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Multi-profit Centers

C-store, see profits?

October 11, 2010
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For some reason, convenience stores across the nation seem to be prospering during these tough economic times. Even though the products do not offer as much bang per buck as a grocery store or big box store, customers — looking for convenience and efficiency — don’t seem to mind.

For instance, a can of soda at a convenience store can cost about $1; yet an entire six-pack at a grocery store or big box store is $3. Luckily for c-store owners everywhere, cost logic is not at the forefront of the average c-store customer’s mind.

According to the National Association of Convenience Stores (NACS), there are 144,800-plus stores throughout the United States which combined, account for more than $624 billion in sales.

Jeff Lenard, a spokesperson for NACS, said, “While no one wants an economic downturn, our industry may be more recession resistant than most. We sell immediate consumption and fulfill immediate needs. When you’re hungry, you buy something to eat. When you’re thirsty, you get a drink. And when you are low on gas, you fill up.”

Lenard added that in 2009, in-store sales at convenience stores grew by five percent compared to the prior year.

Carwash + c-tore = good idea?
Carwashes and convenience stores work well together because customers getting their cars washed are probably already on the go and looking for a quick caffeine fix, snack or sugar boost. Convenience stores that sell air fresheners or other low-cost car care-based products also can seem attractive to people who just spent their time getting their car cleaned.

Terrence Elder knows first hand what it’s like to own both a c-store and carwash. Based out of Attleboro, MA, Elder owns Mobil on the Run and Triple Play Car Wash. His business includes a friction and touchless carwash, a six-bay detail center, a three-bay quick lube, a 3,500-square-foot convenience store (including a Dunkin’ Donuts with a drive-thru and a deli) and gas pumps. It’s a lot to juggle, but Elder said running the convenience store is cake.

“I always wanted a multi-profit center and a convenience store seemed to be a good idea. I needed something that could push carwash sales,” Elder said. “It’s a great idea as it’s getting harder to keep carwash sales up.” Elder said that while the carwash makes up for most of the profits, it’s the convenience store that attracts customers from the road.

Making it work
As with any multi-profit center, thorough planning is crucial. Construction, start-up costs, maintenance demographics and competition all need to be considered, and then reconsidered on a regular basis after it’s up and running.

Before any decisions are made, Lenard suggested questioning:
  • What is the customer base and how are they being served?
  • What’s the competition?
  • What skill sets do you need to acquire?
  • Do you have the right people in place to succeed?

Lenard also said to consider your exact address and to not paint any plans with a broad brush. “Looking at sales and profit averages is important, but that doesn’t address your specific location,” he said.

Instead, analyze the demographics of your location and figure out what your customers are looking for, what they will buy and at what price.

As for competition, Elder said to not build a c-store if it’s next to or even near another well-known c-store, like a Wawa, 7-Eleven or Cumberland Farms. “Don’t be near those guys, because they are tough to beat,” he admitted.

A few challenges
A few of the most challenging aspects of running a c-store, according to Elder, have to do with inventory control, theft and employee management.

Inventory control, Elder said, is the most challenging as it’s an up and down, unpredictable balancing act and the unstable economy doesn’t help. However, he said his store is still up about 25 percent since 2009.

He admitted that nothing in his store in necessarily affordable, but said that beer (see sidebar: What's selling?) and tobacco, his top two selling products, combined account for 65 to 70 percent of his sales. “Customers have always seemed to want their beer and tobacco. People seem to think they always ‘need’ these items and we offer it to them conveniently,” he said.

As for theft issues, a c-store will need good surveillance equipment at all points of the store including over the cash registers, ATMs, and near the doors. Also, employees will need to be trained in what to do if there is an armed robbery and what to do after an incident occurs.

Another challenge has to do with employee management. Employees will need to know how to properly check the identification of people looking to buy alcohol, tobacco and lottery tickets.

Elder’s c-store, which is open 24 hours a day, seven days a week, has anywhere between two to three staff members during its daytime hours and one employee during the third shift. Workers cannot jump from one profit center to another.

The Dunkin’ Donuts employees are under the management of the Dunkin’ Donuts corporation as Elder leases out the space to them, therefore, if no one is buying donuts, but there’s a long line at the c-store counter, those employees cannot jump ship.

It’s difficult finding employees for that third shift, the graveyard shift, but Elder said he has lucked out. “It’s easy for me as I have a great staff, which makes a huge difference.”

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