One of my specialties has been dealing with the importance of liquidating marginal stores and trying to find solutions for sites that no longer are appropriate for continued retail petroleum use. I recently experienced an amusing encounter that reflects some interesting differences in the direction that our industry may be taking from one coast to the other.
At the recent Florida Petroleum Marketers and Convenience Store Association (FPMA) convention I met some visitors from California. They were attending the event to gain insight on Florida’s retail petroleum business and how they could extend the “green retail initiative” eastward to this seemingly progressive state.
When they quizzed a couple of us about the extent of Floridians knowledge of their “carbon footprint” or asked if they would pay more for gasoline from a specially designed renewable energy retail facility that features solar power and E85, it seemed that motorists from the left and right sides of our country were polar opposites. Our visitors were surprised to hear that even with gasoline prices dropping, most Floridians would still cross a six-lane highway at rush hour to save a penny, and that their carbon footprint is about as top-of-mind as the footprint they left in the snow when they exited the wintry north to populate the Sunshine State.
In the past, I challenged retailers to relate the most interesting alternate uses for stores that they found. Responses were as diverse as a Mediterranean restaurant in Florida to a municipal restroom in New Jersey. Given the current retail environment, the level of shuttered sites littering the highways and byways of America will keep growing.
It wasn’t too long ago that you could readily find a buyer for the 50/50 store—ones that do around 50,000 gallons and about $50,000 in monthly inside sales. Now with sporadic fuel margins and higher investments required to secure supply, dealers are generally in crisis and the 50/50 store has less than a 50/50 chance for continued survival as an ongoing convenience and gas concern. The challenge then is for marketers to unlock captured equity tied to these losers by developing buyers for the sites outside the industry.
Successfully uncovering “alternate use” buyers will involve a greater level of preparation to support the site sales process than what is typically required for industry sales. Most national chains, whether they are QSR’s, casual dining, drug stores or banks, have specific criteria that need to be addressed before they will entertain a site for purchase.
Sites slated for divestiture must be evaluated for their alternate use potential by weighing factors such as the size and location of the property, demographics, traffic counts, growth patterns and other retail businesses located in close proximity. In many instances, for example, smaller QSR chains want to be located near a McDonald’s or Burger King and, if the property size is suitable, they may have serious interest in acquiring the site.
Once a listing of potential alternate-use buyers for a specific geographic region is completed—including their site selection criteria—then it’s simply a matter of processing the targeted sites to determine possible buyer prospects. Presentation to the appropriate real estate development contacts follows. Working the process in the beginning with one or two select sites is helpful in developing the various contacts and procedures to enable a greater number of sites to be processed in the future.
Not all sites are destined for alternate uses and many may ultimately be shuttered for the foreseeable future. However, employing a disciplined effort to divest money-losing sites within the industry is the best way to recapture equity and enable its redeployment in more productive growth areas of the company, whether that may be a “green” or more traditional angle.
Mark Radosevich specializes in mergers, acquisitions and financing services in the convenience store and petroleum industry. He can be contacted toll free at (866) 357-2042 or email at email@example.com
Browse the latest issue of Convenience Store Decisions and back issues in an easy to use high quality format. Bookmark, share and interact with the leading C-Store magazine today.
The Convenience Directions concept has been in place for over 15 years in the convenience store industry. What we do is very unique in that
we combine the InfoMarketing newsletter, which is mailed quarterly to over 10,000 c-store executives, with three Idea Exchange meetings.
The National Advisory Group (NAG) is a dues paying association committed to building relationships and profits. NAG’s mission is to provide retail leaders of small to mid-size and family-owned convenience chains a peer-to-peer forum for the exchange of ideas to improve their business performance.