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ExtraMile Joint Venture Opens for Business

Top execs discuss the new company's strengths, expansion plans and more: Q&A

SAN RAMON, Calif. -- ExtraMile Convenience Stores LLC (EMCS) debuted this month with the goal of expanding the ExtraMile retail brand across the western United States. The new company is a joint venture announced in September 2017 between Chevron USA Inc. and Jacksons Food Stores Inc., and it plans to double the number of ExtraMile c-stores by 2027.

“This is an exciting time for Chevron, Jacksons and the new company as we kick off the next chapter in our ExtraMile growth story,” said Paul Casadont, former Americas merchandising manager for Chevron and now president of EMCS. “By partnering with Jacksons, we are well positioned for dramatic growth over the next decade; we intend to double the number of ExtraMile sites in that time.”

San Ramon, Calif.-based Chevron’s more than 250 company-owned and -operated ExtraMile locations are now franchisees of EMCS. During 2018, Jacksons—a Meridian, Idaho-based convenience retailer with more than 230 locations in six Western states—will begin converting its more than 60 existing company-owned and -operated Jacksons Food Stores at Chevron and Texaco fuel locations to ExtraMile under the EMCS franchisee umbrella.

The ExtraMile network, which Chevron briefly considered selling before moving to the new franchise arrangement, includes close to 800 c-stores in California, Oregon and Washington. The new company will be based in San Ramon, Calif.

CSP Daily News spoke with Casadont; John Jackson, president and CEO of Jacksons Food Stores; and Lorne Chambers, Chevron’s general manager for retail west, about how the ExtraMile joint venture came about and what it means for the two companies.

Q: How is the ExtraMile joint venture set up?

Chambers: The joint venture is the franchise organization as a whole. There aren’t any assets per se; it’s a franchisor of the brand, so it brings operational expertise, it brings buying power, advertising execution, all those things that come with a brand that a franchisor would offer. Each of the shareholder parties has company-owned, company-operated assets. Jacksons has 65 company-owned sites that will be Chevron-branded and Jacksons Food Stores that convert to ExtraMile, and Chevron has 220-plus. Those will still be owned and operated by Chevron and Jacksons, respectively, but they will become franchisees.

Q: What is the strategy behind the ExtraMile joint venture?

Chambers: Jacksons Food Stores and Chevron both saw this as an opportunity. Any joint venture has a high opportunity of success at being better than any one of the entities on their own. You need two organizations that have aligned objectives, and Jacksons and Chevron certainly have that. But they need unique and complementary skill sets. And that’s really what we saw: that Chevron has a lot of strength in terms of building a brand, advertising a brand, and Jackson has a very entrepreneurial spirit, quick to take things to market. So we really wanted to look at combining the best of both of those. We wanted an entity that was nimble, that could set its own course in terms of expansion.

Jackson: Chevron is a large corporation that is more deliberate and slower. We want to change that.

Q: Unlike most other major oil companies, Chevron still owns retail outlets. How does the ExtraMile joint venture fit in with that model?

Chambers: A lot of our current customers have asked us about that. I view this as a doubling down on our ownership in retail. We have no intention of selling our company-owned, company-operated stations; in fact, we’re still looking at adding through building new ones. That’s a given. We’re still going to have skin in the game.

With ExtraMile, there were other opportunities, and one of the things that was in front of us was: Do we want to just sell it off to a partner? We decided no. We see real power in having exclusivity of that ExtraMile brand, meaning it will only be married up with the Chevron or Texaco brands. We didn’t want ExtraMile with other fuel brands because we see a product positioning in that quality space that Chevron occupies. That marriage makes sense, and we want it to be very clear in the customers’ mindset that one goes with the other, so we’ve got to remain in an ownership position. We already had a great business relationship with Jacksons Food Stores, and it didn’t take a lot of analysis to figure out that this was the right union.

Q: Were there other interested parties?

Chambers: There was interest out there. We did not pursue it. We didn’t enter into any true negotiations or discussions with any other partners. We went exclusive with the Jacksons organization very quickly. This exclusivity was a key caveat of us wanting to do something, and Jacksons was the right party for a number of reasons.

Q: What is ExtraMile’s plan for growth?

Jackson: Our plan is to double the store count in 10 years.

Casadont: If you look at our current footprint of ExtraMile, right now we are exclusively California, Oregon and Washington. We see opportunities for continued growth in those markets, continuing to fill out the footprint in those states, as well as expanding from a state perspective on where we currently have ExtraMile stores.

Q: The Jacksons rebranding will extend into Idaho, Nevada, Utah and Arizona. What about other markets?

Chambers: There are other opportunities, no question. When we talk about that doubling, that’s really a commentary on the Western United States. And the ChevronTexaco brand already has a very strong, mature footprint in portions of the U.S. East, and there’s interest there as well. The growth, above and beyond the doubling, is really only limited by us being at a point where we are confident we can reliably deliver that high-quality ExtraMile brand proposition. We want to be a reliable, quality supplier and not get ahead of ourselves.

Q: Will there be any changes to the ExtraMile offer?

Chambers: From purely what are the contract terms of the franchise offer, there will be no change. The incentives, the royalty rate, the marketing fee will not change. That’s uniform. But we have some pretty exciting changes to the actual offering—product lines, promotions to consumers—that we’ll have teed up within the first year. Franchisees and consumers are going to see some things right away that signal that this is growth, and it’s new and exciting and different.

Casadont: We are learning very quickly with our new partner, Jacksons, on continuing to evolve our ExtraMile offer. The growth opportunity is great, and it’s why we’re doing this. It will evolve at a quicker pace than what it has previously.

Q: What does the joint venture mean for the employees of the organizations?

Chambers: We’ve cut out the ExtraMile support group from within Chevron, and we added to that with some additional new positions. Most of the employees day one will be former Chevron employees, so we’re going to keep them where they’re currently located. At some point in 2018, we will move out of the Chevron offices in San Ramon and we’ll find some different office space somewhere in the area. We’ll get out from under the Chevron roof, but we’ll be nearby.

We’ve already added new positions, so it was carving out the ExtraMile folks that were within Chevron plus newly created positions to grow this organization. We’ve been interviewing, and Paul and his team have already been extending offers to new employees.

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