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American Business Brokers & Advisors Founder & President MERGERS & ACQUISITIONS BUSINESS VALUATIONS
JUNE 2024
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convenience stores, such as Casey’s, Wawa, and Sheetz, just to name a few, are rebranding themselves as food service businesses first and convenience stores second. Humm. This could be confusing to the customer. Does it mean there is less emphasis on the cleanliness and operation of the convenience store and more emphasis on the food portion of the business? Other convenience store operators who believe food is the silver bullet to making their store successful have embraced the idea of having a food franchise either in the store or next to the store. One thing I do know, having been in the restaurant business, owning and operating over 30 restaurants, is that there is a difference between having a clerk brain and a food brain. This means if you are trying to get the person behind the counter to do two jobs efficiently, it won’t work. On paper, this idea looks good, but in reality, it doesn’t work. The only company I know that has had some success at this is 7-Eleven, but then again, the majority of their stores are franchise stores with independent owners running the stores themselves. Even they don’t do a great job of selling food and being the clerk. It is like trying to serve two masters. Remember, Casey’s, WaWa, Sheetz, etc. are all promoting proprietary food products, and the public really doesn’t have anything to compare these products to. All the public knows is whether the product tastes good or not. Conversely, if a convenience store is selling franchise food products, it must adhere to a higher standard of quality or risk losing its franchise. Do I think food product is the future of convenience stores? Yes, I do if you want to be a true convenience store. Take a look at Kwik Trip, which is based out of La Crosse, Wisconsin. They embellish the idea of a convenience store with a bakery, hot soups, sandwiches, and a mini grocery store concept.
Basically, they are a complete one-stop shop for everything you should need, and it is working fabulously for them. Is bigger better? This is always the question. Should we build the store bigger? The answer is really pretty simple. Who is your customer, and how big is the market you are trying to serve? When I was a vendor for Walmart, they tried several times to get into the convenience store business but found it did not generate enough revenue for them. Instead, the big box concept worked better. Buc-ee’s has embraced the big box concept as Walmart has because they decided they wanted to be the destination for a very large population, and they are not a convenience store. They should not be listed in the convenience store concept (Sorry, 120 MPDs and a 50,000-plus square-foot building are not convenient). To be successful in the convenience store business, there is not one cookie-cutter concept that fits every situation. The simple answer is that it always goes back to the customers you are trying to serve. I recently came upon a nice convenience store about 10–12 miles from other stores on a highway selling proprietary food and all the normal items you would see in a convenience store. It was run by a husband and wife and generated over $600,000 a year in EBITDA. Are they great operators? Probably not, but they are good operators who are in the right place, serving their customers with the products they want and need, and have minimal competition. I also visited some really nice convenience stores with no food at interstate locations, and they were barely making $150,000 a year in EBITDA. They were in the same size building as the country store, but they had different customers, a different product mix, and more competition. Continued on Page 3 ...
What Is the Future for Convenience Stores?
Over my years of involvement with convenience stores, I have been reprimanded for my opinion about what a convenience store is. I know everybody has their own opinion, but since I am very direct, I just call things as I see them. What I have said is that a convenience store is nothing more than a box or building with products for sale for customers and is located in a convenient location for the public to get in and out of. As the times change, so do the products that convenience stores sell. In the early beginnings of the convenience store industry, they began selling soda pop and candy bars in part of the building that used to be used for automobile repairs. Over time, the size and number of products have increased tremendously, from tobacco products to energy drinks to vapes, and now the emphasis appears to be on food. The recent pandemic changed the public’s perception of the convenience store because restaurants being closed drove more people to convenience stores only to find they were a good alternative to going to a restaurant. Now there is a dramatic push by the government to have the public embrace electric vehicles, which impacts the habits of drivers who do not need gasoline but instead end up hanging around their vehicle while waiting for it to charge. Convenience store owners hope that people will visit the inside of their stores so they can sell them something while waiting.
So, now we are back to the original question. What is the future for convenience stores?
Well, it appears from what we read in the trade magazines that the bigger chains of
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Do You Have a Succession Plan, or Are You Delusional?
One of the many things I enjoy about what I do is that I get to meet a lot of successful and interesting people. Recently, I had lunch with a successful third-generation business owner who had accomplished the unheard-of feat of taking his business into the fourth generation. For most people who start a family business, the dream is to have it stay in the family for generations to come. The founder may think of that as a gift to the family, giving them meaningful employment and an easy income. They may think of it as a stepping-stone, assuming their children can build on what they started. When asked, about 88% of people who run family-owned businesses think that those businesses will stay in the family for at least five more years. However, the statistics paint a far bleaker picture. Most family businesses fail at an alarming rate. It is very rare for them to move on from generation to generation. For instance, a mere 30% — less than 1 out of every 3 businesses — actually make it on to the second generation. These are the children of the founder. They should theoretically be in the best position to run the company. But most fail. And why is that? Because it is difficult for the second generation; when they were born, the business was already alive and in the process of prospering. They never had to feel the pain of being short on cash when it came time for payroll or having to create or invent ways to get business in the door. Basically, when they showed up, the business was up and running, and it was their job not to screw anything up and let the first generation keep going until either they passed away or handaed the reins over to them. Overall, I think being a second-generation owner is the toughest situation.
