Driving into the future – Bob Espey, Parkland Corporation

Bob Espey:
As Canadians, we need to look beyond our borders and push our businesses and enterprises certainly beyond Canada.

Goldy Hyder:
Welcome to Speaking of Business, conversations with Canadian innovators, entrepreneurs, and business leaders. I’m Goldy Hyder, president and CEO of the Business Council of Canada. My guest today is Bob Espey, president and CEO of Parkland Corporation. Now, if you’re not familiar with Parkland, I am sure you’ve seen some of the thousands of service centers and convenience stores it operates across Canada and in 24 other countries under such names as On the Run, Chevron, and Ultramar. Now, as a company that is focused on energy distribution, Bob is thinking a lot about the transition to low carbon fuels.

After all, a big part of Parkland’s business is selling gas, diesel, and propane. What will the energy transition mean for Parkland? How will customers’ needs change as more people adopt electrical vehicles? What will a service station even look like 20 years from now? I’m so glad Bob’s here to walk us through it. Welcome to the podcast, Bob.

Bob Espey:
Goldy it’s great to be able to get together and have a chat.

Goldy Hyder:
Let’s talk about the Parkland story itself. It started out as a small operation in Red Deer. You now operate in 25 countries. It’s a huge success story, and it’s a huge Canadian success story. Just walk us through, how did you do that?

Bob Espey :
The Parkland team has done a great job delivering. We were fortunate that there was an opportunity in the marketplace. We were starting to see the consolidation of convenience and fuel businesses as two things happened. One was as the major oil companies started to get out of that portion of the value chain, and the other was as independents were looking for succession opportunities and were looking to monetize their businesses. We were fortunate to be publicly traded, so to have access to capital, and got into that opportunity very quickly.

First, we expanded East into Ontario and we expanded into B.C. We were able to pick up some pretty large assets that were carve outs from major oil companies that included both convenience and fuel. We also then made a small investment in the U.S. and started to see the opportunity there, a very fragmented marketplace and in some ways Canada had consolidated at a quicker rate. There the structure was different, more opportunities, and started to grow that business, and then had an opportunity to expand internationally.

All through that, we were able to take advantage of something that we developed, which was our core competency around supplying businesses in markets that are in fact hard to supply to and our focus on logistics and distribution through truck, rail, and ship and add value to these businesses. The key was we saw an opportunity. It started in Canada where we were able to take the success we had in Canada and translate that into other jurisdictions.

Goldy Hyder:
Some have suggested that you’re in a dying industry, selling gas and diesel and propane to people at thousands of service centers across the Western hemisphere. But I know you don’t see it that way. I want you to tell our listeners, how do you see Parkland evolving through this transition?

Bob Espey:
Yeah, no, look, it’s something that we think a lot about, we develop our strategy around, and we’re certainly keeping a keen eye on it. I would say one of the things that we do provide with today’s current energy system is we’re focused on providing consumers across the regions that we operate with cheap, reliable energy. We can’t forget that. The current infrastructure, the current energy that’s provided is critical to Canadians, Americans, and other folks that we service to them maintaining their lifestyle, to driving economies. First and foremost, the business that we do today is very important.

It’s still very much valued, and there is a critical need for it. Now that being said, we are cognizant that things are changing. One of the benefits that Parkland has is we’re in many jurisdictions across Canada, the U.S., down into the Caribbean, South America, Central America, and we can see that pace of change depending on the country we work in. It varies greatly. We have some markets like B.C. which are starting to transition quickly and others that really it’s not on the agenda yet. Our approach is to go to where the demand’s developing in these new and alternative energies and participate in that.

And that can be everything from the way that we service our customers through our convenience channel, to providing them with the capability to charge, but also the ability to spend more time at our sites and enjoy the amenities there. Also on the commercial side, where we’re looking at diesel, is helping those customers look at alternatives and continue to service their customers in an efficient way.

Goldy Hyder:
I’m interested in how you square the circle of what you just said, which is in some parts of the world you are moving forward with the transition and in the other parts it sounded like it’s not even started yet. How do you as a company with a purpose, a clear purpose, not one that’s geographically based, I assume, consistent across your business, how do you communicate what really is the issue of our time, which is this transition that it isn’t an on-off switch, that it is a journey and some further ahead and some are further behind? How are you managing that?

