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Alimentation Couche Tard Inc. Business Information, Profile, and History

stores brouchard store convenience

1600 Saint-Martin Boulevard East
Tower B, Suite 200
Laval
H7G 4S7
Canada

Company Perspectives

Couche-Tard's unique operational approach combines the strengths of a large organization and the advantages of benchmarking with the benefits of local management and entrepreneurship in each store. So Couche-Tard is a family of autonomous business units that prosper by showcasing their brands while leveraging the critical mass of the parent company. With such a structure, we can compete with the smallest chains through a personalized approach to better seize local opportunities and minimize costs. Similarly, we outperform other chains by developing operational systems that maximize efficiency, by investing in new marketing concepts that improve profit margins, and by benefiting from supply synergies to lower product costs.

History of Alimentation Couche Tard Inc.

Alimentation Couche-Tard Inc. operates nearly 5,000 stores in Canada and the United States, ranking as Canada's largest retailer and the third largest convenience store chain in North America. The company's stores, more than 3,000 of which sell motor fuel, range in size from small, 400-square-foot units to 10,000-square-foot units, each designed to give customers a local, neighborhood feel. Alimentation Couche-Tard's stores operate under the names Couche-Tard, Mac's, and Circle K.

Origins

Alain Brouchard orchestrated the phenomenal rise of Alimentation Couche-Tard ("food for those who go to bed late") in the retail industry, creating one of the titans of the convenience store sector. A native of Chicoutimi, Quebec, he fulfilled, and most likely greatly exceeded, a goal to build his own retail business, completing a mission conceived during his childhood. "I come from a very entrepreneurial family and I'd always been in the store business," he explained in an October 2002 interview with Report on Business Magazine.

"Even as a teenager, I worked in a store, stocking the shelves. I saw firsthand the opportunity to build my own company."

Although Brouchard technically did not build his own company from the ground up, his achievements on the expansion front thoroughly obliterated any sense of an Alimentation Couche-Tard existing before his arrival. Brouchard, via acquisition, started with 12 stores; 20 years later, after a spate of acquisitions and a relentless march across North America, he was preparing to open his 5,000th store.

After working in Chicoutimi stores, Brouchard moved south as a young adult. During the late 1970s, he managed two convenience stores in suburban Montreal. The experience confirmed his affinity for the convenience store format, spurring him to make his first entrepreneurial move when he was in his mid-30s. In 1985, he spent CAD 170,000 to purchase a dozen stores operating under the name Couche-Tard. The small chain, which began as a single store at the beginning of the decade, became Brouchard's vehicle for expansion, a modestly sized business that he used to create a retail behemoth. Brouchard first launched his attack in Quebec before expanding throughout eastern Canada, westward across all Canadian provinces, and down into the United States. By the time he celebrated the 20th anniversary of acquiring Alimentation Couche-Tard, Brouchard had cleared the way for expansion into Mexico.

Brouchard was at his most aggressive in terms of expansion at the dawn of the 21st century, leading the company forward at such a blistering pace that progress during his first 15 years in charge could be dismissed as insignificant. The period was important, however, because it confirmed Brouchard's talents as a retail executive, established the foundation for Alimentation Couche-Tard's transcontinental expansion at the start of the 21st century, and included impressive growth, which only paled in significance when compared with the company's assault on North American rivals in the new millennium. Brouchard bolted out of the blocks, increasing the size of the chain from 12 stores to 116 stores by the end of 1986. Over the course of the ensuing decade, Alimentation Couche-Tard's store count nearly tripled, reaching 310 units by the end of 1996, when sales totaled CAD 259 million. Up to that point, Brouchard had confined his efforts to his home province, creating the leading convenience store chain in Quebec. In 1997, the essence of his acquisition campaign changed character, marking a turning point in Alimentation Couche-Tard's history and signaling the beginning of Brouchard's bold bid to become the largest convenience store operator in North America.

