Surviving the Next Superstorm

KohlerphotoDo you have a contingency plan in place in case disaster strikes one or more of your convenience store locations?

By Erin Rigik, Associate Editor.

Being prepared for major storms and disasters is vital to any convenience store, especially those in areas most susceptible to hurricanes, as Superstorm Sandy taught us just last year.

The Hartford’s 2013 Small Business Pulse surveyed New York, New Jersey and Connecticut small business owners who reported being impacted during or after Sandy. The insurance company found that a whopping 71% of business owners faced power outages, which most likely disrupted operations. Meanwhile, 74% had to close up shop for an average of seven days before they were prepared to reopen. While only 11% reported structural property damage, 52% experienced loss of sales or revenue as a result of Sandy.
The stats reveal that having a plan in place—from how to reconnect with scattered employees to how to install backup generators—is key to keeping lost revenue to a minimum and reopening a store as quickly as possible.
 
Hurricane 101
Brent Mouton, a veteran of the c-store industry since 1986, founded Brenton Investment Corp. in 2000, beginning with one c-store and growing it to 13 Hit-n-Run Food Stores in southern Louisiana. In 2002, just a few years into his business venture, Hurricane Lili barreled down on his market.

“With Hurricane Lili, we had one store lose power from a fallen tree, but it wasn’t a priority for the power company, which was more concerned about the major roads. As a result we were out of power for 4-5 days at that store,” Mouton said.

An even bigger issue was employees had scattered and phone lines were down in the aftermath of the hurricane, making re-opening for business a challenge. “With the first storm we experienced, we were just worried about everyone being safe, but then it was difficult tracking employees down afterward,” he said.

But in 2005, when Hurricane Katrina hit the area, followed by Hurricane Irene a few weeks later, Hit-n-Run Food Stores—just two hours west of New Orleans—was ready with a plan to handle the challenges brought by the storms.

The most important lesson Hit-n-Run Food learned from Lili was to keep track of where employees planned to go, and to have a plan in place for getting in touch with them once the danger passed. Because phone systems are often down, Hit-n-Run Food Stores looked at when the storm was predicted to end and scheduled a meeting for the next morning for any employees remaining in the area. The result was a smooth transition back to business once the storm had passed.

“Katrina affected us. We had to close everything down before the storm came and prepare to lose power. You have to, because you can’t ask your employees to work under those conditions,” Mouton said. “They have homes and families. They have things they have to deal with on a personal level—such as sandbagging and boarding up their homes, or heading to a safer area, so you have to leave time for them to go and do that,” he noted.

Mouton doesn’t have generators at any of his stores, but in most circumstances he has seen power restored within 24 hours. “The frozen foods are usually fine, with the exception of ice cream, which melts pretty quick. You’ll have to throw out the milk and any food items that already thawed or were waiting to be cooked—you’ll lose those items,” he said. 

Above all, Mouton noted, retailers have to keep their employees in mind. “Allow them time to do what they need to do, but then have a plan on the backend where once the storm has passed and everyone is OK, you can get back to work because we do have an obligation to the community. Typically in those situations people need the services we provide—be it gasoline or food—and we’re usually one of the first ones to open,” he said.
 
Hindsight is 20/20
The Hartford’s Storm Sandy survey found that 25% of impacted small business owners prepared for Sandy by creating backup copies of critical data and programs, while 20% prepared an emergency kit with items such as flashlights and water, and 20% protected their buildings by boarding up storefront windows, etc.

The study went on to report that retailers impacted by Storm Sandy had the following advice for fellow small business owners:
• Review your property insurance coverage (23%);
• Invest in a generator (21%);
• Create a backup of important records (15%); and
• Develop a business continuity plan (14%).

In fact, in the aftermath of Storm Sandy, many East Coast states are doing more than just offering advice. They’re putting generator regulations into effect, and while the mandates differ depending on location, most are requiring at a minimum that c-stores have a transfer switch attached to the back of their buildings so they can accommodate a generator.

