Love it or loathe it, Apple is the most valuable brand in the world. According to Forbes, it’s worth more than $145bn. The brand’s popularity is staggering, with consumers clammering to get hold of the new Apple watch or the latest iPhone or iPad. The fact that we’re in the 21st century is brought home when you see that the top three brands on Forbes’ list are all in the technology sector Apple followed by Microsoft then Google.
The first food and drink brand comes in at number four Coca-Cola, of course, worth $56bn. Obviously you’ll find Coca-Cola on a forecourt you’d be a fool not to stock it. Another brand found on some forecourts typically motorway service stations is McDonald’s at number six on Forbes list, worth nearly $40bn, but further down are two brands that are cropping up more and more on dealer networks: Starbucks at number 52, worth $10.5bn; and Subway at number 84, worth $6.8bn.
There are more than 43,000 Subways in over 105 countries the continued expansion of the brand in the UK and Ireland has seen over 260 stores open in the past 12 months. That’s an average of five stores opening every week.
Subway is one of the UK’s most popular franchises; indeed it opened its 2,000th store in the UK and Ireland earlier this year. Of these stores, over 500 are in what the company describes as ’non-traditional’ locations, such as on forecourts, within convenience stores, in hospitals, at transport hubs or at universities and colleges.
The milestone 2,000th opening highlights the more than £200m investment that franchisees contribute to their local economies, alongside providing over 20,000 jobs in stores across the UK and Ireland.
The company says that its retail partnerships, with the likes of Blakemore Retail, Euro Garages, Applegreen and Welcome Break, are not only beneficial for the Subway brand, but an integrated Subway store can also provide many benefits to the retail partner.
Greg Madigan, area development manager for Subway in the UK and Ireland, comments: "We understand that people like to buy from brands that they trust. The Subway brand has global recognition and is trusted by millions of customers worldwide. Customers know that every store will be able to offer them a wide range of choice, including a variety of both toasted and cold products, and great value. A forecourt convenience store partnering with the Subway brand offers their customers the opportunity to buy a brand which is well-known and regarded around the world."
Food to go
When research company him! asked forecourt customers which foodservice brand they’d most like to see on a forecourt, 41% said Greggs; 30% said McDonalds; and 25% said KFC.
Applegreen sites include Greggs and Subway concessions, which the company says is part of its commitment to providing a consistently high-quality offer to its customers. It adds that their presence gives customers a reason to shop more regularly with them.
In Ireland, Applegreen has formed a partnership with Chopstix Noodle Bars. Chopstix describes itself as "a unique brand-led quick-service franchise operation blending the best fusion of authentic Oriental inspired fast food with casual convenience dining experiences at affordable prices". Its first franchised branch with Applegreen opened in Galway earlier this year. But Chopstix can already be found in the UK at some motorway services (Baldock Extra on the A1(M) and Blackburn Extra on the M65) as well as at major shopping centres.
Its menu comprises vegetable noodles and egg fried rice with a variety of toppings. Side dishes such as spring rolls and prawn crackers are also available.
When it comes to running a franchise, the company says the costs are determined by the size and format of the potential site; whether it’s a kiosk or restaurant. The company’s website says the smaller kiosk-style operation’s set-up costs start at £65,000, up to £100,000 for a fully-fitted restaurant with seating.
Initial franchise fees for a single site are £15,000. Royalty fees are set at 8% of monthly gross turnover and marketing fees run at 5% of monthly gross turnover. The company says the majority of its sites break even within six to nine months of launch.
Training is a key part of the Chopstix offer, to ensure franchisees are serving quality dishes. It provides a four-week on-site intensive training programme at one of its training centres across the country. In addition, a member of its executive chef team spends the first full four days’ trading from launch on site.
Symbols of success
But brand alliances are not all about food-to-go. Many forecourts choose to trade with symbol groups. According to him! the power of trading with a symbol brand is clear shoppers in symbol c-stores such as Spar and Londis visit more frequently (four times per week versus 3.1 visits to unaffiliated independent stores); spend more (£6.38 versus £4.51); give higher satisfaction ratings; and are more likely to recommend the store (92% versus 76%).
