How the Haslams grew Pilot Flying J travel centers into a business empire
To say that James Arthur Haslam II loves football is a little like saying Mount Everest is a big hill. Indeed, for most of his young adult life, all Haslam did was live and breathe football 24/7.
Haslam was born on December 13, 1930, in Detroit, MI, into the heart of the Great Depression. He recently recalled that football simply became a way of life for him. His family wound up living in Florida, where he became a standout on the St. Petersburg High School team. He eventually got recruited to play offensive lineman for the University of Tennessee in 1948, going on to win a national championship with that school in 1951.
After a stint in the U.S. Army, which included several months in Korea following the 1953 armistice that ended the Korean War, Haslam returned to his native Tennessee and quickly received a head coaching job offer for the South Pittsburg High School football team.
A former national college champion got a chance to begin building his own coaching career in the sport he loved. What could be better? Except there was a catch, Haslam explained—a catch that permanently changed his life’s trajectory.
“They offered me the job in February [of 1956], but they said they wouldn’t start paying me until the football season began that fall,” he said. “I had a one-year-old son at the time, so I said no to that.” Instead, Haslam joined LaFollette, TN-based Fleet Oil Company, and after about a year, he took over as head of the firm’s new Sail Oil chain of filling stations.
Yet the desire to truly be his own boss ran deep in Haslam, so he left Sail Oil to start his own company, which he named Pilot Oil Corp., on October 9, 1958. He purchased his firm’s first filling station—with just four fuel pumps—in Gate City, VA, for $6,000; the station also sold cigarettes and soft drinks.
Over the course of the next six decades, that tiny filling station would eventually grow into the Pilot Flying J truck stop network. But we’re getting ahead of ourselves here.
Back in the late ’50s, a three-year non-compete agreement with his former employer kept Pilot out of Haslam’s native Tennessee, so he focused on building his company’s filling station network throughout Virginia and Kentucky. He spent days at a time driving around cities in both states analyzing traffic patterns, trying to divine the optimal spot for new filling station locations.
By 1965, after growing Pilot’s network to 12 stations, Haslam sold a 50% stake in the company to Marathon Oil, gaining a consistent fuel supply and a $4 million loan for further expansion, an effort that included adding convenience stores to the filling station locations. Later, in 1988, he bought out Marathon’s share in his company to return Pilot to his sole control.
It was in the 1980s that providing diesel fuel to truckers became a core piece of Pilot’s business, Haslam said. He’d been visiting with a friend from his college days, Ken Pritchard, who was operating a “travel center” in Slidell, LA, to serve commercial trucks. That facility did a nice piece of business, so Haslam opened a similarly styled facility under the Pilot name in Corbin, KY, in 1981, adding Pilot’s convenience store know-how to the mix.
“We lucked out in a way,” Haslam recalled. “We found we got a lot of business by putting in diesel pumps. So we decided to build a ‘coast-to-coast’ network of travel centers, largely by acquiring other truck stops.”
The first big move in that direction came in 1994, when Pilot acquired 11 Pro Stop stations, making Pilot the nation’s second largest truck stop chain.
By 1995, Pilot was operating over 80 travel centers in 33 states and 51 convenience stores in Tennessee and Virginia, and it employed over 4,000 people. That year, Haslam became chairman while his eldest son, Jimmy, moved up to CEO, a title Jimmy Haslam still retains today, adding in ownership of the NFL Cleveland Browns professional football team for good measure.
Meanwhile, Haslam’s other son, Bill, stepped up to become Pilot’s president in the late ’90s. Today, however, Bill Haslam has a very different job, and that is as governor of Tennessee.
It’s interesting to note that Haslam’s granddaughter, Whitney Haslam-Johnson, the daughter of CEO Jimmy Haslam, became the company’s “chief experience officer” back in May. That brings a third generation of the Haslam family (a family with a net worth estimated at $6 billion in total) into its truck stop business.
