While most of Home Service’s stations have a more open marketplace, in Potosi, MO, the gas station business is geographically contained and relies on the locals – but that doesn’t mean that the competition is small or local. Big national gas brands like BP are there, as are the mass merchandisers, like Walmart, with their huge forecourt of pumps and very competitive prices. These stations are in close proximity to one owned by Home Service, and the competition amongst them was described as “HOT!” by Adam Castelli, Director of Business Development at Home Service. There was a fight for car counts and a fight for an attractive retail pricepoint with a stronger operating margin. In this regard, the loan Home Service location in town needed help, needed a rebirth, and needed it quickly.
Castelli began looking for an answer to the location’s woes in 2017. First off, he established the three pillars of the company’s needs. The first pillar was that it had to be something new and fresh, exciting enough to draw traffic away from the other guys. Whatever solution they ended up with had to compete with the brand recognition enjoyed by the big brands and their appeal, their cachet.
The second pillar was related to the first – the solution had to boost profitability by either supporting a higher price or delivering a more robust margin or both, plus provide a strong ROI on the cost of the change that was obvious.
The third and last pillar was paramount. Home Service had to retain the control that this independent operator had enjoyed from the beginning.
Knowing that the big oil brands were out of the question, Castelli began researching the so-called second-tier brands. He explored several old labels and some newer brands, and he needed to compare all options. What he found initially was disappointing. Nearly all options would provide the independence desired. Some programs allow for somewhat better margins, but none delivered on the brand image, the promise to increase traffic and support a better pricepoint.