Kevin Bahnam immigrated to the United States from Iraq to escape instability and pursue the American Dream. In 1994, he arrived on Michigan soil. He was just 21 years old, but he already had retail experience under his belt as the operator of an antique store back home. He dove into the retail video-rental industry with his brother-in-law, Mike Koza, and soon found himself the part owner of five Mammoth Videos locations.
But by 2000, he sensed the end of their business model was in sight. He and Koza sold the stores and set off for new opportunities. “That’s when I started considering c-stores,” Bahnam says. He took his time, educating himself about the industry. He attended the NACS Show, read trade magazines and talked to friends.
“Knowing that we were going to be in this long term,” Bahnam says, “I invested a lot of time and effort into developing a name and a vision.”
They hired Marco Design Group of Northville, Mich., to guide them through the process. (Marco has since been acquired by Canadian company GHA Design, which specializes in retail.) Bahnam shared his vision—spacious stores with memorable branding, quality foodservice and, most of all, variety—and Marco proposed a few possible branding concepts. One of the store names they proposed was USA 2 GO.
“We thought it was catchy, especially with the interstate shield logo,” Bahnam says.
Koza put his real-estate development background to use to find good locations and, with the guidance of Marco Design Group, the two hired architects and contractors and started building their business from the ground up.
Build-a-Brand
Bahnam and Koza now have four USA 2 GO locations in southeastern Michigan, all in a 25-mile radius between Detroit and Lansing and all with mostly middle-to upper-class clientele. Three of the four are freeway locations and one is in a residential area. The partners eyed locations with good traffic and accessibility, but they also took competition into consideration. “The gasoline industry is being invaded by big-box stores,” Bahnam says.
Remember the spaciousness aspirations? Well, Bahnam’s stores were built with 14 fueling stations at the smallest location and 26 at the largest. “We did our homework and saw that small stores were not going to be sufficient, given the challenges we were seeing with gas margins,” Bahnam says. “We realized that the only way to do this was to go big. That’s when we decided to go with a market, more than just a c-store. Was it risky? Yes. A lot of people thought we were crazy spending that kind of money on gas stations, but we were comfortable with our vision.”
To further accentuate girth despite a modest store count, Bahnam has extended his brand, rolling out proprietary USA 2 GO motor oil, bottled water and lighters. “People always perceive us as a national company when they come in,” he says.
His branding extends to the car wash he has on site at his third location, which opened in 2009. The 120-foot tunnel wash, manufactured by Belanger of Northville, Mich., is branded with his logo and colors. His eight free vacuuming stations and 10-cent-per-gallon gas discount to all car-wash customers generates a positive, generous vibe around his brand.
His quarterly in-store promotions and giveaways also contribute to his brand equity. Each quarter, Bahnam focuses on a different department. Last year, for example, he offered 10% off a purchase of two or more bottles of wine and gave away a wine cooler and full wine set. Starting in January, he’s offering two gallons of milk for $5 and is giving away an Apple iPad.
“We’ve had huge participation in the giveaways,” Bahnam says. “The winners are always shocked when we call them. They perceive it as some kind of gimmick retailers use and don’t follow through on.”
To combat that misperception, Bahnam puts a framed photo of the most recent giveaway winner in each location, next to the new giveaway entry boxes. The giveaways also help USA 2 GO build a database of customers’ phone numbers for text promotions sent out by PNG Marketing, which handles most of Bahnam’s promotional efforts.
Time for Tim
Neither of the partners came from a foodservice background, but both knew it would be critical for driving in-store profits. When they started, they went safe, partnering with Wendy’s, a well-established QSR, at one location.
“Back when we started, joint ventures with other companies were popular,” Bahnam says. “It worked well for us for a while, but later I realized that having foodservice was a necessity,” not just to attract customers to his convenience offerings, but also as a source of income in and of itself.
Their second store, a full 4,500-square-foot space that opened in 2005, offered grab-and-go, as did their third store, a robust 7,000-square-foot space that opened in 2009. “But the grab-and-go items weren’t really cutting it for us,” Bahnam says. “We learned that what we really wanted was to be owners, franchisees.”
Today, Bahnam is exactly that: a franchisee. Three of his four USA 2 GO locations have Tim Hortons, a 4,000- store chain and Canadian icon that is popular in Michigan as well. One of the Tim Hortons is an in-store kiosk with no seating but a full menu. The other two are adjacent to the c-store spaces with interior access and a drive-thru. The newest location, opened in December 2012, also includes a Cold Stone Creamery, one of Tim Hortons’ affiliate companies.
“It’s basically a best-case scenario,” Bahnam says. “We are able to learn from the experience of a company that’s been around for 60 years, but we are the ones to benefit from the profits. We don’t do any of the thinking process involved in running foodservice. We just learn the system, making sure to monitor things properly. Then we can focus our time and energy on our c-store operation.”
Selection Strategy
Much of Bahnam’s “time and energy” has been focused on building variety in his stores. Given the ample space at most of his locations, he’s able to stock wide selections of classic c-store snacks, candy and health and beauty care items. But beverage is the category in which Bahnam has found the most success in diversifying. “Beverages have very much been the strength of our company,” he says.
His nonalcohol offering includes f’real milkshakes, smoothies and iced coffees, again branded with USA 2 GO’s name. The stores offer 20 heads of fountain drinks and fresh-brewed iced tea, all of which sits on a large island in each store.
In recent years, Bahnam has focused on expanding his alcohol selection as well. In three out of the four stores, he has more than 400 square feet of liquor offerings. He carries hundreds of different wines and puts a huge focus on craft beers. The “Mix a Brew” program he introduced last year has been a great success. Customers can make their own fixed-price six-pack with beer from local Michigan breweries.
“We’ve struggled to get people to see us as a destination for beer and wine,” Bahnam says. Nonetheless, sales have quadrupled since the stores’ alcohol-beverage selection began expanding. Series 2K, the Web-based office system software they switched to in 2010, has streamlined their success. “It has helped us tremendously in purchasing, inventory and margin control,” he says.
Like many owners, Bahnam believes listening his customers is the most important factor in making business boom. “Groceries was never an area we heard from customers about, but because of feedback on our beverage category, we’ve been improving gradually,” he says.
Bahnam says he and Koza are definitely open to growing their business with additional locations, but expansions have to be carefully calculated. “It has to be the right time and the right location, especially with the tough economic challenges we have today,” he says. “It seems like there’s a light at the end of the tunnel where economic recovery is concerned, but things still have to be done with caution.”
In the meantime, Bahnam is contributing to the industry as a board member of the Association of Food and Petroleum Services. “We’re committed to this business and want to get involved at all levels,” he says. “This will give us a chance to represent small owners like ourselves and help us all be more successful.”
Looking back, Bahnam sees some major differences about doing business in Iraq vs. the United States. “Purchasing is the easiest thing in this country,” he says. “That is not the case in Iraq. There it’s hard to get products and easy to sell them. Here, selling is the hard part.” Now, Bahnam is grateful for the relative economic stability of the market he’s in. “In America,” he says, “there’s a certain freedom in doing business.”
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