Bob Espey:
The change is different in different areas. Where we are seeing the change in the regulatory environment supporting that change, we’re leaning in. Where it isn’t, we’re continuing to provide our customers with alternatives, understanding that in some jurisdictions when we go further south, particularly south of the U.S., there are countries that their balance sheets, they don’t have the wealth that the U.S. and Canada has to put behind some of these programs, and they will transition slower. But at the same time, these countries do need energy. They do need cheap energy so that they continue to move their economies forward in a productive way.

Goldy Hyder:
Now, you did something really interesting that I wanted to talk about, that is you drove an EV from Calgary to Vancouver. I want to ask you what that experience was like.

Bob Espey:
We did that a little over a year ago now. It was an eye-opening experience. At Parkland, we have an EV that people can use, and I’ve used it quite a bit, to really start to see what the experience is like. Just to put it into context here, if I drive, it’s a Model 3, across that distance, which is about a thousand kilometers, give or take, we stopped five times to buy energy and spent roughly two and a half hours waiting for that energy to be delivered into the vehicle.

When I drive my ICE [internal combustion engine] vehicle, we do that trip and stop once for three or four minutes to buy energy. It’s really changing the way that we travel and think about buying energy as we’re traveling. What became apparent is the consumer experience is underserviced, right? You hear things like range anxiety and time to charge anxiety, and there’s an opportunity there that as we see more EVs come into the market, we can address.

Goldy Hyder:
As you mentioned, you made five stops, each between 15 to 30 minutes to recharge. Is that long charging time a problem, or is it an opportunity?

Bob Espey:
Yeah, no, I mean, we’re looking at it as an opportunity. I think on the one hand, if you talk to consumers in this area, their concerns are, can I charge my car and how long will it take? The opportunity is to have more accessible charging, but also put it in locations where it’s close to amenities. As an organization, we’re very fortunate because we have a lot of sites already that sell gasoline. They’re on major routes. They have proven traffic patterns. We’ve got convenience stores and restaurants that are co-located. And that’s what the consumer is looking for is somewhere that they can charge their vehicle.

They have a safe place where they can go sit inside and spend their 30 to 40 minutes while the vehicle is capturing some charge to enjoy a relaxing surrounding. There’s a big opportunity that we see developing, and we’re quite fortunate to be in B.C. where we are seeing higher adoption than other parts of the country where we can start to experiment in trial and see how the consumer interfaces with the charging and with our convenience sites.

Goldy Hyder:
One of the things you did, not just relying on your own wonderful team that I’m sure you have, is you put out an international competition to help design a service station of the future, if we want to call it that. It was supposed to be for just EV charging. That’s all the station was to offer was EV charging. I want you to tell us about the winning design.

Bob Espey:
Through Electrical Autonomy Canada sponsor a competition to design the charging station of the future. It was a really interesting exercise because it involved architects from around the world, who were rethinking the experience of buying energy and in this case charging and what new amenities would look like.

The winning design really incorporated a mix of, again, of time where you can charge the vehicle with different amenities, whether that’s food, areas to relax, areas for recreation, for children to play. And that really helped us start to think through, well, what could this experience potentially look like and what are some of the aspects of that that we can incorporate into our future sites as we roll those out.

Goldy Hyder:
You did an acquisition recently perhaps on strategy with what you’ve just described, but I want you to take me through it. We’re big customers of this organization, but you bought M&M Meat Shops. Connect the dots here. How does that fit into me getting my car charged?

Bob Espey:
I do need to correct you on that. It’s M&M Food Market. We did buy the business and the business look in the last few years has been completely repositioned from frozen meat to frozen meals that are restaurant quality. The business does really serve a unique niche in the Canadian market where people do want prepared food that’s restaurant quality, but they want to eat it and prepare it at home. The brand is one of the most recognized brands in Canada. There’s three areas where we see the opportunity of that business within Parkland.

First is the frozen food offer is something that we saw that got very popular during the pandemic and having a good frozen food offer and frozen food brand within our sites we believe is additive to our offer and consumers are looking for that. The second thing is I talked about loyalty. M&M has over two million active loyalty participants, and Parkland has a loyalty plan called Journey. We see the opportunity to combine those and create really a leading loyalty program in Canada. The opportunity there to cross-sell product is immense. The third thing is the M&M team has incredible capability around food.

One of the opportunities in Canada, an underserviced area, is fresh food and convenience. We’ve seen that as a segment in the U.S. take off. And in Canada, that’s an underserved segment. The opportunity to take M&M and start to port it into a fresh offer that we can offer within our convenience stores, we think there’s a great opportunity there. Again, it goes back to brand and brand recognition. We’ve done a lot of consumer work that suggests that the consumer would appreciate that and would look forward to dining at an M&M fresh type location.

