Eighty Never Looked So Good

NOCO has become a triple threat, with its growing c-store business a key component of its strategy

Faced with the task of supporting a growing family on one salary in an increasingly difficult economic time, one man did what some would consider unthinkable — he asked his in-laws for a loan. With the borrowed check in hand, Reginald B. Newman took a leap of faith and started his own business, R.B. Newman Fuel Co.

This story could be ripped from the recession headlines of 2009, but in truth Newman's gamble took place 80 years ago as the country tried to fight its way out of the Great Depression. With his wife at home expecting their first child, Newman quit his job at a local hardware store after his boss refused to increase his hours, bought a coal truck and planted the seed that would one day become NOCO Inc., parent company of convenience store chain NOCO Express.

The importance of that first coal truck is not lost on the company or the Newman family. The original July 1933 invoice for the truck — Reginald paid $943 for it — still hangs in the family-owned and -operated company's Tonawanda, N.Y., headquarters outside of Buffalo.

"What was my grandfather thinking when he left the hardware store angry and said he was going to buy himself a truck? I try to put myself in his shoes," said Michael Newman, current executive vice president of NOCO. "He has a brand-new son, his wife [a schoolteacher] is out of work raising his family and instead of swallowing hard, going back to the hardware store and dealing with it, he realized he had to do something different."

THE EARLY YEARS

With that first coal truck, Reginald started delivering coal door to door and making service calls to fix furnaces. From there, he embraced the home heating oil wave and began converting homes. He also partnered with Mobil Oil Co., which had a refinery in nearby Buffalo, and began shipping product up the old Erie Canal by boat into Tonawanda to a small terminal.

In the 1960s, the company moved into the full-service gas station business, and 40 years after putting its first coal truck on the road, Reginald's two sons, Donald and Reginald Jr., expanded the business even further and bought a 33-million-gallon terminal from The Gulf Oil Co. for $1.5 million.

"That's not even [the cost] of half a store we build today. In the 1970s, that probably felt like $20 million," Michael Newman said. "I still have the original metal sign hanging in my office."

Donald and Reginald further added to the company's holdings with the acquisition of an adjacent 10-million-gallon terminal from Ashland Oil. Most recently, in 2006, NOCO entered the natural gas and electricity fields, just as the heating oil business began to wane.

These may appear to be odd beginnings for a company known in the convenience industry for operating 35 NOCO Express stores across western New York. But considering the close ties between c-stores and gas stations, the evolution now seems pre-ordained; although Michael Newman admits the decision to operate convenience stores was not always front of mind.

"We built gas stations, and convenience stores were sort of an afterthought," he said.

NOCO opened its first convenience store at 1155 N. French Road in Getzville, N.Y., in 1984. It was not until the 2000s, though, that the company made a concerted effort to get into the convenience store business, adding foodservice and building stores that were better suited to feature a sizeable grocery and frozen food selection.

NOCO'S NEW GENERATION

Today with a new generation of the Newman family at the helm — Michael Newman and his brother Jim, who serves as president — NOCO Express stores are a key component of the company's three-prong business model: At Home, At Work, and On the Go!

NOCO began to grow its Express footprint in earnest with the acquisition of a number of Cumberland Farms locations in Rochester and Buffalo when the Framingham, Mass.-based retailer went through bankruptcy in the early 1990s. The move left NOCO with several older sites, so the company did some "portfolio pruning" in the early 2000s to find its sweet spot.

"We converted some [locations] to other uses, we sold some sites, and the state took some for eminent domain purposes," Michael Newman explained. "We took our portfolio and right-sized it, getting rid of about 20 stores. Then, we started building ground-ups."

New builds are becoming more of a necessity in the industry as customers demand more from their convenience stores — including significant grocery and foodservice offerings.

Being more than just a traditional convenience store is something Paul Wydro, general manager of NOCO Express, understands fully. Wydro joined the company in August 2011 with a résumé dominated by 25 years of supermarket experience. However, most recently, he was with NOCO Express competitor Wilson Farms, which was acquired by 7-Eleven Inc. in 2011. It was during his tenure at Wilson Farms that Wydro began to take a closer look at NOCO Express.

"We viewed them as a fuel/gas station that sold some items," he recalled.

That model is now being turned around. "We are moving beyond a gas station [and into] a convenience store that sells fuel. There is a transition going on," he said. "Convenience stores are not just beer, [soda] pop and cigarettes anymore. There is a whole experience there if you are looking for it."

Helping drive that experience at NOCO Express is the addition of quick-service restaurants (QSRs) to its stores. Their presence turns locations into a destination spot for breakfast, lunch and dinner. Currently, eight NOCO Express locations have a QSR, but moving forward they will be included in the store footprint wherever possible. In those cases where the company cannot fit a QSR, the stores will feature wholesome food offerings, Wydro said.