Once Brouchard began expanding geographically, Alimentation Couche-Tard entered a new phase of development, taking the first evolutionary step toward assuming a transcontinental profile. The process happened quickly and it was propelled in large part through acquisitions. The start of the new era began with Brouchard's acquisition of C Corp. Inc. in 1997. A subsidiary of Provigo Inc., C Corp. operated 245 convenience stores in Quebec under the Provi-Soir banner and 50 other stores in Ontario and Alberta under the names Winks and Red Rooster. It was a landmark acquisition, one that Brouchard had been pursuing for five years. "This acquisition is the most important in our history and the most important in the Quebec convenience store industry," he said in an announcement quoted in the April 14, 1997 issue of Business Wire.

His next statement indicated the significance of the deal, explaining that the addition of the 50 stores in Ontario and Alberta "would allow us to expand our horizons and will provide an important stepping stone for our national expansion."

With the acquisition of C. Corp., Alimentation Couche-Tard swelled to a 630-unit chain in 1998, nearly doubling in size, with CAD 509 million in sales. Within a few short years, it would take less than a month for the company to match the revenue volume recorded in 1998.

National Dominance in 1999

Brouchard's next move on the acquisition front established Alimentation Couche-Tard as a retailer with a formidable presence. In 1999, he completed another deal that had been five years in the making, purchasing Silcorp Ltd., a Scarborough, Ontario-based chain with 813 stores throughout Canada. The acquisition, which saw Alimentation Couche-Tard purchase a retailer larger than itself, created the first national convenience store chain in Canada, completing Brouchard's ascension to the top of the country's retail ranks. Under Alimentation Couche-Tard's ownership, the stores acquired from Silcorp formed a second brand that operated under the name Mac's, giving Brouchard control over more than 1,600 stores, including more than 200 units in the western provinces. The company's sales, not surprisingly, increased exponentially, reaching CAD 1.6 billion in 2000, three times the total registered two years earlier.

In the wake of the acquisition of Silcorp's stores, Alimentation Couche-Tard pressed ahead cultivating its business in central and western Canada with its Mac's brand and in eastern Canada with its Couche-Tard brand. Brouchard, while discussing the merits of the Silcorp purchase, revealed his intentions to expand to the south. But before he made the international leap, he and his executives developed what they called the company's "Strategy 2000/Store 2000" plan. An important part of the strategy called for decentralized management and creating an eclectic array of stores in terms of size, design, and merchandise mix, ultimately aiming at a chain in which each store reflected its neighborhood. Brouchard, as the century began, made it clear that his objective was to usurp the position held by 7-Eleven, Inc., the largest convenience store chain in North America, but unlike 7-Eleven, which presented customers with identical images of itself at each of its locations, Brouchard wanted individual stores tailored to their communities. As he pressed ahead with expansion, his differentiation strategy spawned stores ranging in size from 400-square-foot, shopping mall-based stores to 10,000-square-foot locations frequented by truckers. A motley collection of stores appeared, including one located in a basement with no windows, which was designed with a submarine theme. Executives at 7-Eleven likely were not beguiled by Alimentation Couche-Tard's many guises, but if they were, the arrival of Brouchard on their home soil in 2001 left no doubt about the intentions of Canada's king of retailing.

When Brouchard first discussed expanding into the United States with the press, he thought his foray would start in the Pacific Northwest. Instead, he made his first move in the Midwest, acquiring Johnson Oil Co. in June 2001. Johnson, which operated its stores under the Bigfoot banner, owned 225 stores in Illinois, Indiana, and Kentucky, a network that Brouchard planned to expand to more than 600 stores. Next, after completing several smaller acquisitions, Brouchard strengthened his position in the Midwest by purchasing another larger convenience store chain. In August 2002, he spent CAD 120 million to acquire 285 stores from bankrupt Daisy Mart Convenience Stores Inc., a company founded in 1939 that, after rapid expansion left it awash in debt, filed for Chapter 11 in 2001. The addition of the stores, which were located in Ohio, Kentucky, Pennsylvania, Michigan, and Indiana, made Alimentation Couche-Tard the eighth largest convenience store chain in North America. Brouchard, who presided over a chain of 2,400 outlets after the Daisy Mart purchase, did not intend to ease back on his expansion efforts. "The first goal is 6,000 stores," he declared in an October 2002 interview with Report on Business Magazine.