Goldy Hyder:
Well, look, we’ll come back to the business and I want to come back to the business particularly in an evolving world and how to make businesses in Canada competitive. We’ll end with that, but I want to put the meat in the sandwich if I can by talking about you. I think what you’ve just said about your business is a little bit of a reflection of you. I can’t just peg you into a box somewhere. You’re an engineer. You were in the military, I believe in the Navy, and then you went on to do an MBA. It’s an interesting, diversified experience that you’ve had. How has that helped you be a leader today?

Bob Espey:
I’m fortunate that I have done a number of things throughout my career. What that’s helped do is build some good breadth in my experience set. If I look back to my early part of my career in the Navy, which was a great place to start, a great place to get some really good leadership experience at an early age, really got taught the value of leading through motivation. The great thing about the military, it’s a bit of a Petri dish where you can look at different leadership styles and try different things and really get good feedback. I really value that.

Goldy Hyder:
Tell me more about that. What do you mean by that?

Bob Espey:
Well, as a trainee particularly, you bounce around between different units. In this case, I was in the Navy, so between different ships. You can experience different leadership styles like real time.

Goldy Hyder:
Whose style did you like?

Bob Espey:
Well, look, I’m big into transparency and being open and honest. Some people would say I overshare with the team, but it’s all about building trust and motivating people to get to a better place. I saw that in spades. I saw really good leadership in the Canadian military, and I’ve been able to take that with me throughout my career. I did leave the Navy after an eight year stint and went and did an MBA. I was intrigued by business, but knew nothing about it. I’d worked in the military and came from a family of teachers. It was a great way to develop breadth and understand some of the principles of business.

And then for about 10 years became a consultant after that and was really fortunate to spend some time in the U.K., working in and around London, and was able to work with some big multinationals and really experience … the U.K. is a really unique place because it really is a… London, in particular, is a global city. As Canadians, we don’t necessarily see that. We tend to have lots of businesses that are focused domestically. This really expanded my horizons and taught me to understand the importance of when people there talk about business, they talk about global business.

They don’t talk about their backyard. Again, that’s something that I’ve been fortunate to experience in these organizations. Something that I took forward is as Canadians, we need to look beyond our borders and push our businesses and enterprises certainly beyond Canada.

Goldy Hyder:
Now, as you know, many of our listeners are MBA students themselves. They’re looking to go on to be leaders like you. One of the things that’s going on now is obviously a lot of emphasis on team for all the right reasons, and you’re certainly a big believer in that, but you’ve also acquired a lot of businesses, not just large businesses like M&M. You’ve acquired a lot of smaller businesses as well. What I hear from CEOs is the importance of culture. How is it that you’re able to integrate these new businesses, large and small and everything in between, and get the culture right?

Bob Espey:
It’s interesting because I like to say we’re a 50 year old company, yet 80% of our employees joined us within the last four to five years. And that’s been mostly through inorganic growth, so acquiring people. On the one hand, that’s a real advantage. You’re bringing diverse perspectives, diverse cultures, diverse nationalities. The strength of that is incredible in terms of bringing the best to the business. The question is how do you harness that? There are some core things we’ve kept. First and foremost is we have a set of values that permeate the business. And look, these values are pretty much aligned with the types of businesses we buy.

Safety is big in our industry, respect, integrity, and community. It’s interesting, I’ll talk a bit about community because we do business in hundreds, if not thousands of communities across our jurisdictions. It’s really important that our teams who are parts of those communities can connect locally. That’s core, right, is that we still want the local connection to the customer in these markets. The other part is our behavior. As the business grew, there’s an entrepreneurial piece that… Look, every business that grows wants to maintain some degree of entrepreneurialism. But how do you codify that and how do you create a set of behaviors?

We came up with the team. I mean, it was great, some of the early work we did with our team around bold behaviors. We like to be bold as a business. We like ambitious goals, and around that we developed four key behaviors. One is build. I like to build great teams. The second one is “I own my mandate,” and that’s a key one. It goes back to being entrepreneurial. It’s all about when I’m given a mandate, I own it and I deliver against it. The third one is lead. I talked about leadership in the beginning. I think good teams are all about leaders that bring people together. I always say at Parkland, the success of the business is not due to one person.

It’s really when we harness the greater team that it’s incredibly powerful and incredibly effective. We really deliberately try and create a culture. You’ve probably heard the expression team of teams where people can come together, work on problems, solve them, and move on. And that really starts with the leadership facilitating that. And then the final thing is delivering results. As we all know in business, hitting the numbers is a ticket to the game. We need to deliver for our shareholders and our other stakeholders, and ultimately that’s the key enabler for the success of the business.

