SAUQUOIT, N.Y. -- Rich Reilly built a small empire to complement his sole convenience store. And he didn't have to acquire any additional property to make it happen.
Reilly, president of Reilly's Dairy Inc., Sauquoit, N.Y., owns and operates a 4,400-square-foot store on a 25-acre lot (only a third of which is usable space) that also includes a Sunoco-branded fuel island, three self-serve car wash bays and a redemption center for recycling customers' bottles and cans.
Through the years, we've had to evolve so much, Reilly told [image-nocss] CSP Daily News. He noted that the family business began in 1942 as a wholesale dairy operation. We didn't even have hot coffee when we first opened, and now it's one of our leading profit makers.
Part of the site's evolution came about as a result of innovative thinking, and part came from changes imposed by New York State's powers that be. In 1983, the state passed a bottle bill requiring c-stores to act as collection depots for recycling bottles and cans. That imposition gave Reilly incentive to invest in the redemption center.
Everyone was complaining about it, but customers were standing in our parking lot with cash in their hands, he said. So I made it a destination. It's not a big moneymaker, but it does attract customers that wouldn't come here otherwise. Most of the time they don't leave here without buying something.
But Reilly just had a gut feeling about the profit center that might have been his best idea: self-storage units. He added the first two self-storage buildings in 2000, and they found immediate tenants. He further expanded the number of storage units in 2002 and 2004. Today the site houses more than 100 for-rent storage units.
I rent them out right inside the store, and customers can make payments here, he said. It's a business that fit right in, and I didn't have to hire anyone else. They're very low-maintenance. The hardest part is collecting money from deadbeats.
Despite increased competition, Reilly's storage units enjoy a 90% occupancy rate. The smallest units (rental fees of $45 per month) measure 5 feet by 10 feet, while the largest units ($130 per month) measure 10 feet by 30 feet. He bought the units from an Arkansas company and used a New York contractor to install them, while he handled the site prep and poured the concrete for the units' foundations.
Reilly characterized the storage units as having a good return if you have good occupancy. It took him an estimated two years to recoup his money. It's not that big of an investment, he said, but I already had the land.
If he had the chance to go back and do it all again, he admitted he would have done at least one thing differently.
I probably wouldn't have done the car wash, he said. I never liked the car-wash business. It's a large investment. I'm in a small town, and I over-anticipated how much volume it would do.
For the immediate future, Reilly plans to focus on growing the self-storage business. Also, after numerous site investments, he's investing more energy in operations and marketing to get the cash coming the other way, he said.
I've thought about other storesmore stores, he said. People have approached me, but I've got enough to handle. I'm hands on, and this is like having four stores.
Look for more on retailers' real-estate strategies in the October 2007 issue of CSP magazine.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.