Investing in Tomorrow

Building a convenience store requires a great deal of planning. Operators are urged to examine all of their options before making their next big investment.

By: Jim Callahan

Thinking of building a new store? Well, I’ve got some thoughts and opinions to help you focus on making a wise investment. In these trying times few operators can afford to invest in a dog.

Not a month goes by when I don’t run into a store designed by a well-intentioned operator who thinks his years of experience in back-office accounting qualify him as an architect. I’ve been in convenience store marketing for 40 years, but would never attempt to build a store without, as Gen. Douglas MacArthur said, surrounding myself with good people. There is absolutely no substitute for hiring professionals for every aspect of the project, from site selection, topography, store design and layout and coolers, to parking, underground tanks, fuel pump and the canopy. There are so many important decisions to be made. Misfiring on just one can hurt the business for years to come.

Incidentally, never build on a piece of land just because you own it. It’s much better to go out and buy the right property than to build on the wrong piece.

Stay Informed
One of the first and most critically important questions to consider is volume predictions. As Abraham Lincoln said, “A man who represents himself has a fool for a client.”

When I built my first store in the 1980s I used MPSI to calculate the fuel demand in a particular area. They considered a number of variables supplied by me such as the fuel brand, hours of operation, pricing strategy, number of dispensers, etc., and provided me with amazingly accurate profiles of the potential of that site and many more over the years. The price, as I recall, was just a small fraction of the total cost of the project. How great is it to know that before committing the money?

Another word of advice is to always ask for thorough analysis that would project what would happen to your new store’s volume if a competitor moved in across the street. Can the market support another store? If not, you could end up on the losing end. No one intends to fail, but you have to be prepared.

Another good rule is to buy more land than you think you need, or at least try to gain an option for more. Consider this especially if you’re a small operator hoping to partner with additional retail brands by becoming a landlord to tenants that will enhance your c-store business.

We took a 17,000-square-foot abandoned auto parts store and made a 4,000-square-foot convenience store, which left room for a large automotive repair shop, a check cashing business, men’s and women’s hair shops, two small restaurants, a pharmacy and a very popular Laundromat. The point here is that these shops cover our overhead, affording us the opportunity to be very aggressive on retail fuel pricing.

Outside, the stores should have a minimum of 16 parking spaces—more with tenant space—directly in front of the building. Instruct employees to use perimeter parking.

While I’m fond of touch-free car washes—and they can be extremely profitable—don’t add one to your site unless you are willing to treat it as a separate business entity that needs to be aggressively marketed. Contrary to popular belief, car washes do not sell themselves.

Now, while property values are down and contractors are looking for work, is a great time to consider building a store. Use my experience as a guide, but know there is no substitute for doing your homework. Ultimately, that will dictate your chances for success.

Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on CSDecisions.com. He can be reached at (678) 485-4773 or via e-mail at jfcallahan502@msn.com.

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