Those four principles are something that we talk a lot about. We recognize one another when we see those behaviors demonstrated. It’s really a way to make sure that we understand the culture that we want to permeate, but also the behaviors that reinforce that culture.

Goldy Hyder:
Well, I hope the kids are listening. That’s a lot of nuggets in there that I think would serve them well in life, not just as business leaders. You mentioned that maybe as much as 80% of your staff are here within the last five years. Of course, within the last five years, we spent two of it in COVID. I’m wondering how the pandemic affected your business.

Bob Espey:
I was just talking to someone this morning about that. I think we all learned a lot through the pandemic. We learned a lot about the countries we live in, the medical systems that we have, our teams and how we needed to rely on one another. There were just a ton of learnings. We learned about the resilience of our businesses, planning a business or making sure that the business can withstand a true black swan event. There were many learnings. When you peel that apart, I do think from a business perspective, we did learn and we did understand how do we stress test a business or make sure that our business is prepared for unplanned events.

We, like every other business, does a risk assessment every year. I tell you, a global pandemic was not on the risk matrix when we finished it just a couple months before. The key thing is that you understand and make sure that you have resilience in the business that’s in your balance sheet, in your culture, and can react quickly when these things happen. The key learning is just making sure that you design the business and the operating model so that it can withstand shocks and not take the business down.

Goldy Hyder:
Now, I want to take some of the things you said about your approach in business and see if we can apply it to Canada. It’s one of the subjects we like to discuss on this podcast is how do we seize this moment here in Canada to do as you’ve suggested, be entrepreneurial, be bold, be ambitious, to own our mandate, if you will, to lead and to deliver results, because the world’s changing. It’s changing fast. What advice would you have to our political leaders and to Canadians generally who may or may not think about this enough in terms of how Canada can take this moment and really set a path for growth?

Bob Espey:
I’m always very bullish on Canada as a country. I think we’ve got some incredible resources at our disposal, and that’s everything from a legal framework that protects people’s property rights, which is something that I think we don’t fully appreciate. Our diversity of our population I think is a key strength, and harnessing that in a productive way is a key competitive factor that we have that many countries don’t have. I would also say that we’re fortunately endowed with incredible natural resources that really provide a strong backbone to our economy and fund a lot of the future. On top of that, we’ve got great education.

We’ve got all the ingredients to be the most successful country in the world. The key thing is that we allow it to kind of happen. Let’s not stand in its way. Let’s provide an environment that encourages people to get together and innovate, provide them with the capital to do that, and not over plan it. I think a lot of organizations, whether they’re business or public, a lot of this happens organically and we need to allow the people of Canada to come together to innovate and encourage that with the right incentives.

Goldy Hyder:
All right, you didn’t say it and you should run for a political life, but what you really mean is we may be overregulated. Is that what you’re saying?

Bob Espey:
Look, it’s like running a business, right? I always say you don’t want our defencemen standing in front of the net, like our opponent’s net. You do need defencemen in every organization to make sure that the offence stays in check, but you don’t want them standing in front of them. When that happens, and look, it does happen occasionally in every organization, you get people that are de-motivated and they leave.

The key is to get that right and understand that every country has both. We’ve got entrepreneurs. We’ve got people that want to be out front and drive change, and other people that want to be part of that and want to protect those people to make sure they don’t get into trouble. But at the same time, we don’t want to prevent them from winning. I think that’s the one of the risks that we run in Canada is that we’re trying to direct it too much and that’s not going to work.

Goldy Hyder:
Are you suggesting that we don’t maybe need to be deliberate and intentional in terms of what our economic policy is, or just kind of leave it to the markets? What are you saying?

Bob Espey:
I think the policy has to reinforce an environment where people can create and move forward. There is a lot of regulation that enables that. But at the same time, it can’t be so directive that it stifles it. To your point, we need the regulation to protect that, but not get in the way of it.

Goldy Hyder:
Enable it, as you said. You’re operating in a lot of other countries. How are we comparing? How are we competing? I know you said you’re bullish on Canada, but where can we do better?

