Forecourt retailers moving into standalone convenience stores has become a popular route in recent years but Peregrine Retail is one up-and-coming operator daring to make the reverse move and venture into the oily business of forecourt retailing.
But managing director, John Mason, is not fazed one bit by the unique challenges of the fuel retailing sector. By the end of this year, four of his seven stores will be on forecourts, and next year he expects to add two more petrol sites.
"Considering the amount of competition from the likes of Tesco Express, to have a robust, profitable site, it needs to incorporate a good shop, fuel and decent car wash facility," he says. "You’ve got to be extremely cautious when you open a standalone shop nowadays because of the competition. If you’ve got a really good fuel site the risk of another site opening from scratch is extremely unlikely. Fuel volume needs to be at least 4mlpa that’s a good volume as long as it’s sustainable."
John says that meticulous research is paramount when looking for a new site. "You’ve got to look at the area in detail the road networks, the likelihood of new competition coming in. You can only do that by looking at the area yourself. A lot of companies look at demographics and give reports but if you get to the site and parking is behind the building or it’s on a bend, it’s not what you want."
With fuel margins being squeezed increasingly, John says location plays a huge part in his development plans. "If you buy a site somewhere like Bristol or Gloucester where fuel prices are through the floor, you have to accept that it’ll be a site with tight margins. The trick is not to buy a site in an area where it’s hugely competitive. You need to either be in a solus position or somewhere not particularly price competitive. I saw a site in Salisbury where prices were so low that they were only making 2ppl. The owner said if they try to make 4ppl, volume goes through the floor."
While Peregrine Retail is new to the forecourt world, it’s not lacking any experience in the c-store side of the business. The company’s operations director, Tom Orford, is a former Budgens regional sales manager, and John began his retailing career as property and development director at independent c-store chain One Stop in 1990. For 10 years he built up the network from 30 stores to 220, and it was sold to T&S Stores, which then sold it to Tesco.
John then took up the same role at Balfour for three years, and that network was sold to the Co-operative Group in 2003. Finally, he helped develop Smile Stores, building that chain up to 100 stores and making it a worthwhile purchase for McColls in 2007.
"Jeremy Symonds, who owned Smile Stores, wanted to set up Symonds Forecourts and had already bought a few sites at the tail end of Smile," explains John. "After Smile was sold the idea was to move forward with forecourts and I opened a few for Jeremy. But I had some of my own shops, too, so I decided to part company with Symonds, and Jeremy bought me out in 2009."
Since then, John has put all his efforts into developing Peregrine Retail, principally with Budgens convenience stores until he bought a forecourt in Blashford, Hampshire, in April 2009 from fuel distributor Watson Fuels. The Blashford site was immediately rebranded BP and redeveloped earlier this year to incorporate a 2,300sq ft Budgens convenience store and a new Washtec Soft Brush Pro car wash.
The development took one year in the planning. "It had to go to committee in the end and, for the first time in New Forest District Council’s history, all 30 councillors gave it the go ahead even though the planning officer advised for it to be turned down," recalls John. "The committee said that garages were closing but here was a company looking to keep the garage, invest and employ more local people, which should be encouraged I couldn’t have written it better for them myself. The officer who recommended that the application be refused didn’t turn up at the meeting maybe he got a sniff of the groundswell support for it."
The planning process was initially held up because one person objected to the jet wash. "So we removed that from the application," explains John. "But the council said we had to do a whole new application that’s why it took a year. Other local residents had previously objected to the development in general but when they went through the detail it was a complete turnaround and several came along to the committee meeting to support us. I personally went round to visit every resident who objected and attended the local parish council meeting, which was fun," he says, with a smile. "I said we were a small family company and wanted to spend money on the forecourt, put in a bakery and employ more local people."
Eventually planning permission was granted late last summer and the redevelopment began, trading from a Portakabin for 12 weeks while the shop was knocked down and rebuilt.
Peregrine’s second forecourt is due to open on a greenfield site on the A38 Bristol Road in Bridgwater in August, with a Budgens store and Subway.
It will be part of the Express Park development, which includes a Premier Travel Inn, pub, restaurant, health club and the headquarters for Avon & Somerset Police. "The site already had outline planning on one acre of land so we just had to get detailed planning, which we got fairly easily. It just so happened that as part of the Express Park development there was a provision for a petrol station that’s going back about 10 years probably."
John has high expectations for the site: "Avon & Somerset Police has 1,000 employees and you have all the squad cars going in there so we will sell lots of hot food and Twinkies.
"Morrisons is also building a distribution centre opposite for the whole of the south. It bought the land for £12m so that’s how big it will be."
The company that designed the forecourt ACT Design is ensuring it has huge impact. "It’s going to have a high curved canopy that comes up like the wing of a bomber plane. The top of the canopy is 35ft and motorists will see it coming as they drive down the A38."
It’s not only Peregrine that has high expectations for the Bridgwater site. "I’ve been surprised that Esso, Shell and BP have been extra competitive in their fuel offers, which is unusual.
"BP came back with a second offer because it was desperate for us to take Wild Bean Café but Subway is better for that location," says John.
Next on the agenda is a knock-down rebuild site north of Swindon, which John’s architect has described as "the best forecourt he’s ever seen".
"It’s a tiny forecourt, but doing 5mlpa and we’re turning it into a proper big boy," says John. "At the moment you can fit only three cars on the forecourt at once and it has a 200sq ft shop. We’re putting in a 3,000sq ft Budgens, new car and jet wash. It’s going to be brilliant. We think there’s potential for 7mlpa and it’s quite premium-priced."
Planning is also ongoing for another large development on the A31 at Alton. This will see Peregrine develop a 3.5acre roadside site into a forecourt with Budgens c-store and Subway food to go.