the founder’s grandchildren. At this point, hopefully, the second generation has learned from the transition from the first generation to the second generation what to expect, but as you can see from the statistics, the odds are turning against this transition of being successful. The fourth generation sees a mere 3%. By the time the great-grandchildren take over, 97% of family-owned businesses are dead, and if the third generation has not sought professional help, the business will have been sold or dissolved. People often have blind faith in their children and other family members. They have misplaced confidence. They think that it will all work out. This is where the saying “Thunder, Blunder, Under” originated. The first generation was the family entrepreneur who put everything together and built the business. The second generation kept things going, and the third generation couldn’t keep the business together for unknown reasons. The truth is that running a family-owned business is incredibly hard. Keeping it going from one generation to the next is nearly impossible. However, one thing the family planners never talk about is this: How many businesses are able to span three to four generations to begin with? I talk about being in the video rental industry. This industry didn’t last one generation. What about the farming industry? It looks like it may have had three generations it could support, but in today’s world, a small farm is not a viable business to be in. And what about the convenience store industry? It began as a filling station, then a gas station, then a convenience store, and then what? A building that sells soft drinks, coffee, food, cannabis, and vapes. Who knows what is next?
So, the question is twofold: Are you in a business that has more than one generation of life left in it, and do you see the business you are in starting to fade away and may not have enough future left to support your family and your children’s family for two generations? The next question you must ask yourself is: Will your family be capable of taking your present business to the next level? Notice I did not say keeping the business running. No, because I could walk in and keep your business running, but I may not be able to grow your business, and if a business is not growing, it is dying. There is a difference between keeping a business running and growing a business. All too often, parents are delusional about the capabilities of their children and what their children can really do. I know when I started in business, I had the illusion of my children taking over what I had created, only to find out some of the businesses I had did not have multiple generational life in them. My children had no interest in them, or worse yet, they didn’t have the entrepreneurial capability I had when I started them. I had to face the harsh reality that there was not going to be a legacy business in my family. Instead, I had to put my big boy pants on and understand that my children were not me, and they were better suited for other businesses they enjoyed and were more capable of and where I could support them in their endeavors. We all think about succession planning, and maybe it is time for all of us to take off our rose-colored glasses and look at the reality of things within our own families and businesses before it is too late. –Terry Monroe
Beyond that, a staggering 12% carry on further and get to the third generation or
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SUDOKU (SOLUTION ON PG. 4) Take a Break!
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"HIDDEN WEALTH" The Secret to Getting Top Dollar for Your Business
► What is the value of what you are selling? ► Want to make sure the sale is confidential? ► Want to sell everything together & fast? Terry has sold over 857 businesses. His book tells you what to do and more importantly what NOT to do when selling one's business. GET YOUR FREE COPY TODAY! Email Terry@TerryMonroe.com Put FREE COPY in the subject line for your free copy of "Hidden Wealth", a ForbesBooks publication.
... continued from Cover I hope I haven’t offended anyone with my view of what I believe it takes to have a successful convenience store. It takes going back to the basics of determining who your customers are and what they want rather than trying to feed one’s ego by building another bigger, brighter, and look-at-me convenience store (like the one I just got for sale where the owner put everything into the store including multiple kitchen sinks, and the store is losing money because they didn’t adhere to who their customers were and what their customers wanted). The convenience store business has a very bright and long future ahead and will continue to be prosperous for many business owners. Just pay attention to the customers you are serving, and never forget you are in the CONVENIENCE store business, not the EGO business. TERRY’S QUOTES OF THE DAY “People often say motivation doesn’t last. Well, neither does bathing. That’s why we recommend it daily.” –Zig Ziglar “Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do so throw off the bowlines, sail away from safe harbor, catch the trade winds in your sails. Explore, dream, discover.” –Mark Twain
WORD SEARCH
ADVENTURE CAMPING
HIKING JUNETEENTH PARK PICNIC
PRIDE SANDALS SUNBURN SWIMMING
–Terry Monroe
FATHER GEMINI
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Sudoku Solution
Do You Have a Succession Plan, or Are You Delusional?
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Thinking About Selling Your Business in 2024?
Fun Facts About America’s Treasure Trove
From Gold Bars to Priceless Artifacts UNLOCK THE MYSTERIES OF FORT KNOX
We all know the country’s gold reserve is securely stored in a vault at Fort Knox. However, have you ever wondered about the exact amount of money housed in the vault or who can access it? A treasure trove of interesting facts lies hidden in the billions bunker of Kentucky, but here are a few tidbits we know. GOLD The first pieces of gold arrived at the fort in 1937 and had to be transported by a top-secret caravan. Every gold bar weighs 27.5 pounds, and Fort Knox currently holds about 147.3 million ounces of gold. By today’s standards, that’s almost $300 billion. The most gold to ever be held at the fort was in 1941 when it contained 649.6 million ounces. SECURITY This building is one of the most secure in the country; no one person knows the whole combination number to access the vault of gold.
The information is split up among several different people. The exterior has two separate electric fences and an additional concrete barrier. The government spends about $5 million yearly to protect the site, including other security measures like searchlights. Visitors are rarely allowed inside, but Franklin Roosevelt did get to inspect the gold vault himself in 1943, making him the only U.S. president in history to visit. OTHER VALUABLES Fort Knox has also kept other valuable, historic items safe. During WWII, the government kept the Constitution, Bill of Rights, and Declaration of Independence within its walls. In 1978, it housed the cape of the king of Hungary and the Magna Carta, the medieval English charter of rights. The military even stored supplies of morphine sulfate inside during the Cold War due to the fear they might run out of painkillers if foreign sources of opium dissipated.
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