"As the industry has moved away from service-bay operations and toward more convenience stores, car washes and other alternate profit centers, it is necessary to reconfigure sites to optimize the potential of the location," Wayne Warmack, director of strategy implementation (West Coast) told CSP Daily News.
He said WRAP is a way for [image-nocss] Houston-based ConocoPhillips to assist resellers and marketers in redeveloping their sites to improve profitability and viability, increase the fuel volume sold and enhance the 76 brand image. Up to 25% of the total project costs of smaller projects and up to 33% of raze-and-rebuild projects are covered in the form of a self-amortizing loan, depending on the company's economics, which are based on the project volume uplift, cost to supply each site and forecast margins in each market.
Since WRAP was first offered in 2008, more than 400 sites have been approved or begun due diligence to see if a project is justified. A project must be approved by the end of 2010 to qualify; operators then have three years from the date of approval for completion.
Of the projects, Warmack estimated that at least one-third will be raze and rebuilds. "Sites that were built with the building in the center of the lot typically make the best raze-and-rebuild candidates because in order to build a good-sized c-store with 'touch parking' on the front, the building really has to be torn down and relocated to the back of the site."
He added that as long as the site operator uses a licensed contractor and meets the minimum quality and investment standards of the WRAP program, they are free to choose their own vendors, contractors and architects. "However, ConocoPhillips has developed a list of companies that are familiar with the program requirements who offer soup-to-nuts solutions that meet the program requirements if the operator is looking for help in pulling their project together," he said.
Operators can also use their own lenders if they choose, but ConocoPhillips has developed a list of lenders and loan brokers that are familiar with the program for operators seeking a new lender.
The company had conducted third-party market analysis to confirm that the 76 locations "are as good as or better than any other major from a real-estate perspective" or have "dirt strength" as Warmack calls it. "Studies done to justify the program indicated there is the potential for significant improvements in fuel volume as well as additional c-store revenue resulting from improving 76 facilities on the West Coast. In addition, it provides the operator with an improved site, better positioned to compete in a very competitive marketplace."
Warmack said studies from Houston-based IMST and Tulsa, Okla.-based MPSI show the reimage opens the potential to generate an additional 70,000 gallons per month of fuel volume and increase c-store sales more than $75,000 per month in additional revenues.
He added that the company is interested in "doing the right thing for each site," and will also partner with operators to develop up to eight potential future site plans to run through the MPSI or IMST models to identify the best redevelopment option for each particular site. "Since our participation is based on a percentage of the total project cost, we intend to do our part to encourage great projects."
Efforts to promote the sites once they are operating include a grand-opening reimbursement and a new 76 advertising campaign.
Grand opening reimbursement is based on project type, with the amount refunded up to $5,000 per site. "The goal is to draw attention to the improved facilities and help create excitement and additional traffic," Warmack said.
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