Jeff Lenard :
Welcome to Convenience Matters. My name is Jeff Lenard with NACS.

Carolyn Schnare:
and I’m Carolyn Schnare also with NACS.

Jeff Lenard :
And today, Carolyn, let’s talk about choice, but in convenience. How choice has evolved to really be one of the dominant things that we have in retail. You can get it this way. You can get it that way. You can pick your own way. A lot of different journeys and customization and to have this conversation I would like to welcome Mike Fogarty, the Founder, and CEO of Choice, which is a convenience store that…let’s just say, it’s one of those that’s hidden in plain sight in Denver, Colorado with three stores, and they’re doing some amazing things there. So welcome, Mike.

Mike Fogarty:
Thanks guys. Appreciate you having me.

Jeff Lenard :
So we’re familiar with Choice, but probably the best way to start off, Mike, is if you can just give us that overview about what choice means, because when you look at your stores, some of the things…you tick, all the boxes that are being discussed in our industry today. The idea of frictionless, the idea of delivery, the idea of choice with healthy options, EVs, we can keep going, but we’ll let you describe why did you come up with a concept and how are you executing it?

Mike Fogarty:
Thanks, Jeff. And at the end of the day, I think Choice was really founded on the premise that we saw really a lack of innovation within this channel. I think you look at fuel, you look at cigarettes, you look at high-caloric, low-nutrition foods, they’re all precipitously declining in terms of consumption utilization. And those are three very large revenue drivers for this channel and the convenience store channel in general. So, this is something that’s been happening for several years…five-plus years. And you know, when we were starting Choice in the business, we wanted to rethink and reimagine what a convenience store can and should be because we saw something in between the 2,500 square foot legacy C-store operator and the 100,000 square foot warehouse that is today’s modern grocer – neither, which in our eyes, meets the needs of our target market, which is the urban millennial and Gen Z’er that values health, they value convenience, they’re shopping four or five times a week, not once on Sunday, they’re smoking less if at all, they may have one car between a family of three, all of these macroeconomic and social changes and just trends in general. We’re right there in plain sight. And yet, we didn’t feel there was a format and a retailer that’s really meeting their needs or digitally enabled all of these different things. So, Choice was really founded on that premise that we’re going to serve that customer. And it’s fully centered around food. We don’t…we won’t sell cigarettes. We don’t sell lottery tickets. We don’t…it’s high quality food, both on the prepared food side, but also on the grocery side.

Mike Fogarty:
As you said, Jeff, we have…and it all is enabled by technology. And whether that’s the ability to order ahead the order delivery to now check-in at a store and utilize the Choice: Now frictionless checkout platform. These are…this omni-channel experience is a part of our core, core business. And not only improves lifetime value , it reduces our customer acquisition costs., it’s a stickier customer and it’s convenient, right? So that is the business we’re building. And it’s gonna manifest in a number of different formats and in ways over the course of the next few years and beyond. So

Carolyn Schnare:
Yeah, I don’t even know which direction to go. I have so many good questions and more about what you do. And before I even go to that, I can point out and Jeff, you can expound on this, but we visited your store for NACS Ideas 2 Go back in 2019. So I’ll put those in the show notes, but certainly check those out because then you can actually see what we’re talking about. And Mike, I follow you on Facebook…no Facebook, I’m sorry, LinkedIn so I see a lot of what you’re talking about and a lot of these really cool concepts. So I think I’m going to start with food because I love food. So I think that you were talking about how the premise of convenience all focuses around food and other things, making it easier to get those things. So speaking of food, I know that you’ve been doing some stuff with like sushi, which is something that usually you don’t want to eat gas station sushi has been the butt of jokes if you will. But not, I would imagine for…I’ve never been to your store, but that’s one of the newer concepts you’re working with. So tell me, how do you decide what’s next, what’s hot, what are you going to try and what are some of the offerings you’ve got out there?

Mike Fogarty:
Yeah. You know, we’re very well aware of that metaphor of the gas station sushi.

Jeff Lenard :
EV charging sushi, that’s going to be the new one!

