to 700-square feet, but was only 13-feet wide.

McGowen’s brother Carl used the old dress displays to make wood shelving for the store. They got what credit they

Congratulations Mac’s on 50 years of convenience from PepsiCo Canada Team

(1898)

(1905)

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(2003) Current Logo

1960s

could from suppliers and opened the doors just before Christmas on December 8, 1961, at 9 a.m.

“We sent out a flyer to the neighbourhood announcing our three-day opening sale. With items like cigarettes priced at $3.05 a carton, a bottle of Pepsi going for a dime and a three-quart jug of milk less than 50 cents, the store did $176.66 its first day in business, and hit $284.79 the next day. By Monday after the sale we were down to $54.89 with a total for the month of $3,438.31.”

The first store took a loss of just shy of $500 over those first four months. Assets included just $92.65 in cash. Inventory stood at $3,718, and other items like incorporation costs ($350), office supplies ($13.24) and fixtures and furniture ($1,444.01) brought the total up to $5,957.93. Liabilities included a $5,000 loan, and $1,456.72 in accounts payable revealed a deficit of $499.75.

Still, revenues were climbing, and with $5,000 in working capital the store was in good shape.

This first operation was a learning centre where McGowen got to know the ins-and-outs of the business.

“My plans were to start opening more stores, but first I had to iron out the bugs and get to know the suppliers and find out what people wanted in a store,” says McGowen, remembering competition from operators like Becker’s, a convenience chain that began in 1957, was tough and he had to be sharp to get a solid foothold in the market.

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Technology Enters the Business Back in the 60s, business moved at the speed of paper.

Without conveniences like POS or scanner technology, clerks often had to remember the cost of items in store. It wasn’t until mid-decade companies began considering computerization, a then new electronic management approach, viewed by some as science fiction.

Not at Mac’s Milk. With one eye on the future, and the other on innovation, Rick Broadhead was brought in to handle the transformation alongside Mac’s comptroller, Craig Waldron.

The transmogrification came July 22, 1966, when Mac’s received its data centre at its Progress Avenue offices. On this Monday, a crane arrived to stand in front of the building in preparation for more than three tons of hardware that had to be lifted through Ken McGowen’s office windows. Once the procedure was complete, Mac’s was in possession of four state-of the-art IBM ‘402’ accounting machines.

The first task for these grey-computing behemoths was to prepare the statements for the franchise dealers. Working in a temperature controlled, windowless room was computer operator, Ron Anderson, and keypunch operator, Gay Saville. Together they completed these first sets and streamlined the approach for the monthly exercise.

The next computer task was to assist with the stores’ daily cash reports. The team systemized 70

banks and could now effectively check store deposits against bank entries. This data could then be taken monthly to give a running tally on sales, tax, coupons and sundry store expenses.

One month after installation, the computer section took over the Accounts Payable department with the addition of new staffer, Irene Oram. Now statements that covered payouts to suppliers, as well as purchase statistics, were easily printed. Important here were the dollar tallies for both cost and retail of all entries appearing on stores’ daily purchase reports.

These were even broken down by individual supplier.

By December, the 402s were handling things like billing daily bread orders from Canada Bread. At that time Mac’s was doing daily pick-ups of bakery goods from the Toronto-based food company that were delivered via the fleet of trucks to stores every morning. The warehouse was also stocking items like cigarettes and confectionary items. The computer output made all this more efficient and helped head office with profit and loss questions. The systems were also doing payroll, as well as grocery ordering and provided the foundations of what would evolve into a sophisticated, cutting edge framework of management technology.

The Sixties | 11

He discovered shoppers wanted convenience and selection. So much so that by year end the next December, monthly sales at his little c-store had climbed to $12,283.21, nearly a four-fold increase from the previous year. Granted, that first month was only a partial period with the store opening on December 8, but the increase is still impressive, especially when one considers that $1 in 1961 has the buying power of $7.35 today.

During Mac’s Milk’s first quarter McGowen spent about $550 on advertising.

“I’d bring people in with sale items and hoped they’d buy something else. The sales also worked to just get people in so they could see what we had. When they needed cranberry sauce or shoelaces they got to learn that Mac’s Milk was the place to go. We had competitors and when you needed something we wanted people to turn to us first. Sure, we always had the staples like milk, bread and eggs, but we also stocked all those little things that you could run out of when you were making dinner. The variety was good, but we didn’t try to out-stock the larger grocery or dry good store. For example, we would have shoe polish, but just brown and black, and we’d only carry one brand. The same was true for soups. We carried the basics like tomato, chicken noodle and mushroom, but you’d have to go to IGA if you wanted something like Oxtail or clam chowder.”

Having the right products available was just part of the equation. Mom and pop stores might close early if business was slow, but McGowen learned that customers wanted a store they could depend on.

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Above: The Mac’s cat was the first mascot of the convenience store chain, complete with tam and kilt.

“When we said we were open until 11 p.m., we stayed open. And, if we had closed and saw a customer come to the door we tried to help them out even if it meant asking them to come back and pay next time they were in if the till was closed and the cash already counted.”

This philosophy extended to children as well.

“Sure, you might lose a few chocolate bars, but you’d lose a lot more if kids went home and told their parents Mac’s staff was unfriendly.”

Store cleanliness was also a huge part of the first year learning curve.

“We always remembered that we were in the food business,” he recalls.” We strived to make the premises as clean as possible. It was tough on those sloppy winter days when people were tracking in slush on their boots, but we really tried hard and I think it made a difference.

It showed we cared and that we were professional.”

Professionalism included apparel, and at Mac’s Milk, staff were asked to wear a clean white shirt and signature apron.

“This was certainly something that distinguished us from the standard mom and pop corner store where you never knew what to expect on a visit,” he says.

With improvement in mind, McGowen seized the opportunity to move three doors down to a larger, 1,100-square foot store in the same strip plaza. The rent was double, but the space allowed them to expand selection. The move was completed overnight with the help of his brother Bernie and friends who waited until the location closed at 11 p.m. and then swooped in with a fleet of wagons, hand trucks and dollies ready to go.

“I didn’t want to be out of business for one day, or one hour for that matter. We had a convenience store and I did not want a single customer to come and find we weren’t open when we said we would be. We worked through the night and got everything in place, even the cooler, by 9 a.m. the next morning. Then I had someone stand by the old location and direct customers to the new store at number 26,” he says, adding consistency of service, including regular opening and closing times, was an early goal they worked on day in and day out until they got it right.

That first year they got it “right” enough to open seven stores. The next locations included a shop in Bay Ridges in Pickering that opened in April 1962, with McGowen as the manager. This was followed by sites in Pickering, Pharmacy at Lawrence, Lakeshore Road, Pape Avenue at Cosburn and Mimico at Lakeshore and Lawrence at Birchmount, all in Toronto.

In order to source these stores while still personally running the business, McGowen, after closing shop for the day, would get into his car around midnight.

“I’d pack a salami and a French stick and then just drive around till maybe 5 a.m. looking at prospective spots for a new store. Traffic wasn’t what is today, and I could cover a lot of territory. I’d grab a couple of hours of sleep, pick up a coffee and be back at the counter when the store opened at 9 a.m. This is how we operated during those first years.”

The same was true for his brother, Carl, who was the in-store handyman.

“Carl would close his store on Levendale and then he’d get to work building shelves and doing repairs. Between us I don’t think we managed a lot of sleep.”

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A successful 1964 promotion saw children wearing Mac’s hats to the stores for a chance to win a bicycle.

The Sixties | 15

Silverwood’s Makes Profitable Acquisitions

Early on Silverwood’s had seen the wave of the future, and it was retail.

Indeed, ever since Mac’s Milk first opened in 1961, the London-based dairy leader had observed a decline in home delivery sales. This continued in 1964, when the company reported a 12 per cent decline in home deliveries. This downward trend continued the following year. Even though the dairy was recording record sales, the negative trend remained a concern.

For every new milk store that opened, Silverwood’s saw two home routes close. To combat this, the dairy began acquiring milk stores, commencing with its buy-in to Mac’s Milk in 19621963.

By 1966, the company had purchased Findlay Kemp Dairies in an ongoing acquisition of milk product companies nationally. With the Findlay Kemp deal came a group of milk stores called Uplands Dairy Shops. These c-stores operated under a subsidiary (Uplands Dairy Shops Ltd.) to which other store acquisitions were added. In 1967, a group of six London-based stores were acquired and merged with the Uplands stores. Locations now included Toronto, Hamilton, Brantford and London in Ontario, with Milky Way and Peter’s Ice Cream stores located in Vancouver and Victoria.

In June 1968, the company reports the decision to increase their position in Mac’s Milk, up from the 40 per cent they obtained earlier. At this point Silverwood’s purchased a controlling interest in the chain from Ken McGowen, who was brought onto the board as a director in May. Plans were to add up to 50 new stores to a group that stood at 209 units in 10 Ontario localities. Under the new structure, Mac’s

Happy Mac’s employees take a trip to the “Head Office” of Silverwoods in London, Ontario.

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would add its profits into the dairy corporation where total sales neared $126 million (March 31, 1969).

Company President, Norman Kaye remarks that Silverwood’s enjoyed a 26 per cent growth in sales during the fiscal year ending March 1969. He credits the gains to the acquisition of Mac’s Milk in June 1968. However, profits lagged due to the cost of acquiring Mac’s and absorbing 46 Uplands stores into the Mac’s system.

In late 1969, Silverwood’s acquired a small chain of 35 c-stores in southern Ontario. The group was known as Good Neighbour Stores, and operated as ‘The Corner Store’ in St. Catharines, Hamilton and Guelph. Moreover, Silverwood’s completed the transfer of ownership of Manitoba’s Kwik Shops to Mac’s Milk. This brought an additional 13 units to the group in the Winnipeg area, and in conjunction with three new outlets in Calgary and one in Vancouver, brought the total of Mac’s Milk locations to 282, up from 209 the previous year. The company reported of these, 37 were operated by franchisees.

Closing the decade with its annual report in March 1970, Silverwood’s announced record sales and earnings. On the books were tallies of more than $144 million, of which nearly $18.75 million were gains from the previous year. Behind these gains says company president Norman Kaye, was the inclusion of Mac’s Milk Limited.

1960s

Above: Mac’s became a welcome addition to many neighbourhoods.

Growing a Chain Even with several locations, McGowen reports credit could be tight.

“After the first year we still were not making money. It was all cash flow. As a result I didn’t want to share my financials with the suppliers. I had told them I was planning to open 100 stores and they were thinking that perhaps I was being a bit optimistic. However, I was meeting my commitments to them and they were happy to do business. I did have a few holdouts though. I remember Coke was not interested in giving terms and I couldn’t afford to pay cash so I had to tell them I couldn’t sell their drinks. They were surprised and after we opened our fourth store they were disappointed, especially given that we were on a growth curve. I could see how important it was to have both Coke and Pepsi, but only Pepsi had come forward with terms so I was stuck. What I did was keep Coke in the back for those that asked for it. This way I didn’t lose customers and showed Coke I could hold out. Eventually they gave us 15 days credit. I paid consistently in 14 days and built trust so that Coke eventually gave us 30 days like the other suppliers.”

However, McGowen still needed an infusion of capital to keep everything running and grow the chain. Enter Silverwood’s.

Statistically speaking, as each new milk store opened, two dairy home delivery routes closed.

The Sixties | 17

This was an aspect of business not lost on Silverwood’s, Mac’s dairy supplier that was then selling several products from McGowen’s small chain.

“I had been talking with Al Gardiner at the dairy and he suggested the financing deal with Silverwood’s. I remember that people like Trevor Davies, a man who became president of Silverwood’s and was heading up the Dupont plant at the time, saw the writing on the wall as these small convenience stores began to put milk routes to pasture. I was pressed for cash at the time and went in really selling the idea, but I suspect that Silverwood’s already knew how good an opportunity the partnership was for both of us.”

Inked just before Christmas, 1962, the deal included a $10,000 deposit to get the partnership underway. McGowen says he traded off 40 per cent holding in the company to Silverwood’s for $1.

A pool of capital to prospect and develop the chain to 100 stores was offered in return, in a deal worth close to $1 million.

What this meant was in-store development with new refrigerated display cases, and ice cream dispensing equipment, an important consideration given the push McGowen was placing on ice cream and his competitive position with Becker’s, an Ontario chain that was selling a premium line of ice cream at prices Mac’s Milk couldn’t touch.

“I kept telling Silverwood’s about the many flavours of ice cream at Becker’s, some with fruit and nuts, and they kept telling me I was mistaken. They’d say that there was no way Becker’s could sell that kind of product at the prices they were. I was not happy with the brush off and so I finally

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1960s

went into a Becker’s and bought several cartons of ice cream and made sure I had the receipt. I took the ice cream into my supplier’s office and I remember he had one of those perfect tidy desks. It was a beauty that was all polished wood. I plunked the cartons down in the middle of it and we began discussing the issue with me showing the receipt and him telling me, yet again, some kind of mistake had been made. As we talked the ice cream began to melt all over his desk and I guess he became a bit nervous about what it was doing to the finish. I told him nicely that I was not leaving until I had the order for the premium ice cream. By this time his perfect desk was getting covered with melted Cherry Burgundy and Maple Walnut. I’m not sure to this day if I got Silverwood’s to agree to sell me the premium ice cream out of their understanding of the business case, or if my supplier wanted me out of the office because the ice cream was ruining his desk. But, I got the ice cream and I think that helped level the playing field between us and Becker’s.”

In addition to the new refrigerated displays and ice cream cases, McGowen got cash for growth and a corporate structure for the company that had previously existed only as a family business between brothers.

“We now started having regular board meetings and things began to change,” he states.

For example, until they had three stores they had been running things from a small basement office at the Levendale store. McGowen recalls they built a trap door between the cooler and the wall

The Sixties | 19

Congratulations *

Mac’s on 50 successful years We look forward to continuing our partnership with Mac’s for many years to come.

* © 2012, Trademark of Kellogg Company used under licence by Kellogg Canada Inc.

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and used the small basement area to do the books and manage inventory. By June they moved the offices to another location.

Company growth required Mac’s Milk to relocate again to more professional quarters in 1962. This time it was a second floor site in the White Shield Plaza at Kennedy and Lawrence.

Three years later, their growth curve demanded a larger facility. This was found at 12 Progress Ave., a location McGowen says remained as head office even after he had sold the company in 1972. The Progress Avenue site offered space including a 2,000-square foot office centre in the front, and 18,000-square feet of warehouse space in the rear.

“We had 18-foot ceilings at Progress Avenue and as we needed more space for office staff we moved into the back and created a second floor. During this period I believe we had some 40 people working in the building,” says McGowen.

In addition to a new office location, the McGowens saw the early need to get staff on the right track. Towards this end they launched their first training centre in 1963.

“The school was in the basement of a Scarborough store on Lawrence Avenue, and the objective was to show staff how to behave and maximize the operation. My belief was that you have to ‘hire the smile’ and everything else would fall into place,” he says regarding their approach that sought to bring in workers with a great attitude. “With this in mind we would be able to work with people who understood how to treat others decently and we could concentrate on things like basic accounting, shelving stock and how we wanted customers to be approached.”

“Our policy was always treat ‘the customer with courtesy and respect.’ We taught that if someone came in and wanted a refund on a half empty jug of milk we did it. We all knew they had drunk half, but the goodwill mattered more. We

1960s

also wanted new managers and employees to understand that if you treat staff and customers with fairness it will show up positively on the balance sheet. So, we sought to hire the right kind of people right at the outset and worked from there.”

McGowen remembers as they opened store number three they also had to find the right person to look after it.

“We put a ‘help wanted’ sign in the front window at our Richmond Hill store. Not long after the sign went up Derek (Dick) Andrews came in and told us he was a steamfitter who’s local was on strike and he didn’t want to walk the picket line. He was looking for a job until the strike ended.

He had been a customer of the store and knew the neighbourhood. So, we hired him to manage the location. He was great. He had the right attitude and was so nice to customers that when the strike ended and he asked us to keep him on. We said absolutely. He turned out to be one of our greatest employee assets.”

As the chain growth approached a dozen stores, McGowen realized they would need a supervisor to oversee the other managers. The obvious choice was ‘Dick’ Andrews.

“He was someone who understood the stores right off and he could work well with others.

The fit was perfect,” says McGowen, adding that Andrews eventually moved on to open an Atlantic Canada c-store chain and later, the Toronto-based Scarborough Fare, a basket of stores that were sold to McGowen’s Hasty Market group, a chain he opened in 1981, nine years after leaving Mac’s.

Congratulations to Mac’s on Their

50 Year Milestone

Hershey Canada are proud of our long association with you and look forward to the next 50 years.

The Sixties | 21

Carl McGowen, meanwhile, managed responsibilities for creating new stores that included building a franchisee network. Helping Carl were people like Elmer Foran, a technical wiz who built store refrigeration cases and assisted Carl with construction.

“We couldn’t see why we would need to go outside for coolers when Elmer could make them for us in-house,” mentions McGowen.

In Ottawa, McGowen opened a new location in the city’s west end. It was here they made a stand regarding the price of bread, which strengthened their position in the latest market.

“We just had the one store in Ottawa and had been open a short while when the supermarkets starting having a bread war. I remember that 24-ounce loaves had been selling for between 25 cents and 26 cents at the majors. During the battle they lowered their prices substantially as they competed for market share. I was paying 17 cents from Canada Bread thanks to our number of stores in the Toronto area that allowed us to obtain strong pricing.”

McGowen says they mirrored the grocery chains as they lowered bread prices. “I had just opened and people already had an image of convenience stores as being more expensive. I didn’t want to move into the Ottawa market with people coming in to find our bread 50 per cent more expensive. It would give customers a bad first impression. So, I placed a full-page ad in the paper and sold bread for 10 cents a loaf. Sure, I was losing on every bread sale, but customers were seeing we were competitive and they were buying other items when they came in,” he says, remarking that volume increased from 12 loaves to 200 daily.

Soon, IGA and Loblaw’s pulled their flyer and brought bread back up to 25 cents.

Congratulations Mac’s on your

50

th

Anniversary

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1960s Mac’s 100th store with grand opening specials and bright windows, a sign of things to come.

“I think the whole affair was one that told the big players they couldn’t fool with the little guy, and it really cemented us with customers in the Ottawa market.”

The move into Ottawa came as Mac’s Milk was on its drive to 100 stores, a number it reached on its fifth birthday. During the first year, they launched seven locations, adding 32 links to the chain the following year. By December 1966, the chain was preparing for the opening of its 100th outlet.

That store was located at Leslie and Wycliffe. McGowen remembers they had to pull out all the stops to get the site open for the celebration. After the landlord delivered the property late, the group had just days to get the shop ready.

“We had only done something like this once before. That was the move on Levendale back in the first year when I had my brother and his friends work through the night to get it open by 9 a.m.

This time there was considerably more complexity given our larger selection and the size of the store.

We had teams working around the clock, and we did it.”

Now with Ottawa and southern Ontario firmly in the picture, Mac’s began to look abroad to places like Manitoba. Silverwood’s made a move to acquire a 51 per cent stake in Kwik Shops Limited in 1968. Norman Kaye, president and CEO of Silverwood’s, recalls the small chain was starting up in Manitoba and they had been approached to assist with financing.

“These stores offer an established channel of distribution, not only for dairy products, but also other foods or allied lines into which Silverwood’s programme of diversification may carry the company,” he reported at the time.

By the following year, 1969, Silverwood’s and its Mac’s Milk division had increased its stake of Kwik Shops to 100 per cent and the move to Manitoba was complete. By June 1970, a period when Silverwood’s announced record sales and earnings, Mac’s was advertising 13 stores in its Winnipeg flyers following the amalgamation. Reports in the pages of the Winnipeg Free Press business section reveal plans to open five stores by the end of that summer, and 60 more stores planned for Manitoba during the next five years.

“Winnipeg was a tough market for us. I suspect it may have had something to do with the large number of mom and pop stores that seemed to be on every corner,” says McGowen, noting the tough competition in a city that boasted adversaries like Mini Mart stores, which operated 35 locations.

However, the Mac’s juggernaut prevailed, and as the decade closed, McGowen watched as Mac’s took flight. Born from a single outlet in Richmond Hill in 1961, the group now (1970) operated 282 outlets stretching from Ontario to B.C.

The Sixties | 23

CONGRATULATIONS FROM

1970s

Even More Convenience Second Decade, Second Phase

The 1960s were a buoyant time of economic growth in Canada. The 70s however, were a period of negative economic change. Factors such as, inflation with rising costs for energy and a reduction in the buying power of the Canadian dollar, heightened unemployment within the industrial sector and the shift to a more service-oriented economy all made big impacts on life in Canada.