Most recently, NOCO added three Subway franchises. The retailer also has a relationship with Tim Hortons, which rents space from NOCO, and three local restaurateurs: Charlie the Butcher, Just Pizza and Mighty Taco.

"Not every store can have a Subway; there may be arrangements with other franchisees in the area. We are always looking for something that may be available to help us enhance that food offering," Wydro noted. "To bring in a national brand like Subway or Tim Hortons really says a lot about the quality standards we want to bring to the consumer."

NOCO also has a proprietary foodservice program, Nickel City, and operates its own commissary that delivers to the stores daily, Michael Newman said, adding that the company would like to leverage that distribution system to include other items.

CHARTING GROWTH

With plans in place for in-store growth, NOCO is also charting an expansion path across New York State.

"We have a fairly substantial Rochester expansion plan," Michael Newman said. "We are using our dealer network — our gasoline supply customers that run convenience stores of their own — in conjunction with the development of our [own] stores. It has two legs to it: growing our gasoline portfolio and growing our convenience store portfolio."

Expansion into the Rochester, N.Y., market will help support NOCO's rapidly growing natural gas and electricity division, too, Wydro added. That goes hand in hand with the company's business objective to serve customers At Work, At Home, and On the Go!

"When looking at new markets, we look to see where other elements of NOCO have a presence," Wydro explained. "NOCO Express almost acts like billboards for the company's At Work, At Home, and On the Go! approach. The natural gas and electricity business is really growing in the Buffalo market because people here know the name. It is growing in the Rochester market as well, but we need more of a presence to help it."

As for spreading out further to Syracuse, the company is unsure that would be a good move. "It is a pretty crowded market as you get east of Rochester. It is hard to break into a market like that," Michael Newman said. Plus, there is still opportunity left in Rochester.

Besides, it is hard to manage convenience stores from a distance, he pointed out.

"A town like Buffalo is still very local," he continued. "When we talk about remodels, what scares me the most is giving people opportunities to make new habits. If our store is closed for six months, it becomes harder to get you back as a customer."

Even so, remodels and upgrades are part of NOCO's five-year pipeline. The company aims for one teardown/rebuild, one new-to-market store and two major remodels a year. Each remodel costs between $500,000 and $700,000, while a teardown/rebuild can reach up to $3 million.

"That is the calendar right now," said Newman."The real challenge as a private company is making sure you don't get too far ahead of yourself."

At this time, two older NOCO Express stores are undergoing major remodels and slated to be finished this month. The company is also rebuilding its very first store, bringing it from 1,900 square feet to 6,500 square feet. Once completed in the late fall or early winter, the store will be identical to NOCO Express' new prototype and include a Tim Hortons and a Subway.

With each remodel, NOCO is adding more foodservice and coffee, installing conduits for electric car charging stations, and increasing its grocery lineup. "With Wilson Farms leaving the market, it opened some opportunities for us in small grocery," the executive VP stated.

SEIZING OPPORTUNITY

The void left by 7-Eleven's acquisition of Wilson Farms — stores were either converted to the familiar red-and-green 7-Eleven banner or received for-sale signs — is one that NOCO is looking to fill with its Express stores, according to Wydro.

"Wilson Farms was developed as an alternative to the weekly supermarket shopping trip. The stores carried a lot of grocery, deli and dairy items. They were built primarily in neighborhoods. If you couldn't get to a supermarket, at least you could get your basics. It was a totally different concept from your traditional convenience store," he said.

When Dallas-based 7-Eleven Inc. transitioned those stores, that niche faded away.

"When 7-Eleven came in and converted the stores to its concept, it took away some of that offering, which opened the door for NOCO to come in and pick up some of that," Wydro said. "It's one of the reasons we are moving quickly toward more fresh offerings, and expanding our deli and grocery selection. There is a void in the area now that Wilson Farms is gone and we are ready to pick up that torch."

In addition to these changes, NOCO is replanograming its Express stores to give the chain a more consistent look and feel. Once completed, the retailer will look at micro-marketing based on the demographics of each neighborhood.

"We want people to be able to walk in and know where the candy is in any one of our stores, but the type of candy that is there might be marketed to that [store's] demographic," Wydro explained. "We do the same thing with beverages."

There are also some changes underway behind the scenes. For example, NOCO is investing in its training and customer service programs. According to Wydro, "it is not new, but something we are going to work on becoming more efficient at. We want to enhance the shopping experience for our consumers through our people."

He said this will take a little bit of training and a little bit of focus on the hiring side to make sure NOCO is bringing on the right associates, but added, "I think this is the next big step for NOCO, having our people represent the family-owned and locally-operated company that we are."

While that's a lot on the plate for this 80-year-old company, NOCO is leaving room on that plate for some anniversary cake. NOCO Express stores are celebrating the company milestone with in-store giveaways and birthday cake at each location this month. One special guest was even refurbished to join the celebration — the original 1933 coal truck.