Financial analysis firm IHS Global Insight estimated that Sandy resulted in $25 billion of lost business activity, and with 21% of affected small business respondents recommending generators, it should be an important consideration for c-stores vulnerable to weather-related issues. CSD spoke with generator experts to determine the options available to c-stores to stay power ready when disaster strikes.

Permanent Solution
One solution is to have a generator permanently installed, so it automatically starts within 10 seconds of a power outage. “The transfer switch would be hooked up to the electrical panel of the gas station or convenience store. You won’t need an employee to start it, and it automatically shuts down when the power returns,” said Dan Giampetroni, business manager for Kohler Power.

While this is the most expensive option, it’s also the most efficient and reliable. “There’s no interruption of business with a permanent backup generator. We think that is by far the best solution to maintain a revenue stream,” agreed Rich Thompson, marketing director for commercial and industrial generators at Generac Power Systems.
“You could probably pay for this generator in one day by not losing 24 hours of sales plus all your spoilable food,” Giampetroni said.

Thompson concurred the ROI—depending on the type of business—is measured in hours with high volume stores paying back faster. “The solutions are more affordable than business owners think. Owners who think they can’t afford it often assume it’s twice as expensive as it really is,” he added. 

Towable Generators
The second option is to rent or lease a towable generator from a third party. “You would still need to install the electrical box that the generator would plug into. It’s less expensive than the permanent solution, but the towable option is manual. Someone would have to bring it in and hook it up,” Giampetroni noted. With the towable option, retailers typically have a power provider and a rental or generator company that provides the power per a set agreement.

One challenge with the towable option is that it can take 24-48 hours to receive the generator, and if roads are closed or flooded, or if curfews are put in place by the town, it could potentially take even longer.

But operators who decide that money is an issue in affording a generator, might find the towable option is the best suited to their needs. Some c-store retailers have been known to buy their own towable generators.  “I met a couple of gentlemen who owned three towable generators between them as operators, and had eight gas stations in Florida. They hired an electrician to make their connections and managed those generators between the stores. If a storm came through and five stores were down, they’d take the top three stores for traffic or sales and dispatch the generators,” Giampetroni said.

Thompson noted that while store owners with multiple facilities often find success buying and sharing a generator between their sites, small operators who wish to rent may have to get in line when the power goes down. Bigger companies, such as national retail chains or big financial institutions, tend to have written agreements with rental companies up front with first claim to available generators, while smaller chains might have to wait days to receive one. This could hurt sales.  

The least expensive option would be to buy a portable generator, such as for your home, that would at least keep the cash register running and maybe keep the lights on, but it won’t have enough power to keep the coolers running. In this scenario, you could move merchandise before it spoils as well as dry goods.

Important Considerations
The more gas islands and the more coolers you have, as well has the amount of air conditioning needed to cool your store, the more electricity your generator will need to be able to generate.

Another consideration is the transfer switch. “With the permanent solution it’s an automatic transfer, but with the towable solution, it’s a manual transfer switch,” Giampetroni said.

Towables usually are powered by diesel fuel, while the permanent stand-by generators come in diesel or natural gas/propane.

If you’re in a state that has a generator mandate, make sure you find out what’s required in your area before you buy. Some mandates are even providing operators with financial support. Some are providing different support based on whether it’s a towable solution or a permanent solution.

“We like the fact that mandates are bringing to the forefront that backup power is something you should plan for instead of being reactionary. But from our standpoint, a transfer switch isn’t going to be much better than not being prepared. Even if you can get a mobile generator, attach it to your truck, tow it to your place and plug it in, by the time you finally get it to your store, you’re already in trouble,” Thompson said. 

Lastly, don’t hesitate to prepare. “Last October at the NACS show, a retailer in New Jersey, whose business was impacted by Hurricane Irene in 2011, said he didn’t want to go through it again and decided to install a generator for every store he had. Here was a gentleman who wanted a permanent solution, and wanted to be prepared. And then two weeks after NACS, Sandy came down and devastated New Jersey,” Giampetroni said. “You have to be prepared.”

And start today. Because tomorrow could be too late.

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