"It will take a few years to get there, but it will happen," he vowed.

Acquisition of Circle K in 2003

Following the Daisy Mart acquisition, Alimentation Couche-Tard maintained a presence in six states, far from the geographic footprint Brouchard envisioned for his company. He wanted to do in the United States what he had done in Canada:

create a nationwide chain of convenience stores. An enormous opportunity to take a major step toward achieving his goal was presented in 2002, when ConocoPhillips Co., the largest petroleum refiner in the United States, announced plans to divest the majority of its vast retail marketing network because management believed there were better business opportunities in the wholesale market than in the retail market. Brouchard saw his chance to leap past his closest rivals and he took it, reaching an agreement with ConocoPhillips in October 2003 to acquire the refiner's chain of Circle K stores. In December 2003, the CAD 1.1 billion deal was concluded, giving Brouchard 1,663 stores in 16 states and franchise relationships with more than 350 franchised and licensed stores. The acquisition, which included roughly 700 stores in California and Arizona, had a tremendous effect on Alimentation Couche-Tard's stature, enabling the company to leapfrog from the number seven position in North America's convenience store market to the number four position. Alimentation Couche-Tard entered 2004 trailing only 7-Eleven, Royal Dutch/Shell Group of Companies, and BP PLC.

In the wake of the Circle K acquisition, considerable effort was directed at integrating the chain into Alimentation Couche-Tard's operations. Previously, the stores acquired by Alimentation Couche-Tard had been rebranded as either Mac's or Couche-Tard units, but the Circle K stores retained their name, giving Brouchard a three-pronged approach to expansion. He resumed his acquisition campaign roughly a year after inking the Circle K deal, completing transactions that chipped away at 7-Eleven's lead. In November 2004, Brouchard acquired 21 stores in Arizona from Shell, and announced plans to acquire several more regional chains in 2005.

As Brouchard celebrated his 20th year of ownership in 2005, Alimentation Couche-Tard stood as a towering force with a network of nearly 5,000 stores. After purchasing 19 stores in the Augusta, Georgia, area in February and another nine stores in Illinois in April, the chain consisted of 4,853 stores. Sales totaled CAD 10.2 billion by the end of the company's fiscal year in 2005 and net income reached CAD 199.5 million. Brouchard revealed during the year that within two years he would complete another major acquisition, one that was expected to add hundreds of stores to the company's portfolio of properties. As he plotted his company's continued growth and pursued his goal of reaching 6,000 stores, few industry observers doubted the capabilities of someone who had parlayed a CAD 170,000 investment into a CAD 10 billion retail empire.

Principal Subsidiaries

Mac's Convenience Stores L.L.C.; Magasins Couche-Tard Inc.; Magasins Couche-Tard Inc.; 2966565 Canada Inc.; Actigaz Inc.; 9006-7141 Québec Inc.; C Corp. Inc.; The Circle K Corporation.

Principal Competitors

7-Eleven, Inc.; Exxon Mobil Corporation; Royal Dutch/Shell Group of Companies.

Chronology

  • Key Dates
  • 1985 Alain Brouchard buys 12 stores for CAD 170,000.
  • 1997 The acquisition of C Corp. expands Alimentation Couche-Tard beyond Quebec's borders for the first time.
  • 1999 Alimentation Couche-Tard becomes the first national convenience store chain in Canada after acquiring Silcorp Ltd.
  • 2001 Alimentation Couche-Tard enters the U.S. market with the purchase of Johnson Oil Co.
  • 2003 The purchase of 1,663 Circle K stores makes Alimentation Couche-Tard the fourth largest convenience store chain in North America.
  • 2005 Revenues surpass CAD 10 billion as the company becomes the third largest convenience store operator in North America.
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