Mike Fogarty:
And it’s vegan sushi at that. So that’s…we are very in tune with our customer and their dietary preferences and where food is going in general, I would say. And for us, and for a lot of folks, like veganism, gluten-free, these are two very much massive trends in how people are eating. And, we’re lucky enough that we started carying on the wholesale side at all stores, this vegan sushi. Guy named Steven Lee, who started it’s called Wellness Sushi – it’s fully plant-based sushi. So, theres like suveena tomatoes to look like to tuna, dicing up soy with like what appears to be a spicy tuna mixture. And it all tastes…and using the same flavor profiles. So it’s amazing. I love the products and I tried it and so we started carrying their sushi probably three years ag. Honestly almost since we started, but you know, it wasn’t until our latest location where we always wanted to have a store within a store. Which it could be sushi, it could be ice cream, it could be a coffee shop it could be any non cannibalizing business that we feel is incremental to the business. And this was the perfect opportunity to do that. We had a perfect space for it. So we launched that store-within-a-store at Wellness Sushi, I think it was probably two weeks ago and honestly he’s been absolutely crushing it. And not just sushi – ramen, he’s doing very innovative plant-based products. I think food, not just this particular instance, we’ll continue to innovate on that, on that front. We switched our menus out three times a year based on the seasonal produce. It is core to the business. Prepared food makes up roughly 50% of our sales, a much higher margin as I think we all know. So whereas the average convenience store, I think is in like in the 20% or lower range in terms of just product mix. This is what makes Choice unique and different.

Carolyn Schnare:
And local, too, right? You focus a lot on a local, obviously you don’t have an ocean next to you in Denver, so that’s part of the local, too, like plant-based sushi, right?

Mike Fogarty:
We have plants!

Jeff Lenard :
So thinking, as I mentioned, you have three stores. Now to get into it…and with a smaller operators, the biggest challenge is testing and learning is really not an option the way it is for larger stores or somebody that’s more established. So you have this concept of Choice. You introduce it, you don’t…you’re not a trust fund kid that just has somebody else’s money. You’re putting your own money into this. So how do you determine what’s the difference between a good idea and a bad idea when there’s such a low margin for risk in this whole retail environment?

Mike Fogarty:
You know, it’s a great question, Jeff. And, honestly the business was built…I mean, I sold my house and got an SBA loan. That was the founding of the company. It wasn’t, as you said, I didn’t come from money and have a huge checkbook from VC funding initially, but that has evolved and we do have it now at this point, cause we took a risk on the front end and said this is a concept and a format and an offering that we think will resonate with our customer. And we turned out to be, I think, somewhat right, I guess. And in that traction, people notice that stuff pretty quickly. So we now we do have that type of capital and are able to take bigger risks around frictionless checkout technology, around some of the new formats and things that we’re doing. , um but it is a balance, right? Like it’s like, what do you invest in and when do you do that? Not just with technology, but with people and your corporate staff and it’s chicken and egg thing all the time. What we’re building foundationally is, we think, a large scalable national business. At this point now I think we have the partners on the capital side, on the tech side and like the visibility that people get it, they understand.

Jeff Lenard :
So following up on that, talking to a store in its infancy. What was the conversation that took you to funding? Did they find you and say, “cool idea, gotta talk to these guys.” Did you talk to them? Just kind of wondering what kind of insights you’d have for a company that has a couple of stores, but really grand visions that it’s going to be a couple of stores for awhile, but we’re building for something big.

Mike Fogarty:
Yeah. You know, the first investor, a guy named Martin Dolphi, he started a venture capital firm called M3 Ventures. They were invested in Foxtrot, actually. A very similar…

Jeff Lenard :
It just made a lot of news in our industry and a lot of funding right now.

Mike Fogarty:
Exactly. And they were very interested in this space, but they saw Choice as doing something foundationally a little bit different than Foxtrot around just product mix or on technology and a few other areas. And so, they found us. Honestly we weren’t at the time necessarily looking for funding. At that point, we’re just trying to build the business, like run the store. At that point it was one store. I think for anybody that’s in that same space where you have a few stores, but you have this grand vision, you really do have to communicate. Whether it’s through the press, whether it’s through trade shows, whether it’s through folks like yourself, you have to communicate what makes you different.