Certainly one major shift was the changing Canadian family with women heading out into the workplace in greater numbers than ever before. This heralded a further decline in Silverwood’s home dairy sales and the expansion of c-stores. The upshot was the 70s were a period of rapid expansion for Mac’s in stores, sales and profits.

As the 60s closed, Silverwood’s reported 282 Mac’s Milk outlets in 1970. A year later the number had grown to 314 stores with presence in five provinces. The Mac’s Milk division now offered stores in B.C. with 19 locations in Vancouver, eight stores in Calgary, 16 outlets in Winnipeg, 270 stores in a wide variety of Ontario sites and a single operation across the river from Ottawa in Hull, Quebec. Impressive as well was the growth of franchise operations. In that first year of the 1970s Mac’s had gone from 37 franchise operations to 76.

The transference of the milk business to the chain store sector was one that was greeted with a feeling of inevitability at Silverwood’s. According to Dr. D.H. Thain, a long serving director of Silverwood’s (1971 to 1992) and eminent academic (Ivey School of Business), as well as advisor to an impressive array of Canadian major corporations, “Anybody in the business could see that the dairy sector was changing in a way no one Silverwood’s building in the heart of Winnipeg’s could stop. At Silverwood’s there was [in the 70s] an Exchange District. attrition of the dairy people as the practicality of this change became ever more apparent. The view at the time was to stay ahead of the curve so that the competitors could not get an upper hand,” he says, adding this was where Mac’s came into the picture.

Indeed having Mac’s in its family gave Silverwood’s a good competitive position. The fact was that with the exception of Becker’s in Ontario, no convenience stores had a dairy behind them.

“I think that Ken McGowen was really in tune with the situation when he sought a stronger marriage with Silverwood’s. He really showed a tremendous understanding of the total picture between dairy and what we then called the ‘forgotten stores,’ stores where people sought goods they had forgotten at the grocery outlets.”

The Seventies | 25

26窶ポ窶イelebrating 50

Moves at the Top

1970s

Dr. Thain comments the board and executive at Silverwood’s in the 1960s and into the 70s were comprised largely of dairymen. However, leading the company on behalf of the Silverwood family during these years was Donald Silverwood, a man who had attended Ontario’s Western University and its School of Business Administration (this would later become the Ivey School of Business).

There he met Dr. Thain, an academic who was teaching at the faculty. When Silverwood joined the company ranks he sought out bright minds to assist in the growth and challenges facing the firm and Don Thain was brought onto the board.

Another significant hire Silverwood spearheaded was the recruitment of Robert Maich, a man who would provide visionary leadership to Mac’s through the 70s and well into the 80s.

Maich was also a graduate of Western’s School of Business and came to Silverwood’s following a posting as Colgate-Palmolive Company’s point man in Kenya. Maich was widely regarded by his classmates, as well as his professors, at Western as a brilliant young business mind. After discussions with Silverwood, Maich joined the firm in May 1971, as director of corporate planning.

“I could see right off that the convenience store division was the real gem amid the various operations,” says Maich, regarding his first five months poring through company data.

He reports during those months he examined the full range of business options for Silverwood’s.

“After five months I proposed a greater emphasis on the Mac’s division. In September 1971, I was appointed vice-president and general manager of Mac’s under D.F. Guy, a man who was brought in from the dairy operation in Langley, B.C. to oversee Mac’s as president.”

At that time Mac’s sales were not what they could be and the chain was underperforming in relation to its scale and had not shown a profit. In fact, Mac’s had been on a steady acquisition and development curve since day one where moneys were poured into the growing of the chain resulting in a drain on overall corporate revenues. Maich was tasked with changing this and he began moves amid tremendous shifts in the executive suite.

In 1970, Silverwood’s had been reformulated to address the growing slate of operating companies and by January 1971, Silverwood Dairies had become Silverwood Industries Limited.

At that time Norman Kaye resigned as CEO and chairman of the board after 30 years with the company (he would go on to form a joint venture with Silverwood’s, Kayesil Limited, a leasing operation that planned leasing and finance requirements for the expanding business sections such as Mac’s). Succeeding him was E.F. (Eric) Findlay, who moved up from his previous post as executive vice president. Findlay, a prominent shareholder, carried with him a heritage as a member of one of Ontario’s leading dairy families whose business had been acquired by Silverwoods in 1966.

Also in 1971, Donald Silverwood moved up to take on the president’s mantle from Kaye.

Previously, Silverwood had been executive vice president in charge of business development. It was at this time that Maich came on board to fill the business development vacancy as Silverwood moved up the ladder.

The Seventies | 27

By December 1973, the company was reporting that Eric Findlay had taken over as president from Don Silverwood following Silverwood’s surprise retirement and relocation to Victoria where he had set up a new subsidiary, Silvertree, a California Company, involved in property development.

Ken McGowen remembers the eventful board meeting where the resignation occurred.

“Typically the board meetings were run to a tight frame of reference. There was an agenda that was followed and generally there were no major issues presented or outside business. At this meeting in 1972, the Chairman, Norm Kaye, had concluded the agenda when Don asked to speak. I remember there was a bit of a buzz, because even though Don was president, matters outside the agenda were not addressed in this way. Don stood and announced his resignation that came as a shock to all present.”

Now for the first time in company history there was no Silverwood on the executive. However, Don Silverwood would continue to exert influence as a leading shareholder through his membership on the board of directors.

Another very significant development was the outright purchase of Mac’s Milk from Ken McGowen. McGowen had been working as president of the division as the group continued to expand. However, during 1971, it was decided to buy out his portion of the company, a move that followed previous investments.

He remarks the deal for an undisclosed amount occurred just prior to the end of the calendar year to take advantage of a tax situation. The government had just launched the Capital Gains Tax, and by inking the sales agreement December 31, 1971, McGowen was able to obtain a significant tax advantage. The actual deal giving Silverwood’s 100 per cent holding of Mac’s was closed January 12, 1972.

With this change McGowen resigned as president and took a position on the board. He also agreed to stay out of the convenience store business for the next seven and a half years; a deal he stood by, waiting nine years before opening his Hasty Market chain in Toronto in 1981.

These moves combined to give the new CEO a freer hand to make needed changes to the overall corporate operating structure over the coming year. In his remarks made to the nearly 4,200 shareholders early in 1972, Silverwood’s Industries’ new CEO, Eric Findlay, stated that the company is now not so much a dairy with some sideline subsidiaries, but “a business engaged primarily in the processing, distribution and retailing of consumer goods.”

New Strategies 1972 heralded the first year that Mac’s made a profit.

“This period ushered in the second phase for Mac’s,” points out Maich. “Ken McGowen had built the bricks and mortar and delivered 378 outlets by the time he exited. Now we were making it a profit centre as we moved forward.”

28 | Celebrating 50

Where early birds and night owls meet looking for the SUN!

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Partners in convenience for decades. The Sun congratulates Mac’s on 50 years of success.

50 years of sharing happiness together

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速 Coca-Cola Ltd., used under license.

1970s

According to Maich, a key to their strategy was to bring in talented people and move experienced hands upwards from within the company.

“We started to put together a team in an effort to get Mac’s to where we knew it should be.

This meant a new head of marketing, a new head of merchandising, a new finance chief, as well as key store operations people.”

He reports they looked inward and advanced staff such as Rick Broadhead to lead the merchandising section. Others such as Lou Philips, the new director of marketing was brought in from the outside. Maich also brought in Bas Livingston to head up real estate and Russ Egerdie came on board to handle finance.

“We also advanced internal people like John De Wit and Ray Pylypiw who became vice president of operations in their respective regions. John was based in the east and Ray took on the western territory,” says Maich.

“At the time Silverwood’s viewed Mac’s as a captive account to sell their dairy products. I saw it could be so much more.”

Indeed, while the executive at Silverwood’s was largely dairy driven, Maich came with a background from a top business university and was marketing oriented.

“I could see the power of Mac’s as a consumer driven enterprise and could move beyond

The Seventies | 31

Below: Mac’s launched a guerilla marketing campaign to draw attention to their Winnipeg locations. By successfully protesting a (non-existent) attempt to bring bullfighting to Winnipeg, Mac’s generated amazing amounts of press coverage.

just a milk store. Together our new team was able to bring the stores into profitability and for the first time in 1972 we turned a profit, something we would continue to do well into the 80s. In fact, between the 1970s and the 1980s Mac’s was typically responsible for more than 100 per cent of Silverwood’s consolidated profits.”

First off, Maich and his team sought to assess what Mac’s could be and got down to the basic fundamentals.

“We’d look closely at stores to determine whether they had the kind of profit and return on investment we were looking for. Early on we closed poor performers.”

This tactic was in keeping with the restructuring underway at Silverwood’s. Following the changeover in the executive suite, the corporation was shedding its money losing baggage from milk plants to c-stores. It was also reorganizing the company into spheres of activity. For example, Silverwood Dairies would concentrate on milk products, Baskin-Robbins 31 Flavour Stores would focus on retailing premium ice cream, Londonderry Distributors would stick to citrus juice products and Mac’s Milk would offer products to consumers looking for convenience.

At the end of 1973, Mac’s operated 439 outlets (330 in Ontario, 30 in Manitoba, 33 in Alberta and 46 in B.C.), a considerable gain from the 378 that Ken McGowen sold to Silverwood’s the year earlier when he exited. Sales had grown by 13.8 per cent, and hit a record $82,764,367. Impressive as well was the fact that Maich had closed 33 poor performing stores that year in his continuing effort to maximize profit.

At the time he reported management attention was focused on the thorough assessment of store viability prior to opening with the use of internally developed market and location criteria.

Particular attention was being paid to individual store profitability with uneconomic stores being closed where necessary. The upshot was that during 1973, both sales and store count were increased even as 33 stores were closed.

“We now began to look very closely at prime location sites with enhanced visibility and access. This meant prominent street corners rather than mid-block locations.”

Mac’s was also beginning to look at stronger advertising campaigns to drive its brand and increase sales. In the development and acquisition period during the McGowen years the company had used innovative approaches to drive Mac’s brand awareness. For example, in Winnipeg, Mac’s had created considerable buzz by starting a whisper campaign during their initial forays into the

32 | Celebrating 50

1970s

city when they were scrambling for market share. Ken McGowen remembers they started first by letting people know there was a possibility that bullfighting was coming to Manitoba. A few mentions of this to radio call in shows was all it took to get the city talking. The next thing was for Mac’s to take a stand against the cruel practice through billboards and newspaper ads and Mac’s brand was getting traction.

“It got people talking about Mac’s Milk. Of course we, nor anyone else for that matter, never intended to bring bull fighting to Winnipeg so it was an easy thing to talk tough about making sure it would never come to the city,” says McGowen.

That year (1971) saw The Winnipeg Free Press run an announcement in its September 14, edition that proclaimed Mac’s and The Citizens Anti-Bullfighting League as the winners in the campaign against the El Toro Committee. “We Won And That’s No Bull” read the copy which went on to invite Winnipeggers to join Mac’s in victory celebrations at its stores where specials included Swanson TV Dinners for 65 cents, York Peanut Butter for a mere 43 cents a jar and Jubilee Luncheon Meats for just 31 cents a 12-ounce can.

The campaign cemented Mac’s in the eyes of Manitobans as a good corporate citizen and earned them a place at the convenience store table. However, this was more about building the brand and developing store count than creating profitable high sales units.

This was the focus of Maich’s 1973 initiative where he began to aggressively market stores like never before. In fact, the company won a national advertising award for its “Mac’s Quickie”

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campaign that used a clever double entendre device to attract attention to the stores. This campaign was followed by others in an attempt to establish the stores as retailers of products and services in the convenience sphere rather than a milk store. By the mid-70s consumers were familiar with slogans such as “More than a milk store” and “Make a quick trip to Mac’s.” Both campaigns greatly enhanced the public’s perception of the chain as a business that could be a help in a time pressured world.

“We recognized that the public was becoming increasingly short of time and we wanted to show that Mac’s was the right fit for changing lifestyles. Today, this seems like a given, but in the 1970s it was bordering on revolutionary thinking,” he says.

Another key point to Maich’s strategic plan was to get right down to the store level to obtain the best possible understanding of the business and what people faced on a day-to-day basis. According to Maich he would put on a uniform and take time to work the stores in order to obtain this information.

“I could see that it was often a one man show where staff had to really be in two places at the same time,” he says, noting he typically found a manager had to receive goods at the back and greet customers as

Mac’s sixth birthday celebration included many appearances by the Mac’s mascot.

34 | Celebrating 50

1970s

they came through the front door almost simultaneously. “I certainly gained a new respect for how hard our frontline people were working. I could also see that to make our stores more profitable and competitive we needed to stress more training and store support.”

According to Maich a tremendous point of satisfaction for him was the entrepreneurial nature of the growing group of franchisees, dealers and store management personnel. He comments in numerous examples those who had got their start in the business as a Mac’s dealer or franchisee went on to forge considerable business interests beyond Mac’s once they left the fold.

“While we had a fairly structured system, a real strength for us was the people who ran the stores and their ability to retain their entrepreneurial drive. I think this gave us an edge.”

These efforts all contributed to Mac’s earning sales that neared $96.8 million in 1974, an increase of some $14 million over the previous year, a 17 per cent increase. Behind this was a ramping up of store numbers to 478 units, an increase of 39 stores over 1973.

“Even with the gain in store numbers we were still weeding out poor performers and closed a number of outlets that year,” states Maich.

That year he went on to report management was focusing strongly on marketing to increase both system-wide and per store sales. The company was also looking farther afield to find new markets for Mac’s to capture.

“Our infrastructure was growing and we had an excellent team in place,” he says, remarking that district and regional offices were then located in Vancouver (B.C. district), Calgary (prairie region), Winnipeg (Manitoba district) and district offices for Ontario sited in Scarborough, Weston, Burlington, London, Windsor and Ottawa.

New Products, New Business Tools Mac’s Milk stood out as a professionally run organization as they moved in to the 70s. They also had the backing of one of Canada’s largest corporations. However, much of the day-to-day operations had changed little from when the McGowen brothers opened the doors in 1961. Typically, stores were stocked with goods that were deemed necessary for an increasingly time crunched lifestyle. However, some business practices that are considered mandatory today were often not brought to bear. For example, effective tools such as category management and in depth merchandising were only partially used. The standard practices tended to be quite fundamental. Simply, if goods sold they were reordered. If something didn’t sell it was delisted and no one asked why.

“This was about as far as things got when I started,” says Maich, stating among the initiatives he brought on board was category management. “This enabled us to follow through in a much more systemized approach. Already we were removing unprofitable stores from the chain.

With category management we could drill down into store sections and tailor product assortment to better meet the needs of shoppers. Our overall goal was to operate stores at a profit and make those stores as profitable as possible.”

Certainly one part of the strategy was to get operators to buy in to the program.

“We sought to retain the entrepreneurship of the franchisee and dealer and then add

The Seventies | 35

professional management tools to help them be the best they could be. Looking at the industry at that time, I could see that this model was what was lacking from our competitors like 7-Eleven and others.”

According to Maich, they built on a platform where the basis was “the convenience factor.”

They added pricing and cost controls and developed solid relationships with suppliers beyond Silverwood’s. This included firms like Canada Bread, Pepsi, Coke, Humpty Dumpty and a wide range of others from confectionary to tobacco. In the past Ken McGowen had worked to get the best terms in an approach where suppliers brought in goods, Mac’s sold them and then paid on a 30 day net program. Maich looked more broadly and saw it was a mutually beneficial arrangement that could be worked further to Mac’s advantage.

“At this point we did not have to go cap in hand to the suppliers. We were able to negotiate from a point of strength. Our goal here was to increase our gross margins. In the past Mac’s had only worked to increase sales by adding stores. Now we were tooling the chain by axing poor performers in the network, looking at each category to offer the best products and obtain those products at the most beneficial terms to maximize our profit per square foot of retail space. In this way we were able to achieve not just record sales, but record profits as well.”

One of the tools Mac’s tried in their drive to enhance store profit was private label. These in-house store brands included, potato chips, soft drinks, coffee creamer and tea bags. Maich reports this was an experiment that did not pass muster over time. After several years where different scenarios were attempted, it was realized it was the major brands the consumer wanted.

“Mac’s was known as a place of convenience not as a manufacturer of quality beverages and snack foods. Our mistake was to step away from what people saw as our core values and try to be too much.”

Late in 1974, Maich took over Mac’s as president, replacing D.F. Guy who headed to Silverwood Dairy Limited. The initiatives Maich rolled out while he was vice president and

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general manager continued to earn the division top spot within Silverwood Industries’ family of companies. Sales in 1975 were reported at $119,159,687, a 23.1 per cent increase over the previous year.

“We had opened an additional 50 stores that year bringing our total to 528,” claims Maich. This included 379 stores in Ontario, 60 stores operating in B.C., 47 stores in Alberta 35 outlets in Manitoba and seven stores in Quebec by year-end December 31, 1975. This reflected a considerable growth in La belle province where the chain had just launched in July with one store in Montreal (the Hull location was considered part of Ontario).

Another point of growth in 1975 was in franchise outlets. This year Mac’s introduced 50 new partners to the program within Ontario. To complement this move, the company also launched its training centre in an advance that sought to standardize the approaches franchisees would use to in their new retail business. The school also offered programs to supervisory staff and those persons within the dealer network.

“We were also performing a reorganization in the west where we were working to strengthen our management group. That year we opened our Western Regional Office in Calgary to oversee store operations from Manitoba to British Columbia.”

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1970s

While 1975 was a watershed year for profits, the challenging Canadian economy was beginning to wear on the fortunes of Silverwood Industries. In 1976, corporate CEO and President, Eric Findlay, announced that both sales and earnings were well below the trends and achievements of the past years. In fact, the dairy division recorded a substantial operating loss for the first time. On the flip side, Mac’s continued to earn with profits up by 7.7 per cent, a slimmer gain than in the previous year, but one that was still impressive and spoke to sales of more than $128.36 million. Again, Mac’s had carried the ball for Silverwood’s.

In 1976 the group opened 90 new stores in its continuing process of expansion. However, 34 outlets were closed for either being unprofitable or having leasing agreements where the company was unable to negotiate a renewal. This brought the tally up to 584 stores from Quebec to B.C. The company reported they were excited by the prospects of more locations in the Quebec market where there were now 23 sites, a number that reflected considerable growth in just over one year. Still, profitability in Quebec was a tricky matter with the stores working to gain consumer acceptance. The team at the provincial locations were also up against some language barriers. For the first time Mac’s was working under bilingual arrangements, and French had been declared the language of business for the Quebec territory, a fact that required the development of a multilingual operations team.

Despite some minor cultural bumps in expansion, the trend to profitability continued into 1977. This year Mac’s earned its parent a 14.3 per cent increase in sales with numbers hitting $146.7 million. This reflected a 20 per cent gain in sales in B.C. and a whopping 30 per cent gain in Alberta. These gains certainly helped to offset the slower Ontario market where sales were sluggish in what has been described as a “maturing sector” for the chain. Still, Mac’s opened 61 new outlets this year (they closed 51 sites) and ended the period with 594 locations, including 395 in Ontario, 31 in Manitoba, 67 in Alberta, 60 in B.C. and 41 in Quebec.

“Profitability was below plan in the Ontario and Quebec markets. As a result we decided to suspend further expansion in Quebec until such time as the existing operations proved more viable,” says Maich, remarking they were looking closely at aspects like product mix and margins in efforts to improve the fortunes of Mac’s in Quebec.

A point of contrast in 1977 were the returns earned by Silverwood Industries’ other retail operations – Bantam Stores and Astro Variety, units that had been acquired following the purchase of Hamilton’s Royal Oak Dairies in 1976. Bantam Stores operated 45 outlets with Astro Variety offering seven stores. While Mac’s had shown double digit growth of 14.3 percent, these Ontario operators were showing just four per cent gains over 1976, a number that was likely caused by a pricing battle between dairies in the province.

Maich, like Findlay, recognized Canada had entered a severe inflationary period that was impacting a wide range of businesses. Inflation averaged 9.4 per cent by year-end with the next year showing only modest calming to 8.4 per cent (2010 – 2.3 per cent). Certainly, the economy was hammering industries like dairies and those in consumer goods. However, Maich suggests that Mac’s was able to weather this storm because, “We had become an essential service that

The Seventies | 39

was sheltered from some of the challenges of the economy. People now saw us as a place they had to go if they needed staples after hours or when they were close by. As a result, consumers were willing to pay a slight premium for the service and the changes in lifestyle meant more people were shopping outside regular hours. This proved to be good for us and we were able to continue on our upward glide.”