Bob Espey:
Well, I am bullish on Canada. I think we’ve got great people, great education, great skills. We’re not an exporter. We’re a consolidator of businesses, so we buy businesses that run very locally. We’re not moving product across borders. We’re really just moving our capital into markets where we can get a good return on that. We operate in many jurisdictions in the U.S. I would say in some ways they have the same challenges. I think it depends on the state. They’ve got state regulations. We have provincial regulations. It’d be nice to see some of that stuff loosen up so that there’s less friction between various jurisdictions to do business.

We do move a lot of product across borders. I would say as you get further south in some of the markets that we’re in, in some of the emerging economies, this is where I think we’re very fortunate, like I say, around protection of rights and property that we don’t necessarily see in those markets. We do do business there, we do it carefully, but it does make you appreciate what we do have in Canada and the U.S. in terms of protections.

Goldy Hyder:
Let me ask because you just triggered it in my mind here, that you do cross a lot of interprovincial boundaries. Does the issue of interprovincial trade barriers inside this country affect your business?

Bob Espey:
It does. It does create a lot of friction. Particularly in the business we’re in of moving energy, and a lot of it moves by truck or by rail, there are different taxes, now different carbon environments that we need to comply with. And that creates extra costs, costs that ultimately flow through to the consumer. I think as a country, if we could eliminate some of that, it would be better for our productivity.

Goldy Hyder:
We talk about these interprovincial trade barriers and they’re way up here for the average person. Bring it down to the customer. How does the fact that you have to manage that impact the customer in some way, shape or form, or does it?

Bob Espey:
I’d say the consumer, it’s kind of invisible, but where they would see it is when you look, and I’ll take Alberta and B.C. because they’re close by here, the price per litre of product is very different. It’s much more expensive. A litre of gasoline in Calgary if you compare it to Vancouver, it’s 50, 60 cents more a litre. A lot of that’s just regulations that are driving that. Well, for each of those regulations, you need systems and processes that manage them. We need to be remitting taxes in different jurisdictions. That creates a lot of overhead in the business that quite frankly is we have to ask, is that really adding value to the consumer?

Goldy Hyder:
Well, let’s be clear, where is that overhead being passed onto is my point. The customer is paying at the end of the day.

Bob Espey:
Yeah, no, ultimately it does. It does come in the form of lower productivity ultimately, which is one of the big metrics of a country.

Goldy Hyder:
Let’s look forward, what kind of a Canada do you think we can be even a decade from now if we do some of the things that you’ve talked about?

Bob Espey:
Again, I do go back to the fundamentals in Canada are awesome. When I look at education people, healthcare, where we are, we don’t have any big threats unlike some other countries where you’re in a rough neighborhood. We’re in a pretty gentle neighborhood. And then again, I’m very bullish on natural resources. I do think energy transition is going to drive a lot of demand for the types of natural resources that we have.

It’s just making sure that in some ways we use that wealth thoughtfully for the future, that we do enable the economy and the country to continue to diversify and develop new ways of wealth that aren’t as focused on our natural resources. They’re very important, but we need to make sure that we have a thoughtful approach. Again, let the market do it. We have a lot of smart people and they’ll figure it out.

Goldy Hyder:
I’m going to sneak in one more question because I think it is central to your business, but also to our country at this time when it comes to the demand on energy, the demand on food, the demand on critical minerals. The infrastructure, do we have the infrastructure to move these products in the country, in the continent, and around the world?

Bob Espey:
Yeah. I mean, look, I think we all know the answer to that is it’s difficult. I think it depends on the commodity, but certainly in Canada. Look, this isn’t just in Canada, it’s in the U.S. and other jurisdictions. It is hard to put infrastructure in place that spans across different provinces or different jurisdictions. We need to make sure that that backbone is in place so that we don’t squander that wealth.

Goldy Hyder:
Bob, it’s been great having you on. I want to wish you and the company and everybody the very best of 2023. I’ve been telling everybody, may it just be kind to us all. I think we all deserve a little kindness right now.

Bob Espey:
Yeah, look, great and really appreciate the opportunity to chat, Goldy, and really appreciate the leadership that you provide and your organization.

Goldy Hyder:
Thank you, my friend. We’ll see you soon.

Bob Espey:
Great, thanks. Take care.

Goldy Hyder:
Bob Espey is president and CEO of Parkland Corporation. If you’ve been enjoying our conversations with innovators, leaders, and entrepreneurs, please give us a review wherever you get your podcasts. And if you’re not already a subscriber, why not sign up to receive our monthly episodes? Search for Speaking of Business wherever you get your podcast, or go to our website at thebusinesscouncil.ca. Yes, it’s thebusinesscouncil.ca. Until next time, I’m Goldy Hyder. Thanks for joining us.