INDIANAPOLIS, Ind. -- With Alimentation Couche-Tard's acquisition of 40 Indianapolis stores from Shell Oil Products US earlier this week, speculation is surfacing: could this deal be the tip of a much larger iceberg involving the Quebec retailer and Shell?
At this time, I think there could be additional opportunities with Shell, Darrell Davis, Couche-Tard's vice president of operations for Couche-Tard's Midwest division, told CSP Daily News. I don't know of any today, but there could be in the future. At Couche-Tard, we're an acquisition company, and [image-nocss] whether it's Shell or any other opportunity, we're certainly looking for good locations that fit within our markets.
CSP Daily News has learned that 35 of the 40 stores Couche-Tard acquired were operated by Shell multi-site operator (MSO) Robert Juckniess, owner of Indianapolis-based RWJ Cos., with the remaining five coming from lessee dealers. The 13 supply contracts included in the deal are with open dealers, according to Shell spokesperson Karyn Leonardi-Cattolica.
Juckniess, one of the first operators to sign onto Shell's three-year MSO program, was recently thwarted in his legal challenge to force Shell to offer him first rights to purchase the sites.
We are clearly disappointed that Shell elected not to go forward with an Indianapolis-based company, but we are pleased that the court recognized our Indiana franchise claims, Juckniess told CSP Daily News, referring to the earlier ruling that had stalled Shell's plans to sell the stores. RWJ is proud of the accomplishments it has made in the Indianapolis market and pleased with the strides [it] has made in serving its customers in Indianapolis. The company continues to operate stores in Cincinnati, Ohio. Even so, he wishes things in Indiana might have taken a different turn.
Converting to Circle K
With the Shell transaction expected to be completed within weeks, Couche-Tard plans to convert the majority of the stores to the Circle K brand this spring. Davis said the company plans to reinvest in the stores; some may be knocked down and rebuilt, others will be remodeled and others will require a little cosmetic makeup. The acquisition gives Couche-Tard 676 corporate, franchised and dealer-operated stores in its Midwest territory.
These were prime real-estate locations, and this group of stores gives us a better foothold in Indianapolis, where we had just 10 locations, said Davis. It's just a nice fit for us, especially since our division headquarters [in Columbus] is about 40 miles south. We like the real estate, and Shell is a good partner that we've done very well with in the past.
Considering the trend of major oil companies divesting themselves of retail assets, the Indianapolis sale raises doubt over Shell's long-term plans for the MSO model. In a CSP Daily News Poll yesterday, roughly 75% of the 170 respondents said they expected Shell to sell off its company-owned or MSO stores.
Leonardi-Cattolica reaffirmed the company's commitment to the class of trade and said it would use the MSO marketing model in selected markets to strengthen and grow the Shell brand by actively managing assets and supply. She said existing MSO clusters would either be renewed for a three-year period, offered to a new operator or extended in some markets.
Richard Oneslager, president of Denver-based Shell and Conoco distributor Balmar Petroleum and retail division Firsthand Management, presently has a portfolio of 57 stores. But that may soon change. An MSO with Shell stores in Denver and Portland, Ore., Oneslager said he understands that both markets will be converted to the wholesale class of trade in the near future. Denver will make the change some time this year, he said, with Portland making the switch in 2007.
I've been real happy with [the MSO program], he told CSP Daily News. Almost three years into it we've really hit our stride with operations. It's unfortunate that the plans are changing, but this business is about change, and we have as good an opportunity as anyone else to make an offer on those assets [once they go up for sale]. It's just another twist to the ever-changing convenience store landscape.
Of Firsthand Management's 57 stores, 35 (including 11 stores the company purchased from Shell last month) are based in the Denver area and 22 are in Portland. Oneslager said the MSO model has enabled his company to focus on the business inside the four walls and be mostly insulated from the volatility of the motor-fuels market.
We don't look at it like we need a certain size, he said. We're just going to size up and size down as the opportunity presents itself. It's hard to say [how losing the MSO stores might affect us]. A lot of buyers are looking to buy stores and put in a lessee operator, and we might be the logical operator for those [if someone else buys them]. We might take the same approach if we acquire them.
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