Certainly 1978 showed this glide was indeed continuing. The chain reported sales of $166.71 million, a gain of 13.6 per cent. Maich comments they were justifiably proud of this achievement especially given the fact the chain had performed this with just a two per cent increase in stores. Behind this were a host of forward moves.

“During 1978 a multitude of new concepts were developed and initiated into prototypes and test marketed throughout Canada. New product categories were introduced into select markets and these included Mac’s Fast Snacks, photo centres, reading centres and other non-food items. Gasoline retailing was also being undertaken as was a new cluster concept where we had launched delis, wine stores and in-store bakeries,” he says, noting Mac’s also made a move into fountain drinks at this time. “Today, most c-stores offer this kind of service, but in the 70s we were one of the first.”

Stores also sported a new fresh appearance. In the 60s the logo was a black cat with a jug of milk set amid a white sign with square lettering. Already in the 70s the company had removed the ‘MILK’ from the signage in an effort to brand the stores as places of convenience rather than a dairy centre.

“We did some research and discovered that red and yellow were strong colours that attracted attention. I remember drawing the name in longhand and saw that the cursive script was more personalized and friendly. Our cat logo device was reduced to just the face so that the milk was completely gone,” says Maich.

With the new signage and branding, stores were also remodeled. This was a process started early on in the 70s, but took some time as the stores were re-invented with consistent décor themes and larger square footage to accommodate a greater product mix, as well as the deli and fountain drink programs.

“We would still be able to tailor stores to their specific markets. For example, locations in downtown Toronto might have a different product assortment than a store in Winnipeg or Niagara. What we wanted though was a recognizable retail space that customers would understand no matter where they travelled,” states Maich.

By year-end in 1978, Mac’s had grown again to 602 stores. This included 46 new “quality” locations where customers would find even more service and selection. Maich reports they also closed 38 outlets that year, 17 of which were in Quebec. The aggressive assessment of the of individual store potential resulted in significant disposal in Quebec during 1978. However, the remaining outlets showed average sales per store increases, this in a market where Mac’s did not enjoy beer and wine sales like others in the province’s convenience store sector.

As the decade closed Mac’s was bigger and better than ever. Sales were massive with a

40 | Celebrating 50

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A Company Where Staff Stays By the 1970s the company now measured employees in the hundreds. One such member of the team was Paula Murray, a woman who started at head office on Progress Avenue in July 1973. She began on the order desk and worked many areas, including data entry on the massive IBM 402 machines. She just recently retired in 2011 from a position in accounts payable.

Murray remembers a company in the 70s that was filled with promise and excitement.

“It was a lot smaller back then and had a family-like atmosphere. Certainly, we were part of a big corporation, but there was a separate quality and we were located in our own building,” she says, noting things like new product additions were great cause for excitement, as were store openings. “Because of the smaller scale of things back then there seemed to be more buy in from everybody. Even if you were someone at a lower level in the company, like a clerk or a receptionist, you were somehow more involved in the total picture. Today, we are too big for that. People have to concentrate on their specific areas and work within a much larger context.”

Part of the nature of the smaller Mac’s back then was a long serving staff where turn over was not the issue it is today. Murray remembers staffers like Donny Titus who supervised the warehouse. He had been part of the team when she stared in 1973 and finished when the warehouse was closed in 1997.

“He was a real fireplug. A man who took his job very seriously, and everyone respected him. He really had his finger on everything back there and 42 | Celebrating 50

made the warehouse run like clockwork,” she recalls.

She also remembers buyers Ernie Fergusson and Ernie McDonald.

“These two guys were really well liked and were fixtures at the office for years,” she says, still laughing about the time Fergusson accidentally bought an order of 100,000 marshmallow broomsticks for a Halloween promotion that they had to sell until April of the next year. “I think we got rid of all of them, but with tighter cost controls and systems in practice today, something like this would not be possible.”

Doris Van Damme was another long serving member of the Mac’s office in the 70s and beyond.

“She was like your grandma and I think she stayed on well after she could have retired. I was quite young so I always remember her as an older lady who was very dignified. She worked in the franchise department and everyone just loved her. At Christmas time she would bring in those little chocolates filled with brandy and pass them around.”

Another figure that comes to Murray’s memory was Marilyn Hames.

“She was a girl from Windsor that was our receptionist for years and years. I remember she had a very no nonsense manner and knew everybody. I guess you could say she was like the voice of Mac’s, because everyone that called back then got to speak to Marilyn first.”

Another aspect of the smaller nature of Mac’s back in the 70s was the celebrations. “We’d have picnics every summer at a place between Barrie and Orillia. These would happen in August and staff would take the drive up with their families.”

At Christmas the company would put on lavish

parties for the staff and their spouses and Murray reports this included lots of food and an open bar.

“Today you have to be so careful about things like over-serving guests at your party. Times were different back then and these parties tended to be very lively.”

Looking back she notes that the company would obtain a hall at the Holiday Inn on Wynford Drive off the Don Valley. One year, when the company was promoting Ronnie Hawkins’ new record

50

he came with his band to play at the event.

“I remember he had Beverly D’Angelo with him to sing back up. We were over the moon. Really, this was a great party that contributed to the Mac’s family atmosphere that we all seemed to feel back then,” she says, noting in her view, it was this family feeling that contributed to the large number of long term employees who worked through the period.

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Congratulations on your

50

th Anniversary!

11264 NSTC C+C MAG - MACS 50th 1/4 AD - 11-11 .indd 1

The Seventies | 43 11-11-22 12:11 PM

record $189 million brought in from 631 stores in five provinces. This tally showed a 371 per cent increase in sales and record profitability from where the company stood in 1970. Behind this increase was a slate of continuing change.

In 1979, the company reports the first moves into Saskatchewan.

“This gave us coast to coast coverage for the first time with presence from Quebec to B.C.,” states Maich.

Altogether 52 new stores were opened across the country for a total of 631 stores as the decade closed. This included 42 styled with the new Mac’s look.

According to Maich the new store design offered unobstructed glass fronts and angled aisles that had the store divided into four distinct merchandising zones – fast foods, family snacks, grocery and non-food, which helped move customers in patterns that contributed to strong merchandising.

The new stores also featured a special section called Mac’s Snacks – a fast food counter located close to the front end. Here customers could find everything from quick breakfast foods to bedtime snacks that were microwave easy. These were located at 105 sites in southern Ontario and Edmonton.

Concluding the decade, Maich comments, “Despite unprecedented competition from Canadian and American operations and the escalation of real estate, energy, operation, government and capital costs, we experienced record sales over the period. This was a very, Congratulations to Mac’s on your

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44 | Celebrating 50

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very good year. Sales per square foot, per store and in total, outpaced inflation thanks to an approach that has proven to be responsive to the current and anticipated needs of consumers. We focused on factors from how we stocked the shelves with products in demand to our store hours that became 7 a.m. to midnight seven days a week.

Mac’s is first and foremost a people oriented business. The more we met the needs of the people we served, the better were our sales and profit. I believe this was the key story of the 70s.”

Cottonwood Golf & Country Club Your Home Away From Home Congratulations to Mac’s on 50 years Proud to host your annual golf event

Phone: 403-938-7577 email: admin@cottonwoodgcc.com www.cottonwoodgcc.com 46 | Celebrating 50 The Eighties | 46

Shaping the retail and fleet fueling industry since 1891.

Wayne has been a Manufacturer of Gas Pumps & Dispenser since 1891 and opened its 1st Canadian Operation in 1919

Wayne, A G.E. Energy Business 613.475.3313 dean@wayne.com

The mission of Mac’s is to serve Canadian consumers through a large number of conveniently located specialty retail outlets emphasizing leading brand name products and services.

Our employees and the independent Dealers who operate our stores are dedicated to superior customer service.

Derek M. Ridout President

48 | Celebrating 50

1980s

Gains Continue Through the 80s

The 80s were about more than hyperinflation and big hair. Certainly, gas prices were spiking, rents were going through the roof and Cyndi Lauper and Boy George were offering their unique takes on fashion, but the real deal on how the 80s impacted us could be seen in how time starved we had become. On average, Canadians were working 38.6 hours a week, and now 49.8 per cent of the workforce were women working outside the home. On the positive, the 80s were a period where the societal changes that began in the 60s came to fruition. All of us began to feel the pull of an increasingly frantic lifestyle. Enter Mac’s and its one stop solution for many of the woes facing time crunched Canucks. This was a decade where Mac’s introduced 24-hour service, more quick foods, gas bars and brought things like bank machines and video rental to the neighbourhood corner store.

As the 1970s turned into the 80s, Mac’s was able to take the challenges of society and find a commercial opportunity that allowed the company to continue to forge additional links in a strong chain across the country.

“During the 70s we established Mac’s Convenience Stores as a major company in its own right on the Canadian scene with few comparable records in the Canadian food industry. We have seen the change from a jug milk store of the 60s established by others, to a concept developed by Mac’s in Canada. Its future will be in the adaptation to changes required by society in its lifestyle needs,” stated Eric Findlay, chairman, president and CEO of Silverwood Industries.

To be sure, the rapid and far-reaching changes to Canadian society seen in the 60s and 70s were continuing at breakneck speed. And, Mac’s was prospering because it was proving to be relevant to those needs of a faster paced life where convenient shopping was becoming an essential service.

“By 1980 we realized that the convenience factor was shielding us from a lot of the pressures that were impacting the overall economy,” says Mac’s President, Bob Maich.

In the early 80s, Canada was in the worst recession since the Great Depression began, with high energy prices, rising unemployment numbers and troubles in the real estate sector fueled by high interest rates. Regardless, Mac’s was relatively unaffected with the company reporting significant profits.

“From 1971 to 1983 we enjoyed record earnings. Only in 80 – 81 did aspects such as high interest rates seem to really hurt us. We had entered into the essential service category with Canadians and our customers shopped the stores in increasing numbers.

This was helping us support Silverwood Industries where the economic picture and changes in society were proving difficult for the other divisions corporation,” he states.

Indeed, Silverwood was battling hard to remain a source of profits for shareholders.

The Eighties | 49

Towards this end in 1980 the group made a series of acquisitions in the U.S. market, including FarrView Limited, a Michigan-based group of c-stores, a 33 per cent stake in Hop-In Food Stores, as well as the addition of the Three Crowns Restaurant Group and Borden’s dairy division.

According to Eric Findlay, these acquisitions had been in the planning stages for some time, but it was just coincidence they all seemed to come together in one fiscal period.

He pointed out even with Canada’s high occupancy costs and the heavy limits on liquor sales that were not present in U.S. retail, the company managed to produce profit returns on equity on a par with those in the U.S. sector. The success of Mac’s had shown when it came to convenience retail, Canadian operators could pull their weight in very tough business environments. Findlay reported the additions of the two U.S. c-store groups was viewed by management as a springboard to further expansion into the market south of the border.

To achieve this goal in 1980 Bob Maich was positioned as executive vice president of the newly formed Retail Group, a body that would oversee Silverwood’s convenience store amalgam in North America that included Mac’s. This was in addition to his role as president of the Mac’s Convenience store division, a unit that was continuing to perform. In fact, 1980 reports have Mac’s expanding still further in both number of units and sales.

In 1980, Mac’s offered its parent another record year with sales reaching $218.84 million, a 15.7 per cent gain over the previous year. Store count now stood at 656, a four percent increase with 53 new locations open and 23 marginal sites closed.

Congratulations… and welcome to next 50 years Saputo & Mac’s convenience stores partners for decades in Western Canada offering market leading brands, Quality, Customer Service, Integrity

50 | Celebrating 50

1980s

In the late 70s Maich had overseen the development of a new logo and corporate colour scheme. Gone was the milk jug and tartan-clad tabby. In its place was a new logo with a more personalized script and a happy-faced tam-wearing cat all on yellow and red. In store customers were treated to new décor, as well as product selection tailored to fast-paced lifestyles.

As the 80s rolled in the company aggressively updated existing stores and built each new location with the modern identity. By the end of 1980 the chain had updated 470 sites with the new colours. Further, 300 locations were equipped to offer Mac’s Snacks, a program featuring sandwiches, ready-to-heat pizzas, hot dogs and other quick food items. At locations customers would find a dedicated fast food refrigerated display alongside a prep counter that offered a microwave oven.

Mac’s Snacks was officially rolled out to 35 Windsor, Ontario stores in the second quarter of 1979 following a highly successful market test in Toronto. Edmonton was the next site for development with stores seeing new food sections installed before year’s end. These moves were a watershed for convenience retailing in Canada.

According to John Crofton, special projects director at the time, this marked the first Canadian-owned convenience chain to introduce the take-out foods concept here at home.

“More than 90 per cent of convenience stores in the United States offer some form of fast food.

In the U.S. fast food statistically ranges from four per cent of total store sales to a high of 14 per cent.

This translates into a lot of extra dollars for everyone,” he says.

Impressive as well was the fact that the turnover to the new style stores could be accomplished without having to close. Workers were able to merely replace old refrigerated displays with ones offering the new colours, and shelving could be moved during off hours. Dealers such as St. Catharine’s Mattie Hogg comments at the time her customers were excited by the changes in-store.

“They overwhelmingly approved and business is up dramatically,” she says.

Bob Maich remains understandably proud of the team’s achievement during this period and comments that Mac’s had placed itself in an ideal spot to take advantage of the challenges facing Canada and the retail industry at the time.

“There were restraining factors such as inflation, unemployment and energy cost increases. For Mac’s these factors would be offset by other challenges such as an increase in the number of out of home working women, more single-person households and more people eating away from home. We saw these as opportunities for our company to be responsive to the needs of the Canadian consumer.”

These efforts pushed Mac’s into another banner sales year, keeping it’s forward momentum.

Maich’s success in the face of adversity was rewarded with CEO, Eric Findlay appointing him executive vice president of Silverwood Industries Ltd. in 1981. This meant Maich could bring to bear his skills on the challenges facing the corporation as a whole as it entered a very difficult and changeladen period.

“My promotion was more of a recognition of the strengths of the team and their accomplishments rather than any one or two things I did as a senior executive. Without the placement of talented and capable management at Mac’s we could never have achieved the level of success we established at the time. We prospered because there was such great buy-in in every area by everyone.”

The Eighties | 51

With Maich now at the helm, Silverwood’s did slightly better the following year with consolidated operating losses reduced by almost $3 million dollars over 1981. However, the corporation’s earning picture fell to its lowest level with net loss of $291,000. Even Mac’s sales growth, albeit still in doubledigit range, was down.

Simply, the economic picture in Canada during this period was very poor. Many businesses were lucky to just keep their doors open. In the face of this Mac’s had achieved a 10.8 per cent gain in sales over 1981 with sales of $287.9 million.

“This sales accomplishment is noteworthy particularly in light of the negative economic impact across virtually all markets typified by high unemployment, low consumer confidence and high interest rates,” says Maich. “During this most challenging of years the Mac’s Division achieved its eleventh consecutive year of profitability.”

During the first half of 1982 there was a considerable decline in profit due to adverse external factors such as a deepening economic recession. In May 1982, Maich was posted as president and COO of the overall company, Silverwood Industries Ltd. He points out that while Ontario was being hammered with falling orders for durable manufactured goods like refrigerators and car parts, the west was seeing its economy

52 | Celebrating 50 The Eighties | 52

54窶ポ窶イelebrating 50

1980s

Tom

go into a tailspin thanks in part to the negative influence of the National Energy Program that funnelled billions of dollars out of the oil patch and away from provincial coffers and western shareholders.

Mac’s also looked to its dealer network for inspiration. For example, the Calgary regional office had just brought in Hugh Large to oversee its merchandising efforts. Large had come from a career with multi-store retailers and could see the value in listening to those in the field.

At the time he said, “Probably our biggest challenge – and our biggest area of opportunity – over the next year will be to become more effective in dealing with the various needs of our stores. A key role will be to better tailor the merchandise we have in store to suit the particular needs of each store.”

A key factor that kept Mac’s running hard was the competitive force of operators such as Becker’s in Ontario and 7-Eleven in western Canada. Tom Clermont, a Mac’s personality who started in 1979 as an area rep moving up to become district manager based in the Calgary office and then district manager for Edmonton and Northern Alberta, mentions the 7-Eleven factor as one that really kept everyone on their toes.

Clermont “We had to be better to win and I remember the fight was a kind of ‘fly by the seat of your pants’ kind of thing. They [7-Eleven] had more money, were foodservice driven and relied on a corporate direction that created a consistent standard execution.

What we had was heart and we worked to create success one store at a time,” he says, adding given the speed with which Mac’s was growing, they had to get that heart pumping pretty fast as they moved on to the next new outlet.

Kim Trowbridge agrees. Like Clermont, Trowbridge started with the Mac’s back in the early 80s (1982 in fact). Today he is vice president, special assignments with Mac’s current parent Alimentation Couche-Tard Inc. a move from his previous role as vice president, operations, Western Canada.

“The parent company resided in Ontario and most of the focus was on that area. We were a bit more pioneering and placed a western stamp on our stores that was more in keeping with the competitive struggles we were facing out here,” he says remembering those early days of market combat. dge i r b Trowbridge remarks in the 80s they had grown to around 115 sites in B.C. Trow Kim alone. “These were pulled back as we consolidated our power-base in Calgary and Alberta. We could see that you had to be strongest in your core market area and with 7-Eleven based in Burnaby they had a stronger hand in places like the lower mainland, and were expanding rapidly in the province. We decided to make a play for dominance in Alberta where our regional office was located.”

He reports western initiatives also meant differences in aspects such as marketing campaigns and product assortment.

“In the 80s the west had about 33 per cent of sites equipped with fuel, while only about 15 per cent of Ontario sites had gas bars. We could also tailor promotions to the needs of our customers. For example, we would do promos on things like windshield washer fluid, while stores in Toronto might do a tie-in with milk. We were starting to look at tailored marketing

The Eighties | 55

that sought to build sales on a localized basis rather than use a cookie cutter approach like 7-Eleven that had a more corporate driven sales culture. I think this was one of our real successes at the time.”

Russ Egerdie, who worked as the Mac’s executive vice president during the 80s, reports that all Mac’s employees, store dealers and their staff put their heads together and came up with a wealth of prospects. It was in this context the company developed 24-hour stores, video games and even charity sponsorship programs like Mac’s for MDA (Muscular Dystrophy Association).

Rick Broadhead, vice president of marketing at the time, suggested the company was in the midst of “store wars.”

“The face of retailing and marketing was changing. It’s tougher to make a dollar and it’s going to stay tough,” he said during an address at Winnipeg’s Marlborough Hotel early in 1982. “Mac’s is going to have to work harder and be smarter to continue to beat the ‘buns’ off the competition. There’s a war out there and its called ‘The Store Wars.’ Mac’s is going to win by being many things to more people most of the time.”

Certainly, the company was ramping up the Mac’s Plus program of enhanced in-store selection.

They were also pushing sales though promos like Cash-in-a Flash. Here, Kim Trowbridge remembers this promo as one of the first loyalty programs to run in Canada.

“We went to huge expense developing this. In-store customers would find a dedicated kiosk outlining the multi-month promotions. Customers who bought goods at Mac’s could obtain instore credits that they could redeem for purchases. We were really ahead of our time in terms of the technology used to create and maintain this promotion.”

Perhaps too far ahead of their time. The Cash-In-A-Flash promotion should be viewed as a symbol of a company (and staff ) willing to try just about anything to appeal to customers. But, when

happy 350 birthday!

th

(or happy 50th in human years)

Your Neighbourhood Gas Station

® Registered Trademarks of Kruger Products L.P. ®’ used under licence. © 2012 Kruger Products L.P.

56 | Celebrating 50

something didn’t work (no matter that it was hugely expensive), they recognized it, and moved on.

As the company moved into 1983 there was significant change within the corporation, as well as a considerable rebound in sales. The foundation dairy business had been flagging over the years and there was little doubt that convenience retail was Silverwood’s strong suit. The upshot was that in the first half of 1983, Silverwood divested itself of its one-time flagship division, Silverwood Dairy, in a sale to Labatt’s Ault Food’s Division.

The move was driven by the poor performance of the dairy unit over the past number of years.

However, since people from the dairy business had traditionally managed Silverwood Industries, there was an emotional attachment to milk and a reluctance to part with the food processing unit.

