Once again the cheers rang out for Euro Garages at the glittering occasion of the annual Forecourt Trader of the Year Awards in September. Having taken the top award in 2011 for its Beehive site in Blackburn, the group was once again presented with the most prestigious trophy in the fuel retailing sector, this time for its Calder Park development in Wakefield.
And, as in 2011, brothers Zuber and Mohsin Issa, the founders and brains behind this most pioneering and innovative of companies, appointed others in their team to take the glory by going on stage to accept the award.
Crucially it’s that aspect of the way Zuber and Mohsin run their business - wanting their employees to take on responsibility and prosper in their careers - that is a significant factor in the high standards of operation on its sites, and enables it to thrive and grow.
This is a company that began as many others have, with the purchase of one service station. That was in 2001 in Bury, Greater Manchester. It now has 120 sites with plans to reach 300 by 2016 and many of them have raised the bar several notches in terms of service station development. Their flagship sites have spacious and well-featured forecourts and convenience stores. But it’s not just about the bricks and mortar. The company’s business model is an amalgamation of various brand offers, as the company pursues its mantra of ’delivering global brands, served locally’.
It has had a licensing agreement with Starbucks since 2010, with which it opened the first Starbucks drive-thru. It now has 32 drive-thrus with plans to open a total of 150. It is also rolling out Starbucks on the Go self-serve machines.
Other key partner brands are Spar, Subway, Burger King and Greggs. On the oil company side 60% of its sites are supplied by BP, and apart from one site newly signed to Shell, the rest are Esso branded, Euro Garages having acquired 43 sites from Esso in a block acquisition at the start of the year. The deal included making their own fuel collection and delivery arrangements, which have been contracted out.
"Our vision is to provide not only a world class fuel offer through the partner brands that we work with, but also to provide that same level of offer on the convenience, and food and drink side as well," explains the company’s commercial director Ilyas Munshi. "Our power lies in how we execute and deliver partner brands."
When the Issa brothers were starting out, the alarming rate of site closures had been well documented, and there was a lack of new-to-industry sites. "There was a big opportunity for someone who was very entrepreneurial to enter the marketplace and develop a successful business model," says Ilyas. That entrepreneurial talent came in the form of Zuber (chief executive) and Moshin (managing director) who, according to Ilyas, have complementary skills. "Zuber was the visionary in terms of looking at what was happening in the forecourt sector and how it needed transforming. How it was done was down to Mohsin he was very focused on the operational detail, how we execute the delivery. So as a family management team, they complement one another. I think that has been one of the key drivers for the business succeeding.
"They are also keen to bring new people on board to support the management of the company, and help shape the business in terms of governance and business practices." Andy Bond, the former chairman and CEO of Asda, was appointed executive chairman in 2011, but now works in a consultant capacity.
"What we’ve done is listened to what consumers want in terms of a forecourt experience," explains Ilyas. "They want to feel they’re being looked after, that they’ve got access to good, well-maintained facilities. We’re trying to create motorway-style facilities, but not charging those prices. A lot of our forecourts provide seating areas, and ample parking, so in terms of people accessing and feeling they want to spend time on the site, we want to create that ’stickiness’ for them to enjoy the experience. The aim is to exceed the expectations of a consumer."
As a business Euro Garages tries to stay ahead of the curve by being aware of consumer trends, stresses Ilyas, so the company keeps a focus on customer research both in terms of industry reports and from their own customers.
"Listening to the customers is very important," he says. "We get together with area managers and site managers on a regular basis, and they give us feedback about what’s working and what’s not on a particular site.
"While fuel prices are controlled from the Blackburn head office, we empower area managers and site managers to place their own orders from partners like Spar. While we manage the brand relationship, site staff decide what promotions to run on their particular site, depending on what’s appropriate.
"It’s important as a business that we give our staff the power to do that, because we’re turning them into retailers. Again that gives us a competitive advantage." Euro Garages recognises the value of a well-trained and motivated staff and provides training schemes and career progression opportunities both vertically and horizontally across the different brands. The company believes the premium facilities also help cultivate a culture of pride in the workplace among staff, who are incentivised to keep standards high.
"For us it’s about keeping the standards up to a level that we would expect ourselves as customers. Communication is a big part of our operation," says Ilyas. "Staff get regular communication about how their site is performing. The finance team is educating the area managers and site managers to own their own profit and loss account, so they can see how their site is contributing to the bigger picture. If they understand what the core objectives are, it makes them competitive."
Historically fuel used to be a distress purchase, and the scope of a motorists’ shop purchase would be limited to drinks, chocolate and cigarettes. But what Euro Garages has done by introducing partners like Subway and Starbucks, has been to encourage people to come at all times of the day, for reasons other than fuel, which then becomes an afterthought once they’ve used the other services. For example, their sites are providing a service to local businesses, with the Starbucks offer providing a nice environment for meetings, not to mention the premium coffee, free wifi, ample parking and easy access to a motorway or main road. On the company’s Beehive site, which also features a pharmacy, the Starbucks outlet is open all evening, with many people turning up for a coffee after a meal out.
"When they’re travelling, people remember places they’ve been to by some of the brands they’ve accessed and plan their journeys around them," says Ilyas. "Euro Garages has leveraged off consumer brands and trends and is delivering something not only of value to the consumer but it is also delivering results for the stakeholders and the partner brands. But underlying all that we have a firm commitment to developing our infrastructure. Although the brand partnerships deliver results for us in terms of increased revenue, it’s our commitment to investing in our systems and people that delivers the profit. It’s no use just putting up buildings. it’s very important for us to introduce smarter and more efficient ways of running our business model.
"Euro Garages is a family business that went into the forecourt sector with a view to refreshing the offer for the consumer. We believe it’s one of the most underdeveloped, underinvested sectors within the UK, and what we’re looking to do is put the forecourt industry on the map. We’re very excited about the future."
Third largest independent forecourt operator in the UK. HQ in Blackburn
Projected £450m turnover circa £18m EBITDA for year ending July ’13
Contribution to gross profit: 36% fuel; 37% shop; 27% food to go
120 forecourts valued at £175m. Plans include growing the network to 300 sites by 2015
450m litres of fuel sold per annum
Partner brands include Spar, Starbucks, Subway, Burger King, Greggs, BP, Esso and Shell
Mainly supplied by BP (60%) and Esso (38%). Bought 43 sites from Esso at the start of 2013.
45 drive-thru Starbucks; plans for 100 by 2015
Rolling out Starbucks On the Go
On-site pharmacy at HQ site Beehive