What’s up guys! It’s Jason here and welcome to my YouTube channel, Company Insight.
Let’s start today’s video with a trivia game question! What do Billy the Kid,
Poncho Villa, and the Hilton Hotel have in common?
Times up! The answer - they all have historical ties to
the border city in West Texas known as El Paso.
Added to the historical mix associated with El Paso aka the City of the Sun,
and long before Marty Robbins crooned about love gone wrong with wicked Feleena,
a major commercial and business brand was being created with its humble beginnings in El Paso.
This brand, not etched on Texas livestock, was the ushering-in of a convenience store market company
designed as a "one-stop-shop" for consumers that has gone to take over the world. The brand?
Circle K...pardner. Not much is known about this company compared to say,
7-11, especially if you’re on the east coast. In this video, I’ll run you through who started
Circle K with the full Rise and Fall and Rise Again of this iconic convenience store.
By the end, you’ll be a Circle K expert and you’ll know exactly what happened to Circle K.
I’ve condensed 70 years of history into just 10 minutes here for you!
But first, I just need a quick favor from you. If you wouldn’t mind just hitting that LIKE button
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Thanks for doing that and now let us continue on with, Where did Circle K Come From.
History of Circle K Yup, in 1951, three food stores were bought
by a visionary entrepreneur by the name of Fred Hervy. These existing food stores were known as
Kay's food stores in this border town of Far West Texas. Hervey would move on to change the names
of these existing food stores and rename them as Circle K Food Stores, Inc. The era of convenience
shopping for customers in a hurry began. Six years later, the successful convenience
business plan of Circle K Food Stores had rocketed and had expanded their commercial outreach.
Additional store openings spilled over state borders as Circle K Food Stores
branched out into the neighboring states of New Mexico and on into Arizona.
In the beginning years of the '60s, business success reflected a company that enjoyed
robust growth by doubling in size. In addition to expanding the number of stores available for its
customers, Circle K relocated its headquarters during this time. They moved from Sun City (El
Paso) to Sun Valley or Phoenix, Arizona. Also, building upon their success Circle K, in 1963
went public by offering 96,000 shares of common stock. From that initial decision to go public,
the stock of this successful convenience store operation has split eight times.
The First Convenience Store to Offer Gas In 1964 Circle K hit a major milestone by
opening its 100th store. Not resting or being satisfied with past successes, the
aggressive board of directors began to expand the convenience food items offered to their customers.
Rather than just being a food store providing for the food and snacking needs of their customers,
they expanded their offerings to other stocked products and ventured into non-food activities.
As a full-service convenience store, Circle K, in the mid-'60s, offered its
mobile customers the opportunity to zip in and out of their food store by offering gasoline.
This cutting-edge approach to its "in a hurry" customers was a welcome combination of quick
fuel for the body (no pun intended!) and quick fuel for the car. Circle K was the
first convenience store to combine the corner shop with filling up your gas tank at the same time!
Along with this choice of products offered, they made a corresponding change in their
corporate name. The name of Circle K food stores was shortened to simply Circle K.
During the late '60s, the United States experienced and witnessed an
era of self-reflection. The latter part of the decade saw protests,
involvement in an unpopular war, and placed under the microscope of self-discovery. Circle K also
reflected this self-discovery dynamic and began to re-invest in themselves. During this time,
they made sweeping changes in their operations by investing in technology and computerizing
their day-to-day store operations.� In-House Products Followed by Outsourcing
Also, in 1968, a food chemist was recruited to develop food products for the company.
In the food laboratory, the experimentation led to the creation of the Hi Spark’l line
and Circle K Freezes. These food products were developed and tested in the food division of
Circle K known as the Polar Bear unit. Consumer products such as the fruit punches labeled as
Del Sol along with Just Orange Juice were all developed in the 1970s and maintained their
popularity through the middle of the '80s. The company also developed popular pre-made and
packaged sandwiches for in-store sales. Also, to ice the change, Circle K began testing their
own manufacturing of ice and branded the ice under the name of Crystal Clear Circle K.