“Eric Findlay and I had been approached a number of times by Labatt’s who were interested in the dairy side of the business to add to its growing Ault Foods Division. Understandably, he [Findlay] was conflicted about the sale because of his life-long history with the sector. I remember that I was attending a Blue Jays baseball game and ran into Paul Widdrington (president of Labatt’s). We went out into the corridor to discuss the possibility of a deal and Widdrington asked ‘What’s it going to take to sell the dairy?’ I felt that Eric really wanted to maintain some presence in the industry and could be of benefit to Ault Dairies and so I suggested they offer him a seat on their board. I believe the deal was finally valued at close to $70 million and Eric was elected to the Labatt board. With the

58 | Celebrating 50

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Derek

dairy business behind us we were able to move on from what was a stumbling block to the company’s business health and our greater success.”

Silverwood and Mac’s had had a good year in 1983, making the company all the more attractive to suitors such as Ault. The shortfall of the previous year was a distant memory with operating income climbing to $1.46 million from a loss of $476,000 in 1982. As well, Mac’s sales were purring, revealing a growth of net income of more than 20 per cent.

“The major effect of these corporate actions was to refocus Silverwood’s position within the North American convenience store market. At year end Silverwood was one of the major convenience store companies in North America with a total of 906 (Mac’s/ HopIn/ FarrView) units operating in Canada and the United States,” says Bob Maich.

With the dairies a thing of the past, the company, now called Silcorp Limited, was in a position to concentrate fully on its main profit drivers in retail distribution. Towards this end, Bob Maich hired Derek Ridout as his replacement as president, Mac’s Convenience Stores.

Looking forward, both Maich and Findlay saw a bright future for the new corporation. Expectations were for continued growth in revenue from the convenience stores. However, more importantly, the removal of debt meant a drastic lowering of interest payments, as well as more cash for capital improvements and the ability to further expand profitable operations.

Ridout “That year we made plans to increase our capital spending by $15 million and increase the store base by 65 units,“ says Maich.

The company also consolidated its western regional operations in September 1983, with a new Calgary facility located on Southport Road in the city’s southwest. Housing 68 employees, the new facility offered an additional 3,000 square feet over the previous location. The additional space was needed to facilitate the new IBM System 34 computer that was installed to streamline financials.

The new “34” replaced all manual accounting procedures like dealer remittances, kept track of store inventory and paid store bills. The increase in space was also necessary to accommodate a larger mailroom and data processing centre. This not only increased space, but employee morale as well.

Employees remarked they liked the windows that lined the new building’s walls and the near-by fitness centre.

According to Calgary’s Special Services Manager, John DeLisle, the move was accomplished with minimal disruption to business. “Two hours on Friday and two hours on Monday, the rest was done over the weekend,” he says.

His plans were cut short by the vagaries of the corporate change over during the previous year.

Silcorp earnings fell short of projections by a little more than $20 million, and net store openings were only 15 units, a far cry from the proposed 65 stores planned the year before.

“In Canada, the openings of Mac’s Plus stores were suspended in 1984 to allow for the restructuring of capitalized costs of these extremely productive units. This led to the delay in the opening of 12 Mac’s Plus stores during the year,” says Maich, remarking they planned to get these stores going in 1985. He reports further they closed 13 Bantam stores in Ontario following the integrating of the chain into the Mac’s Convenience Store family.

Wobbles aside, 1984 was still a very good year.

59 | Celebrating 50

Successful partners in Canadian convenience.

Congratulations Mac’s on 50 years in retail convenience. As a proud partner, CIBC offers customers access to bank machines in over 450 Mac’s store locations across Canada. To find out if a CIBC Instant Teller® bank machine could be right for your business, email CIBC at Mailbox.ABMSolutions@CIBC.com.

® Registered trademark of CIBC.

1980s

“During fiscal 1984, intensive marketing and merchandising programs pursued the prime objective of market share improvement through increasing customer traffic and average customer transaction per visit,” says Ridout. “A combination of major national promotions with regional and local marketing and merchandising activities supported continuing sales growth within the store base.”

As Mac’s increased its footprint on the retail landscape it sought to change the location of its stores to places of higher visibility. In the early years, the company had been content to locate in midblock or mid-plaza sites. As Mac’s grew in prominence so too did its need for real estate. In the 80s the company was discovering gas companies held many of the prime spots on street corners that were attractive to convenience demanding customers.

“When we saw the benefit of locating on these high traffic corners we started talking to the oil companies to begin a partnership. We could see that the oil companies lacked the strengths in consumer marketing that were necessary to make a success of product sales beyond gasoline and car products,” says Bob Maich, adding the arrangements they often worked out had Silcorp rent the land and building to set up a Mac’s store while they continued to sell the landlord’s (oil co) pump products.

“It was a marriage made in heaven. These arrangements served to further cement us as the place for convenience in the Canadian marketplace.”

In 1984 Mac’s had 41 sites selling gas, and a year later this number had grown to 64 locations.

According to Ridout the development of three new Mac’s Plus stores signaled yet another change in their approach. Starting with a full assessment in the early part of 1984, the company redesigned three of these stores to ensure maintenance of high sales volume.These stores combined a Mac’s extensive training program included modules on inventory management.

deli, in-store bakery, sandwich section, as well as the standard product mix most Canadians had come to expect from a company that was, by this time, the leader in the industry. In the east the first of these new format stores was in Windsor, while the west opened a Mac’s Plus in Vancouver. The Mac’s Plus concept stores were not ultimately successful, and were converted back to regular Mac’s stores over the following six years. Mac’s Plus was a concept ahead of its time, and financial issues in the early 1990s forced the company to rationalise this and other programs, and concentrate on developing programs that could be rolled out to all or most of their locations.

“Fast food and beverage centres were now included in 650 stores. This really differentiated from our many direct and indirect competitors and we saw this as a key strategy that represented a major opportunity for profitable growth,” states Ridout. “We were looking to the customer to tell us what they needed in a store and then we would work to get this into the market. For example, by the end of 1984 we were operating 590, 24-hour outlets as a direct result from consumer driven demand.”

To Eric Findlay’s son, Scott, market innovation was the key to Mac’s continued gains. Scott Findlay came on board in 1981 as a marketing manager with Silverwood. Following the Labatt, Ault Diaries acquisition of the dairy business in 1983, he moved over to become director of new products and services for Mac’s under vice president of marketing, Rick Broadhead.

“We moved forward by taking chances and risks and thinking outside the box,” says Scott Findlay. “For example, Mac’s offered Canadians the first in-store bank machines. We called these MagicBanc and started offering them in 1984 at select locations. With Interac just set up we were able to leverage the power of our network and offer a new and innovative convenience to our customers that really set us apart.”

Findlay comments further Mac’s was also the first chain to come forward with VHS and video machine rental. Customers could drop into a Mac’s outlet, select from a list of titles at the Renta-movie kiosk, insert a major credit card and walk out with a copy of Karate Kid or Ghostbusters, as well as a machine to play them on.

“These services made us more valuable to time crunched Canadians. They also brought in traffic. We knew that customers who needed to use the bank machine or select a video would also buy a pack of cigarettes, pick up some cat food or grab a couple of quarts of milk. This enabled us to greatly increase incremental sales on a per store basis,” he says.

These initiatives led Mac’s into 1985, a year of challenges to be sure. However, 1985 also offered sales of $393 million, a number that represented a 6.6 per cent increase over the previous year.

Mac’s also kept up its considerable development momentum. In 1985 the company reported a network that featured 788 outlets in six provinces. Of the new operations 29 were standard Mac’s, 23 sites provided gas pumps and four locations were set up as Mac’s Plus sites.

“Mac’s store network then comprised three distinct formats,” says Derek Ridout. “The standard Mac’s format offered about 3,000 high demand products that included fast foods, fountain drinks Froster Frozen Carbonated Beverages (FCBs) and Mac’s Super Coolers, soft drinks, tobacco, snacks, dairy and bakery goods, select grocery, health and beauty, as well as reading material. By year-end we operated 708 of these stores. We also operated 64 self-serve gas bars, of which we built 23 sites in 1985. The third format is the Mac’s Plus store. As mentioned these offered deli, in-store bakery and dedicated sandwich sections. Of the 16 Mac’s Plus locations three offered gasoline.”

When it came to gas sales, Silcorp was enjoying significant gains. Consider in 1984 the corporation reported combined gas sales and commissions of $34.9 million. The next year they 62 | Celebrating 50

1980s

reported a doubling of sales with tallies hitting $73.24 million. Behind this growth was the acquisition of the 21-unit Pump N’ Pantry stores in Michigan the corporation brought on board in April 1985.

The Pump N’ Pantry outlets were amalgamated into the FarrView Division of the company as it continued to look farther afield for fresh opportunities.

Speaking to shareholders in 1985, Chairman and CEO, Eric Findlay remarked the corporation was on a tear regarding its capital expenditures and as such return was reduced in favour of foundation building.

“It is important to acknowledge the impact new store growth has on short-term profitability,” he said. “New convenience stores are generally not expected to make a contribution to overhead during start-up and in fact do not usually reach optimum profit potential until the third year.

The added time now being taken to develop new prime sites has increased our start up costs and consequently has affected earnings to a greater degree than anticipated.”

Development of new stores one at a time is, of course, more expensive than buying existing and profitable chains that have already worked out their start-up issues and built their business.

The Pump N’ Pantry acquisition in the United States added some $31 million to the Silcorp Limited balance sheet that year. Significant as this was it was far less important than the acquisition of Convenience Services Limited from founder Mike Murphy. Convenience Services Limited, a Barrie, Ontario company, operated Mike’s Mart and Mike’s Milk stores in central and northern Ontario communities such as Collingwood, Owen Sound, Barrie, Midland, North Bay, Sault Ste. Marie, the Muskoka region and Thunder Bay. Mike’s also operated Northmar Distributors, a wholesaler that largely supplied its store network. The purchase, valued at $6.825 million, involved 78 stores that were the leaders in convenience retail in the region.

Mike Murphy was a colourful and charismatic executive who inspired intense loyalty from the people in his organization. Many of the staff working for Convenience Stores Limited (CSL) became key members of the Mac’s organization, including David Rodgers (then construction manager, and future VP of Mac’s Ontario division), Steve Tennant (then operations manager, and future Regional Director of Operations for Mac’s and president of the Canadian Convenience Store Association) and Robert Moffat (controller of CSL, and Corporate Finance manager of Mac’s Shared services currently), as well as many loyal field and store staff. His strategy in the north of securing highquality real estate, keeping rents under control and “ferociously defending our turf,” meant that Mike’s became a valuable brand, and the acquisition of CSL was important to Mac’s’ future in northern areas.

Prior to the acquisition, Mac’s had only a few outposts in the north, confined to a few stores in the Sudbury area.

The group was operated as a separate and wholly owned subsidiary of Silcorp under the guidance of Joe Lewis who had come over from Mike’s to oversee the division as the new president of the division.

“The Mike’s purchase was a key acquisition for us and one we had been working on for five years,” states Bob Maich. “Mike Murphy and I would meet every few months to discuss the deal, but Mike’s owner and major shareholder Mike Murphy was reluctant to sell. We finally came to terms in 1985 and then finalized the deal just into 1986.”

He remembers the trip into downtown Toronto to the lawyer’s offices on Christmas Eve in 1985 with an impressive cheque in his briefcase. “It was a really cold and dark night by the time we concluded the deal and I remember riding down in the elevator to the parking garage with Mike. I

The Eighties | 63

Mac’s celebrated the opening of the 500th location with a commemorative coin set.

64 | Celebrating 50

1980s

was going home to Oakville in a snow storm and Murphy was taking his multi-million dollar cheque, getting into his Cadillac and driving to sunny warm Florida.”

According to Convenience Services President, Joe Lewis, a long serving Mike’s executive who had started with the Barrie-based group at age 23, the fit was good for both companies. “It allowed Silcorp to operate in a region in which it had little presence and it could do it from the standpoint of consumer recognition. Mike’s Mart was a well-known brand in Northern and Central Ontario. Mike’s could benefit through the deeper pockets of Silcorp. Together we could learn much from each other’s organizations. For example, Mike’s was more decentralized and was closer to individual markets.

Mac’s had much to offer in terms of well-tuned systems like accounting and merchandising.”

The purchase of Mike’s Mart in 1986, gave Silcorp a commanding hold on the Canadian convenience scene. Together Silcorp’s retail group, which included Hop-In Food Stores, and FarrView Limited in the U.S. and then Mike’s Mart, and of course Mac’s Convenience Stores in Canada, created a network of 1,242 outlets of which 868 were in six provinces.

Certainly the acquisition of the Barrie-based group of chain stores delivered an edge to Silcorp. Following the purchase of Mike’s the corporation reported substantial improvements over the previous year.

Nineteen eighty-six was also Mac’s 25th anniversary year and the division had a lot to celebrate. Sales increased by 8.6 per cent revealing impressive totals above $427 million.

According to Derek Ridout, challenges were never far from view. For example, the western provinces of B.C., Alberta and Saskatchewan were seeing Congratulations on hard times due to the continuation of the National Energy Program, high interest rates and high unemployment. Ontario was being battered by the same unemployment and the auto industry was in decline. Despite this, Mac’s achieved a record year where nongasoline sales vaulted by 7.4 per cent and gas sales soared by 40.3 per cent reaching 113.5 million litres.

With numbers like these showing Quality gasoline sales and convenience was a match European made in retail heaven, 13 of the new stores Gummies built in 1986 were designed to offer pump and Sours products.

“To make the most of this opportunity we aggressively sought out new TOSUTA International staff for the management team that had 1-800-663-1080 experience in the petroleum industry. We saw this as a move that would accelerate our strategic commitment to gasoline marketing,” explains Ridout.

50 Years

The Eighties | 65

MACS Convenience Stores

1996 to 2011 In 1990 MACS Convenience Stores (Silcorp at the time) entered into a tank and line testing program with Tanknology for all their

gas stations across the country. In 1996 we started a SIR monthly monitoring program on 70 sites. This program has developed

into a full Fuel Management program which

includes all MACS sites in Ontario and the western provinces approximately 181 sites.

The program involves a daily SIR flag report

and a monthly report on all sites; calibration of all meters; compliance testing (Leak Detector testing, ATG/sensor inspections, Cathodic Protection Inspections); tank and line testing under the SIR guarantee.

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66窶ポ窶イelebrating 50

1980s

In an effort to keep the ball rolling in other store sectors Mac’s expanded on its video rental program in 1986. This year saw the chain offer movie rentals in 450 outlets and expectations were that by the next year Mac’s would be the market leader in this category.

The foodservice offering was also tweaked. Starting fresh, Mac’s began testing higher-end coffee products with the goal being they would become a leading source for coffee across the country.

Stores were also being outfitted as fast as possible with new fountain beverage systems, as well as dispensers for FCB through their signature Mac’s Froster program. These efforts also capitalized on the massive traffic of the Mac’s network where more 220 million customers dropped in during the year.

Looking back Kim Trowbridge suggests these years were ones where they were in a competitive struggle with the oil companies and others for the best real estate.

‘The oil companies were becoming more sophisticated and they wanted to better use their sites,” he states. “As a result we started to see a shift in market share and we fought back by seeking out better locations and this cost money.”

The money to develop and expand was found by issuing a $60 million convertible debenture that year. This enabled Silcorp to retire its secured and long-term debts and set its sights on new properties in prime locations, as well as acquire competitors in c-store and gas. However, the cost was high with Silcorp offering interest at eight per cent, a move that would prove hazardous when the wheels came off the corporate wagon a few years down the road.

And, while the debenture was expensive, so was Canada’s real estate. Rents and real estate prices continued to rise in the 1980s. Consider in the early part of the decade the average new store cost $87,000 to build. By 1986, the 39 new outlets built that year cost $9.7 million or $248,717 per unit, a figure that also shows the expense of developing gas bars.

The drive to more gas bars was positioning Mac’s to become a major force in petroleum retailing. In 1986, the group had pumped 113 million litres. The next year, the chain saw customers put more than 130 million litres of gas into car and truck fuel tanks. This showed an increase of 15 per cent in sales. It also showed Mac’s was competing hard for pump share in the country’s roughly 12 billion-litre trade in fuel.

Overall, Mac’s used its new beachhead in gas to help it achieve another record sales year in 1987. Largely this was mounted thanks to its consumer driven approach where goods and services were positioned where they would receive the greatest acceptance. “This was our tailored approach to marketing. Yes, stores had a core of standard products, but we sought to offer a mix that was relevant to each community we served,” says Kim Trowbridge.

Mac’s was also rolling out new programs that were hitting the target. In 1986, the company tested a fresh store design. In 1987, the new design with its emphasis on foodservice, was taken to 107 locations across the country. This was being followed up with yet newer designs that featured larger stores and time of day menu offerings that brought in customers looking for signature breakfast, lunch and snack-time foods. More, Mac’s stores began offering its Fresh Express bannered program that served to dramatically drive sales in its quick service menu.

“The Fresh Express program really helped with the development of things like the ‘Froster’ frozen carbonated beverages and the ‘Coolossal’ fountain drink section. People were really identifying Mac’s as a place where you could get it all. Whether you needed a tank of gas, or a quick meal, Mac’s was it,” states Ridout.

Trowbridge adds this period was also one where Mac’s introduced bulk candy and nuts. “These

The Eighties | 67

Mac’s Celebrates the Big Two-Five

May 2, 1986, saw Mac’s staff gathering at both 10 Commander Blvd. in Mississauga and on Southport Road in Calgary to celebrate 25 years in convenience.

On that day the doors closed early with everyone ready to party after the offices shut at 2 p.m.

What began as a small single unit Mac’s Milk store in Richmond Hill, Ontario had become a chain of retail outlets that were the envy of the industry. By 1986, Mac’s had grown to 886 stores in a national group that spanned a market from B.C. to Quebec. Understandably, Champagne corks were popping.

Present at 10 Commander Blvd. were Silcorp Chairman, Eric Findlay, Silcorp President, Bob Maich, and Mac’s President, Derek Ridout, who cut the cake and spoke to the staff about the level of commitment displayed over the years that had led to that day.

Festivities included a 1961 trivia event where long term staffer Ron LeDrew took top honours and a cash prize. Second and third place went to Derek and Mary-Ann Hodgson.

In Calgary, Vice-President Operations, Bob Scott officiated and cut cake alongside Harold Lewis, the region’s longest serving employee. Not

68 | Celebrating 50

to be outdone Calgary staff also participated in the 1961 trivia quiz. Winners at the Calgary office included Colleen Butt (first), Don Rohl (second) and Marcy Bobyn (third). The funniest answer prize went to Angeka Stepa. Even Mac the Cat showed up. For this event Operations Secretary, Christine Lee’s husband Ed volunteered to wear the suit of honour.

1980s

were brought into 230 stores as an experiment. It lasted well into the 90s before we changed back to more of a complete emphasis on national brands.”

Other important areas seeing continued development were video rentals and lottery sales. In 1987, videos represented more than $12 million in revenue, a number that has since withered to zero due to the onset of alternative technologies. Lottery sales also showed tremendous gains that year moving ahead by 25 per cent over the previous year. And, while video rental business became largely extinct in the face of Internet and cable services, lottery business continued to grow and become a member of Mac’s core product offering.

While these initiatives were impressive, gains to the sales were slowing. Still, the company reported a record year with sales reaching $433.6 million. This was just a 1.5 per cent increase over 1986, a number that revealed a significant stalling of growth that had been typically recorded in double digits.

Another reversal was for the first time in years the number of Mac’s outlets declined. In 1987 there were a total of 779 sites operating compared to 789 the year before. Still, the company constructed 24 new sites in prime locations. Of these eight offered gas bars. The decline in store count came from the fact Mac’s management elected to close 34 outlets that were not delivering an adequate return on investment.

According to Bob Maich the year was typified by developments in the service sales sector.

“This encompassed automated teller machines (ATM), video movie rental, sales of lottery tickets, money orders, stamps and video games,” he says. Many of these sectors are no longer viable, having been replaced by video on demand, email money transfers, email and home-based or portable game platforms. But, at the time, Mac’s was nimble enough to exploit these new business opportunities without betting the house on them.

However, despite the positives of 1987 there were major challenges in the market. According to Maich, rent for class “A” sites were climbing and causing considerable concern. Other factors were also serving to alarm management. He reports at that time labour was coming off a period of unemployment and as such Mac’s was starting to see significant human resources turnover as workers sought positions outside the chain. The upshot was that both dealers and Mac’s were in a position where costs for labour were climbing while operators were finding it difficult to staff locations. As well, Sunday shopping regulations were in flux with city halls and provincial legislatures discussing the implementation of new laws that would allow grocers and other retailers to do business on a day that had been Mac’s near private domain for decades.