“Trucking moves the U.S. economy; without trucks, where would you be?” Haslam said in terms of explaining why his company shifted its focus almost entirely to the truck stop industry back in the ’80s. “We think we’re a vital part of a vibrant industry, and we really went into it right as it became deregulated, right when lots of new [motor] carriers entered the business.”
In 2001, Pilot experienced a moment of déjà vu, partnering with Marathon-Ashland—a refinery division of Marathon Oil, later spun off in 2011—to form Pilot Travel Centers LLC. Two years later, Pilot bought 60 locations from Williams’ Travel Centers for $189 million; five years after that, it repeated history yet again as Pilot bought out Marathon’s ownership stake for a cool $700 million, then in turn selling a 47.5% stake to CVC Investments.
Finally, in 2010, Pilot merged with bankrupt truck stop chain Flying J to form Pilot Flying J—creating a company that today operates 750 locations in 43 states and six Canadian provinces, employs more than 26,000, sells over 7 billion gallons of fuel annually, and serves more than 1.3 million “guests” per day at its far-flung facilities.
“Trucking is still made up of mostly small businesses. It’s not dominated by just a few large companies,” Haslam pointed out. “The people running them are hard-working and successful, and we love serving them.”
Despite his company’s obvious success—sales topped $29.2 billion in 2016 and Pilot Flying J is ranked 14th on the Forbes list of Top 25 privately owned companies—Haslam said that a business needs two critical ingredients for successful growth. And, for a time, he lacked one of them.
“You need financial capital and ‘intelligence capital’ to really grow successfully, and the mistake I made for a time is that I acquired too much money to build. The biggest challenge is finding good people,” he explained.
“We’ve survived a lot of tough situations—the [Arab] oil embargo [of 1973], tire shortages, all sorts of things—and I learned that to be really successful long term means putting the right people in the right places, training them well, and giving them a game plan for success,” Haslam added. “This isn’t something we do for three hours on a Saturday afternoon; it’s something we need to do 24/7.”
To help set the overall philosophy guiding Pilot Flying J, he still leans on the football experience gained long ago on the college gridiron though he readily admits he’s got “a great team of executives” now in place to run the day-to-day business.
“It’s all about putting together a game plan and then sticking with it; staying the course long term no matter what happens in the short term,” Haslam stressed. “The economy goes up and down, but you can’t run a business just based on one bad week or one bad month.”
When it comes to the specifics of truck stop operations, Haslam reiterates several lessons learned over the nearly 60 years he’s spent in the industry:
• “To be successful in this business, you have to like people and especially like dealing with truck drivers. They spend a lot of time alone, so when they stop to buy fuel or get something to eat, they want to talk. You need to understand them, their work schedules, and their needs.”
• “You need to make all of our guests feel welcome. When you think about it, we’re not really selling diesel, food, or truck repair services. We’re really in the hospitality business. Our guests will buy those things if they feel welcomed, if the restroom is clean, if the [parking] yard is neat, and if the food they ate at our location 200 miles down the road was good.”
• “We try and get all of our new managers out into the store and to the fuel island, to talk to drivers about what they like and don’t like. We need to know why they chose to stop here with us and why they will or will not come back.”
• “Efficiency is critical. Once a driver told us, ‘You are all so busy; I have to wait a lot.’ We laughed at first because, hey, that means we’ve got a lot of business going on. But then we realized waiting means drivers will go somewhere else. We’re losing future business. So we learned we needed to make our fuel islands and stores as efficient as possible so drivers don’t have to wait. ”
• “Taking care of the customer extends to taking care of their trucks; that’s why we are getting into the shop business. We need to be able to take care of almost all of a truck driver’s needs when they stop at one of our locations.”
• “Technology is only going to play a larger role in our business. For example, we’re working on a [smartphone] app that will push to a driver what they might need at our truck stop when they are 50 miles or so away—a shower reservation, a reserved parking spot, or a food order. They pull in and it’s all there—a one-stop-shop all via their iPhone. Things like that are coming quickly.”
And as for that long-ago passed-up chance to coach high school football, Haslam has few regrets. “When you’re 86 like me, you rarely get to coach football teams anymore,” he laughed. “That’s not true in the business world.”