Spar is enjoying a run of success, with new trade partnerships with Jet as well as Top 50 Indie the Simon Smith Group.
Jet used April’s Forecourt Show at the NEC in Birmingham to announce that it had entered into a five-year agreement with Spar which gives existing Jet dealers, as well as any new sites joining the network, the choice of four options.
symbol partnership: aimed at larger convenience stores that would like to be part of the Spar brand with multiple retail formats. Dealers can choose from various branding options for both their forecourt and shop. Combined with a raft of Jet exclusive benefits, savings and promotions, this offer is said to add real value for dealers.
wholesale convenience: aimed at dealers who would like to be part of the successful Lifestyle Express symbol group. As well as benefiting from Jet exclusive rebates, dealers choosing this option will be offered support via retail consultancy Make More Margin and receive industry updates via Jet’s membership of ACS.
wholesale: for those dealers who wish to retain their own shop brand but would benefit from a wholesale supply service. Dealers will benefit from Jet exclusive quarterly rebates offering potential annual savings of thousands of pounds, along with Jet’s extensive support options via Make More Margin and ACS.
independent: for dealers who wish to operate their shops independently but could benefit from additional support, such as via the Make More Margin retail consultancy services, ACS updates and access to Jet exclusive deals, preferred suppliers and industry experts.
"Jet’s new convenience initiative has been over a year in development," explains Stuart Cufflin, Jet’s transport and retail contracts manager. "The retail element of a forecourt has never been more important so we wanted to develop a programme that encompassed a range of retail support packages. We recognise that there’s no ’one size fits all’ solution when it comes to forecourt retailing so this programme is all about enabling our dealers to strengthen their own unique retail offering and providing them with choices to select the right solutions that will enhance their businesses.
"Although other fuel suppliers have entered into arrangements with symbol groups, we believe this is the first time that this range of bespoke retail support packages is available to UK dealers. We’re confident they will see real value in the packages, particularly in terms of the consultancy support and the financial benefits of the rebates we have negotiated on their behalf."
Top 50 Indie, the Simon Smith Group, recently teamed up with Blakemore Trade Partners to launch an ultra-modern forecourt and speciality food convenience store at Highworth Service Station in Swindon.
Working in partnership, the two family-run businesses redeveloped the site to create a convenience store that’s dedicated to high-quality, locally sourced products.
The major renovation project involved knocking down the existing 700sq ft store and building a new 2,800sq ft one, relaunched under the Spar fascia. All the forecourt facilities were new too.
Following the changes which were unveiled in February the store enjoyed a record-breaking opening weekend, with sales over the two days up 176% on previous weekends and fuel volumes up 11%.
Susie Hawkins, director of the Simon Smith Group, says: "Our aim was to establish Highworth Service Station as a convenience store with a real community focus. As a family business we are very keen to support other family businesses in the area and small, regional producers.
"By working with Blakemore we have been able to implement the unique feel that we set out to achieve at the same time as benefiting from the internationally recognised Spar brand.
"Blakemore provided us with co-investment to redevelop our site as well as great product ranges and distribution and support services. Blakemore Design & Shopfitting also did a fantastic job of developing our new store and Blakemore Fine Foods provided us with invaluable support with sourcing local, quality produce."
Blakemore Trade Partners managing director, Jerry Marwood, says: "Highworth Service Station is another example of how we work with independent retailers to create unique stand-out stores with the flexibility to meet the specific needs of the local community.
"We recently enjoyed a string of industry award success with our forecourt retailers and new-concept stores, and we are confident that, with the expertise of the Blakemore group behind it, Highworth Service Station has a very strong future."