Under this cloud Mac’s finished 1988 with a decline in operating revenue of 11 per cent. This was in spite of sales that continued to move forward. Indeed, 1988 reported record sales of more than $460 million, an increase of 6.3 per cent.

Despite these troubling factors, Mac’s plowed ahead with some important initiatives designed to revive the profit picture. In 1988, the company spent in excess of $2.5 million to improve the instore atmosphere. Ultimately, this program saw 410 stores remodeled and renovated to achieve more modern standards.

According to Ridout, a principal objective of the expenditure was to grow the foodservice segment of the business that was valued at $40 million. Consider that Mac’s served over 21 million fountain and FCB drinks in 1988, as well as nearly three and a half million sandwiches, not to mention 15 million cups of coffee and the scale of the opportunity can be gauged.

The Eighties | 69

A similar opportunity was seen to exist in the gasoline sector. In 1988, sales of gas increased by 17.9 per cent with locations selling some 154 million litres of diesel, premium and regular gas.

However, the dramatic decline of the barrel price for oil meant pump prices were down and so too were profit volumes. Still, Mac’s had earmarked 50 per cent of all new sites to include a gas bar and car wash facilities similar to the prototype it launched at its Kanata, Ontario location that year.

Mac’s was also undertaking further pushes in new merchandising. For instance, stores now offered attractive add-ons like TicketMaster sales where customers could drop in to pick up entry to plays, concerts and a variety of other attractions. This was in keeping with the goal of being many things to more people and was a welcome addition to the product mix, even though the TicketMaster initiative would be ultimately unsuccessful.

Further additions to merchandising were added in the form of new electronic message boards.

According to Tom Clermont, these delivered in-store shopper information that captured shopper attention and assisted them with purchase decisions through advertising. “Product messaging directly at point of sale is one of the most powerful methods of driving sales,” he says, commenting on the systems that were in place at 460 locations in 1988. This early form of electronic advertising board was, unfortunately, spectacularly unsuccessful. It depended on a modem connection with an offsite message database, which was often faulty. The advertising revenues that were hoped for never materialized. Within a few years, most of the message boards were getting dusty in storage rooms and basements, and they were ultimately written off at great expense in 1991.

With the turn in the labour market, Mac’s had to improve staff retention, recruitment and job satisfaction. Towards this end the company launched a series of initiatives. According to Derek Ridout the company was operating on a leaner staff cohort than it had previously due to worker unavailability in key markets.

He suggests it was viewed as more important than ever to build team skills and recruit the best and brightest. In response, Mac’s offered some of the best training and personnel development programs in Canadian retail.

Nineteen eighty-eight was also a year where Mac’s acquired the assets of La Masionnée in a move that greatly expanded its presence in the Quebec market. Purchased from Groupe Franchise Plus, a unit of Steinberg Inc. of Montreal, the La Maisonnée deal was valued in the $20 million range and gave Mac’s a 78 store leg up in a market where it already operated 27 outlets.

The La Maisonnée sites were largely in the Montreal area with other locations in Hull and Quebec City. The stores were more upscale than a standard Mac’s and offered customers both beer and wine, as well as in-store bakery and deli with a product mix tailored to each neighbourhood they served. Size was typically about 3,000 square feet with chain-wide sales in the order of $70 million.

Eleven sites also offered gas-bars.

At the time reports indicated that La Maisonnée had lost money since its birth in 1981 in a Quebec market dominated by Provisoir (Provigo), a chain with 230 outlets, and Bonisoir (Hudon et Deaudelin Ltée/ Oshawa Group) with 222 locations. By 1988 its parent had stemmed the flow of red ink making the buy more attractive to Mac’s that was working hard to grow through acquisition. The company would retain the name La Maisonnée and use the group’s on-the-ground expertise to assist in moving forward in a province that had always proved a challenge to the Ontario-based Silcorp and Mac’s. In the 1990s, the La Maisonnée chain became an important early acquisition of Alimentation Couche-Tard, the eventual owner of the Mac’s chain, when they bought it from Silcorp.

70 | Celebrating 50

1980s

Another significant milestone during 1988 was the resignation of Bob Maich as president and COO of Silcorp. Maich delivered his resignation, but agreed to stay on as a director to help smooth the transition to another chief executive. Maich had been a guiding force for both Mac’s and Silcorp for more than 17 years. His resignation (he resigned from the board a year later) was a further indication there were storm clouds building.

And indeed, hard winds were beginning to blow at Silcorp. At the close of the next year, 1989, Eric Findlay remarked it had been an extremely difficult operating period for the corporation. Despite another year of record revenues with consolidated sales hitting $852.2 million, a 17.98 per cent increase, the corporation announced an extraordinary loss of $8.97 million.

Behind this loss was an underperforming U.S. division that was being sold off, a decline in operating returns from Ontario c-stores and losses from the new Yogurty’s Yogurt Discovery chain where start up costs were far higher than expected. Add to this heavy competition from the petroleum sector, drug store chains and mass merchandisers, difficulty in the Quebec market where stores were not panning out as expected, as well as rising development and real estate costs and the stage was set for future drama.

Still, Mac’s was showing good numbers in the Canadian c-store market. Once again the chain reported record sales with 1989 figures up by 17 per cent over the previous year. Gas sales were ahead of the previous year as well with the company reporting 200 million litres pumped, a figure that represented a 27 per cent increase. Mac’s even continued to open new locations with 68 stores built in prime locations across the country. Interestingly, Mac’s purchased nine 7-Eleven stores from Southland Corporation that year, located in Toronto, Hamilton and Welland and were amalgamated

Mac’s Gives Back

Muscular Dystrophy Association, Cash For Kids, Mac’sMidget Aid in Cornwal, Junior Achievement, support for Humber prevention in Edmonton, MDA Celebrity Cookbook and Since its earliest days, Mac’s has stood out as a leading supporter of charities. In fact in 1980 Mac’s was rated as the Canada’s top contributor to needy programs, and was North America’s number two corporate contributors among members of the National Association of Convenience Stores (NACS). More, Mac’s was third in terms of total dollars collected among a group of 200 convenience chains.

According to Bob Maich, Mac’s got involved with the Muscular Dystrophy Association (MDA) following his experience in the U.S. as chairman of the National Association of Convenience Stores (NACS). From this post Maich, and the crew at NACS, had been able to raise a considerable amount of money for the charity and handed Jerry Lewis a cheque for $5 million on one occasion.

“I thought we could do this up here. When I started as a Chairman with NACS Southland Corporation (7-Eleven) was a leading sponsor for MDA in the U.S. I saw this as an opportunity to raise awareness of both Mac’s and MDA in Canada and we ran with it. It proved to be a good partnership that helped a lot of people who were battling this horrible disease.”

In 1980, Mac’s handed the Muscular Dystrophy Association (MDA) a cheque for $121,000 at its annual Jerry Lewis telethon. In 1981, Silcorp President, Bob Maich hoped the chain would be able to double this amount to $400 per store.

Towards this goal, Mac’s outlets were equipped with collection canisters on backer cards and window banners promoting the MDA Celebrity Cookbook and MDA buttons. Customers would be invited to purchase one of these items and then place the money themselves into the canister with the knowledge that monies donated in Canada stayed in Canada.

72 | Celebrating 50

In 1980, the first year of the cookbook promotion, Mac’s staff themselves bought $25,000 of the $2 books. The concept that was started by Mac’s staffer, Jean O’Connell looked to a wide range of entertainment personalities for their favourite recipes. Inside the cookbook she managed to get foods from Mohammed Ali, Johnny Carson and Jerry Lewis. There were even recipes from people like Alberta Premier, Peter Lougheed and the mayors of both Calgary and Edmonton. Drawings in the book were contributed from another Mac’s staff member, Ingrid Jipp.

Stores were also encouraged to try out their own fundraising ideas as well. For example, one store organized a flea market in Toronto that raised $7,000 for the campaign. Others tried car washes, marathons, t-shirt sales, auctions and raffles to gather money for MDA and raise awareness about this horrible disease.

Mac’s sweetened the deal by offering prizes to dealers that got involved. Here, the company provided 14 prizes spread over the two regions. In 1980, Mac’s in Rocky Mountain House won first place and won a trip to Las Vegas. Prizes of $100 to $400 were also put out there with special awards going to Area Representatives and District Managers.

Year in and year out Mac’s employees stepped up with events that helped put money in the pot.

For example, Manitoba staff were out in the rain in May one year holding a rummage sale that earned Jerry’s Kids $700. In Calgary a raffle pulled in $946 with a couple of car washes garnering more than $670. In Milton, Ontario store #204 organized a five mile bike-a-thon and raised $812. In Hagersville, Ontario (store #689) a slow pitch baseball tourney and dance raised $1,142. Altogether the efforts of staff were responsible for MDA funding totals in the

Hockey Tournament, YMCA, Journey for Life Children’s College and Cornell University programs, child abuse MDA buttons $100,000 range over each year of the decade.

And, while Mac’s stood out as a major corporate contributor to MDA, the company also came forward to work for a host of other worthwhile causes during the 80s.

In 1984, Mac’s was there when Cash For Kids and its Variety Village program needed some wheels. The company opened its wallet and contributed $16,000 to purchase the first Sunshine Van, a vehicle used in Brantford, Ontario to assist handicapped kids when they needed to get around.

The same year Mac’s helped Midget Hockey by organizing a sports tournament in Calgary. This was actually the third annual Mac’s Midget Hockey Tournament and in this year the company was able to assist by turning over $50,000 in proceeds to support of hockey in Calgary. The event became a regular date on the city’s hockey calendar and attracted teams from as far as Europe to compete.

In Collingwood, Mac’s came to the rescue for the local YMCA. Dealer Dave Hood saw the need and partnered with a local realtor to hold a sidewalk sale. With Mac’s staff pouring hot cups of coffee while the skies rained on passers by, the event raised $1,150 for the Y and showed off the community spirit of the First & High St. Mac’s In Calgary the north and south districts got together to show their support for Steve Fonyo and his Journey for Life. Mac’s donated five cents from every medium Slush Cat beverage and collected donations in boxes in store. Just before Christmas, western regional representative, Russ Abernathy was able to stand in front Calgary City Hall and present Fonyo and the Kinsmen with a cheque for $15,000 for the cause.

When Winnipeg was hit by a record setting blizzard, Mac’s stepped into action to help the city.

In November,1986, Winnipeg got walloped with 14 inches of snow that left the streets impassable except for military vehicles. At store #3063 customers who got inside were unable to leave, and dealer Mohamoud Gayid made 20 people as comfortable as possible for more than 24 hours until they were given the all clear to leave. This meant sleeping on pallets between aisles and cooking meals in store. Others like dealer Vadivelu Nadarajah of store # 3008 worked straight for 56 hours to make sure people could get the service they needed in the midst of the brutal weather.

By 1987, Mac’s had contributed more than $850,000 to the MDA, a charity that the chain had taken on just seven years before. This money is in addition to other MDA targeted cash raised such as the $19,000 pulled in from the Western Regional Golf Tournament that was presented to the Calgary MDA Telethon. The golf event was held that year at the Shaw-Nee Slopes Golf Course in Calgary; the tourney was the sixth and offered a fun day of prizes and fresh air to 158 participants.

Consistently through the decade Mac’s has been there for kids. From small donations like the $400 raised for Children’s Aid in Cornwall, Ontario though the raffle of a dollhouse built by Area Representative, Gordon Walden to $55,000 donated

by Mac’s for child abuse prevention in Edmonton, Mac’s has shown its tremendous neighbourhood involvement. This involvement extended into sports with support for teams like Oakville’s Mac’s Squirts (mini-soccer), Hamilton’s Mac’s Rovers (minisoccer) and the Lyles a midget lacrosse team, as well as into Junior Achievement and even post secondary training with support for Humber College and Cornell University programs.

The Eighties | 73

Employee and Dealer Involvement Proved Key Mac’s always valued its dealer network and saw these independent business people as its troops on the ground fighting a competitive battle for share of consumer wallet.

In 1985, Mac’s launched its Dealer Recognition program to show its support for this group of dedicated operators.

Within the program awards were presented for operations excellence, community activities and store performance among other criteria. Recognition came in the form of a “Cat” sticker placed next to the dealer or staff member photo on the store’s recognition board.

Already in 1985, 17 dealers and their staff had reached the Bronze level, or eight Cat status. Both Bronze and Silver levels allowed employees to pick from a list of gifts and wear a specially designated name tag in store. The gold level staff winners received a gold watch.

Dealers took it further by working towards the “President’s Club” distinction where they received a ring with indicative diamonds noting the degree of their standing.

New as well in 1985/86 was the introduction of IdeaMac’s.

This program was one that sought out good thinking by staff and dealers. Under this program employees and dealers were asked to propose workable solutions to challenges facing stores and offer innovative new ideas.

Beginning late in 1986, the first cheques started going out to staff. IdeaMac’s first recipient was Roy Wilson of 10 Commander Head Office. Wilson received a cheque for $3,200 for his idea. Others who got in on the first awards were Mac’s Ontario and Quebec trainers who had an idea about mailings to dealers. This group of seven received $225. Bill Snowden of Hamilton took home $85 for his suggestion of using poster ads on Mac’s trucks. In London, trainer Kevin Slipiec was rewarded for his idea on how to re-write forms to make them easier to understand.

74 | Celebrating 50

Still, Mac’s was showing good numbers in the Canadian c-store market. Once again the chain reported record sales with 1989 figures up by 17 per cent over the previous year. Gas sales were ahead of the previous year as well with the company reporting 200 million litres pumped, a figure that represented a 27 per cent increase. Mac’s even continued to open new locations with 68 stores built in prime locations across the country. Interestingly, Mac’s purchased nine 7-Eleven stores from Southland Corporation that year, located in Toronto, Hamilton and Welland and were amalgamated into the Mac’s brand.

Ridout reports store rent had skyrocketed, especially in Ontario where occupancy costs had dramatically offset increases in revenue and margins. In addition, a record number of lease renewals combined with an aggressive prime site real estate program served to heighten the problem.

Looking forward he echoed Eric Findlay’s statements that 1990 would see little in the way of new development in the chain.

“The net impact of these sharply higher store expense costs was an income decline of 17 per cent,” he said, noting the entire Silcorp organization was in restructuring mode and Mac’s was looking at a revamp of the total store system with an eye to increasing its profitability one store at a time.

As the decade closed Silcorp was operating 1,361 outlets in six provinces and several U.S. states. Employee count stood close to 10,000 managers and workers in businesses that sold ice cream (196 Baskin Robbins), frozen yogurt (35 Yogurty’s Yogurt), general merchandise, groceries, quick service foods and gasoline (104 Mike’s Mart/ 145 Hop In Food Stores/ 881 Mac’s). The plan was to use the expertise of its people, as well as the solid foundation of well known and respected retail brands to bring things around. Important, says Eric Findlay, was to reduce the level of capital

expenditures and generally reduce costs in an effort to reverse the poor showing of the last couple of years. He looked to 1990 with optimism.

This optimism was matched by Derek Ridout at the Mac’s Convenience Store division. There he could see sales were continuing to climb, store counts were up and fresh postings were helping to strengthen the management team with new vice presidents in store operation, human resources, marketing and finance.

Further, Mac’s had invested in significant upgrades to its information systems in an effort to keep on the edge with things like state-of-the-art cash registers. The company was also working to introduce new products like American Express money order service, fax centres and even fresh baked hot cookies. This year also saw Mac’s roll out its Fast Friends advertising campaign to further drive business.

This optimism was misplaced. Serious structural problems promised to undermine the Silcorp operating structure. Environmental remediation issues in the U.S. assets destroyed any hope of profitable operations in many states. Baskin Robbins as a division was underperforming, despite large capital expenditures to improve its physical plants. The Yogurty’s Yogurt division was a serious money-loser that drained attention and capital away from the more profitable areas of the company. And, most serious of all for Mac’s Convenience stores, the company had continued to invest in substandard real estate assets in high rent areas. These structural issues would come to a head in early 1992.

“As Mac’s looked forward to the 1990s there is a single-minded commitment to reversing two years of operating income declines,” concludes Ridout. “Key areas have been identified for immediate and ongoing attention – customer service, cost containment and reduction throughout the overhead structure of the division.

Our goal as we reached the 90s was a total store health with an increasing commitment to local or target marketing and a leadership in both practice and service innovation.”

GCMc Macs 50th Ad_Layout 1 12-05-07 4:22 PM Page 1

76 | Celebrating 50

January/February 2009

MARCH/APRIL 2011

SEPTEMBER/OCTOBER 2011

NOVEMBER / DECEMBER 2010

캐나다 한인 상공 실업인 총연합회보

캐나다 한인 상공 실업인 총연합회보

캐나다 한인 상공 실업인 총연합회보

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C-stores NortherN style

The Best Things You Never Realized About ATMs

북구풍의 편의점

Why Icelandic Locals Dine at The Gas Station

U.K.B.A C.C.I.C

BC Oil and Gas industries the BiG Winners With hst

HST 시행 후 BC 오일 및 개스 회사가 최대 승자로 부상

귀하가 몰랐던 현금자동지급기(ATM)의 장점들

True norTh sTrong and free?

이이슬랜드 사람들은 왜 주유소에서 저녁을 먹을까

진짜 북구 스타일 유행이 강세인가?

Clean Up in Aisle Six! Finding Faults in the Salt

스낵 진열대를 정리하자! 소금에 있는 나쁜 점들

Blurred Lines – Diverse Markets Mean Declining C-Store Revenues

불분명한 유통업계 경계선- 유통업계의 다양화는 편의점 매출 감소 의미 Other People’s Money The awful truth about where those pesky credit card fees actually go.

Calibrating meters so you get what you pay for

The Environmentally Correct C-Store

New Business Model that (WOW!) Thrives on Change 변화의 물결 속에 번창하는 새로운 사업 모델

New Life For Old Carwash Tokens

구식 동전 세차방식에 새로운 활기

Carwash Systems for Automatic Bays Mean Lots of Choice 자동 세차방식은 수많은 선택 가능

Tobacco Icon Ron Funk Gets Up Close and Personal

September/October 2008

JULY / AUGUST 2010

MAY/JUNE 2011

캐나다 한인 상공 실업인 총연합회보

캐나다 한인 상공 실업인 총연합회보

1940

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25

CELEBR

S A R CK Y E ING BA

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G GAS KIATNES

JULY/AUGUST 2011

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Change Brings Challenges

Servicing The North Country has its own set of rules Pump Up the Volume: The Humble Gas Pump is Not to be Taken Lightly 주유소 개스 펌프기 변천사 : 개스 펌프기가 단순해 보인다고 가볍게 보아선 안된다

Western Convenience Stores Association Tells Us The State of Your Industry 서부 캐나다 편의점 업계 실태 보고서

A WINK IS AS GOOD AS A NOD...

NO, IT’S BETTER!

변화에는 도전이 따른다

Bullfrog Croaks Up Big Energy Savings 맥스 편의점의 대대적인 에너지 절감 방안

북쪽 나라에서의 서비스 사업에는 그 지역만의 룰이 있다

COLD MEANS GOLD TO C-STORES AUTOMATED FUEL MANAGEMENT SERVICES SERVE YOUR BOTTOM LINE

The Carwash Trilogy Packaged and Bundled Just For You

OF GIV 년을 창업 25주 킹 맞는 개스 개 소 주유소

Going West With Success

카워시 3부작(Trilogy) 귀하를 위한 맞춤형 서비스

Couche-Tard continues its impact on the Western Canadian c-store market.

After Dark Continuing tobacco sales under the Smoke Free Act. BA ITO

Winner

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Kim Trowbridge, VP Macs Convenience Stores West.

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State of the Art A review of the Canadian car wash industry.

(B2B/Association)

2011

Proud to be a supply partner to Mac’s Convenience Stores bjjohnstone@convenienceandcarwash.com 204-489-4215 www.convenienceandcarwash.com March/April 2009

MARCH / APRIL 2010

NOVEMBER/DECEMBER 2011

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SEPTEMBER / OCTOBER 2010

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IN THIS ISSUE:

Hot and Cold Beverages and Their Various Taste Sensations 냉·온 음료들과 다양한 맛의 세계

Clearly Where it’s At

Carwash Technology: Greener, Meaner, Cleaner 세차 기술 : 보다 친환경적이 고, 솜씨좋고, 깨끗하게

The Top Ten Ways to Wash Up Profits For YOUR Carwash

Fuel Management CHIP AND PIN TECHNOLOGY New “cloud” technology changing the world of cardlock systems

연료 관리-새로운 “클라우드”기술이 카드록 시스템 산업의 변화 초래

캐나다 한인 상공 실업인 총연합회보

Bottled Water:

Prepaid Cards are Here to Stay 선불 카드 정착 단계 진입

WARNING: Growth Opportunities May Be Closer Than They Appear

COMING TO A C-STORE NEAR YOU!

