Changes Abound at ExxonMobil

Since winning CSD’s Chain of the Year award in 2003, Exxon Mobil Corp. has been busy, beefing up it’s foodservice program at On the Run stores, then forming a new strategy that moves away from direct-store operations and beating out Wal-Mart for the top spot on the Fortune 500 list.

But it’s the changes at ExxonMobil that have the industry buzzing. Like other major oil companies—Shell, BP and ConocoPhillips—the Irving, Texas, oil giant announced plans in 2008 to exit direct-store operations and sell 825 company-owned and -operated stations, as well as 1,400 stations leased to dealers. The 2,225 stations made up about one-fifth of the Exxon and Mobil stations in the U.S. The oil company, which at that time sold about 14 billion gallons of gasoline annually at its branded U.S. stations, said the sites to be sold would continue to sell ExxonMobil’s products. ExxonMobil said the sales would take place over a “multiyear period.”

“As the highly competitive fuels marketing business in the U.S. continues to evolve, we believe this transition is the best way for Exxon Mobil to compete and grow in the future,” said Ben Soraci, director of ExxonMobil’s U.S. retail sales.

As gas prices skyrocketed, few could argue the reasoning behind ExxonMobil’s exodus from direct-store operations, where retailers plagued with increasing costs from all angles are still struggling to maintain profits. To make ends meet, c-stores are moving further into foodservice and other areas that require day-to-day management, perhaps better suited to local operators who know their markets and customers on a more intimate basis. With this consideration, ExxonMobil has begun turning over its gasoline retailing to independent owners and operators.

Sell-Off Begins
In May, ExxonMobil began its highly anticipated sell-off. Alimentation Couche-Tard Inc. came up the big winner, acquiring the On the Run convenience store franchise system in the U.S. and 43 of its company owned and operated sites in the Phoenix market. The agreement transferred to Couche-Tard the franchise agreements for about 450 On the Run c-stores operated by ExxonMobil branded fuel dealers and distributors. These stores, located in 28 states, primarily east of the Mississippi River, will continue to be operated by the franchisee dealers and distributors of ExxonMobil.

“ExxonMobil values the tremendous commitment of its On the Run franchisees in helping to build one of the leading convenience store brands in the industry,” Soraci said.

The 43 Phoenix sites were converted to Couche-Tard’s Circle K branded convenience stores, and offer Circle K branded fuel.

In other recent deals, Getty Realty Corp. acquired 36 Exxon-branded properties in a sale/leaseback transaction with White Oak Petroleum LLC for $49 million in September. Exxon also is selling its 25 stations in Hampton Roads, Va., to Doswell Ventures. That sale is scheduled to close by the end of November. The stations will continue to carry the ExxonMobil name.

On the convenience store side, On the Run stores are known for their strong branded programs.  In 2007, the chain was again recognized by CSD with the Best in Class Foodservice Award. In 2005, with its popular Bengal Traders coffee program, Exxon launched a line of proprietary gourmet breakfast sandwiches under the On the Run Cafe brand name.

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