October 11, 2010 | last updated March 25, 2012 4:36 am

Shop Talk: Q&A with Joseph Petrowski, Cumberland Farms

Photo/Christina H. Davis
Joseph Petrowski, CEO, Cumberland Farms/Gulf Oil.

You'll have to forgive Joseph Petrowski if he seems to have split personalities. That's because as CEO of Cumberland Farms Group he not only oversees a growing chain of convenience stores under the same name, but also the Gulf Oil gas business. The two-pronged business consolidated its headquarters in Framingham in 2009 and it's been full-speed growth on both sides of the house. The business got its start in1962 when the Haseota family opened their very first convenience store in the Northeast. Today, the business is still owned by the Haseotes, but the size has grown tremendously – there are more than 600 Cumberland Farms locations. Here, Petrowski talks about how both sides of the business have fared in the economy as well as how he made the transition from the commodity business at Louis Dreyfus to the convenience store business.

>> What circumstances led you to join Cumberland Farms/Gulf Oil?

I had been at Louis Dreyfus for 22 years. I came to know Cumberland Farms, besides growing up in this area, when they put up a third of Gulf Oil for sale as part of a reorganization in the 90s. Louis Dreyfus bid on it, although we weren't the winning bidder. During the bidding process I had gotten to know the Haseotes, and they asked me to serve on the board. Eventually I became president and CEO of Gulf Oil, and I became CEO of the entire group in 2008.

>> It must have been a shift for you to move from Louis Dreyfus over to the gas and convenience store business.

It is different, but when I ran Louis Dreyfus, even though I never ran a retail business, most of my franchisees were running retail businesses. So I couldn't avoid looking at their businesses and their financials. Also, gasoline is merchandise. And most of the gasoline is merchandised at convenience store locations. Of the 172,000 gas stations in the U.S., 35 percent are two-bay service stations, while 65 percent are what you would deem a convenience store food retailer.

>> How's the gas side of the business?

Demand is flat. Our miles driven, year over year, is absolutely flat. Normally you would expect 1 to 2 percent growth, but I think the weak economy has kept that down. But the bigger question isn't this year versus last year — it's where will demand be in five to seven years.

>> How closely are you watching GM's electric car, the Chevy Volt?

Quite close. We firmly believe one of the challenges of the gasoline side of the house is that in seven to 10 years consumption of traditional gasoline will be down 5 percent at best, and could be down as much as 20 percent. And that will obviously be determined by a host of factors: the price of oil, whether the current efficiency standards are enforced and implemented, repealed or enhanced; and where we're going with the electric car as well as compressed natural gas. If you're optimistic and pro gasoline — and we're agnostic — demand is likely to be 5 percent down. But we've heard that some of the major oil companies like Exxon Mobil and Shell are forecasting a 10-year decline in the U.S. of 20 percent.

>> How is the convenience store side of the business?

Our business has been very good the last few years. We like to think that we're the market leader in New England and we are really. We have major plans to upgrade all our stores. I think you'll see in the coming year, 50 or 60 of our stores completely renovated to a new format. While our business is very strong, we do worry about five to seven years down the line because we still sell a lot of tobacco products. We realize that trend is not a positive trend. For us to be the convenience store of the next decade of the 21st century, we're going to have to have to be a food-centric operation.

>> What does food centric mean?

It means that when you come in for a couple of cups of coffee in the morning, you're going to get fresh pastries, you're going to get an egg sandwich, you're going to be able to satisfy your breakfast needs. If you come in for lunch, we're going to have a lunch offering — fresh salads, sandwiches.

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>> What do you mean that you're agnostic when it comes to fuel?

The mind set of Gulf is that we're here to serve the motoring public in transportation fuel. We're not doing any exploration or production, so I have no pro-oil bias. Nor do we have an oil refinery. We do have a bias in the following way: We want clean and cheap energy. We think inexpensive energy is probably the best for the nation. We don't want $4-oil or the electric equivalent of that. The irony is that when gas prices go high, sometimes the frustration is taken out on people who own gas stations. We believe that high energy costs are a regressive form of taxation and it hurts workers and the demographics of the people who shop our stores.

>> You mentioned compressed natural gas, yet that doesn't get a lot of attention in the media. Do you think that energy source is being overlooked?

I think natural gas would be a lot better. Frankly with my background as a trader, I think having having choices is always preferred. Any ecosystem - whether it's human beings, plants or the transportation sector - benefits from diversity. We don' t know what's going to happen, but if I were trying to nudge the 250 million vehicles in the U.S., I would divide it among electric, natural gas and petroleum. Petroleum's not going to go away in our lifetime. But if we can just stop the growth or take 2 to 3 million barrels a day off U.S. balance sheet, we would do wonders for the price and for the political balance between OPEC and the consuming nations. But I don't think natural gas has gotten the attention it deserves. Electric seems to have been sexier.

>> In a way you're trying to compete against the Starbucks and Dunkin' Donuts of the world, aren't you?

Absolutely. We think we can compete because we have certainly great locations and we have two brands names that are recognizable. We want people to think of convenience stores as places where they can satisfy not just their snack cravings, but where they can also get wholesome, healthy food and it will taste good.

>> What's the toughest management lesson you've had to learn?

Probably the toughest lesson is when to back off and when to give people that you've hired enough discretion to do what they need to do. Most people who love their businesses, and who think they know everything, have a tendency to want to do everything. But the fact is a leader can't make every decision - you end up winning the battle but losing the war. The only way to create a great organization is to hire great people, trust them and as a coach, wade in. If I see something that is absolutely critical going in the wrong direction, I have no inhibitions. But if I see somebody that did something 90 percent optimal, I'd be careful about weighing in and trying to make every decision.

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