Maverik's Growth Tsunami is conquering the West one market at time
When Dan Murray started working for Maverik 29 years ago, the chain had just 60 convenience stores and real estate was a one-man department. He was responsible for selecting sites, putting them under contract, doing forecasting, taking them through the zoning process and then handing them off to the construction manager who oversaw the actual building of the stores.
A lot has changed since then. Now, as vice president of Growth Tsunami, Maverik's real estate and construction department, Murray has a team of real estate representatives, zoning permit managers, field permit managers, project managers, a transition manager, director of real estate and a director of construction all working underneath him, and his job is to oversee it all.
"I'm responsible for the whole of it, but my biggest contribution is that I have the ultimate say on whether we go on a location. I have to review every site before it gets approved," he said.
Maverik has always realized the need to add stores each year â "you grow or you die," as Murray put it â but the VP said the company's growth has accelerated in the last three years. At the time of CSNews' visit, 32 sites were somewhere in the real estate and construction process â eight under construction, 12 in the building permit phase and 12 in the zoning permit phase. The hope is that within a year, all 32 stores will be completed and open for business.
Growth is happening in both new and existing markets. Maverik's historical markets include all of Utah, Idaho, Wyoming and northern Arizona. A couple of years ago, the retailer entered the Reno market in Nevada, and it's now moving into Las Vegas. Other new markets are eastern Washington State (five stores so far), and the front range of Colorado (it's already on the western slope).
While staking roots in new areas is exciting, Murray said it's equally important not to forget your existing markets. Even in a mature market like its hometown of Salt Lake City, Maverik still looks to add three or four stores each year. "You can't afford to neglect your existing markets," he said. "We did that once in Boise, [Idaho], and we'll never make that mistake again."
On the day of CSNews' visit, Murray had to attend a meeting of the Real Estate Committee to review two proposed sites, one in Las Vegas and the other in Colorado. Maverik has five Vegas stores under construction, five more in the building permit phase, as well as additional sites in the cue to follow. In Colorado's Denver market, the company has five sites that have been put under contract and are in the zoning permit phase.
The Real Estate Committee consists of Murray, Maverik President Mike Call, the director of real estate and the real estate representative(s) proposing that day's site(s). Leading up to this point, the site selection process begins with the five real estate reps, each with their own territory. They are responsible for identifying sites, doing sales forecasting and putting them under contract.
For every site, the rep prepares a packet of information that's presented first to Murray to review and then to the entire committee. To gather the information, the reps use a desktop mapping system called ArcView, in which they are able to look at variables such as competition, population, employment, traffic counts, etc. They also use two sales forecasting approaches â an analog approach where the rep compares a proposed site to existing like sites in the network, and a cluster analysis approach that is similar, but the matching of stores is done by computer software rather than the rep. Maverik employs a third-party solution from Buxton as well that prepares site-by-site reports on sales projections and a host of other variables.
Every packet also includes a return-on-investment (ROI) projection â Maverik's target is a 15-percent return at maturity, which it estimates at 24 to 30 months from opening â plus projections on gas margins, store margins and operating data based on the last 10 stores opened.
"We probably put far more effort into sales forecasting than the average convenience store chain. That's the heart of the decision of whether to build a store or not," Murray said, noting its average spend to build a new store today is $3.3 million. "If you can get to the point where you have accurate sales forecasts, projecting the ROI becomes much easier."
During a typical Real Estate Committee meeting, the information packet is presented by the real estate rep, who gives a report and a sort-of sales pitch on that site. Reps get base compensation, but also have a bonus program based on the performance of the stores they pitched.
Every contract has to be ratified by the committee, although Murray said it's rare for a site to get before the committee and not be approved, especially because the site selection process is such a team approach. He personally visits each site and stays involved at every stage.
Once the contract has been ratified, the site goes to the two-person permitting group tasked with processing zoning permits and performing due diligence and entitlement work. Once that is completed and the site is ready for a field permit, it transitions over to the construction side where it is assigned to one of four project managers who report to the director.
When a store nears completion, there's a different employee who handles the turnover to Operations, and then it's on to the next property. "It's a lengthy process," Murray said. "A short turnaround time would be 10 to 11 months, but it could take as long as a year and a half."
But while the entire process is extensive, nothing stays on his plate for very long and that's what he enjoys most about his role â the variety. He said his job provides non-stop action.
"It's always a new site, a new day, a new transaction."