Flying J Inc.

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Flying J Inc.

9900 S. 50 W.
Brigham City, Utah 84302
U.S.A.
(801) 734-6400
Fax: (801) 734-6556

Private Company
Incorporated: 1968
Employees: 8,000
Sales: $1.6 billion (1996)
SICs: 5172 Petroleum Products, Not Elsewhere Classified; 5541 Gasoline Service Stations; 2911 Petroleum Refining

Flying J Inc. owns and operates the United States’ largest chain of truck stops. Its fast-growing, national chain of 96 Flying J travel plazas not only sells more diesel fuel than any other chain, but has also set a new standard for roadside accommodation for the trucking industry. Flying J is also one of the country’s largest independent, vertically integrated petroleum fuel corporations, with its own oil and gas exploration company, petroleum refinery, and truck, barge, and pipeline distribution system. Together, this private company’s operations produced an estimated $1.6 billion in sales in 1996. Day-to-day operations are led by President Phil Adams. Founder Jay Call remains as company chairman, and the Call family continues to own more than 75 percent of the company.

Flying J has pioneered a novel concept in the truck stop industry: that truckers deserve clean, friendly, comfortable facilities with a range of amenities, from hotel and motel accommodations, to restaurants, to computer access, well-stocked convenience stores, and even bars with nightly music. The company’s innovative service has all but defined a new category of roadside accommodation, the travel plaza, helping to distinguish the chain from the traditional truck stop’s more rough-and-ready image. A new full-service Flying J typically occupies some 20 to 25 acres, costs from $5 to $7 million to build, and features up to 12 diesel fuel islands and parking spaces for 50 trucks or more. Beyond truckers’ amenities, the chain also seeks to attract the “four-wheel” and recreational vehicle market, and it includes propane hookups as well as fast food restaurants and the company’s own Country Market family restaurants. But the chain continues to emphasize the trucker. Each Flying J, which ranges up to 20,000 square feet or more, features a truckers-only section, with a barber shop, telephone booths, television lounge, arcade game room, laundry facilities, and showers. The plaza’s convenience store, which serves to separate the trucker’s area from the restaurant and the rest of the driving public, is also highly geared toward truckers’ needs, stocking as much as $250,000 or more in inventory ranging from lug nuts to underwear to hiking boots, as well as an extensive array of electronic goods that can draw power from a dashboard cigarette lighter.

In addition to the chain’s Flying J Inn motels, the company has also linked with the growing Crystal Inn hotel chain, formed by Flying J founder and chairman Jay Call and his daughter Crystal. A Crystal Inn features an “all-suite” concept of 100 rooms catering to the business traveler. The Crystal Inns operate independently from Flying J, but the two chains are closely linked, with many Crystal Inns slated to be built on land owned by Flying J and adjacent to its travel plazas. The management company of Crystal Inn, MacCall Management, has also been contracted to operate the Flying J economy motels. Rounding out Flying J’s services offerings, the company has also instituted its own line of truckers’ credit, contracting with national fleet operators.

Pioneering the Travel Plaza in the 1980s

O. Jay Call, a native of Idaho, came to Willard, Utah in the mid-1960s to run a gas station he had bought from his family. Call’s father had owned a gas station in Idaho; his relatives also owned the successful Maverik chain of convenience stores and service stations, founded in 1930. Call set out to build a chain of his own. By 1968, Call owned four gas stations; in that year, Call organized his company as “Flying J,” named for his love of flying. By the late 1970s, Call had recognized an opening in the market for a different kind of truck stop. The typical truck stop of the day could be classified as somewhat squalid, rough-and-ready places offering few amenities. The truck stop industry itself was highly fragmented. Call took a tip from the booming fast food industry and its growing chains of restaurants offering consistency, quality, and cleanliness, as well as low prices. In 1979, Call debuted the Flying J “travel plaza,” in West Haven, Utah, adding amenities such as a restaurant, motel, shower stations, and fuel islands for both cars and trucks. An early hallmark of the Flying J concept was its emphasis on cleanliness. Another was its low fuel prices, with which it lured customers.

In 1980, Flying J took a step to ensure its ability to keep its fuel prices low. The company moved into integrated operations, buying refinery and gas processing assets from Inter-City Gas Ltd., based in Canada. The $31 million purchase gave Flying J refineries and gas processing plants in Cut Bank, Montana and Williston, North Dakota, as well as a number of retail gasoline and propane outlets in Montana, Oregon, Washington, and North Dakota. The sale also gave Flying J its own exploration operation, based in Williston. The company’s refinery operations concentrated on blending, upgrading, and distributing petroleum fuels, rather than refining crude oil. The following year, the company was awarded a $4.9 million contract from the Defense Logistics Agency for gasoline and other petroleum products. But the company’s emphasis remained on its own chain of service stations and its drive toward vertical integration.

By the mid-1980s, Flying J had expanded its operations through much of the northwest. With 35 Hying J gasoline and truck stops and convenience stores, the company was achieving annual sales of some $240 million and a spot on Forbes’s list of the largest private companies in the United States. In 1986, Flying J made its next major move, more than tripling its annual sales with the $70 million purchase of the U.S. refining and retail operations from Canada’s Husky Oil Ltd. The purchase included a 35,000 barrel-per-day refinery in Cheyenne, Wyoming; a pipeline stretching from Wyoming to Nebraska; and a refinery in Salt Lake City, Utah with a capacity of 14,000 barrels per day, as well as a closed refinery, capable of 15,000 barrels per day, in Cody, Wyoming. The purchase also gave Flying J some 550 retail outlets and 40 gasoline stations and truck stops under the Husky brand name. The acquisition made Flying J the largest independent oil company in the northwest.