Mike Fogarty:
And whether it’s technology, whether it’s merchandising, whether it’s sustainability, whether it’s store design, whatever you feel is the true differentiation between you and another c-store market. That’s where I think you’ll start to resonate with the investment community, with the press, et cetera. And it’s yeah, it’s easier said than done. And I think we got lucky in some ways. But, these are things that I would say are top of mind, if you do have that grand vision. Some people just want three stores and just have cashflow and have a nice life. We could easily done that probably, but cCoices is very much on the ladder where we are building, I think, a large and sustainable, high-growth business. So it’s that nuance. And so just getting your voice out there and really talking about your differentiation is key.

Carolyn Schnare:
And we get to say we knew you when. So in like 10 years when someone goes ‘oh, remember that podcast when he was just getting started?’

Jeff Lenard :
Yeah. And he won’t return our phone calls.

Mike Fogarty:
I’ll always return your guys calls!

Carolyn Schnare:
Jeff, what’s a phone?

Mike Fogarty:
Exactly. It’s just going to be an earpiece!

Carolyn Schnare:
Exactly. And that leads me to my next topic, because you talked about it, which is technology. And I know some of the cool things you’re doing are on par with some of the giant corporations, the Amazon’s of the world. You have walkout, checkout. I don’t know what is the best way to say it without breaking some kind of copyright or something, but check out…more than just self-checkout, just take your stuff and go kind of thing. And an app and all of this talks together. And that’s just like…it’s just beyond cool. And this last weekend, I was in a convenience store with my daughter and she’s 16 and you know, she’s 16. So we were in this one store out in Maryland and they had a self-checkout and she goes “there’s self-checkout in a convenience store?” And I’m like, yes, my dear. Yes, there is. It’s the new thing. But you’ve been working on this for a while, right?

Mike Fogarty:
Yeah, exactly. Like a hundred percent. The idea of an omni-channel, you hear that term a lot, obviously, but that was foundational for the business from day one. Even when we wrote the business plan, we knew that this tech was coming. I think Amazon launched their Just Walk Out Technology/Amazon Go. I think they made the announcement three days after we opened or something, it was like, “okay, now they’re getting into that space.” But, convenience will be, in our opinion, will be fueled by technology in the future. And currently and in the future. And convenience looks very different than just “being open”. Now you have to have the products that I want, at the place that I want, at the price that I want, and all of those things have to triangulate in order for it to be truly convenient. And so technology will fuel that level…the new era of convenience. And I think we, again, we made the conscious decision to invest in these tools and technology for our customer ahead of maybe launching a fourth store or a fifth store. And that was a very conscious and purposeful decision because we’re building a foundation and a tech stack that I think is not just innovative within the c-store industry, I would consider innovative across all food retail, because it’s this one singular application and platform that you can use to order ahead. You can get delivery, you can shop by recipe, you can now check-in at the store and shop frictionlessly.

Mike Fogarty:
And that allows us to now expand into new and exciting different formats, not just the 3 to 5,000 square foot market that we’re currently operating, but 300, 400 square foot fully cashier-less model at hospital for instance, that we’re going to be launching in Q1 of next year. And so we’ve built the foundation, we’ve built that tech stack, and now we’re able to deploy it in a number of different formats in ways that I think are innovative in food retail in general. And so it’s core to the business, our customers, really appreciate it, the adoptions there, it increases basket size, all these things that you hear about, but this is very real for us.

Jeff Lenard :
And speaking of getting your word out there, your name out there, the September NACS Magazine had an article about delivery and how do you do it? Do you do third party? Do you bring it do you do it on your own or as they call it native? And you talked about how you have it in house. That’s a lot more work when you have three stores. Walk us through how you decided that you wanted to do delivery and does it make a difference?

