By Keith Reid
As we move into 2021, it’s a good time to reflect on what has happened for the industry in the past year and get some perspective on what lies ahead. We leveraged the four marketer/retailer members of our new FMN Editorial Council to get their perspectives on the Year of COVID-19, and what they are planning for in 2021 (two in each part of the article). They also provide some best practices from their operations and answer questions about how they lead their successful operations. The Council, composed of four retailer/marketer members and four supplier/vendor members, was developed to provide insights and ideas to help the FMN team maintain the quality of our publications and to help us consider innovative developments for the brand. Two of the members will provide insight in each past of this article. To check out the first part, click HERE.
Scott Minton is the business development director for Stillwater, Oklahoma-based OnCue, a growing innovator in the Oklahoma convenience store market. Since 1966, OnCue has expanded to more than 75 locations today and employs over 1,200 people. The operation strives to provide the ultimate customer experience and values honesty and respect for others.
What did 2020 mean for your operation?
Minton: We had plans to open four units at the beginning of 2020, including our first unit in Houston, Texas. This is part of our growth strategy. As we got into March and April, and COVID started to develop, we very quickly had to reevaluate the plans and outcomes for 2020. So, early on we put a freeze on all spending and shut down all our construction projects, except for Houston. We just did not know what to expect.
While our overall business volumes dropped from people not going to work, it became apparent that we were not going to be in trouble financially. As we started getting more comfortable, we restarted the other three stores, and we will have all four stores open this year as was our goal. So, we are excited about that. And we are excited about the continued growth in Oklahoma City, as well as our new market in Texas.
I understand the Houston location is a bit of a special project.
Minton: Almost all our growth in the last decade has been inside of the greater Oklahoma City metro area, and we know this area well. That was not the case for Houston.
We have very strong relationship with Phillips, and Phillips wanted a new distribution partner in Houston. They asked us to come and try our brand and see if our brand does as well there as it does in Oklahoma City. Our first store will be within eyesight of the Phillips 66 headquarters, so it will have a lot of eyeballs on it. If we do as well in Houston as we have in Oklahoma City, we will have a lot of stores there in the future.
What is your take on branded oil as a company with a strong brand relationship?
Minton: For five years we have been the under the Phillips 66 banner, and the two years prior we were selling Philips gas. But, we were not necessarily a branded marketer in the Oklahoma City market, though we were in all our rural markets. As for the advantages, we can say we sell Top Tier gasoline. We are 100% confident that the fuel we are selling is a fuel that our customers not only want, but it’s going to be a top-level fuel. When you have confidence in your fuel product, you can concentrate on the inside of the store.
Also, you get a lot of the brand advertising. Having 75 stores is not small, but we’re certainly not near the largest in the industry. So, having the collective benefit of what they are doing in every other state gives us the ability to appear to be much larger than we are. So, there’s a lot of benefits to it.
As we eventually begin to move past COVID, what do you anticipate as being longer-term ramifications?
Minton: I don’t think anything is going to quickly change. We may have fewer restrictions on how many people are allowed in a room at a certain time, or things like that. But, a lot of the simple stuff—washing hands, cleaning counter surfaces, standing a little bit apart from each other, being a little bit more cognizant of hygiene—will stick around.
How is OnQue with EMV compliance?
Minton: It is a priority for Phillips 66. They wanted all sites to be EMV compliant by the original deadline, but that did get pushed back. We internally said we will be compliant by the time that Phillips was requiring. The fleet fuel cards are not yet EMV compliant. I think that eventually everyone will be EMV compliant and there are benefits to it, not only for the retailer but for Phillips as a brand as well as the customer.
Your operation has a strong commercial business, including CNG. How is the CNG market today?
Minton: It was a great business for us. The number of CNG vehicles on the road has decreased over the last four or five years. There are still a lot of large semis that are CNG, but it becomes one of those cases where you very quickly put your own fueling infrastructure in as you get past a certain number of vehicles, because you’re going to save money. We continue to have 16 operating CNG sites, but our volumes, obviously, are not as good as they were five years ago when diesel was over $4.
What about EV charging?
