MAPCO Embraces Alternative Fuels
In January 2014, MAPCO Express, Inc., announced it would begin selling E15 fuel, which contains 15 percent ethanol and 85 percent gasoline, in select locations this year. The move is just the next step in a series of pioneering moves for this Brentwood, Tenn.-based c-store chain that already purveys E85 and biodiesel fuels and has a long track-record of offering innovative products to its customers.
Convenience Store News spoke with Dan Gordon, vice president of business development for MAPCO, to find out why the company is so committed to alternative fuels, and how being an industry pioneer is helping MAPCO differentiate its stores from its competitors.
Convenience Store News: MAPCO is known for being an industry leader where innovation is concerned. When and why did you start offering alternative fuels?
Gordon: We started offering alternative fuels approximately three years ago. We started off with E85, then added E20. We wanted to differentiate our product offerings, and be able to meet the demands of our customers, whatever those demands might be. We also wanted to take advantage of the financial incentive alternative fuels can offer. If ethanol costs significantly less than gas, margins for an ethanol product can often be enhanced, although that relationship is constantly changing.
We’ve also added electric charging stations at two sites because we want to understand how consumers are going to use them. It will help us understand consumer behavior and decide if we should be in that [business] in the long-term.
CSNews: How are alternative fuels impacting your overall business from a competitive standpoint.
Gordon: The c-store industry has become more competitive than ever—there are more than 150,000 c-stores in the U.S. and you have to find a way to differentiate your business. How are you going to compete? We have developed our large-format stores with a food concept as a core component. We have a variety of concepts including Subway, Quiznos, and our own My Deli concept—it varies by location. These large-format locations also have a selection of traditional c-store items, a large presence of our private label MY MAPCO products, and an ever-expanding selection of new items and services to meet the needs of our customers. For example, we have started a beer growler program offering local beers. But a big part of competing and differentiating our stores is having alternative fuels—that helps us stand out in the crowd.
CSNews: You started with E85—how has that fuel performed for you? Has it been tough getting customers to understand and buy the product.
Gordon: E85 has been a successful product offering for us. We do a nice job of differentiating our stores with E85 at street level. All of our new stores offer E85, and we include the E85 on our price signs. The dispenser for E85 has its own graphics to call out the product. We try to educate customers about E85. We have materials available at the point of sale; we talk to our store managers and district managers about the product; and word of mouth also helps. What’s surprising is that many people have vehicles that can use E85 but don’t even know it! Most U.S. automakers have embraced flex fuel vehicles, so there are a fair amount of them out there, but the owners don’t realize they can use E85.
CSNews: What made MAPCO decide to add E15?
Gordon: MAPCO will start offering E15 this summer at one of its newly constructed sites—we’re not sure which one yet, but it will be one of several currently under development. The company is evaluating retrofitting other locations, and we plan to continue to offer E15 as we open new locations as long as the government allows us to.
We decided to offer E15 because it is a fuel that certain groups are pushing for. As we look at the ethanol mandate, without changes to the RFS [Renewable Fuel Standard], the industry will hit a blend wall. If higher ethanol blends are required to meet the mandate, we will be ready to go. We’re guinea pigs—we’re learning as we go. But we want to understand the market to get a jump on the competition. E15 might be a viable option in the long-term, but even if it isn’t, we’re prepared to offer whatever fuel ends up the winner because we’re putting in the systems and have the infrastructure in place. Being a pioneer, we will be positioned to benefit for a long period of time.
CSNews: Do you have any advice for retailers who are thinking of adding alternative fuels?
Gordon: Adding a new product—particularly one that is complicated—requires a change to your organization and supply structure. From the outside, it often sounds easy to just say, “I am going to offer X.” But in reality, there is a lot to it. It isn’t something that can be executed in a short amount of time. The entire supply chain is affected. There are many things you have to consider. How will you source, store and dispense the fuel? What are the rules in your state? What about advertising, point-of-sale support, and the back-end accounting you’ll need? You can’t just flip a switch. It takes real effort and communication to see it through and to see it through correctly.
MAPCO Express, Inc., a division of Delek US Holdings Inc., operates 362 locations under the MAPCO Express, MAPCO Mart, East Coast, Discount Food Mart, Fast Food and Fuel, Delta Express and Favorite Markets brand names.