Mike Fogarty:
Yeah. And, we have a hybrid model. We still do use third parties, especially on the prepared food side. But with a mobility or transit center with superchargers and fuel, it makes a lot of sense then create that closed loop because we use an EV vehicle to deliver and we have e-bikes and we just announced only yesterday at Groceryshopwhich is another conference, that we’re partnering with, a company called Tortoise that’s a remote-controlled electric delivery vehicle. And this will be a pilot that we launch here in October. Initially it will be just taking our goods from the commissary to the other two stores, but eventually we’ll also be last mile to the actual end customer. And so this and each of these make sense, and if you have a large order and it’s three miles away, it probably makes sense to use a vehicle.

Mike Fogarty:
If you have a high density, urban neighborhood, and you have a lot of prepared food, the e-bike that goes 20 miles per hour and can navigate those streets, makes a lot of sense. The Tortoise, it goes eight miles per hour, it’s probably better for groceries that can withstand up 30 minutes. So each of these…what’s called native delivery for us, hey, it’s more efficient. A, it’s more cost-effective, B it’s more sustainable. And this just is core to our business. Now, are we going to use Uber Eats and third parties? Yeah. We’ll continue to use them and especially on the prepared food side, but I think having some level of hybrid model makes a lot of sense for a lot of folks. And it’s ultimately more cost-effective at the end of the day, it’s more efficient and we’ve done the math. The margins there. So for us, it’s efficiency and sustainability that drives that program.

Carolyn Schnare:
I think I see where you’re going. When you’re on Uber Eats and all those platforms, because people need to find you, they might not, like you said, they might not know you’re out there yet. And then they see you and then they find that platform. And then you say, “hey come on over to this side, use our app or whatever and we’ll save you this or that other thing,” but you have to, you have to meet them where they are. So if they’re already over there, then you bring them back in, I think. Is that why you were keeping that in?

Mike Fogarty:
Yeah, exactly. Every package that we have as our QR code to download our app. So even if it’s an Uber Eats delivery, they’re getting a bag with the Choice Market QR code that says download our app. I don’t know if I’m supposed to say that, but regardless…

Carolyn Schnare:
But it’s a very sustainable packaging bag, right, of course.

Mike Fogarty:
Yeah. And at the end of the day Uber Eats, you get mostly prepared food. Whereas on our app, you can get the full selection of products, the entire store is deliverable, especially alcohol, we can deliver through our app as well, which Colorado has specific walls around. You get loyalty points, its cheaper. For the customer, there’s an incentive there outside of just downloading the Choice app and I think, again, it goes back to the technology and the omni-channel experience when they come in and use the frictionless Choice: Now, that’s the same app they would use to order delivery. So once they’re in the ecosystem, they’d be more likely to order delivery or through another channel BOPUS or whatever.

Jeff Lenard :
So in 2019, when I visited your stores everything you were doing was around trends that really seemed that they were going to be long-term. The urban customer, people walking the stores, the joy of living in that tight radius. You even had things with omni-channel where you had fresh food at a vending machine, essentially, at a concert hall, a couple months later COVID changed everything. And the idea that people liked being downtown, that there were even concerts, totally changed. That had to be quite a shock to the system. It was for everybody, but particularly for you with a focus on the downtown customer and omni-channel. What were the kinds of pivots that you made that kept you not just going, but evolve faster.

Mike Fogarty:
Yeah, and Jeff that store specifically – at the time we only have one store and it was central business district, Denver, we did a lot of catering, we did a lot of business lunch – it was thriving. It was very much a very active and high-revenue store. And we had things like, as you said, at the infancy of building out this omni-channel platform and formats and including the vending machines at, at a music venue and all of that, it was overnight. I mean, we never closed, we were essential retailer. But we did pivot. We started bringing in more conventional, bulk products and things of that nature, obviously toiletries and things of that nature that honestly, other retailers couldn’t get, but like we leveraged both our supply chains, both the restaurant side, and the grocery side, too for instance, toilet paper we were able to get toilet paper because we had this multitude of supply chains.

