The growth of the independent class—those retailers with one to 25 stores—has prompted a call to arms: cleaner sites, friendlier staff and an inspired customer experience.
Sure, it’s nothing that the forward-thinking chains aren’t also doing. But at 63% of the industry, indie operators have a big role in the ongoing effort to improve the c-store experience. It’s a focus of NACS and its incoming chair—and fellow independent—Jack Kofdarali.
CSP spoke with a number of independent operators to identify their strategies, struggles and successes toward becoming better operators—raising the bar for themselves and the industry as a whole.
The New Face of NACS
Lebanon’s 15-year civil war that ended in 1990 displaced 1 million people. One of them was Jack Kofdarali. He escaped the fıghting, but at the cost of his father’s lumber business and all of the family’s possessions. After an initial stop in Chicago, the family of five moved west, with 17-year-old Kofdarali driving a U-Haul behind his parents in two separate cars. They stopped in Orange County, Calif., where they managed to buy a tiny liquor and convenience store. Today, Kofdarali and his wife, Taline, operate 25 stores under J&T Management in Corona, Calif., as one of ampm’s largest franchisees. And this week he takes the reins of NACS as its first chairman who is a U.S. immigrant.
For Kofdarali, the mandate is clear: Independents must elevate their game. Under constant scrutiny from local lawmakers and neighborhood watchdogs, c-stores overall have an image problem. Leading by example, he spends $10,000 in each new store for upscale, granite fıxtures in the restrooms; cultivates a friendly, customer-fırst culture; and prioritizes team building and best-in-class execution. As a result, each year his managers win a disproportionate number of ARCO awards based on sales increases and mystery shops.
“We fıght so many misconceptions,” Kofdarali says of c-stores. He believes engagement starts with local offıcials because they tend to rise to state and federal positions. “I love building [stores] from ground up, but … we fıght [perceptions and regulation] on every level.”
0.3% - Growth of singlestore operators since 2011. Though the pace of independent growth has slowed, they still represent a majority of the industry.
The Indie Impact
The one-store operator is getting back on top, growing to the majority at 63% of stores in 2015—a 13-percentage-point increase since 2001, when NACS began tracking the numbers.
Operators with one to 25 stores make up a majority of the c-store population in every region of the country, with the Southeast having the most.
Big Store, Big Expectations
Lanman Oil’s new store offers clean restrooms and friendly service to 2,000 customers a day.
A year ago in July, Lanman Oil opened a new travel center with a 7,000-square-foot c-store, fried-chicken operation, spirits, gaming and fresh grab-and-go salads, wraps and subs. In the middle of all that, president and owner Michael Lanman built what he considers the best restrooms for miles around, which feature handle-free entrances, wooden stall doors and touchfree sinks that control water temperature for maximum comfort. Accessible mop sinks help employees execute their hourly cleanings.
Located in Tuscola, Ill., a town of 5,500, Lambo’s sits off I-57 and I-36, about 2 1/2 hours outside of Chicago. It handles 2,000 customers a day and is one of four company-operated locations that tie into the firm’s fuel supply and transportation businesses.
Despite competition from major consolidators and regional powerhouses, Lanman sees room for Independents like him. Pockets exist where he can not only survive but also thrive. The glaring opportunity for his Charleston, Ill.-based company comes with improving customer service, something his nearest competitors simply aren’t doing.
“A customer with his young family told me that [before coming to us], they stopped at banks because they had the cleanest restrooms,” he says. “We can be better— from our facilities to our cashiers.”
A unique competitor of his—a drive-thru c-store where customers pull into a covered driveway and staff runs items out to them— as well as a nearby McDonald’s prompted Lanman to create a drive-thru of his own at the travel center. But so
far, he has had mixed results. Despite spending $150,000 to put coolers, a coffee bar and baked goods next to what is essentially the fast feeder’s drive-thru, traffic has not met expectations.
That said, he’s not giving up; he plans to add signage and speakers to upsell c-store items to his foodservice customers.
Rise of the Indie
The expansion of the independent class traces back to the 1990s with the major oil companies and the vast networks of retail gasoline stations they built. Their destinies paralleled the merger of convenience and the pump.
1990s: Major oil merges
As oil companies began to consolidate, they created conglomerates of upstream and downstream assets that needed pruning to receive government approval. That freed up the first wave of selloffs.
2000s: Majors exit retail
In the next decade, the trend continued as most major oil companies left retail altogether.
7,000 - The estimated number of major-oil retail outlets in 2005, representing 7% of the 106,000 convenience stores at the time.
443 - The number of major-oil stores in 2014, less than half a percent of the 152,794 c-stores in the United States at last count.
Doubling Down
Though it took Southern Sandoval Investments 13 years to open its second Warrior Fuels store, the company set its sights high. The Santa Ana, N.M., company built its fi rst 5,500-square-foot store in 2002 and jumped to 7,500 square feet for its second, which opened in April 2013. The fi rst store had six pumps, the second 21. But both have extensive foodservice including freshly made burritos, enchiladas and chile rellenos, says Silvia Gibson, manager of retail operations for Warrior Fuels.
700,000 - Fuel gallons sold monthly from both stores
$3 million - Cost of building the second Warrior Fuels store
700 - Breakfast burritos sold per day from both stores
Lanman Oil’s new store offers clean restrooms and friendly service to 2,000 customers a day.
A full kitchen supports Warrior Fuels’ regional Tex-Mex menu.
Highs and Lows
Though no true performance averages exist for independents on the whole, NACS calculates top and bottom performers in its annual State of the Industry report. Independents can be top performers and are represented to a degree in the NACS numbers, but larger chains often have the capital and clout to be able to build bigger stores, secure better supplier deals and have stronger in-store programs.
A Fetching Idea
If a new idea goes south, a retailer could find his business in the doghouse. For Dwayne Cover and Tom Moser of Westminster, Md.-based Tevis Oil Inc., that may not be a bad thing.
Cover is business manager and Moser is general manager of the company, which does business as Jiffy Mart and operates four stores and a heating oil business just outside of Baltimore. Three years ago, Cover and Moser tied a pet wash to a site that also has a car wash, Subway, Dairy Queen and a 5,000-square-foot c-store.
Purchased for about $36,000, the pet wash sits in a separate, climate-controlled building that’s open 24 hours a day. Customers pay $5 for six minutes and, as with a car wash, they can add shampoo and conditioner as well as flea-and-tick remover.
Though a modest profit center, it draws families and pet owners from all over Carroll County and offers Cover and Moser a point of differentiation amid big regional players such as Sheetz and Wawa.
In terms of pet wash must-haves, they threw us a few bones:
- Credit-card acceptor: Cash gets wet.
- Rubber aprons: They keep owners dry.
- Water pressure: The hose water has to give a good scrub to the big dogs but can’t blast away the Chihuahuas.
The employees of Jiffy Mart want animal lovers to love the stores.
Expanding As A Segment
Though chains are both acquiring and building ground-ups, they’re also shedding stores that don't fit their models, opening up opportunities for entrepreneurs.
500 - Members
26.7% - Single-store owners’ storecount growth since 2003
3.4% - Chain-store owners’ storecount growth since 2003
This past summer, the Milpitas, Calif.-based American Petroleum and Convenience Store Association (APCA) launched its third chapter, North Bay, which will stand alongside its Fresno and Bay Area chapters to represent 70 store owners from Santa Rosa, Sonoma, Fairfield, Napa and Vallego. In a fragmented industry, developing a united voice is difficult, but it’s important if store owners are to reach their full potential, said J.P. Sethi, chairman of APCA, at a launch ceremony in August.
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