growing through innovation

Richard Oneslager’s perspective of the convenience industry has benefited Balmar Petroleum, as he capitalizes on real estate and foodservice to differentiate his offering.

CSD: You began your conveniencestore experience by managing the familybusiness in 1987. What did you learnthen that you are applying to your businesstoday?

RO: Working with my family afforded me manykey learning opportunities. The first being thatI wanted to own our real estate and I wantedto be a wholesale jobber. As we started ourown business, we were fortunate that we wereable to do both.

From an operational and personal standpoint,I’ve learned that things don’t reallychange. People are people. The employeesthat we were dealing with 20 years ago arenot a whole lot different than the employeeswe work with today. For the most part, we continueto treat our employees the same as wedid back then. It boils down to how you recognize,relate to and reward your employees.

Another early learning that I apply today isthe ability to differentiate through customerservice. I know offering great customer servicecan be done. This has always been our strategyand it will continue.

CSD: Explain your operating strategy?

RO: Historically, our operating strategy hasbeen to be fairly flexible with our management.We give a great deal of autonomy to ourmanagers. However, as we grow and get morelocations, we have become aware that we mayneed to tighten that down a bit. You need tostrike a balance between offering creativity atthe store level as well as the ability for managersto make their own decisions, but you stillhave to keep a number of controls in place.I think our business reflects my somewhatunstructured approach, and that’s not necessarilya good thing. But I like to do things alittle differently. I’m very transaction-oriented.As a result, that’s the direction our business is going in. Wildly successful retailers have significantfocus, and I believe that focus startsat the top.

CSD: You have remained true to yourdesire to own the real estate your storesare on. Why is this important?

RO: In our industry there has been a biastowards owning your real estate. I decided thatI wanted to go in that direction because myfather was a lessee-dealer for an oil company.Hence, he had an oil company as his supplierand as his landlord, and I thought that is notwhere you want to be long term.

However, in the restaurant business weadopted this concept of real estate neutral,which is to do whatever it takes to get the bestsite. With Qdoba and Noodles, many timesyou cannot own your own building becauseyou have an end cap in a shopping center, andthey really don’t want standalone buildings. Forinstance, if we have to be a tenant in someoneelse’s food center then that’s fine, we will rent.If we have to buy a building and develop thelocation to get the best possible site then wewill do that. We are not married to any one philosophyon real estate other than securing thebest possible site.

With our convenience stores, we are lookingat doing things like sale/leasebacks becausethe cap rates are at such historical lows thatit just makes sense to sell. It borders on silly.We had some other real estate shopping centersthat we built and sold last years becausethe prices were too good to pass up.

CSD: What are your future plans for yourconvenience stores?

RO: We’re in the process of evaluating all ofour stores right now and we are determiningwhat we can credibly offer our customers withrespect to foodservice. I think we’ve made mistakesin the past and we have changed ourapproach to avoid making these types of mistakesin the future. For instance, we offereddrive-through coffee at two of our locations.We didn’t do well with it because we weren’tprepared to make the necessary commitment.It started slower than what you wouldexpect and, inevitably, we weren’t doing thevolume we wanted.

Now our focus is on prepared foods. Thechallenge we have as an industry is that everytype of customer stops in to purchase fuel, byand large, and you have a wide variety of consumers.As a result, we have tried to be allthings to all people. It’s hard because you haveexpensive real estate, credit card fees andother expenses. Thus, if you try to reach outto all consumers you end up diluting yourself,your image and your offering, which ultimatelydoesn’t satisfy the consumer. This is why wehave some stores where our focus is solelyon being a standard convenience store withtraditional offerings. In these stores we wantto make sure that they are clean, convenientand well executed because that’s all that facilitycould ever be.

CSD: Do you have an ideal consumerdemographic that you would like toserve?