1940

U.K.B.A C.C.I.C

U.K.B.A C.C.I.C

SomeTimeS a CigaR iS JuST a CigaR: DRawing on inDuSTRY ChangeS 때로는 시가는 그냥 여송연일 뿐: 시가 산업계에 부는 변화 바람 The Luck of the Draw: C-stores betting on a quick fix with the lottery system

Cover

행운의 추첨 : 편의점 업계의 복권 시스템 개선 노력

Reduce, Recycle, Remanufacture: C-stores can benefit before buying new equipment 줄이고 재활용하고 재조립하기 : 편의점이 새로운 장비 구입전에 갖는 이익들

Teens are Part of Your Team Too! 10대 직원도 당신의 팀원!

Province-Wide Initiative Keeps Consumers on Right Side of Healthy

소비자들 건강 지키기에 나선 주정부 주도 정책들

Some Like it Hot – Making Your C-Store

일부 손님은 뜨거운 음료를 좋아한다- 뜨거운 음료를 편의점에서 찾게 하기

A Hot Beverage Destination How to NOT Skimp on Petroleum Contracting

의점 고객에게 환경친화제품을 늘리게 하는 지속가능발전성 의식

Mid Island Co-op: Celebrating the

www.conceptphoto.ca | Lance Sullivan | Concept Photography

Big 5-0

The climate of change was extraordinary as Canada and Mac’s Convenience Stores entered the 1990s. To be sure there were both positive and negative influences that were reshaping not just business, but society as a whole.

Mac’s proved it was up to the challenge.

78 | Celebrating 50

A Perfect Fit

1990s 2000s

The climate of change was extraordinary as Canada and Mac’s Convenience Stores entered the 1990s.

To be sure there were both positive and negative influences that were reshaping not just business, but society as a whole. Mac’s proved it was up to the challenge.

Consider the 90s was a decade that really saw things like cell phones and personal computers come into their own. Advances in technology and manufacturing had increased capacity and greatly reduced cost, putting these game changing devices into more hands. New technologies from fax machines to debit cards were now a way of life for a country looking hard for efficiencies to battle the challenges that seemed everywhere during these years.

Economically the country was still fighting hard times following the shock of Black Monday in 1987, when stock exchanges received a shellacking that pushed much of the developed world into a severe and sustained recession. Adding to the problem was a devaluation of real estate where prices tumbled while property owners continued to be saddled with the high interest rates of the 80s. As the 90s began, Canada was economically hamstrung, resulting in a halt in positive growth and an economic decline of two per cent over the decade’s first few years. Moreover, the Bank of Canada was still tackling serious inflation with high interest rates in a move that served to slow the economy still further. No surprise that bond rater Standard & Poor’s downgraded the country to AA status (1992), a factor in Canadian’s cost of borrowing for the next six years.

The recession and high interest were certainly bad tidings for Canadian business at the time.

However, in a move that poured gasoline on a commercial sector already in flames the Conservative government of Brian Mulroney introduced the Goods and Services Tax (GST) in 1991. This national seven per cent sales tax delivered a heavy blow to businesses struggling to climb out of the blaze.

Especially hard hit were restaurants and convenience stores where the price of prepared foods rose seven per cent overnight to the advantage of grocery retail that was largely exempt from the tax.

Indeed grocery retail was benefiting from not only the provisions of the GST, but from the repeal of the “Lord’s Day Act” and the “Retail Business Holidays Act” in Ontario, laws that had kept them closed on Sundays leaving the day for c-stores to do the week’s best trade.

“Quebec also introduced extended hours for grocery shopping during the week. Further challenges included unseasonably cool and wet summer weather that severely impacted our foodservice programs. There were also challenges in key categories such as tobacco and gasoline,” stated Eric Findlay, adding the Persian Gulf conflict created considerable pricing instability for fuel products at the time.

This was the climate in which Mac’s found itself as the new decade came along. There has been little doubt the period from 1987 to 1993 were among the toughest years Mac’s experienced in its history. Still, the company managed to soldier on offering its parent a plate of revenues, albeit greatly reduced, to help stave off wolves hungering at the doors.

The Nineties and Two Thousands | 79

CONGRATULATIONS ON YOUR 50 YEARS FROM YOUR FRIENDS AT

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1990s 2000s

With the new decade Mac’s revenues were up by more than $78 million with 881 locations across the country. These revenues came at a cost. Sharp rises in store expenses, expensive lease renewals and real estate additions served to push down operating income by 17 per cent, a fact management sought to reverse in the coming year.

Regrettably, the reversal was not in the cards and Silcorp reported a net loss for 1990 of $7.42 million on revenues of $782.85 million. Chairman Eric Findlay reported that external forces had again overshadowed the company’s internal achievements.

Combating these negatives, Silcorp management enacted a number of initiatives that came into play in 1990. Known within the company as “Project Alpha,” this plan of action was developed to manage a successful return to profitability, positive cash flow and a strengthened balance sheet.

Within this program Silcorp planned the divestiture of the corporation’s U.S. holdings, a reduction of corporate overhead through a streamlining of management process, a reduction of operations personnel and a strong focus on capital management and under-performing assets.

“Management, recognizing that the convenience store industry is changing across North America, has the single-minded goal of becoming a profitable leader in its market sector. We are developing distinctly different ways of managing our operations and changing the mind set of our operating people through training and by equipping them with accurate marketing data,” said Findlay.

Toward these ends Silcorp formed the Canadian Convenience Store Group, an amalgam of

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The Nineties and Two Thousands | 81

Mac’s Canadian operations, Mike’s Marts in northern and central Ontario and La Maisonnée in Quebec.

Heading up the Ontario division would be Scott Findlay who came over from his leadership role at Convenience Services. Field operations and corporate structures were centralized with Derek Ridout posted as president and chief operating officer of Silcorp that had become an active operating entity under the plan.

At the time Derek Ridout reported the idea was to reduce costs, increase operating efficiencies and refocus efforts aimed at reversing a trend in declining customer count by targeting a number of new traffic building marketing and merchandising initiatives.

“Our real estate focus shifted significantly from aggressively expanding our new store base to rationalizing our store network to ensure marginal or unprofitable stores were divested and new capital committed to triple ‘A’ prime locations,” says Ridout, noting in 1990 they closed 106 unprofitable units while opening 45 new stores. By year end the tally of locations in the Canadian Convenience Store Group stood at 933 sites.

According to Scott Findlay, the real estate push had been part of a growing problem that was becoming a crisis.

“During the 80s we had built as fast as possible, then the rules started to change and it all happened very quickly. Once Sunday shopping was opened up for grocery retail we saw 10 per cent to 12 per cent of our business disappear over night. This was also the height of tobacco smuggling and we were hit with reductions in this area that was our number one category at the time.”

Findlay states Mac’s was overdeveloped in areas that were not profitable, and when the trouble hit, the poor performers pulled downward on the entire company. Certainly this pull could be viewed in Silcorp’s annual report for 1991 where the corporation reported losses above $10 million. Silcorp also took a $20.3 million write-down to reflect the declining market value of its assets. This fiscal “haircut” provided higher leasing costs for c-stores in Ontario and Quebec, the disappointing sale price for Yogurty’s Yogurt Discovery stores and the high cost of corporate restructuring that sought to address market changes.

“Earlier in the year it was recognized that the time had come when it was prudent to restructure and cut back on operations wherever possible in order to reduce debt. These efforts, fully supported by the corporation’s bankers, saw a reduction in bank indebtedness from $47.8 million (year end 1990) to $42.7 in 1991,” says Silcorp’s Chairman who added that further capital expenditures would come from internally generated funds.

In a move designed to shore up the declines on the balance sheet it was decided to dispose of the Quebec stores. Simply, the retail environment and difficulties gaining traction in the province was causing the 109 Mac’s and La Maisonnée stores to continue to drain Silcorp’s strained resources. However, despite an 1992 letter of intent from purchaser, Quebec-based Alimentation Couche-Tard Inc., the transaction was cancelled after the parties failed to agree on terms. This left Silcorp and its Canadian Convenience Store Group holding a significant underperforming territory in the face of mounting pressure from institutional creditors.

Despite the numerous challenges, the news was not all bad. There were bright points in the regions.

“Project Alpha,” plan of action was developed to manage a successful return to profitability, positive cash flow and a strengthened balance sheet.

106 unprofitable units were closed while opening 45 new stores. By year end the tally of locations group stood at 933 sites.

Conservative government of Brian Mulroney introduced the Goods and Services Tax (GST)

1991 82 | Celebrating 50

Reduction in bank indebtedness from $47.8 million (year end 1990) to $42.7

1990s 2000s

While Mac’s sales were slow in Manitoba, Saskatchewan and B.C., Alberta was generating considerable revenue at its stores that stood out as rays of hope for shareholders. In the north and central regions of Ontario, Mike’s Mart and its “close the customer approach” were also performing above Ontario’s Mac’s outlets and helping to reign in challenges.

The group had also been successful in launching new technology that was helping to make things more efficient from the store level to the administrative offices. For example, the installation of new state-of-the-art POS cash systems created a direct linkage that permitted management access to better and more up-to-the-minute customer and category data on an individual store basis. This meant greater ease when tracking promotions, improving inventory turns, as well as margins.

“This type of system allowed us to really drill down into what made individual stores tick,” says Kim Trowbridge. “It delivered the ability to target price and promotional programs within local trading areas, something that was working very well in the western region.”

It was this thinking that pushed what was to become known as Tailored Marketing Plan (TMP), a radical initiative that sought to create a micro marketing footprint.

“Under this plan Mac’s would still behave as a chain with massive economies of scale, but the emphasis would be on strengths of each individual store where the focus was on the unique needs of its customer base,” he says.

Here Trowbridge remembers getting together with a group of people and brainstorming one warm afternoon in 1990.

“There were five of us–myself, Mike Odgen, Rose Brady, Terry Chapman and John Bachewich.

We sat on the banks of the Chatham River in a park and discussed options to help the company pull itself out of the downward spiral. Together we came up with the idea to micro market as a way to meet customer demand and grow business,” he recalls. “I took the ideas back to management and told them we could turn ourselves around by doing something completely different. I would need some working capital and a few people. I was given the go ahead, but kept on a short leash with only a few months between summer 1991 and New Years to prove our plan. With the Brantford Project we grew sales over those four months by 38 per cent by being more customer responsive in the community and marketing Mac’s as a chain of one.”

Still, the company was facing significant challenges that kept it from a chain-wide roll out of TMP. Mac’s was experiencing a 3.8 per cent decline in overall sales in a year where they closed 33 outlets and opened just eight new shops. This said, management held on to the plan as it decided how to maintain its grip on the 908 outlets it operated in six provinces.

At the shareholders meeting in late April 1992, Derek Ridout who had been recently elevated to president and CEO in February, and Chairman, Eric Findlay acknowledged hard realities were continuing to melt the icing off the cake. They offered a concerted plan to reduce administrative costs

Derek Ridout who had been recently elevated to president and CEO in February

The company filled for Companies Creditors Arrangements Act (CCAA) in a move that gave them some breathing room until September 15, provided they could come up with a solid restructuring plan by July 15.

The last quarter of 1992 the tide was turning and the company was able to show a small operating profit.

1992 The Nineties and Two Thousands | 83

and close or sell as many as 100 stores in an effort to shore up declines and appease creditors.

The banks were not appeased. In a little more than a month the banks called their loans and Silcorp management woke up to find itself having a near death experience.

According to Scott Findlay, the shock was massive.

“I was running the Ontario operation as vice president Ontario at that time ( June 11, 1992). I remember being called into the boardroom first thing in the morning and given the news that the banks had called our loans. We had 24 hours to come up with a plan to keep things running and it was a 24 hours I won’t forget. At that time we established that we had to close 200 stores in three weeks to prove to the banks we could stop the losses.”

The entire corporation went into crisis mode. A lot of people were let go overnight, and vendors were told they would have to wait for payment. Staffers, like Paula Murray in accounts payable, remember Derek Ridout coming into the main office and standing on a chair to address the staff about the situation.

“We were stunned. We knew things were bad, but when he came in and spoke to us just the look on his face told us it was more serious that most of us had expected,” she says.

It was obvious the circumstances were “do or die” and the staff rallied.

“It was remarkable to see just how passionate our people were about saving the company. It was like a military operation. People literally worked around the clock in a mood of ‘get it done and ask questions later,’” says Scott Findlay, noting the overall efforts trimmed the cost structure by 38 per cent in three months.

With the banks pulling hard to dissolve the company and get its money back, Silcorp asked the courts for protection as they reorganized. The company filed for Companies Creditors Arrangements Act (CCAA) in a move that gave them some breathing room until September 15, provided they could come up with a solid restructuring plan by July 15.

According to Derek Ridout a series of “agonizing” but necessary actions took place to put the company back on the rails. Under the plan, management closed 228 stores, more than 25 per cent of the chain. They also closed the separate head office location near Toronto’s Pearson Airport and downsized the office/ warehouse network. The company also went to its landlords and negotiated $2.5 million in rent reductions. It also reduced administrative overhead by 30 per cent, an $8 million saving above what it had already targeted prior to the CCAA filing. Further, Silcorp developed a comprehensive program to upgrade its accounting and management information procedures in a move designed to greatly improve store and corporate reporting. Staff also redistributed $8 million in inventory from closed stores to those remaining open.

Ron Thompson, who started with Mac’s in the fall of 1988 as an area representative, and is today the western region Marketing Manager remembers the challenges.

“We all had to step in to do what had to be done. I was in the office and I remember manning the phones to discuss the troubles with vendors who were not happy with the prospect of slow payment during the period. Others on the team had to go out in rented trucks to pull stock off shelves at stores that were being

Reducing unprofitable operations, Silcorp deals off its Baskin Robbins division, as well as renegotiate the purchase of its Quebec operations.

Alain Bouchard, president and CEO of Alimentation Couche-Tard Inc. called Derek Ridout and ACT bought the Quebec Mac’s stores.

With the backing of the banks the company moved forward on their national tailored marketing program and 200 stores were redeveloped.

1993 84 | Celebrating 50

Mac’s was repositioning by partnering with leading foodservice brands like Subway and Pizza Pizza along with music retailer Sam’s and florist Growers Direct

1990s 2000s

closed and move that inventory to locations that were open. CCAA allowed us the ability to do this because we had court protection. It was a real juggling act to keep things running, but in the end it moved us to a go ahead position where we could start to rebuild from a point of strength.”

Indeed, Ridout reports in the last quarter of 1992 the tide was turning and the company was able to show a small operating profit. This was a huge turnaround from the gigantic losses of the previous year. “We also saw modest improvement in same store sales on a total network basis while posting significant improvements in all average store performance indicators.”

Reducing unprofitable operations, Silcorp was able to deal off its Baskin Robbins division, as well as renegotiate the purchase of its Quebec operations. Here, Alain Bouchard, president and CEO of purchaser Alimentation Couche-Tard Inc. reports he called Derek Ridout and ACT bought the Quebec Mac’s stores.

As the year closed Silcorp was finding itself back on track. Most of the creditors were in agreement with the restructuring that had the company operating under a pared down network of 547 profitable Mac’s Convenience Stores and Mike’s Marts (plus 54 Hop-In Food Stores in the U.S.).

With this now in place the timing was right for Eric Findlay to step down as chairman in favour of Robert Martin, a five-year board member who came over from The Consumer Gas Co. Ltd. Findlay had already ceded day-to-day control of the business to Derek Ridout who became president and CEO of the corporation in 1991.

Under a CCAA team, the operations of which were headed by Senior Vice President, Operations, Joe Lewis, they continued to seek the bank’s approval. Lewis was in charge of the field reorganization and as such worked closely with the creditors to maintain lines of communication, as well as put the pieces in place for Mac’s to continue.

“The main issue was to get time to restructure. As hard as we were working we could see that this was not going to happen overnight and we knew we could not succeed if the banks were not behind us,” says Lewis. “The first time we sat across from the banks at the table I suppose you could say we were not convincing, and when they asked why they shouldn’t call the loans we could not offer them the kind of evidence that kept them from acting. As we moved on the restructure plan I remember I took one of the bankers to our stores to show them the kind of people and commitment we had going for us and how the business was viable and that we existed in a retail space that was viewed as a vital service by our customers. The banker took a good long look and then told me to go back and tell the board we could move forward.”

Under the plan Lewis, Ridout and others, such as vice president and CFO, Dale Pettit created and oversaw a four point program that was approved by the board in May 1993. The plan included the sale of non-strategic business units, cost cutting, more accurate store management information and an increase on individual stores as individual businesses. This last point was pivotal. Previously, Mac’s

Company pushes to reduce its dependence on tobacco sales that represent 31 per cent of merchandise sold.

Mac’s opened 17 in-store Subway Sandwich locations

Derek Ridout positioned Kim Trowbridge in Calgary as vice president, western operations from his post as general manager, southwestern Ontario.

David Rodgers, who had been northeastern Ontario’s GM would become vice president, Ontario operations.

1994 The Nineties and Two Thousands | 85

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www.britessunglasses.com had experimented with its TMP program and saw just how valuable an asset this could be. However, the purse strings for a massive redefinition had been pulled tight. With the backing of the banks the company was now in a position to move forward on this national tailored marketing program and 200 stores were redeveloped in 1993.

“This program was one of proven business building capability which establishes an appealing and unique identity for each of Silcorp’s stores tailored to specific, local community needs,” says Ridout. “In association with this program we also sought to improve customer service within our stores through an enhanced Dealer Motivation and Training Program.”

Scott Findlay had been repositioned as vice president, marketing and distribution, and had been tasked by Ridout to create a new look for Mac’s.

“With TMP we changed the pyramid to one where the individual store was the focus and we concentrated on the profitability of each individual unit,” says Findlay. “It was this thinking that helped get us through CCAA and onto the other side in what can only be described as one of Canada’s greatest business turnaround stories.”

Mac’s tested a totally new store design retrofit concept called Store 2000 that amounted to the second phase of TMP.

1995 86 | Celebrating 50

Thompson and Trowbridge met with Seattle’s Best Coffee in a game changing move that establish the Western Division Mac’s as neighborhood cafés.

Sold U.S. variety store holdings for $29 million to buy back a large amount of outstanding shares, borrow and then buy c-store competitor Becker’s.

1996

Sales of cigarettes and cigars comprised 33 per cent of totals. Gas revenues were also higher with close to 100 Mac’s outlets now offering petroleum products.

1990s 2000s

To really make the program fly it was necessary to address the people factor, suggests Kim Trowbridge. He had seen how important this aspect was when they experimented with the Brantford store.

“With an enhanced training component we were able to create a cultural shift because of the heightened service levels that resulted. This program was one that truly invigorated the store,” he says, noting the package was so much more than just décor and product assortment.

Certainly, the elements of TMP were impressive to the banks.

“In CCAA the banks looked to TMP as a point that differentiated us from others,” says Trowbridge. “I think this was our ace in the hole. It showed we knew our markets and we were a company that could originate true innovation. This made us worth the investment.”

To get this initiative off the ground, Silcorp and Mac’s management had to first plug the leaks in the organisation. As mentioned this task was taken on hammer and tongs in 1992 with the challenges of CCAA and followed through with a concerted restructuring and reorganization program the following year.

According to Robert Martin, to keep viable and move forward it was essential that Silcorp and Mac’s normalize its relationship with banks, suppliers and others that had been strained during the process of restructuring the company.

“Following implementation of ‘The Plan,’ Silcorp’s relationship with suppliers had returned to a more normal footing although general industry norms for supplier trade terms had tightened,” he said.

Further, Silcorp had achieved a number of important business milestones during the year that worked to help it shore up respect in the marketplace. Nineteen ninety three saw Silcorp’s Canadian operations record $4.76 million in income opposed to the $1.42 million loss the year before. Perhaps most important was that the company had met all its obligations during 1993 with $12.4 million in scheduled payments going out to both secured and unsecured creditors. In part these milestones assisted in gaining creditor approval to offer a special warrant and issue 1.25 million common shares resulting in $14.2 million that was used to further pay down debt thereby freeing funds to allow for development and growth.

In 1993, management was making moves to complete the changeover of all stores to TMP. As well, Mac’s was repositioning by partnering with leading foodservice brands like Subway and Pizza Pizza along with music retailer Sam’s and florist Growers Direct. This was part of an initiative to get people to stay in store longer, look at Mac’s as a destination for more than the basic necessities and develop fresh categories in the face of declines in areas like tobacco.