Full of praise
Meanwhile, those with existing relationships with Spar are keen to praise the group. Harvest and Spar launched Spar-branded forecourt store concepts in April 2013. Ian Woodcock, head of retail at Harvest Retail, says: "Using both teams’ wealth of expertise in the retail field, the joint venture helped retailers to compete against the multiples and major oil companies with a very credible alternative.
"Sales from both the forecourt and shop increased substantially, with the forecourt averaging a 30% increase on sites that converted in 2013 and 2014. With more sites in the pipeline in Scotland over the next three months, this will open up even more opportunities for retailers to access supplies, while offering cross-promotions that effectively link shop purchases to fuel savings."
One site trading well with Spar brand fuel is Barrons of Hathersage in the Peak District, owned by Richard Barron. He bought the site in 1993, when it was a traditional forecourt with just a small shop. But Richard soon got to work making the changes required to turn it into a successful business.
Part of those changes included having Spar-branded fuel. Two years ago when his contract ran out, Richard went for a new deal based on Platts.
"A friend at Spar told me about Spar branded fuel and as I’d spent £250,000 expanding the shop and improving the site it seemed like the right thing to do.
"Spar is a good name and I didn’t hesitate putting its name on our fuel. Putting the name on our petrol has done us no harm."
When it comes to fuel, he goes for volume over price. "We decided to work on a lower margin no matter what and our volume gradually went up. We don’t follow what other people are doing. Some days we might be 2-3ppl cheaper and some days we’re not. That’s not to say that I haven’t been tempted to add 1ppl but I think that defeats the object. We’re on target to double our previous volume this year, which I think is excellent on a site with just one island and two pumps with four nozzles on each."
And he reports that the 1,200sq ft shop is now achieving one of Spar’s highest turnovers per square foot on a forecourt. Richard has a long history with Spar going way back to the John Irish days and he’s a great advocate of the Spar brand: "Spar brand means quality and it’s quality products that sell. It easily matches Sainsbury or Tesco own labels; other symbol group labels just don’t have the impact."
Forecourt Trader of the Year winners 2014 Portsbridge Service Station in Portsmouth trades with Nisa. Owner Tim Garner says he and his brother Mike looked at every single symbol group before opting for Nisa and chose them because they seemed the "freshest one".
"Their promotions are incredibly strong, easily as good as the supermarkets. We have to be competitive as we are a promotion-driven business now. Plus we liked the new grey and orange imagery and we were the first forecourt store to have it.
"We also liked the people and people are important in business. Nisa has definitely been the right choice for us. Their promotions continue to be strong. Their Heritage own label is improving all the time and they’re working hard on fresh fruit and veg; they have a new buyer and it shows."
Brian Charlton of Middleton Service Station in Pickering, North Yorkshire joined Londis back in 1996 and has been a loyal supporter of the group ever since.
"I chose Londis because they were the most helpful. I bought the site when it was a Ford dealership with a petrol station and a workshop, but I bought it because I had another business dealing in dairy equipment and I needed a home for that. I had no experience in retail and Londis were incredibly helpful in getting me started. They helped me set the store up and gave me all the information that I needed.
"Then when we had a fire nine years ago and the place burnt down, Londis helped get us up and running from a Portakabin within five days. They went hell for leather helping me with spare kit.
"I believe that our store is a superb advertisement for Londis as we purchase almost all our supplies from them apart from also supporting our local suppliers who are of great importance to our business. We have continually promoted the Londis brand as offering quality products and I firmly believe that this has been a major factor in our success over the years.
"Lidl moved into our area 12 months ago and we expected to see a decrease in trade but that hasn’t happened, which I put down to good product mix and competitive pricing, which leads to a great shopping experience."
Middleton is a rural site in a small village next to the North Yorkshire Moors National Park so it serves two roles as a viable alternative to what Brian calls the "impersonal supermarkets" as well as serving the tourist trade. We want the local community to use us as a viable alternative to a large impersonal supermarket; therefore our prices are pitched to be very attractive to the people who live nearby. "We get a large influx of visitors during the holiday season, and it is very heartening to know that a large proportion of them return time and again to shop with us. That is why it is important that we carry an extensive range of local products.