Today, however, the trend and evolution experienced in convenience stores are
similar to the business strategy of out-sourcing. Consequently, Circle K entered into partnerships
with other brand names to sell popular snacks and foods. Such an example includes the offering
of Dunkin’ Donuts in the various stores. Domestic Expansion and Overseas Markets
In 1972, the company was listening to the words of Horace Greely. They had gone west and were
operating successfully by selling convenience in the western states of Arizona, Colorado,
California, Idaho, Montana, Oregon, New Mexico, and Texas. By the time year 1975 rolled around,
there were more than 1,000 Circle K stores located in the continental United States.
Motoring into the '70s, John Gillet was named as the president of Circle K. While he sat in
the executive chair, Circle K began to look beyond the boundaries of operations in the United States.
In 1972, an intrigued Japanese businessman, representing the Uny Company, arrived upon the
desert terrain of Phoenix, Az. His purpose was to study the convenience store model. He came,
he saw, and entered into a foreign licensing contract with Circle K in Phoenix.
This historical foreign licensing agreement of 1979 was the first of its kind for Circle K
and in 1979 Circle K went international by establishing Circle K stores in Japan.
A company that started in the City of the Sun was now operating successfully in the land known as
the Rising Sun. Pretty incredible right? Bolstered by this successful international
expansion of Circle K, additional countries were added to the international flavor of the company.
In the 1980s, Europe, Australia, and Asia joined the Circle K family.
Circle K opened its first Indonesia store in Jakarta in 1986 and then continued to
expand all throughout the region. Interested parties would read on the company's annual
report a presence in 13 overseas countries. As the company moved into the '80s, Circle K
took up the mantle of aggressively expanding their convenience store impact on the country's
landscape. Under the visionary leadership of CEO and chair of the board, Karl Eller, and along
with his business associate, Carl H. Linder, a major growth strategy was implemented. One of the
previous leadership positions for Eller was the founding of Combined Communications Corporation.
Eller also served in the movie production business as the president of Columbia Pictures. Eller's
resume reflected keen leadership acumen with the powerful ability to broker deals and identify and
seize upon golden business opportunities. Hyper Expansion and Growth
Together, this dynamic business duo generated reflective sales graphs that skyrocketed
up and off the charts. This was accomplished by almost tripling the number of Circle K
stores through the purchase of failing stores run by competitors. Like a game
of Monopoly, real life in the convenience marketplace in the 1980s was aggressive
and ruthless. Victims of the competition war included the buying out of "players" such as
Utote M, Little General stores, Day-N-Nite, Shop & Go, 7-Eleven, and Charter Oil. Geographically,
the "game board" showed significant expansion into the Southern and Northwest areas of the
country with less expansion in the East and Midwest and Internationally.
During the years of 1983 to 1990, the success of Circle K climbed upwards as they moved into
the enviable number two position of convenience store success and they continued to try harder.
This clearly indicated to the management team, stakeholders, and employees that people were
willing to pay for convenience, Eller led the company to an annual revenue increase of $747
million to over $3 billion annually. Circle K had established itself as the largest convenience
store chain owned by the public that boasted 4,631 stores in 32 states with an expanded
international market of over 1,300 stores in 13 separate foreign countries.
In that same year, Circle K decided upon a facelift and revamped the imagery of
their locations. The stores would now be splashed with orange, purple, and red.
This striking blend of vibrant colors is the same look today that was created in 1983.
Circle K was experiencing profitability and in 1984, the balance sheet reflected this giant
convenience store company realized over $1 billion in sales. What to do with that money?
Well, spend it on one's self, of course! So, in 1985, Circle K built a new convenience
store in Phoenix. Oh yeah, as a nice added touch, they also attached a new four-story
stylish headquarters to the new store location.� Partnering with an Oil Company and Bankruptcy
Based on the 70's thirst for oil and being subjected to the unpredictable whims of
those providing nations a new phenomenon was experienced by motorists in the United States.