Calgary Flames mascot “Harvey the Hound” meets “Mac’” cat at a store opening in 1990.

March 1, they inked the deal to purchase Silcorp, Bouchard’s company had grown to 634 stores with 307 gas stations.

Branded strategy included Subway, Pizza Hut, Taco Bell, KFC, Chester Fried Chicken and Second Cup. Planning for eight new branded locations.

1999 The Nineties and Two Thousands | 87

To a large extent the efforts of staff and management, as well as the contribution of the tailored marketing approach, pulled the company rapidly forward to the point where Silcorp and Mac’s could see a bright light at the end of a troubling period. In 1994, the corporation’s benchmarks were showing sound advances.

Important in 1994 was the company’s push to reduce its dependence on tobacco sales that represented 31 per cent of merchandise sold. At that time it was evident tobacco was a product under pressure from governments as proved by the enactment of Ontario’s Bill 119 that took the sale of cigarettes and related products away from locations such as drug stores. Mac’s could see c-stores would benefit in the short haul, but as time moved on it didn’t require a crystal ball to see tobacco’s place in convenience retail would diminish.

According to Ridout, taxes on tobacco were also up dramatically and as such placed pressure on consumers who would react by buying fewer smokes. The answer was to increase the presence of foodservice in a strategic move designed to limit this potential shortfall in revenue. In response, Mac’s opened 17 in-store Subway Sandwich locations in 1994.

The company also completed the first phase of its TMP program at all its Canadian store locations. This gave Mac’s a fresh start and readied it to take on the coming challenges with an enhanced service offering that was making it number one in the industry.

To further balance the picture, Derek Ridout positioned Kim Trowbridge in Calgary as vice president, western operations from his post as general manager, southwestern Ontario. David Rodgers, who had been

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northeastern Ontario’s GM would become vice president, Ontario operations. Together they would oversee the strategic moves that would continue Mac’s’ forward momentum.

Trowbridge comments his plan included stronger development of TMP in the west as a way of continuing the region’s strong performance, which was making more money per store.

“With our tailored marketing approach the west had gone from the bottom to the top division quickly with stores producing more per year while Ontario stores were less than half the average sales on a per store basis,” he says, remarking through the approach the net income from the west exceeded the eastern stores even though there were far fewer units.

As Silcorp entered 1995, the corporation’s Canadian Convenience Store Group operated 520 Mac’s and Mike’s Mart locations in Canada. Certainly the numbers show these operations had turned a corner and were now on a steady track forward with stronger revenue, lower debt and a shareholder equity that was a far cry from just a few years previous. In fact 1995 marked a turning point where the corporation was able to exit its CCAA position after satisfying the demands of creditors six months earlier than projected.

Once out of the CCAA woods Silcorp chairman, Robert Martin announced management had embarked on a new three-year strategic plan that would move the peg still farther.

“This plan sets the course for a number of new initiatives designed to further enhance the competitiveness of Silcorp’s retail trademarks in literally every area from store design to distribution.

The growth segment of the plan also included a commitment to carefully consider in-channel or contiguous market acquisitions, designed to strengthen our core convenience store business.”

Mac’s was embarking on an aggressive program to increase its presence in the foodservice sector. That year the company reported a total of 60 branded kiosks in-store that included 52 Subway franchises, seven Pizza Hut test locations and a Second Cup coffee outlet at the chain’s Collingwood, Ontario store.

Couche-Tard implemented another 220 Store 2000 locations to bring the total to 819 in Canada. This represented 41 per cent of the corporation’s network of stores.

2003

Alberta opens up sales of beer, wine and spirits to private enterprise. Mac’s offers spirit sales in its Edmonton and Jasper locations.

2005 The Nineties and Two Thousands | 89

Above: The evolution of foodservice and the addition of Subway.

Bottom Left. Sampling fresh baked goods at Lower Cooke Street grand re-opening.

90窶ポ窶イelebrating 50

1990s 2000s

Another milestone was the introduction of break open Nevada gaming tickets. Originally a product in a select few northern Ontario stores, Director of Merchandising, Todd Hayman quickly saw the potential and rolled this out through all of Ontario’s stores. According to Martin, this new product helped Mac’s service revenue skyrocket. In fact, the new lottery product and the commissions earned by stores were the number one generator in this sector bringing in $13.8 million that year (a 9.5 per cent increase).

It was in this year (1995) Mac’s tested a totally new store design retrofit concept called Store 2000 that amounted to the second phase of TMP. According to Kim Trowbridge this meant all new graphic elements, a revamped and updated in-store appearance and a range of merchandising initiatives that were designed to take Mac’s onto a higher plateau.

Under Scott Findlay’s guidance, Store 2000 offered a different colour scheme to the exterior.

The familiar yellow and orange was replaced by red and teal colours seen to be more female friendly.

“In the 80s the stores were targeted to the 18 to 34-year old male customer,” says Findlay.

“With our new store appearance there was a more boutique look. We wanted our customers to spend more time shopping the store and with changes in society we were looking to attract a greater number of female shoppers who were then a quickly growing segment of the out of home workforce and facing the kind of time restrictions that would have impacted men in the past.”

Stores would also feature a greater foodservice component and offer a more locally attractive product mix.

“We were moving to an 80/20 scenario where 80 per cent of what Mac’s was would stay much the same at stores across the country, while twenty per cent would be unique to the outlet and would be part of our tailored approach,” he says, noting Kitchener and Maple, Ontario locations were the first to get the new appearance package. “In the past it had been too easy to get in and out. With our new approach we placed multiple displays though the store moving away from the traditional layout of straight aisles that led between the cash and the bank of coolers at the back of the store. We also began offering a stronger foodservice component by offering branded products like Subway in a store within a store format. In fact, we were the first Subway franchise in Canada and I believe Mac’s is now the world’s number one franchisee. This was all part of taking brands outside the box.”

Also gone were the traditional gondola shelving systems in favour of modular sections. Here customers could pick up a fountain or frozen carbonated beverage at Thirst Central or local bakery goods at Leo’s Bagels, a proprietary Mac’s in-store brand introduced into the Victoria market. For the dedicated coffee drinker stores featured Expresso’s, a wood and brass island that hosted a variety of fresh brews like cappuccino, hot chocolate, teas and drip coffee from decaf to heady dark roasts.

In addition, to create a total company buy-in of this new concept the approach was one where the entire organization was brought in on the planning.

“We had contests to get our people to help with design,” says Kim Trowbridge. “There was a real team approach where accountants might work on merchandising or data entry clerks could offer their thoughts on something like tile colour. It took the entire store to a new level that was more professional and a step higher than anything else in the industry. Here we had a concept that gave ‘ownership’ to not just the staff, but to the neighbourhood as well and we began hearing people describe their local Mac’s as ‘My Mac’s.’”

The Nineties and Two Thousands | 91

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1990s 2000s

Ron Thompson agrees, “We built something no-one else had built. Over the years we have had busloads of people from competing organizations drop-in to examine the concept. Few, if any, have been able to replicate the package because the real strength of the approach was not as visible as shelving or décor packages. We created a culture of service that was unique to Mac’s that continues to this day.”

Thompson states in the early days they would take extensive investigative journeys they called “Highway Hound Trips” to discover what was exciting among other retail operators in North America and then bring it home to Canada.

“We’d fly to a destination and then sometimes drive 1,800 kilometres looking at stores from all genres of retail and then fly home and put our learnings into play. We’d go to clothing stores, grocery stores and even electronic stores to look at how they did everything from flooring to lighting to display fixtures. Our western team still meets once a week to draw stores in an effort to stay fresh and in touch with the final product. The idea has been to stay out front with a product that is decidedly different from the competition and we try to do it with a one-store mindset. We recognized that what worked in Lethbridge might not in Sherwood Park and we have had our share of hiccups.”

In the west Kim Trowbridge had vaulted his region ahead of the pack by instituting some of the Store 2000 program early on after he moved to the Calgary office. According to Thompson the region’s Kitsilano store (Vancouver) and a store on lower Cook Street in Victoria were among the

TM

The Nineties and Two Thousands | 93

Above: Re-designed interiors with the integration of Fresh Food in several of the western Store 2000 locations.

Lower Right: exterior of Lower Cooke Street location, Victoria, B.C.

first to show off a unique foodservice element that married take home dining and c-store. Thompson had seen how they were in a battle with local and national coffee purveyors the likes of Starbucks being across the street from our coffee business. He and Trowbridge travelled to Seattle and met with Seattle’s Best Coffee in a game changing move that helped to establish the Western Division Mac’s as neighborhood cafés worthy of the most dedicated java connoisseur.

Alongside coffee the team rolled out the company’s first take home entrée section with The Diner at Mac’s, another modular section in-store. Here customers could drop in to pick up muffins and sandwiches, as well as ready-to-eat (RTE) foods which ranged from soups to lasagna. There was even seating inside and umbrella tables outside.

“Our idea was to get customers to linger. We knew that if people stayed longer store dollar counts were higher,” explains Trowbridge, who adds it was all so much more than updating the lighting and changing the colour scheme. “For us Store 2000 was both a look at where we were coming from and a redefinition of the convenience experience.”

To do this the Mac’s team looked to seven key principals: Great experiences; The Wow factor; Individual contribution; Caring for our people; Empowerment and support; Enthusiasm and attitude; and Communication and teamwork.

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The company also turned to a greater use of electronic reporting systems. Along with the modular designs and fresh food focus, Mac’s was using new state-of-the-art computing and scanner technology to interface with head office management information systems (MIS) which were collecting demographic data on households within store local trading areas. This was all part of the TMP initiative and its “chain of one” thinking, which allowed Mac’s the ability to create local promotions and offer niche products.

“We know where ethnic foods may sell better than another type of foods based on demographic,” says Jim Reynolds, who was vice president of Corporate Information Systems at the time. He mentioned further they had already established EDI (Electronic Data Interchange) to more effectively work with invoicing and were looking to establish ECR (Efficient Consumer Response) at the time to shorten the supply chain and reduce costs.

Defining the initiatives further, Kim Trowbridge suggests their efforts were tailored to the consumer who was in the driver seat and wanted to customize their shopping experience.

“The days were done when you could tell a customer how to shop,” he says, pointing to simple principles that drove Store 2000 such as respect the customer both internal and external, add value at every point and make life easier for the consumer.

Store 2000 hit full stride in 1996 following a $20 million spend from the company. At that time 60 stores in the chain had been redeveloped with a plan to increase this number to 160 by the next year.

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It was at this time Mac’s president received an early morning call from Alain Bouchard, Alimentation Couche-Tard’s chairman, president and CEO. Ridout remembers the call came as a surprise, especially when Bouchard told him they were prepared to purchase Silcorp. Ridout balked at the offer and refused to sell believing it was not in the shareholder’s best interests.

According to Bouchard, the Couche-Tard bid was one that came from poor advice.

The Couche-Tard bid of $16.50 a share went out to the media where shareholders were free to make up their minds about selling to the Quebec-based company. The board was in opposition to the sale believing the offer was below value, and over several months considered their options with both white knight and poison pill scenarios.

Barbara Insinger, Manager Human Bouchard states they were interested in the reworked Resources and Administration for Western Silcorp that had managed to free itself from the heavy debt load Division is pictured with her family at Christmas. Barbara has organized both the of 1992. Important to him as well was the quality of the group’s Adult and Children’s Christmas parties in the management and the ability of Mac’s chain to give Couche-Tard west for the past 28 years. the presence it desired outside the province of Quebec, such as the U.S. stores, which were showing good gains and market position.

The reality in 1996 was that the marriage between Couche-Tard and Silcorp was not to be.

Management and the board decided instead of selling to the Quebec group they would sell off the U.S. variety store holdings for $29 million to buy back a large amount of outstanding shares, borrow and then buy c-store competitor Becker’s and its 525 outlets for $38.8 million. In what is known as a “poison pill” maneuver, the Silcorp/Becker’s deal made them too expensive for Couche-Tard at that time. With the November 1996, deal Silcorp had become the leading force in Canada’s c-store

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universe with 1,089 stores and dairy operations. Revenue at Silcorp now stood close to $1 billion, almost 25 per cent more than nearest rival 7-Eleven.

According to Alain Bouchard, they had kept the deal on the table until January, but with Silcorp greatly altered, they decided the timing was not right. Silcorp had issued a million shares and taken on new debt to complete the Becker’s deal and, he says, “They became a totally different company from the one we went after initially.”

Silcorp’s new form continued to show solid business numbers over the year. At Mac’s, sales were up, especially in the west where the region was outpacing the larger eastern division by two per cent. Altogether Silcorp was able to show an 11-point gain in net income over the year. Behind this said Robert Martin was a reliance on core strategies. As mentioned these included reimaging the brand to a greater emphasis on foodservice and local marketing, a greater adherence to the latest techniques in category management and information systems with technology such as EDI and ECR, as well as sharper pencils that were helping with cost reductions across the board.

According to Robert Martin, the challenges of CCAA had honed management’s skills to address difficult situations as they moved forward. As such, there was a lot of confidence despite the challenges of getting a grip on a suddenly much larger distribution picture.

“Our commitment going forward was to continue to build shareholder wealth through the combination of innovation and productivity enabled by our commitment to leadership in systems re-engineering, as well as a dramatically expanded customer information base on a site-by-site basis,” said Martin, adding that in the final analysis it all came down to the more than 7,000 people

The Nineties and Two Thousands | 97

behind the brands such as Mac’s. “For more than 10 years we have stated both privately and publicly that our success depends on our ability to deliver superior customer service. We have espoused the concept of customer intimacy. To accomplish this we have developed a passion for recognizing individual contributions. This starts with thorough hiring and training practices and continues with a commitment to providing the best tools of the trade such as information technology,” he said pointing to new scanning systems that were being installed across the network to enhance retail management.”

Kim Trowbridge remarks this harkens back to their key pillars of success where both external and internal customers are valued, along with staff and dealers. He notes the company had achieved its goals by demonstrating its commitment to the dealers and their staff, as well as those who work in company stores.

“There must be respect across the board and this extends to everyone, not just those who buy our goods.”

Towards this end Mac’s still keeps staff up-to-the-minute with weekly route meetings, regional and national conferences, as well as seasonal barbecues that seek to create a family atmosphere among workers, dealers and management.

“The company might have grown tremendously, but we still saw that it was the power and success of the single store and its relation to both customers and those that manned the till and stocked the shelves that were keeping us where we were,” he adds.

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This mood placed Mac’s in a position to increase merchandise sales by four per cent that year.

Tobacco was still moving up despite the writing on the wall that was pointing to an end to these robust increases with both provincial and federal governments enacting legislation targeting merchandising efforts. In 1996 sales of cigarettes and cigars comprised 33 per cent of totals, and was ahead by five per cent over the previous year. Gas revenues were also higher with close to 100 Mac’s outlets now offering petroleum products.

In 1996, the company remodeled another 15 stores to offer branded QSR partnerships such as Subway. With the Becker’s acquisition Silcorp now offered 97 sites with branded locations and sales had climbed by 54 per cent over the previous year.

It was numbers like these that kept Couche-Tard interested in Silcorp and Mac’s. And, while the 1996 hostile bid had died, the executive suite in Laval kept the lines of communication open with an eye to future opportunities. Couche-Tard had backed off the Silcorp deal, but had seized the chance to pick up C-Corp from Provigo in 1997 in a $85 million transaction that gave them 285 new stores (235 Provi-Soir) of which 50 (Winks, Red Rooster) were in Ontario and Alberta. This brought revenues up to nearly $800 million the following year and gave Couche-Tard the leverage to bring its president closer to his goals.

“My first goal was to be number one in Quebec. After that, to be number one in Canada,” said Bouchard at the time.

It was this thinking that moved the Quebec-based group to look again at Silcorp. According to Bouchard, one of their vice presidents was meeting quarterly with Silcorp’s Senior Vice President and COO, Joe Lewis, over lunch. It was during the last lunch in 1998 they saw the companies could come together in a deal that would be mutually beneficial.

What they liked about the Scarborough-based Silcorp was its operational management team, its different management style and the breadth of stores which spanned five provinces. They also

The Nineties and Two Thousands | 99

Additional Acknowledgments

David Spence, now EVP and CFO of Golf Town, was a critical part of the company’s emergence through CCAA. He worked for Ernst and Young in their insolvency section, and I met him in mid-1992 when I helped him put together the list of stores that were underperforming, and would have to be shuttered during CCAA. During the months that followed, he probably put in 16 hour days, almost always on the phone, telephoning landlords, suppliers, creditors and whoever else needed to be kept informed of our progress through the difficult early days of restructuring. I’m sure he negotiated countless small deals that allowed us to exit early from punishing real estate leases. While he had a fiduciary responsibility to be almost heartless and dispassionate when dealing with an almost unending supply of issues and people, his warmth and common sense was always present.

Gary Miller, one of his key contacts at Silcorp, was so impressed by David that he hired him away from Ernst and Young. David’s hard work over the next seven years that he spent with Mac’s certainly helped make Mac’s a more inviting takeover target for Couche-Tard. During that time, he pitched in on countless restructuring projects, and was one of the

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many “boots on the ground” during the integration of the Beckers assets into the Mac’s organization. He left Mac’s about six months after Couche-Tard bought us, on very good terms.

Michael Rousseau, now EVP and CFO of Air Canada, joined Mac’s around late 1992 or early-1993.

He was (and is) a straightforward guy, with tons of energy and persistence. I think Mike’s “finest hour” was really a finest summer, the summer of 1996 when he almost personally negotiated the purchase of the Beckers store assets from the Pottow family.

The negotiations were quite daunting, but over many months Mike’s willingness to sweat the details to come to an agreement that made both parties happy.

During the period between the purchase of the Beckers’ assets and Silcorp’s takeover by Couche-Tard, the management team, including Mike, were always under extreme scrutiny from investors. During this time, Mike was usually the point man, taking the calls, explaining our strategies, and absorbing the secondguessing and criticism that comes with having actively involved arbitrage funds as investors.

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1990s 2000s

appreciated the concept of dealer network that was unique to Mac’s where individuals contracted with the company and then managed the stores and hired their own staff from the standpoint of independent businesses.

“We had many similarities and we could see where we could adapt some things from each company,” says Bouchard. “For example, Mac’s had Store 2000 and we had something similar, but Mac’s had started their program first and was really ahead of the game with a more advanced approach. After our Provigo acquisition we had established ourselves in the Ontario and Alberta markets. With Mac’s we could expand on this into the other western provinces where the Mac’s name was very well known and respected. We could also see that Mac’s had a very strong talent pool with people like Kim Trowbridge and David Rodgers. It was evident after the sale that we could let these people continue to manage the business much as they had and create a more decentralized administrative system.”

Bouchard had considerable experience in the convenience retail sector from which to base his judgment. He had started in the industry at age 19 managing a Perrette convenience store (part of the Becker’s chain) in Laval, Quebec alongside his brother. Together with his business partners Réal Plourde, Richard Fortin and Jacques D’Amours he built an enviable retail empire that got its start in 1980 with a single store. By March 1, 1999, when they inked the deal to purchase Silcorp, Bouchard’s company had grown to 634 stores with 307 gas stations.

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The Nineties and Two Thousands | 101

The deal to purchase was a much friendlier affair than the previous attempt three years before, and the board voted unanimously to accept. Reports suggest Silcorp President, Derek Ridout was motivated by changes in the Canadian grocery scene which were seeing a wave of consolidation at the time. The shareholders were motivated by Couche-Tard’s offer of $23 in cash, or 1.2 class B shares of Alimentation Couche-Tard, plus 20 cents for each unit of Silcorp stock. In total the agreement was valued in excess of $220 million that gave the purchaser an additional 974 stores of which 128 had gas stations. In total this created Canada’s c-store leviathan with sales on the order of $1.6 billion and an employee cohort of some 11,400 staff across six provinces.

According to Joe Lewis, Couche-Tard was able to buy the business without hiccups. Mac’s and Silcorp had come out of CCAA a much stronger company with greater equity and a battle hardened administration.

“They were Quebec-based and the acquisition gave them a national presence. It also gave them our experience in the U.S. that was considerable. With their aspirations to move into a full North American presence the experience was valuable. There was also tremendous opportunity to create synergies and cost savings,” states Lewis.

