BURLINGAME, Calif. -- On-demand fueling, in which consumers can order a fill-up of gasoline where and when they want through an app, used to be considered a niche industry. But based on the growth of one early mover in this space, it is becoming a potentially disruptive force to the traditional fueling industry.
Within its first 18 months of business, Booster Fuels has delivered more than 3 million gallons of gasoline, both regular and premium grade, to customers in the San Francisco Bay and Dallas-Fort Worth suburbs. This is in between filling their tires, replacing wiper blades and cleaning windshields.
“Our average customer uses Booster as their default, No. 1 source of gas,” Frank Mycroft, CEO at Booster Fuels Inc., Burlingame, Calif., told CSP Daily News. “We’re not the emergency option; we become the normal for our customers.”
While the idea of fueling at “the push of a button”—or in this case, an app—seems like a luxury, Booster aims to show that it is an option for most everyone. For one, unlike some on-demand fueling providers, Booster does not charge a delivery fee. It also offers prices several cents below the market average for regular- and premium-grade gasoline.
“It’s pretty easy to build a service where you go to peoples’ homes, in an affluent neighborhood, and charge them a premium for a luxury service,” said Mycroft. “Booster is about leveraging technology to provide a better service for the masses.”
Here are six insights into Booster Fuels and its plans to upend the fueling transaction ...
1. The origin story
Mycroft, who has a background in aerospace engineering, became familiar with mobile fueling at airports, where trucks would service the planes in between flights. But the idea really began to solidify about three years ago, when he and his wife were expecting their first child.
“I went to the gas station to fill up my and her car for both of our commutes,” Mycroft said. “And after a month of doing this, it occurred to me this is probably the least favorite thing I had to do in my weekly routine.” He also heard from friends who had experienced crime while at the gas station—having a purse snatched or a credit card hacked—and wondered if there was a better way to refuel.
“If you really want to reinvent the way people get gas into their car, you had to find a way to do that and not charge people any more than the gas station,” he said. “We would build a business, deliver gas, be more environmentally friendly, convenient, efficient, more cost-effective than a gas station.”
2. On campus
While many on-demand fueling services deliver gas to individual customers’ homes, Booster Fuels decided to focus exclusively on serving corporate campuses because of the greater cost efficiencies of fueling multiple vehicles in one area.
Today, these businesses include more than 250 companies in the San Francisco and Dallas-Fort Worth areas, such as Cisco, Oracle, eBay and PepsiCo.
The corporation signs a no-fee contract that gives Booster Fuels permission to come on to its property to provide service. The company, meanwhile, can market the service to employees as a perk. Employees in most cases pay for the fuel themselves, although some companies subsidize the cost, provide gift cards or apply funds to pay for fuel to an employee’s benefits account.
Some of the first corporate clients now have more than 50% of their employees using the Booster Fuels service as their main fueling occasion.
At minimum, Booster Fuels provides free, same-day fuel delivery to all customers. Anyone who orders by 10 a.m. will be fueled up by 4:30 p.m. Those corporate campuses with more customers have other delivery-time-frame options, such as a one-hour rush delivery, or morning or afternoon rush services.
3. Priced to sell
Booster Fuels is able to offer gasoline at 5 to 15 cents per gallon below the market average, Mycroft said, “and that’s before you take into account the value of time, wear and tear on a car and the gasoline the car would burn to go to a gas station.”
How it can provide discounted fuel involves some proprietary “magic,” he said. Some of it includes not having the overhead costs of a fueling station. Booster also uses small tanker trucks that can fit in an average parking spot but also carry enough gasoline to minimize frequent refueling runs during the day.
And some of it involves cutting costs out of the century-old fuel supply chain.
“We probably go as far up the supply chain as we can,” said Mycroft. “Every time someone in the supply chain is loading fuel from somewhere, moving it or transferring it to a storage system, you have to pay for that driver, that truck and transfer time. We look for opportunities to cut out those costs whenever possible, and bring higher-quality, zero-impurity … product to the end consumer.”
4. Safety first
On-demand fueling services have raised concern among some local regulators and fire marshals who have struggled to make current regulations fit to this completely new model. Booster has sought to establish a strong relationship with regulators from the beginning, said Mycroft. Beyond having certified and trained drivers and compliant fueling equipment, it means explaining to city and state regulators the benefits that Booster Fuels’ service provides to the community.
“Our decision to service parking lots where cars are clustered together helps to reduce vehicle miles traveled, CO2 emissions and road congestion,” said Mycroft, noting that most of Booster’s driving takes place on private, commercial property.
“Every delivery we do actually eliminates a trip to the gas station, typically at peak commute time, which cities love,” said Mycroft, adding that Booster Fuels also provides more local full-time jobs than a traditional gas station.
5. Fleet growth
While commuter vehicles make up the bulk of Booster Fuels’ deliveries, a small but growing segment is fleets. The company currently serves “dozens” of fleets, from commercial and logistics companies to couriers and rental-car operations.
“We solved a key problem for a lot of people in this space, whose only alternative up until now might have been going to the gas station,” said Mycroft. It also allows Booster Fuels to keep its trucks running through the night and continue to build cost efficiencies.
6. Risk and reward
Thus far, no major, traditional U.S. fuel retailer is offering on-demand fueling at customers’ homes or workplaces (although at least one major oil company, Shell, is testing the concept in Europe). Mycroft believes the service requires certain qualities that are more common among startups.
“This opportunity is challenging and complex, and requires new tools and thinking and different skill sets and motivations than the conventional world has,” he said. For example, Booster Fuels has invested in a large engineering team to oversee the app and the fueling service itself.
And while the company’s growth plans are cautious—it does not plan to add any new markets until the end of 2017—its approach to creating a new business model is not.
“Great startups exist because we’re willing to take that bold risk and try something new and different,” said Mycroft, pictured above. “We see an opportunity, are willing to roll up our sleeves and make it reality.”