EET Retail is on track to hit its target of operating 100 Essar-branded leased forecourts in the next 12 months, and 500-plus in the next five years, says its recently appointed chief executive officer for retail Narayan Bhatra.
The retail division of EET Fuels, formerly known as Essar Oil UK, has eight company-operated sites currently signed up to the lease model, which the business announced in February it would be using to grow its forecourt network.
Since taking these petrol stations under its wings, giving them Essar branding and other improvements, turnover for them has increased by more than 20% on fuel, and there has been a double digit week on week growth on the convenience side over the past few months.
Bhatra, who was appointed in June to drive growth in the company’s forecourt business, says that there are currently another 15 locations expected to sign up to the lease initiative, and that ”more opportunities are in the offing at various stages of prospecting and development”.
Most of the agreements are with independent operators for one or two of their sites. But the business is in discussion with some of its dealer-operated sites, and also one undisclosed Top 50 Indie which has been considering leasing all of its locations with EET Retail.
An attraction of the 15-year lease is that EET Retail invests in developing the petrol station. The landlord can sell their business at any point after signing the agreement, with the lease arrangement remaining in place. Highway Stops, for instance, went to market to sell two sites after each had been developed, benefiting from their better market traction and valuation.
“We don’t glorify this, but it is a free market and we don’t prevent landlords from discovering their sites’ value,” says Bhatra. ”But we are very clear that it is a 15-year lease, and that we will run the business for 15 years as per our contract terms, and add value with our value propositions and ops excellence rigour.”
With the lease tying in sites for longer than the five-year dealer contract, Bhatra says that it is the company’s preferred model for future expansion. The longer life of the lease package offers EET Retail greater longevity than expanding its 45-strong dealer network, he explains.
Bhatra says that key to the success of its lease package is that it is backed by the company’s Stanlow refinery. “It gives fuel supply security to the operators, with a strong future driven by sustainability and greening of the refinery. This offers a unique position to EET Retail,” he adds.
“We want a steady, consistent business strategy which is long-term and sustainable. We are here for the long-term backed by sustainability plans of EET Fuel’s Stanlow mega site,” he adds.
Currently the company offers hydrotreated vegetable oil (HVO) on pump at its flagship Lea Gate site in Preston. Bhatra says that this will be a focus area for all suitable locations.
Bhatra says currently the higher price for HVO compared with diesel is holding back the fuel’s growth and market penetration, but that the business expects to be an “active player” in this area as interest in cleaner fuels grows, and he says the Stanlow complex is well placed to leverage this emerging market opportunity.
The business is also planning on piloting EV charging stations at several sites by the end of this year, and Bhatra says it is focussed on introducing ”strong customer centric value propositions” like jet washes, as core propositions in its growing network.
It is also looking at extending the number of different shop fascias it has from its current agreements with Morrisons, Londis and Spar. “We are happy with our partners, but are talking to one or two other players in convenience so that we have an offer which suits every type of location, demographic and market needs,” says Bhatra.
He says that he is happy with his progress so far in his role. “I’ve spent a lot of my time in the first four months developing the organisation’s structure at EET Retail, and interest in the lease model has been greater than we anticipated. We are confident that backed by the strong parentage of EET Fuels and the Stanlow mega complex plan of sustainability we will be able to achieve our long-term goals,” he adds.