"These are sold alongside a large range of the more everyday products that people on holiday require."
Over the years, Brian has been approached by other symbol groups, but he’s always turned them away.
Finally, Babu Sivarajah trades with Best One at Chatham Road Service Station in Maidstone, Kent. He says: "We’ve been a Best One for seven or eight years. Then, not many people were used to the name but there are more of them around now so people are more familiar with it.
"I like Best One because they are more flexible than other groups and there are no hidden charges. We can always get what we need; they’re good on promotions and there are always lots of deals."
Jet in with Amazon
Jet is working with online retailer Amazon to make Amazon’s outdoor parcel lockers available to dealers across the brand’s 350-plus site network.
As part of Jet’s dealer package existing dealers will be able to sign up to have Amazon lockers installed at a convenient location on their site (subject to a site survey). Lockers will initially be available on a limited basis, with plans for a wider roll-out over the coming months.
The concept behind Amazon lockers is simple: instead of requesting Amazon deliveries to go to a home or business address, customers can select an Amazon locker at the time of placing their order and pick up or return the parcel at a convenient time. This means customers no longer risk missing a delivery and their parcel will remain safely stored until they use a unique pick-up code to access the locker.
Jet says that from a dealer perspective, as well as benefiting from increased customer footfall, the Amazon lockers deliver an attractive financial reward as dealers will receive a monthly fee from Amazon, which Jet has negotiated on their behalf. This payback is guaranteed to be higher than if dealers approached Amazon directly. As the lockers are fully self-contained and managed by Amazon, there is no support required from forecourt staff.
In April, Jet surveyed its dealer network to gauge what the likely uptake would be and the response was described as "phenomenal".
An eye on the competition
It’s always good to keep an eye on the competition and although neither One Stop or WH Smith Local franchises are currently operating in the forecourt sector, they are very much in the convenience and CTN market.
Tesco-owned One Stop is celebrating treble figures for its franchise operation, just 15 months since the full roll-out. The 100th store to sign up is located in the Midlands and will be converted within the next two months.
One Stop says its franchise offers a "credible alternative to the various wholesale-based options, providing independent retailers with the opportunity to work with a genuine retail partner".
To date, One Stop has attracted well over 2,000 enquiries about its franchise scheme, a figure which has been boosted recently by more than 100 ’expressions of interest’ from independent retailers in Scotland, as the group prepares for an imminent launch north of the border.
Of the 100 stores already signed up, 62 were previously with symbol groups while 38 were unaffiliated independents.
Meanwhile, the WH Smith Local franchise has been created exclusively for existing and new CTN and post office owners.
The company is after stores with a turnover of £250,000 or the potential to reach this as well as 500sq ft of selling space. In return it says it can help retailers achieve increased sales of up to 60% and gross margins of between 32% and 52%.
It says payback of the initial investment averages 15 months. The franchise is currently operating on 25 sites.
Top 50 Indie Euro Garages has successful partnerships with Burger King, Greggs, Starbucks and Subway.
In its financial results for the year to July 31, 2014, the company cited that part of the reason for its continuing success was its links with these big-name brands. It reported double-digit like-for-like growth at its Starbucks and Subway outlets and said it hoped to be operating 100 of each by the end of 2016.
During the year to last July, the company added 12 Greggs stores and plans to have 30 by the end of this year.
Everything Euro Garages does, is done properly. At its Markham Vale site, for example, the 24/7 Spar store incorporates a Subway and Greggs with dedicated parking outside. In addition, there’s a Starbucks Drive Thru with a further eight parking spaces out the front as well as a 33-space car park. There are comfortable seating areas inside for those who want to relax with friends or family or have an informal business meeting. And, for those in more of a hurry, there’s the dedicated drive-thru lane. And if you don’t make it into the Starbucks, there’s the Starbucks On The Go station in the Spar store.