Certainly, the synergies came at a cost for the executive at Silcorp. Derek Ridout had commented to media at the time that he expected to stay on for a couple of years to smooth the transition. This was not to be. Couche-Tard was moving ahead with the transition and wanted to get it done as quickly and efficiently as possible. To this end they saw no need for additional layers of management, and as a result personalities such as Ridout, Lewis and Findlay exited. This left David Rodgers to oversee Mac’s as vice president, central Canada operations, and Kim Trowbridge to look after the west from his post as vice president, western operations. Dale Petit, Silcorp’s highly respected vice president and treasurer stayed on taking a similar role with the new company.

“One of the assumptions of the acquisition of Silcorp related to economy of scale,” says Bouchard. “Our initial objective in this regard was an annualized saving of $10 million over two years, including $7 million the first year. Not only did we achieve this goal, but we exceeded it on the strength of increased buying power afforded by our new size and the elimination of duplicate head office functions.”

Following the acquisition, Couche-Tard reorganized its operations into three geographical areas – eastern Canada, central Canada and western Canada. It also set up the groundwork for an advanced distribution system to address the needs of the broadly based company. According to Réal Plourde, a senior shareholder and person who was Alimentation Couche-Tard vice president and COO at the time, the new organization would trade on the strengths of each of the two company cultures as they molded into a cohesive unit.

“Our unifying themes were, and are, customer satisfaction, profitability, synergies, the exchange of ideas, solutions and combined know-how, as well as decentralized management. To mould the new organization into a highly efficient business, we created a consolidation plan that left nothing to chance. Our goal was to see the full commercial and financial benefits of the integration within two years,” he says.

David Rodgers adds over the short term they had identified several key projects to help continue the forward momentum including a further move into foodservice with the creation of

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their own coffee brand, Sunshine Joe, and testing the waters for fresh sandwiches from suppliers like CARA and Druxies.

“Our branded strategy included Subway, Pizza Hut, Taco Bell, KFC, Chester Fried Chicken and Second Cup. In 1999 we planned for eight new branded locations,” he says, adding in the coming period they were looking hard at a line of frozen entrées, as well as upping the ante with FCB with in-house brand Froster.

Rodgers reports that first year (1999) they sought to continue on their program of developing Store 2000 locations at the region’s 634 sites. Towards that end Roger’s team added 65 stores to the initiative.

“Over the longer term our goal was to expand the Store 2000 program by 60 stores a year.

We also sought to amalgamate the other banners, Mike’s Mart, Becker’s and Winks under the Mac’s brand,” he says.

Out west Kim Trowbridge was ramping up the development of his group by creating a fleet of distinctive locations wrapped around the Store 2000 concept.

“We were constantly on the lookout for single outlet and small chain acquisitions, as well as locations for new store construction. In the 1999-2000 year we added 25 stores to the network,” he says, noting the goal was slightly more conservative than Ontario’s with 50 new Store 2000 locations planned each year.

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The Nineties and Two Thousands | 103

Vancouver Canada Above: 2010 Olympic Torch Run participants Kelly McGuire (L) Doug Hartl and Kelly McGuire (R).

What made the western stores unique?

“All stores were designed to appeal to their immediate market areas which resulted in individual differences in the interior design and offerings. We were featuring hot and cold foods from sandwiches to complete meals that were prepared on site with an eye toward capturing a greater share of the burgeoning home meal replacement trend,” says Trowbridge pointing to stores like Victoria, B.C. that offered health foods, lounge area and sophisticated coffee selections that were far beyond any offering available at competitors’ locations.

Given this power it’s no surprise Couche-Tard continued to scale up the Store 2000 model into more and more central and western Canadian locations. In fact, by 2003 the company was reporting they had teamed with 66 national brands over the past year. The list comprises a Who’s Who of QSR and specialty retail marquees with trademarks such as M&M Meat Shops, Mr. Sub, A&W and Triple O now co-branding to drive sales at sites.

That year (2003) Couche-Tard implemented another 220 Store 2000 locations to bring the total to 819 in Canada. This represented 41 per cent of the corporation’s network of stores that now reached well into the U.S. in addition to its historic strong hold in Quebec. Development of the concept was rolled out at 38 stores in the east, 90 locations in the central region and 10 in the west.

According to COO, Réal Plourde, the concept is one that was predicated on flexibility. As such each site could be developed with an eye to its unique budget and stylistic requirements. “Some stores required minor renovations that varied between $40,000 and $60,000 while others required conversions that ran up to $200,000.”

Unique as well was the product mix. For example, in the Quebec market Couche-Tard stores were marketing Sloche, FCB’s with youth oriented novelty marketing such as Rosebeef (Roast Beef ) flavour, or Sang Froid (which came in unique bags similar in some respects to those one might see at Red Cross). These attained brand equity above 70 per cent among key 12 to 17 year-old consumers who flocked to get in on what was seen as a very “cool” beverage that screamed trés nouvelle in advertising, events such as Célébration Jeunesse and on a dedicated website.

In the central and western regions Mac’s was cooling 13 to 24-year old customers with their Froster FCB program. Like the Quebec Sloche beverages, these too were promoted with extensive tie-ins that really drove sales. For example, Froster was prominent on MuchMusic and the Space Channel. Sales were further driven with prize give-aways like trips to the Brit Awards in London offered through in-store “rip cards.”

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The innovations continued. In 2005, Mac’s Store 2000 program was renamed internally to Impact 2000 in a spirit of corporate amalgamation that reflected the similar Couche-Tard project.

This same year Mac’s introduced its first multi-brand location in Toronto. This featured a Subway and a Timothy’s World Coffee. In the west, Mac’s Store Impact 2000, had raised the bar to its highest level with high profile residential-style designs that married QSR with c-store in tasteful architecture that fit well into established neighbourhoods. For instance, in Kelowna, B.C. the newest Mac’s sported gabled roof lines with cedar shake and contemporary hardy board siding similar to popular housing designs. Further, the stores offered brand tie-ins that enhanced the comfort level, as well as service range. Here signage proclaimed CIBC banking, Seattle Best Coffee and Sarpino’s Pizza in addition to a full selection of convenience goods targeted to the local market.

The company even got into the liquor business in western Canada with Spirits on Jasper in Edmonton. As most Canadians know, liquor sales are highly regulated in provincial markets, but as Alberta opened up the sale of beer, wine and spirits to private enterprise in a concept that had the province do the distribution and regulation, Mac’s was there offering convenience and professionalism.

Here the benefits of Couche-Tard’s experience in Quebec where the group offered Le Pub CoucheTard at many locations proved invaluable in this successful market test.

It has been these types of initiatives that have propelled both Mac’s and Couche-Tard forward.

To quote Alain Bouchard, “Luck is when preparedness meets opportunity.”

Indeed this has been the position of both Couche-Tard and Mac’s over the years. Consider in 2009 the collapse of crude oil pricing allowed the corporation to achieve gains in gas margins and record its best net earnings in the company’s history. The same is true regarding sales of tobacco, another key category. In both Ontario and Quebec some 50 per cent of tobacco sales were the result of contraband in 2009. This, as well as a tough regulatory environment, had forced as many as 1.5 mom and pop operators out of business every day in these regions. The result is that Couche-Tard operations such as Mac’s were able to achieve a growth in market share as a result of this regrettable circumstance.

It’s this market preparedness that has seen Mac’s in Canada ramp up its development program of Impact 2000 outlets across both central and western regions.

“In the west we’re just coming off our biggest development year in the six to 10 years,” says Calgary-based, Ron Thompson speaking about 2011. He reports they have been going back and looking at older stores with an eye to continuous improvement consistent with their history of innovation.

To be sure, innovation will be crucial to Mac’s as it moves into the future. From the beginning, Mac’s has been at the forefront of many of the technological and marketing tools of the trade we take for granted today. Mac’s was first in Canadian convenience retail with computerized systems for inventory and accounting, the first with automated banking machines and offered loyalty promotions before anyone else in the trade even considered them valuable.

Even today Mac’s is ahead of the game. In the west, the company points to its partnership with companies like Intel that deliver cutting edge business data to management with Audience Impression Metric software to generate unique metrics that measure the effectiveness of in-store promotional campaigns. These metrics confirm, in real time, audience measurement, gender and age

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to increase effective brand advertising and generate higher revenues and ROI on the Mac’s in-store digital sign network.

Intel is also testing its Anonymous Video Analytics or AVA, software-based technology which a sensor to gather viewership metrics for digital signage and then measures total viewer counts, viewing times, and demographic information such as gender and age.

“Certainly technology will be playing a greater role in how we manage and satisfy our customer needs as we move forward,” says Ron Thompson, who points to a new, soon-to-be launched loyalty program which will offer more value to customers with things like tie-ins to online music downloads.

“We will be looking as well to constantly and continually enhance our key categories such as foodservice. As tobacco margins have decreased the company has raised the bar at foodservice to fill the void.”

Recently, Mac’s west created a new Director of Foodservice post at the chain to help them zero in on opportunities and maintain the high quality of brand assortment that has become synonymous with the retailer. They are also looking to increase foodservice sales by utilizing knowledgeable staff.

Consider, says Thompson, that once upon a time in earlier days stores utilized the services of 1.5 staff per location to achieve our foodservice goals.

“Now we have seven foodservice staff in locations that are fully Impact 2000 oriented. We want to bring foodservice up to 50 per cent of sales as tobacco sales taper off and we are well on our way to accomplishing this as we move into 2012,” states Thompson.

Congratulations on your 50th Anniversary Contact Information Calgary: 403-237-8829 Toronto: 416-926-8558 Toll Free: 1-800-829-4098 info@canadiantradehouse.com www.canadiantradehouse.com

The Nineties and Two Thousands | 107

Congratulations Mac’s on your 50th Anniversary

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To do this Mac’s will innovate again with more opportunities for customers to grab a quick meal or snack in a tastefully designed environment that harbours nationally recognized foodservice brands.

“We’re even retooling familiar programs to meet current trends. For example, we are reintroducing fountain drinks back into our stores in an effort to give our customers what they want.

Mac’s will also enhance the Froster program with a new entry that mixes soft serve ice cream into most available flavours of FCB to create the Froster SWIRL.” A simple look at the stores and their improved total look, size (some are in the 3,000 square foot range) and tremendously enhanced service offering is behind large increases in revenue. For instance coffee sales in 1995 were about $2 million, while today Mac’s customers reach for five levels of gourmet coffee every day that has annual java sales numbers peaking well above $15 million. Store sales have blossomed, remarks Kim Trowbridge. He notes back in 1995 an average location would ring in $583,000 in revenue, while today’s Mac’s operation sells more than $1.65 million per store in the west, and $1.1 million in Ontario in merchandise. Mac’s continues to expand its gas offering, improving average throughput in Ontario from 2.8 million litres per site to over 5.0 million litres per site between 2006 and 2011.

Today’s Mac’s is also working hard to find efficiencies that are adding to a positive balance sheet. A great example of this is the drive towards leaner and greener locations. Twenty-five per cent

of all the stores are powered 100 per cent by green renewable technology and rely on things like LED lighting to greatly bring down the cost of illuminating fuel canopies in the west alone.

“In the mid-90s our net income was modest and now 15 years later we are showing thousands of per cent growth at locations from Ontario to B.C.,” says Trowbridge. “Mac’s with its 934 locations continues to be a brand in convenience to watch.”

Alain Bouchard could not agree more. A man who continually challenges and pushes the envelope in the industry (who else has chains of stores from Hanoi to Chicoutimi), Bouchard saw the value of Mac’s and chased the brass ring until it was his.

“We could see that it would be a perfect fit for us. Our philosophy has been to empower people to succeed. We let people work hard and make their own decisions and this is Mac’s from the decentralized management team to the dealer network. From the beginning, it has helped Couche-Tard grow to what we have become today a true global leader in convenience with nearly $20 billion in revenue and nearly 6,000 stores. Yes, it was a good fit.”

From the ducktail and fender fins of the 60s to the digital age of the 21st century Mac’s has set the course for convenience. And, over a tremendous 50 years the cat became an owl staying up late to meet the needs of the changing society. Whether it’s a tank of gas, a toothbrush, a quick meal or a cup of coffee, Mac’s has become so much more than a milk store. Mac’s has become an indispensable and invaluable asset in challenging times for millions and millions of Canadians around the clock each and every day.

Congratulations On Your 50th Anniversary

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Convenience, Community and Caring

Over Mac’s long history the company has stood out as one that steps up for communities. The list of Mac’s partnerships and initiatives is a long one that includes frontline work with organizations like Muscular Dystrophy and the Jerry Lewis Telethon, to smaller projects such as the Caribana Parade in Toronto when it ran into financial trouble. Mac’s was there when organizations needed a sponsor to help with local recycling in Richmond Hill, and the company has been a partner in local Easter Seals campaigns in Winnipeg alongside the Society for Manitobans with Disabilities. Moreover, Mac’s has been a supporter of amateur athletics on both a local and national level, and has been a key sponsor of leading motor sports for nearly 20 years.

Today Mac’s is perhaps best known as the sponsor for one of Canada’s premier hockey tournaments that will celebrate its 35th season this year. Known as the Mac’s Major Midget Tournament, teams travel to Calgary’s Saddle Dome from across the country and internationally over the Christmas season to complete for prizes and bragging rights. Over the past 35 years the event has seen as many as 400 NHL players participate when they were teenagers.

“There is a lot of scouting at the tourney especially from U.S. universities who are looking hard at recruiting female sports talent to their schools,” says Ron Thompson, Mac’s western-based director of marketing who is a key organizational figure in the yearly challenge. “This is just one of the ways we give back to the community as a show of our gratitude for their support for our stores over the year. It’s also proved to be a lot of fun over the years and has achieved tremendous support from local fans and even television audiences. Its grown to the point where we now have 1,500 volunteers to assist us with a tournament that has become a major showcase for amateur hockey.”

He adds Mac’s also supports smaller tournaments in places like Northern Alberta and Saskatoon.

Mac’s is known as a supporter of motor sports as well. Since 1994, the company has been an avid sponsor of Legends Racing, a multi-venue event that hits the tracks from Wetaskiwin at the Edmonton International Speedway to Kings Park in Regina to Medicine Hat and even into Montana. Front and centre is The Frosters 50, an “Enduro” event that offers more spills and chills than a Mac’s frozen beverage centre. The “Chase for the Mac’s Cup” is awarded to the season’s top driver in each division.

The most prestigious Legends Race in Canada, the Frosters 50 differs from other Chase for the Mac’s Cup Races in this is a 50-kilometre race that runs drivers around

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Who would have thought the young boy above would go on to race for Mac’s along with so many great championship drivers we have been proud to sponsor in western Canada over the years.

Convenience, Community and Caring the ovals in an 84-laps thrill-ride. With $10,000 up for grabs, The Frosters 50 offers the largest purse for a Legends Race in western Canada, and it attracts the largest and best field of Legends racers from Canada and the northwestern United States.

While these events are fun based and support the good times, Mac’s customers have also come to associate with the chain with a more serious side to Mac’s community commitment.

“Mac’s western division has been involved in the background of many local, regional and even national charitable initiatives over the years,” says Thompson. “For example, going back to the early 90s we worked on the ‘No excuse for Child Abuse’ campaign that had sports figure [boxer] Donny Lalonde as its spokesperson.”

Lolande, known in the ring as “The Golden Boy” was himself a victim of child abuse and he established this charity to create awareness and help victims.

“Mac’s anchored our participation with a couple years of events with film and entertainment stars attending and hosting dinners with proceeds going to the start-up of The in Calgary (www. childrenscottage.ab.ca). We were able to raise enough funds to break ground on the facility which stands today to assist those facing the trauma of abuse,” he states.

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The mid-90s saw Mac’s move to supporting Mustard Seed Street Missions. Initially Mac’s helped in Victoria where Mustard Seed operated a food bank. Local stores collected funds on front counter cookie jars and then matched the tally. Then Mac’s moved its support to Calgary where Mustard Seed was trying to go from a very dilapidated and small space to provincially funded 224-unit housing facility for the city’s most impoverished. Using the power of Mac’s annual golf tournament as a fund raising tool, the chain was able to bring together support in 2008 for a new kitchen for the $21.4 million tower.

Mac’s Charity Golf Tournament came to the rescue again when Calgary police showed a need for a helicopter to assist in dangerous activities like high-speed car chases. The need had become apparent when Calgary Police Constable, Rick Sonnenberg was run down during a chase while on duty. After his death The Sonnenberg Society was formed to raise funding for Calgary’s police Air Helicopter I. “By using our Charity Golf tournament we raised the monies to purchase a very sophisticated onboard computer system for that first aircraft,”

Mac’s Charity Golf Tournament Top Right: Roy Kingsmith, Kim Trowbridge, Ed Adolf and Scott Nichols Lower Right: Cameron Lewis (Mac’s), Ross McCune (Alpha), Garry Edwards (United News).

Below: 1995 Golf Tournament and donation to first year in service Hawks Police helicopter.

Convenience, Community and Caring says Thompson.

“Today our efforts are with the Brenda Strafford Centre a transitional housing and counselling unit for abused women and their families. We got involved in 2010 and were able to outfit 12 apartment units with a full slate of furnishings. Its part of Mac’s commitment to community. We look to organizations that can make a difference in very meaningful ways.

This is why we are there with assistance to organizations like the Brenda Strafford Foundation not to mention Kid’s Help Phone and a host of others. Here in the west we have made a dollar commitment to women’s shelters in Surrey, B.C., soup kitchens in Victoria, a children’s cancer camp in Calgary and lunch programs in Saskatoon,” he says, adding they are also involved with the Special Olympics and Boys and Girls Club in Winnipeg.

“When it comes to caring Mac’s want to show it is about more just being a business. We are part of the community and I think our commitment shows.”

In the central region Mac’s has been hard at work with their community and its specific needs.

For example, The Community Giving Program has distributed tens of millions of dollars to hundreds of Ontario communities from the proceeds of Nevada gaming tickets. Recipients include local fire halls and schools, as well as Child Find and The Easter Seals to name just a few of the worthwhile organizations funded through the program. Here, individual Mac’s locations indicate where funds are needed in their neighbourhoods in a program that gets right to the heart of community.

Looking more broadly, Mac’s supported an effort by Toronto EMS paramedics who wanted to show Canada’s troops in Afghanistan they were not forgotten. Called Operation Booster Shot, the

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idea was to send troops a bit of familiar comfort from back home. Mac’s collected a large assortment of goods such as candy and gum, magazines and Gatorade to send off to CFB Trenton and for the long flight to Kabul.

In another initiative Mac’s got involved in 2010 with the Ontario Amber Alert program. This initiative was designed to get the word out as fast as possible when a child was abducted anywhere in the province. Under the program Ontario Mac’s stores would have the Amber Alerts signal customers from inside stores via LCD screens. This way Mac’s can help at the early stages of a child abduction resulting in greater success of getting kids back home.

Mac’s community extends beyond the streets and roadways of Canada’s cities and towns going right into stores to address the needs of its workers who comprise an internal family. In this context Mac’s has been giving as well. For instance back in 2006 the company arranged for five workers to receive full makeovers, as well as a shopping spree and a day off to do it. The company retained the services of Sarah Collins, a Toronto-based image consultant to assist the women that included staffers Olga Pasieka and Christena Soumvalis in creating fresh looks right down to nylons and nail gloss.

According to Thompson, many people say “My Mac’s” when they speak about their local store. He suggests this goes both ways with Mac’s saying “My Community” when they speak about the neighbours and customers who come in to the chain’s stores every day. With caring programs Mac’s has been able to give back in such a way that they have been able to make a considerable difference right across the country.

1970 Mac’s Milk Snowmobile derby.

Lucky draw for ladies and mens matching sealskin winter outfit valued at over $650.

CONGRATULATIONS

Mac’s On achieving a major milestone

“50 years in business”

PETROLEUM EQUIPMENT SPECIALISTS Containment Solutions Underground FRP Tanks, Underground Flex Piping systems, Service Station Equipment, Electronic Leak Detection & Tank Gauging, Wayne Pumps & Dispenser, LED Lighting

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“The only thing constant is change. The continued evolution of our stores is what has made Mac’s a leader in the convenience store industry.

The welcoming feel of this larger footprint allows for a broader product selection and new food programs. We have designed inviting seating areas with a combination of hard and soft seating. To improve speed of service there is greater focus on product adjacencies and paypoint technology.

Our focus is on consumer product customization, be it a cup of coffee, a hotdog, a sandwich or the toppings on a sundae. We have enhanced our fresh offerings of sandwiches, fruit, salads and even the topping for the roller grill items. We are a destination for food.

Attractive, clean, well stocked and organized stores are the result of good people. It’s our store operators and staff who build the customer relationships that have created ‘My Mac’s.’ ” Ron Thompson, Marketing Manager Mac’s Convenience Stores – Western

Mac’s – The First 50 Years