Pacific Profile, Pt. 1 Dealer Takes All
PC&F, Platinum Energy hope to infuse dealer network with entrepreneurial spirit
[Editor's Note: This is the first in a three-part series highlighting Pacific Convenience & Fuels, San Ramon, Calif., the one-year-old convenience store giant that purchased nearly 600 stores from ConocoPhillips in 2008.] AGOURA HILLS, Calif. -- A couple of days before Thanksgiving in 2008, David Delrahim received a late evening phone call from his business partner, Sam Hirbod. The news wasn't good. Tower Energy Group, which had originally signed on to supply the California dealers who were part of Pacific Convenience & Fuels' August 2008 acquisition of ConocoPhillips' [image-nocss] retail network, had dropped out of the deal. It was yet another roadblock in PC&F's attempts at closing what was perhaps the industry's largest acquisition in 2009.
But Hirbod and Delrahim were determined not to let this setback scuttle the impending closing.
"We talked until about midnight; as of the following morning, 6 a.m., we were out there putting a company together," said Delrahim in an exclusive interview with CSP Daily News. That new distributorship headed up by DelrahimNorthwest Dealerco Holdings LLC, dba Platinum Energy, Agoura Hills, Calif.has since assumed supply for 85 dealer locations throughout California, Oregon and Washington, with an additional 115 set to transition over by the end of first-quarter 2010. Four of those first 85 dealer sites are new to the ConocoPhillips brand.
Despite the challengeand unanticipated expenseof setting up a distributorship overnight, Delrahim said it was simply an extension of a very basic model that he and Hirbod embrace.
"Ultimately, we're in the business of servicing customers," said Delrahim. "It is no different from operating service stations. When you're operating a small business, you're sure to give good service to clients. You'll do anything and everything to set yourself apart from the competition."
For Platinum Energy, that differentiation comes in the form of business development and experience.
"Signing up people on a contract, that's just a beginning," said Delrahim. "We want to ride along with accounts every day of the week to show them how they can grow their business and really improve their bottom line." The exec cites Pacific Convenience & Fuels' (PC&F's) convenience-store and car-wash expertise, as well as the experience he and Hirbod bring as former dealers.
"I started 27 years ago with Exxon in Southern California," said Delrahim. "I, over the years, have gone through all things the dealers are experiencing.... So we already have a template of how to transform from a dealer relationship to become an entrepreneur."
In addition to heading up Platinum Energy, Delrahim oversees several full-service car washes in Southern California, and has developed 14 ground-up c-store sites in the state.
Ray Batra, owner of 11 sites in the Portland, Ore., metropolitan area, acquired five of them from Platinum around the same time that the ConcocoPhillips deal closed in January 2009. All are branded Union 76 and range from 1,500 to 2,000 square feet, with an average of four MPDs.
While the rest of his sites are supplied directly by ConocoPhillips, Batra is content in his relationship with Platinum, citing the distributor's assistance at securing remodeling funds from the major oil as well as its competitive fuel prices. "We would have been given the same prices if were direct-served," he said.
Dennis DeCota, executive director of the California Service Station & Automotive Repair Association, Santa Rosa, Calif., and himself a ConocoPhillips dealer, has heard no complaints about Platinum from his members. "From my standpoint, in dealing with them, and what I hear from the outside, they're about middle-of-the-road pricing on fuelnot the highest, not the lowest," he said. "They really have a tendency to have a hands-off policy with much of their dealer network."
Batra has remodeled two sites with the ConocoPhillips funds, upgrading dispensers, repaving, gutting and remodeling the interior, and installing new POS systems. He said this has been reflected in site volumes; one of the locations saw a 200% jump in gallon sales. The retailer plans to remodel the rest of his sites in 2010.
Investments like these are sure to put PC&F's dealers on a growth track, believes Delrahimbut they're just the beginning.
"With the overwhelming majority of these sites, nothing's been done [to them] for 10 to 15 years," said Delrahim. "They're good dirt, but in terms of facilities, they're outdated. As dealers are making a huge investment in purchasing the sites, they need to start putting a business plan together to grow the sites, grow their business and increase their bottom lines. Those are some of the ideas and expertise we can bring to the table."
For his part, Batra hopes to acquire more sites from Platinum Energy in 2010.
Read more about Pacific Convenience & Fuels' retail empire in the January issue of CSP magazine.