Chevron ExtraMile Charts Franchise Growth

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Chevron ExtraMile Charts Franchise Growth

By Melissa Kress, Convenience Store News - 08/10/2011

SAN RAMON, Calif. -- Today, Chevron's ExtraMile portfolio stands at around 519 convenience stores, evenly divided between company-owned and -operated stores and franchises. But that 50-50 split will undergo some changes in three years, with franchises making up the majority of its growth strategy.

Speaking with CSNews Online at a Chevron Media Day yesterday, Colin Parfitt, president Americans Products West, explained that the company is looking to double its franchise c-store network by 2015. Currently, franchise sites number approximately 250; company-owned and -operated sites number approximately 270.

"We would like to double our franchises. We see an opportunity to grow through dealers," he said, adding that new franchises are on pace to increase by 100 to 120 a year.

That is not to say that expansion on the company-operated side will be thrown into park. "There will be some expansion in company-owned stores where it makes sense," Parfitt said.

The new ExtraMile locations will open their doors -- either by way of existing sites that are converted to the brand or new-to-industry sites -- primarily in California and the Pacific Northwest. Partiff noted the growth will come in areas near Chevron refineries. The company has three refineries on the West Coast -- in the Los Angeles area, in Richland outside of San Francisco, and in British Columbia, Canada.

It is the company’s refinery strategy that played into Chevron's decision to exit the retail game in 13 states on the East Coast, except for Florida. The Florida ExtraMile locations (which number around 21) are served by its refinery in Pascagoula, Miss.

"We will play to our areas of strength and those are typically close to our refineries," said Parfitt. "Potentially we can go inland, but right now we are planning to grow where we have our strengths.

And while Chevron may be known for being an oil company, ExtraMile is an important component for a successful retail arm. "Retailers find it very hard in today's world just pumping gas," he said. "You generally need alternative profit centers to maximize profits."

In the same vein, ExtraMile stores will continue to exist with a fuel station component, with no plans for stand-alone convenience stores at this time, he said, adding "we are an oil company."

Chevron is, however, exploring scaling down ExtraMile stores where a typical 2,800-square-foot convenience store is not possible. "Sometimes there is no space, so one of the challenges is could [the ExtraMile concept] work in a smaller format?" Partiff asked.

Part of that challenge is fitting ExtraMile's four destination categories into a smaller footprint. The four categories, as detailed by Adam Sparks, general manager, company-owned/company-operated, for Americans Products West, are the HydraZone, cigarettes, coffee and its foodservice offering ExtraGood to Go.

The most recognizable of those destination categories is probably the HydraZone. Placed front and center in each store, the cooler typically features new products, which change about every two months, Sparks explained.

One area still in the growing phase is foodservice, he said. The ExtraGood to Go category launched approximately two years ago and contains roller grill and heat-and-serve foods, as well as fresh sandwiches delivered by McLane Co.

"We are in the infancy stages from a foodservice standpoint," Sparks said during the media day visit to a Chevron ExtraMile on Crow Canyon Road in San Ramon. He shared that the company is in the process of evolving and changing the menu, and improving the component from an operational standpoint.