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America's Largest Invisible C-Store


Texas company takes away hassle of retailing for oil companies, equity investors and banks

Quick: What company based in Temple, Texas, operates more than 200 convenience stores across the United States, but its name appears no where on any of the stores?

If you said Strasburger Enterprises, odds are you are a major oil company or a large financial conglomerate that needs help operating or turning around any number of small-format stores on your balance sheet.

This privately held, diversified company based in Central Texas has worked in dozens of countries in North, South and Central America, Australia, Asia and Europe to handle retail site operations for numerous clients.

In recent months, a confluence of factors increased the company's focus on operating convenience stores in the United States.

"During the last couple of years, we've moved our site operations, outsourcing business from international to the U.S.," said Roy Strasburger, vice president of the company and president of the convenience division. Strasburger Enterprises started in the retail business in the 1950s. In the mid-1960s, the company combined small-format retail stores with fuel. Its wholly owned and operated convenience store chain, Quix, currently consists of 50 stores in Texas from Dallas to the I-35 corridor.

Strasburger entered the international market in 1984, using its expertise in retailing to provide training, operations and site management programs for international companies with little knowledge or experience operating small-format retail outlets.

"We've been involved with over 10,000 sites in 35 countries in our history," said Strasburger. A partial list of clients includes Chevron, Shell, Morgan Stanley, BP, Fina, GMAC Financial Services, Lehman Brothers, Tesoro, ExxonMobil and COPEC, the Chilean energy company.

But market transitions occurring in today's U.S. convenience store industry have provided the company with opportunities to expand its client base to domestic sites owned by Big Oil companies and to financial institutions. Many major oil companies, in the midst of divesting their retail assets, need to keep stores running profitably until they can find buyers. Meanwhile, many banks, which have foreclosed on convenience store properties that became roadkill during the recession, need professional management to run these sites until they can be sold.

Finally, equity investors, seeing that valuations of convenience store sites have dropped to relatively low levels due to the recession, are once again targeting the market, buying distressed convenience store companies with hopes of getting a future return on their investment. These companies are also ideal candidates for outsourcing employee training, operations and site management programs to an experienced operator.

An executive for a commercial real estate lender who asked to remain anonymous said he heard about Strasburger through another commercial lender. "We acquired 23 stores through foreclosure but needed a consultant who understands how the c-store business works and could manage the stores for us," said the executive. "We needed to increase accountability and improve store performance. Our goal was to prepare the stores for sale while ensuring that in the meantime they run at the optimal level given the current state of the c-store industry."

The lender said the appeal of outsourcing these tasks lies in Strasburger's ability to manage a small-format store in any location. "They have credibility with regulatory bodies and, most importantly, the staff. They brought a level of professionalism that employees at the sites immediately responded to," he said.

"We've done this in about 40 states and are capable of doing it on a nationwide basis," Strasburger told Convenience Store News in an exclusive interview. All told, Strasburger estimated the company was currently operating in excess of 200 sites for other entities in the U.S.

Strasburger provides complete site operations and accounting. On a foreclosed property, for example, Strasburger can take the job with as little as 24-hours notice—"I call them our 'smoke-jumpers.' They go in, make the site operational, maximize the revenues and protect the assets for the owner," he said.

"They're very easy to do business with and very flexible," said Bill Fry, president of BP's ampm franchise operation based in La Palma, Calif. "We've given them less than a week's notice in some cases and they are expert at handling all the licensing and regulatory tasks to keep the lights on and the cash tills ringing."

BP's story is similar to that of several other large oil companies, such as ExxonMobil and Shell. In 2007, the company decided to consolidate its U.S. retail presence and shift ownership of its retail facilities to jobbers and local entrepreneurial franchisees of the ampm brand. Over the next two years, it sold — by one and in packages by — it was down to just less than 100 remaining company-operated stores.

At that point, maintaining a large support staff designed for more than 800 stores didn't make sense anymore. So in early 2009, BP began working with Strasburger Enterprises, according to Fry. Meanwhile, BP continued selling units even as Strasburger operated them and kept them viable for sale. "They are also very good at working with the new owners who take over the store," said Fry. Currently, Strasburger operates just nine units for BP, as the oil company is now focused on its ampm franchise business.

Fry pointed out that outsourcing services offered by Strasburger became critical when financing became a huge issue during the national economic downturn starting in 2008. "Strasburger was able to step in and operate sites we contracted to sell until the financing was in place and the deal closed," he said.

To the consumer, the stores continued to appear as a BP station throughout the process.

When Strasburger Enterprises is hired to manage a store, the entire store staff becomes employees of Strasburger. "They work for us. They get our benefit program. We hire the field staff and provide the training programs to bring them up to speed," said Strasburger.

To the consumer, the Strasburger's involvement is totally invisible. The sites maintain their former branding and, in most cases, the same store personnel. Yet, Strasburger's offices in Texas are actually handling buying and operations for more than 200 separate sites across the country.

Strasburger's staff implements and executes all buying and merchandising plans for the sites, including any existing national marketing programs with oil companies, major product suppliers such as Coca-Cola and tobacco contracts.

The commercial real estate lender pointed out that outsourcing is more than just about eliminating the "headache" of running the stores, "it's about having the expertise immediately available to run the store at an optimal level as soon as possible."

The company works on a fee basis. "Every dollar the store earns, either through sales, rebates, allowances, whatever, goes to the client," said Strasburger.

The way the fee schedule works is Strasburger Enterprises gets reimbursed for all the costs of operating the site, including labor, utilities, landscaping, repairs, maintenance, etc. Then, there is a weekly management fee per site to cover general and administrative costs, field supervisors, accounting, human resources, information technology, legal and marketing. And finally, a performance incentive fee in which Strasburger earns a percentage of performance improvements at the site in any number of areas chosen by the client, such as EBITDA, gross profit dollars or fuel gallons sold.

With Big Oil still divesting their retail assets, banks holding more and more foreclosed sites, and equity companies taking advantage of lower multiples, it would appear that this invisible convenience store chain will only grow bigger.

For comments, please contact Don Longo, Editor-in-Chief, at (646) 654-7489 or [email protected].

"Every dollar the store earns, either through sales, rebates, allowances, whatever, goes to the client."


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