More and more forecourt retailers are looking for new and different revenue streams to help them compete in tough trading conditions. Whether it be for coffee or food to go, DVD rental or other non-food offerings such as greetings cards, retailers are teaming up with big brand names to make their business stand out.
Partnering with high-profile brands has been key to Top 50 independent Euro Garages’ success in creating an "added-value forecourt experience". Its partnerships span across food, drink and retail and include Subway, Greggs, Burger King, Coffee Nation and Spar. The most recent alliance was formed in March 2010 when a licensing agreement was signed with Starbucks to open 50 coffee shops by 2014. The majority of the stores will be drive-thrus and the deal marked the first roll-out of the Starbucks drive-thru concept in the UK. So far four outlets have been opened three of which are drive-thrus with another seven planned in the next four months.
Mohsin Issa, director of Euro Garages, says: "Starbucks is an internationally trusted brand and the addition of it to our portfolio was essential to provide a more sophisticated forecourt offering. Increasingly, people expect to find the brands they know on forecourts and a quality coffee house is no exception.
"We are now part of a fast-moving world and people want fast coffee without compromising on quality. By building drive-thru Starbucks on forecourts in high density locations we are giving the travelling public what they want. Excellent customer service is about realising the customer’s needs and by partnering with well-known brands we are doing just that."
Meanwhile, Esso has an established alliance with Costa at its On the Run sites but soon independent forecourts will also have the chance to adopt the Costa brand following the company’s acquisition of Coffee Nation. The coffee shop chain plans to launch 3,000 Costa Express self-service coffee bars in the next five years, with Coffee Nation’s existing 900 units providing a perfect platform for developing the new brand in the coming months.
John Derkach, managing director of Costa, says: "The unique combination of Costa’s superior coffee and brand strength together with Coffee Nation’s best-in-class technology provides an exciting opportunity to create a new and appealing quality product for customers that simply doesn’t exist in the self-service coffee bar market today. Moving into this area of the coffee market enables us to respond to customer needs and trends."
Costa’s plan is to rebrand the majority of the Coffee Nation self-service coffee bars to Costa Express within 14 months but it will be working with Coffee Nation’s existing retailers to find a time frame that suits them. "As the the UK’s favourite coffee shop brand, which beats the competition in blind taste tests, the benefits of a Costa offering are clear," adds Derkach. "With the acquisition of Coffee Nation and the roll out of Costa Express, Costa can now offer a range of solutions to retailers. We believe the introduction of a Costa self-serve product will be a very attractive option in the forecourt market."
When it comes to food to go, Subway has now overtaken McDonald’s as the world’s largest restaurant chain with 33,749 sites across the globe at the end of last year, compared with 32,737 for McDonald’s. And the brand has made huge inroads in the forecourt sector in the UK. Caroline Thomson, national accounts manager at Subway, says: "Partnering with the Subway chain provides excellent dual branding opportunities, high rental returns and increased customer market share. The outlets are efficient, convenient and provide a quick service, which draws a steady flow of customers, creating energy and a beneficial atmosphere."
The Subway chain is actively seeking new businesses to lease space to trained franchisees. Because of the operation’s simplicity, Subway forecourt stores can be as small as 300sq ft and still carry the full menu. This format also means that staff levels can be increased at peak times and down-scaled to just one person during quiet periods.
Subway franchisees benefit from operating in a tried-and-tested system with great training, and a solid support structure with advice and guidance provided on aspects such as site selection, leasing, purchasing, marketing and more," says Thomson. "This support has proved to be very successful, and testament to this is the fact that over 70% of all new franchises sold worldwide are sold to existing owners.
"To run a successful franchise it is important retailers know their business inside out and are prepared to ’work the line’, which for us means working behind the counter as a ’sandwich artist’. This experience can prove invaluable, allowing you to master all aspects of the business from serving customers to managing the everyday running of the store. A willingness to ’get your hands dirty’ enables you to empathise with your staff and customers, and gives you the knowledge to direct the business effectively. Hands-on management is vital for a successful store.
"To be a success in any franchise, you also need to be passionate about what you do. Many potential franchisees already have excellent business flair, but you need more than this to run a successful franchise. It’s important to know your franchise, your market, community and competitors a franchise is hard work and to make it a success you have to believe in what you are investing in."
The Subway chain has developed a comprehensive training programme for franchisees and each candidate is required to attend an intensive two-week course. An in-depth support structure is operated through regional developers who have specific experience in opening and developing Subway franchises and often own several outlets of their own.
There are 18 regional development offices in the UK and Ireland which assist and mentor all franchisees with site selection, leasing, design, construction, hands-on training, purchasing, operations, advertising, local store marketing and more.
A Subway franchise can be set up for as little as £70,900, with costs varying depending on the size and location of the store.
For unaffiliated independents looking to get into food to go Country Choice, which supplies 4,500 stores, offers the Bake & Bite brand. Stephen Clifford, marketing controller at Country Choice, says: "Bake & Bite is the default brand for pure independents. If a wholesale group has its own brand they will often use that. For example, stores that are Londis will take our product but use the symbol group’s Good to Go brand, while Spar stores use its To Go brand.
"The Bake & Bite brand gives consumers reassurance of quality if the store doesn’t have its own brand name. Most of the branded point of sale is free of charge."
Meanwhile, BP started franchising its BP Connect/Wild Bean Café brands around four years ago. There are two franchise options: the company franchise (COFO) is a franchise offer in its company-owned sites, where the franchisee is the operator of that site, but does not own the property or the wet or dry stock, or a dealer franchise (DOFO) offer. Darren Cousins, BP Retail UK franchise district manager, says: "As a franchisee you will be part of a larger family but still very much in control of your own business. A successful franchisee knows their market and customers and is prepared to work within the framework of a large brand.
"All our forecourts sell BP fuel including our premium fuel BP Ultimate, but there other great brands on-site such as Nectar and, within a BP Connect, customers find all the basic things a driver needs including a Wild Bean Café," adds Cousins. "You operate a site within the BP framework, you are responsible for your staff, your performance and your customers of course. The more effort you put in the larger the potential benefits.
"You have renowned brands, a successful offer and a global company behind you."
BP requires a £6,000 deposit before a franchisee can start operating a COFO site. Thereafter, an operator contribution is required after the third and sixth month of operation totalling £7,000. Finally, the franchisee needs some funds to pay for upfront training and staff salary before the first invoice is due.
Also on the agenda for BP is an extension of its M&S offer to the dealer network. In an interview with Forecourt Trader in January, Neale Smither, BP’s UK supply, marketing and retail manager, said: "The relationship with M&S is good, the performance has been very strong. We are now talking to some of our big dealer partners about sites we’ve identified in their networks that could support an M&S offer."
play your cards right
Greetings cards supplier Card Connection is providing branded offers to almost 1,000 forecourts in the UK including Shell, Total, Texaco, Palmer & Harvey, Murco and Costcutter. Andrew Cutler, sales and franchise director at Card Connection, says: "The Card Connection brand is associated with quality and variety. Adopting the branding in-store with Card Connection’s point of sale can alert and direct customers to greeting card displays."
Card Connection franchisees merchandise stock and displays regularly to ensure they always look fresh and up to date. Products are supplied on a consignment basis, this means retailers only pay for stock they sell allowing them to display the products at no risk.
"Retailers can get the most out of the Card Connection brand by talking to the franchisee that covers their region," adds Cutler. "Franchisees can provide ideas on optimising displays and information about price points that are most appropriate for the target market. Franchisees can also supply the latest card designs plus additional products like the party accessory range which provide additional revenue streams for retailers."