Mike Fogarty:
So certainly we pivoted on the merchandising side, operating hours were reduced, put in place safety programs and just survived. Did we thrive in that? No. Because I think we all know during that timeframe, most folks were buying their groceries from Amazon or Walmart or one of the big big multinational delivery companies that and cooking at home.But that said, there was still revenue. We still were able to make it through that very rough period – for us and for all convenience stores. I think, as we know, all c-stores felt that pain. People aren’t driving, people weren’t traveling. The convenience store industry felt that especially as did the restaurant industry.

Mike Fogarty:
But I think in general, we were able to find our place with one store, but meanwhile, we were building two other stores during that whole timeframe. And both of those were delayed by six to eight months because of the pandemic. So we didn’t build that into the “cashflow model.” So I think that for us, was even tougher. It was like, well, those two stores were supposed to be open eight months prior and start generating the revenues and we’re still building the organization, the tech stack, and everything that we were building. So no doubt it was tough, but I think the idea of fresh, convenient, healthy, and accessible food that’s on-the-go was the core to the business and the things that we had done and build that customer base for delivery, for instance, or built the online pickup capabilities that was already prior to the pandemic. So again, we were well suited, we didn’t grow, but we didn’t like lose 60% of the revenue either. So it’s like we were able to make it work.

Jeff Lenard :
Well we had talked about music and a lot of people in our industry are really into music. And so we’ll wrap up and you’ll have more conversations love to talk more down the road about some of these other applications. But as I said, a lot of music fans in our industry and you’ll hear everybody has their favorite bands. We know that yours is PPfish and you’ve seen them well more than a hundred times thought it was interesting when you mentioned that and it’s like, “oh yeah, Mike Gordon, the bass player, his father was Chairman of NACS a couple of decades ago. His whole chairman speech was quoting a PPfish song and of course PPfish also as PPfish Food Ice Cream and Ben & Jerry’s, their first store was at a gas station. So the links to our industry are endless if you want to draw them. So if you’re a PPfish fan, get in touch with Mike as well, in addition to all these other things. So you’ve seen a lot of PPfish shows. You have a lot of PPfish music. Is there a certain lyric or a song that inspires you that relates to all these things you’re doing in defining your concept of Choice convenience stores?

Mike Fogarty:
You know, there’s a…well, Pfish has a large catalog as some may know, it’s probably four or 500 songs. As it relates to Choice, there’s a song called Reba. It’s “bag it, tag it, sell it to the butcher in the store. And certainly that’s a more direct correlation to Choice and offering high quality products. But I think, of the better lyrics is “keep what’s important and know who’s your friend” and it’s from “Theme from The Bottom.” And to me, it’s just, s a very poignant and awesome lyric as a part of an awesome song. And so I think in general, we all want to keep what’s important and know who’s our friend and then these are certainly lyrics that resonate with me.

Mike Fogarty:
And I think in general Pfish sings a lot of metaphors and similes. It’s all…it may seem like children’s music to some, but it’s really a deeper meaning underneath it all.

Jeff Lenard :
And I forgot the the drummer opened a convenience store in Maine, essentially. So there’s all kinds of connections.

Jeff Lenard :
So if you’re in the band Pfish and you want to play a three song acoustic set at a Choice Market I think Mike would have that as well, next time you’re coming through playing Red Rocks. So with that want to thank you, Mike. The idea of Choice and what you’re doing, the technology, it really is…you have gotten out there in the press. And Google, Choice stores to learn more. The Ideas 2 Go segment is under convenience.org/ideas2Go with the number two, like Prince songs from, I believe that was 2018 we visited you guys. So a lot of cool things going on out there and I think that there’s a lot of innovation at the large stores. There’s a lot of innovation at the smaller stores. Thanks for leading it. And we look forward to hearing more of your success and talking more about your success. So thank you, Mike, for joining us today.

Mike Fogarty:
Appreciate having me. It’s been a pleasure.

Jeff Lenard :
And thank you for listening to Convenience Matters.

Convenience Matters Outro:
Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.

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