MotoMart Learns from the Competition

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MotoMart Learns from the Competition

ST. LOUIS -- To fuel the MotoMart convenience chain's need for 40 more stores and an entrance into new markets in the Midwest and South, company president Jim Forsyth hired QuikTrip's Brian Pendleton, who was the director of real estate development for the Tulsa-based company, the St. Louis Business Journal reported.

Pendleton facilitated QuikTrip's growth in the Midwest for 15 years, and headed the company's real estate office in St. Louis until 2004, where he oversaw site selection and development of QuikTrip stores in the St. Louis, Kansas City and Des Moines markets. In St. Louis alone, QuikTrip grew from 12 locations to 65 during Pendleton's tenure, the report stated.

"This is a cutthroat business. You have to grow or die, and you have to have the expertise to do this," Forsyth told the paper.

Forsyth has been president of the chain since 1986, and stated that growth will take a dramatically different approach under Pendleton, who served as a consultant for a year before being hired full time in December.

"In the old days, I would drive around and look at corners and say, 'This looks good,' " Forsyth told the Journal. The chain bought the land, then built the store, the report stated. In recent years, MotoMart focused on adding car washes to key locations and making improvements at existing stores.

Now, Pendleton will use a data-driven strategy that relies on traffic and demographic studies to find optimal sites. "We look for housetops, daytime population and traffic," Pendleton told the paper. "We'll put all that together and compare it with existing stores."

Stores will follow a sales/leaseback model that is used by many retailers, including QuikTrip, where the company will buy the land, sell it to an investor or bank, then lease back the land and improvements excluding equipment for 20 years. "Basically, it frees up your cash and makes you more liquid," Pendleton told the Journal.

With this approach, the company will begin construction on four new stores in 2007, including its first store in St. Louis -- an 8,000-square-foot unit, double the size of the chain's existing stores -- which will cost the company $3.5 million in development costs, the report stated. The larger than average store, which will include a Subway restaurant that the company will operate, will capitalize on the cigarette sales tax difference between Missouri and Illinois -- Illinois taxes are higher, according to the paper -- and the store will be located at the first interchange past the Missouri state line, he said.

Other new stores will be larger than existing stores at 4,500 square feet on a 1.5-acre lot. Outside, eight to 10 gas pumps will offer fuel to customers, the report stated. These stores will cost about $2.8 million to open. The chain will begin construction in the next few months near Appleton, Wis., Springfield, Ill., and Shiloh, Ill.

The short-term strategy for the company is to fill in the area between St. Louis, where it has 23 stores, and Appleton, Wis., where it has four stores, with hopes to add three more. The next growth phase for the company will be located in central Illinois, centered around Bloomington, Springfield and Peoria, Ill., where the company will add between five to eight stores in each market, Forsyth told the paper.

In the long term, the company will find intermediate markets that are similar in size to St. Louis, Pendleton said. The chain has already identified cities in Tennessee where it could grow.

"In Memphis or Nashville, we could have at least 25 to 30 stores there without a problem," Pendleton said.