Due to the unrest in the Middle East, the oil began to take on a new and critical dynamic.
And so, meet the "gas line." It seems, with the advent of this experience for American drivers
and to minimize price spikes, Circle K decided to partner directly with a crude oil supplier.
The corporation that they partnered with was Nucorp and this occurred in September of 1980.
In partnering with Nucorp Energy, the terms of the business agreement reflected the purchase of
13.2% of Nucorp Energy's holdings. The agreement was entered into in 1981 on February the 23rd. In
fact, this was such a radical venture that in an issue of the Phoenix Business Journal, the number
one area of new business for this company listed was oil and gas exploration and development.
The process at this time reflected a partnership that had already initiated 62
wells with 7 of those wells producing oil. According to the terms of the agreement,
90% of the wells were owned by Nucorp with the remaining 10% of the wells owned by Circle K.
As the saying goes, "stuff happens" and for Circle K there were no exceptions. The partnership
went south when the partner, NuCorps filed for bankruptcy. This financial action sought by Nucorp
was triggered when a lawsuit was brought against this petroleum company. The lawsuit swirled like
a Texas tornado as stakeholders questioned the integrity of the financial accounting practices
of Nucorp and, as a partner, Circle K. Circle K would proceed to sell off the NuCorp
stock and end their business relationship with NuCorp. The legal action taken against
Circle K and NuCorp was resolved in 1988 and Circle K was absolved of any wrong doing.
Also swirling around the precious commodity of gasoline found Circle K, in 1988, going to war
in Alabama…a gas war that is. The igniting of this war occurred when Circle K reduced the
cost of a gallon of gasoline by seven cents. Of course, other retailers of gasoline didn't take
too kindly to this action and threatened legal action against this Phoenix-based corporation
by claiming Circle K violated Alabama's Motor Fuel Marketing Act. Circle K relented and increased
their gasoline prices. Looking to win the public relations war, Circle K indicated their commitment
to customer convenience and offering products, including gasoline, at the best possible price
without selling at a loss to the company. Similar to the peaks and valleys of the El
Paso terrain, the economy took on a parallel reflection as the economy in the United States
began to trend downward. In May of 1990, Circle K took the advantage of shelter under Chapter 11.
The bankruptcy was in part due to the economy and part due to their involved lawsuit with Nucorp.
Judgment in the case required Circle K to write off $33 million as part of the settlement.
Eller resigned his position as CEO and many locations were shuttered because
of underperformance. Two years later, Circle K Corp. filed for Chapter 11 reorganization
and emerged in 1993 with a new owner-investor. It has since changed hands a few more times. In
1993 Circle K was bought by an international investment group known as Investcorp.
Circle K Today And that brings us to today.
The business journey of Circle K has been a winding geographical and financial road
starting in El Paso, TX, and has traveled across state and international boundaries.
As of today, Circle K remains a private company that is home-based in Tempe, Az.
They are part of a company family by the name of Alimentation Couche-Tard Inc. since 2003.
This Canadian parent company owns more than 13,000 convenience stores across North America,
Europe, Japan, China, and Indonesia. For Circle K, El Paso to Paris to Jakarta
certainly has been an exciting and adventurous journey!
Fortunately, as long as customers demand and enjoy the convenience of "one-stop" shopping to
purchase fuel for their cars, snacks for their cravings, lottery tickets for their dreams,
and a host of life essentials, it seems that there will always be a niche for convenience stores.
So with that said, thank you so much for watching my video as this is a brand new
YouTube channel I started this year. There was a significant amount of research and production
that went into making this video possible, so if you wouldn’t mind giving the video a LIKE
and leaving a comment in the YouTube section below, it would really help out a lot.
Have you been to a Circle K before? Did you learn anything new from this video? Be sure to check out
some of my other videos, like the Rise and Fall of Suzuki Motors and the Rise and Fall of New York.
If you’re a foodie, you’ll love my video on Five Guys Burger and Why They’re So Successful.
Thank you again for watching and stay tuned for another episode of Company Insight next week.