With the acquisition, Call set out to build Flying J into a national chain, starting with 50 Flying Js, including 15 former Husky stations to be converted to the Flying J concept. Call envisioned a chain of at least 300 Flying Js; once again turning to the fast food industry, Call’s original plan was to build a franchise concept for the truck stop industry. As he told National Petroleum News, “We’re putting together an extremely sophisticated franchise program for the truckstop industry, including credit systems, cash transfer systems, and marketing programs.” Although the company continued to lease its Husky stores to existing dealers, the Husky name would be phased out through the rest of the decade, allowing Husky Oil Ltd. to retain exclusive control of the brand. Dealers participating in the franchise program would have their truck stop remodeled and converted to the Flying J concept.

That concept was itself undergoing an expansion, as Flying J unveiled its “next generation” travel plaza concept of expanded facilities, heightening the company’s emphasis on its food, lodging, and convenience amenities. As Adams, then executive vice-president, told National Petroleum News, “We’re more in the hospitality business, not necessarily the oil business.” The franchise program attracted the interest of Phoenix-based Franchise Finance Corp. of America, an investment syndicator that had built up a portfolio of more than 1,000 fast food and other real estate franchises since the early 1980s. In 1987, Franchise Finance Corp. raised $52 million to acquire 11 Flying J travel plazas, while beginning a $1 billion plan to build its Flying J franchise holdings to as many as 250 by the mid-1990s.

Leading the Industry in the 1990s

The Flying J franchise network proved to be short-lived, however. By the early 1990s, the company had moved to maintain full ownership of the Flying J chain. With the truck stop industry remaining highly fragmented (there were an estimated 3,000 truck stop companies at the beginning of the 1990s), the time was right for consolidation, with Flying J leading the way. Aiding the company was a rising trend in the trucking industry itself, as more and more husband-wife driving teams began to take to the road. And while some in the industry regretted the slow passing of the traditional image of the roughhewn truck stop, Flying J’s travel plaza concept, with amenities including restaurants, lodging, barber shops and hairdressers, television lounges and other comforts for the truck driver, coupled with its insistence on cleanliness, quality, consistency, and low fuel prices, proved attractive not only to the trucking industry, but to the automobile and recreational vehicle traveler as well.

By 1993, Flying J operated 63 travel plazas and, coupled with its refinery operations, was generating between $800 and $900 million per year. By then, Call had stepped down from the day-to-day running of the company. Call remained chairman of the company, and his family continued to hold a majority of the private company’s shares. But, telling the Salt Lake Tribune, “I’m not an operator. I’ve done it, but I don’t want to any more,” Call had moved on to new projects, including developing a 1,500-acre cattle ranch in Montana. Call, together with his son and daughter, was also developing another side business, forming Call’s Investment to build a new chain of all-suites hotels. Dubbed the Crystal Inn after Call’s daughter, the hotels would feature indoor pools, Jacuzzis and workout areas, as well as a kitchen to serve breakfast. The first Crystal Inn opened in Salt Lake City. By 1995, Call had stepped aside from that project as well, allowing daughter Crystal and her husband to operate and expand the new hotel chain, which would remain closely linked with the family’s Flying J chain.

Meanwhile, Flying J, now under the leadership of Adams, stepped up its expansion. By 1995, the company was operating nearly 90 travel centers, while continuing to upgrade its amenities offerings. In that year, the company introduced a new restaurant concept to its travel centers, opening the family-style Country Market Restaurant and Buffet, offering 24-hour, buffet-style service with seating for up to 150 people. Meanwhile, the company turned over management of its Flying J motels to Crystal Inn, while making plans to add the all-suites hotel concept to some of its sites as well. With the state-of-the-art Flying Js costing up to $10 million to build, Flying J, which had been serving the freeway and interstate market, began developing a smaller-scale concept for the secondary roadways. The company also expanded its oil well operations with the acquisition of Cenex Inc.’s oil and gas production operations. The acquisition more than doubled Flying J’s production to 6,000 barrels per day.

By 1996, the chain had grown to 96 Flying Js, with the company announcing plans to add 15 to 20 travel centers per year toward the end of the century. Flying J, which had already grown to become the country’s largest diesel fuel retailer, had by then climbed to number 152 on Forbes’s list of the largest private companies in the United States, with sales topping $1.3 billion in 1995. The company, which had begun marketing to national trucking fleets in the early 1990s, was also getting into the credit business, promoting its own fuel transaction card, a position that led to a conflict with Comdata, one of the leading credit transaction processors for the trucking industry. When Comdata and Flying J began negotiating to renew their contract, Comdata pressured Flying J to stop promoting its own card. Flying J refused, announcing that its travel centers would no longer accept Comdata’s Comcheck card, and began encouraging customers to switch to its own or other third party cards; the break was complete when Comdata announced that it would no longer process transactions made at Flying J travel centers. With Comdata remaining a major supplier of credit transactions to the nation’s trucking industry, the effect of the break on Flying J remained to be seen. Nonetheless, Adams told The Tennessean, “We’re comfortable about life without Comdata.” Indeed, Flying J’s reputation among its customers in both the trucking industry and the general motoring public appeared solid. Estimates of the company’s sales for 1996 were at $1.6 billion.