RO: My sense is that the middle income consumeris being neglected. I think people getfixated on this notion of capturing the big dollarsand we forget that just about everybodylikes quality and a strong offering. I think weare seeing that with Noodles & Company andQdoba. The fast-casual concept has drawnconsumers from the fast food realm becausethey want a better experience. Now the fastfood restaurants are trying to play catch-up.McDonald’s is trying to provide more upscaleofferings, and as a result, I think there is a voidin the market for the middle income consumeror the core c-store customer that everyonelikes to talk about. I think the core c-store consumeris on the verge of being underserved.Burger King has taken advantage of the voidby targeting the blue collar male, and they arehaving a great deal of success.

CSD: What have you learned in the restaurantbusiness that you have appliedto your convenience stores?

RO: Like many things in my life, I got into therestaurant business by accident. We had aBurger King tenant in a center that we built.Five or six years ago, the Burger King networkwas in complete disarray and they were reallystruggling with franchisees pulling out. Ourtenant was interested in doing something elseand asked us if we would be willing to partnerwith them or become an investor. They wantedus to take a pretty large equity position as wellas take on the real estate aspect of the business.I was surprised because while the siteselection process is somewhat similar, whatmakes a strong restaurant site does not necessarilymake a good c-store site. That wasone of the first things that I learned long agowhen we were looking to include Subway andother branded fast food in our stores.

Also, in terms of menu and overall offering,what looks simple from a distance is notnecessary the case. Actually, it’s amazing theamount of thought that goes into the foodoffering, selection, servings, etc. For example,when Noodles switched from bowls to platesfor some of the dishes, the research that wentinto that prior to making the change was incredible.They learned that some women didn’t likeit because on a plate it looked like too big ofa serving. They also looked at how does theproposed change affect the productivity of thekitchen, the flavor profile, ideal food temperaturesand much more. All of these factors areconsidered in the restaurant business.

CSD: What advice would you givesmaller operators competing in thismarket?

RO: The interesting component in the marketright now is how is it going to shake out withrespect to size and where will everyone compete.The new Americans are doing a great jobat the entry-level sites. This alone has manypeople nervous, but there is an incredibleenergy that comes from immigrants and thatis only going to benefit our industry.

I think the distinction of the conveniencestore business is that you’re selling gas andTwinkies for a living. As a res
ult, you have to besomewhat humble. You can’t get a big ego andI think that eliminates some of the potentialbad apples. It’s also a business that peoplehave started as a small operator and they buildthe business up from there. I always use JayRicker as an example. Jay is right out of centercasting in terms of what you would want froma Midwestern businessman. He’s involved inhis community, and we are fortunate that weget a lot of people that are similar to Jay in thisbusiness. It’s going to be different with all differentlanguages and cultures. Now how do weassimilate? Do we feel some type of connectionbecause we are all in the same business?Overall, I think it’s a great thing.

 

Richard Oneslager, CEO ofDenver-based Balmar Petroleum,became a wholesale distributor forConoco and began to develop conveniencestores in the front range of Colorado.Balmar, through its retail company First HandManagement, currently operates 49 conveniencestores in Denver and Portland, Ore.

Oneslager is also a principal in two restaurantventures, Qdoba Mexican Grills in Las Vegasand Noodles & Company in Indianapolis.Oneslager has spent most of his lifein the gasoline, service station and conveniencestore business. From 1987 to 1995,he managed the family business. Under hisdirection these facilities received numerousawards, including “Best of Denver” and “BestCustomer Service in the U.S.,” bestowed byAmoco in 1993.

“We don’t try to emulate other companies.Instead, we do the things that workwith our culture and philosophy,” Oneslagersaid. With this type of commitment, it’sunderstandable why he is recognizedas a thought leader and innovator in theconvenience channel.

In addition to his company operations,Oneslager serves as the NACS vice chairmanof research and development, overseeing theassociation’s Research and DevelopmentBoard Committee, which directs researchand development initiatives and programs topromote the ongoing competitive viability ofthe channel.

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