Minton: We’re exploring that and just trying to get our feet wet for what we expect to be a much larger market in the coming decades. I think it’s going to take some time for people to convert, especially in Oklahoma, because of the low price of gasoline. But the market’s coming for sure, and we want to understand it before we’re too late.
What’s required to serve the commercial customer well?
Minton: We’re really talking about the light duty, commercial customer—you know, pickup trucks and that kind of stuff. I think most of our commercial customers come to us because they trust our fuel. Most of them want a seamless fueling experience. They don’t want to be waiting in line. We offer 20 or 30 fueling positions. We have multiple entrances and exits to reduce congestion at the sites.
Where the store is concerned, even if you don’t buy from us you can come in and use our microwave for free. Of course, you could also get a drink or roller grill and that kind of stuff. But every single day at lunch hour, you will see people walking in with Tupperware containers that heat up their lunch. And we encourage that. We have clean bathrooms if they need to use them. We have large bathrooms with multiple stalls and no doors, so they’re contactless. You can get in and get out without touching anything.
Jared Scheeler left a senior management position at a successful convenience store chain in Minnesota to enter into a partnership with Chris Fittner to found The Hub convenience store chain. The Hub has established itself as an upscale convenience chain, with six locations operating in western North Dakota’s Bakken oil region. Scheeler is currently on the NACS board, serving as treasurer, and is profiled for his government relations leadership on page [X].
How do you handle you fuel supply?
Scheeler: All our stores, except for one, are branded, and that almost guarantees our fuel supply. We work with a local hauler to make sure that our tanks stay stocked.
What was the impact of COVID-19 on your operations?
Scheeler: At first there was so much uncertainty. We assumed that revenues were going to drop. The one thing that we wanted on the team member side was to make sure that we were not laying off anybody. That was never an option for us. We gave all our teams the option to take off if they had fears about COVID and said we would keep their jobs until they were ready to come back. And then we made all the physical changes to our businesses—[plexiglass partitions], sanitizing stations, converting our faucets and our toilets, getting rid of roller grills, getting rid of our bakery for a period.
Even though all our locations are seeing fewer daily transactions, that average transaction is bigger than it has been in the past. And that is even more magnified at our more-rural stores. Examining the numbers and business flow, we realized one day that people are scared to go to the bigger shops and they’re frequenting us more for their grocery occasion or their dinner occasion. Once we got out of that initial dip in business, we knew that we were not actually going to be off from a year ago.
We’re still in growth mode. I think we’ve established a good base of business and a good reputation in the area. It’s taken a lot of hard work and effort to get to that point, and I have no reservations about the future.
Are there any things that you see carrying over after COVID-19?
Scheeler: Little things like sanitizing stations—I think they’re going to stick around. There are so many things in our stores, whether it’s restrooms, cash and coins, cooler and other door handles that are frequently highly touched areas. Looking back on it, I probably should have always washed my hands more.
I think restrooms are going to mostly have to try to convert to hands-free and remove the doors where possible. I do worry about self-serve foods. We’re actually converting our flagship store into a full-service bakery from self-serve—and we did a tremendous self-serve business. And I think roller grill might go away, and that’s a problem for many people in our industry.
How do you attract and keep quality associates?
Scheeler: It is really a little bit of everything, and the onboarding process is critically important—that first impression that you give to a new team member, the positivism, how encouraged are they by what they see and what they hear. Some people don’t put any effort into that. It’s the ongoing development and the culture that leadership builds within the business. Culture permeates every other area of business.
As a business owner I wanted to build a business culture that workers or potential workers can be proud of. We must be a business that people are proud to go to work for every day. Not just the building, how well we take care of our equipment, how we keep our stores, but also how well we treat our customers and our team members. And if you really focus on that, I think for the most part labor issues can go away. The thing is, most people think they focus on those things, but they really don’t.
I do think money and benefits are important. It is documented. With certain companies you can pay people a lot of money and still make good money as a business. People look at how raising an average hourly pay is going to affect their bottom line, but they don’t look at what positives that can bring to their business.
What is fuel marketing like in the Great Plains?
Scheeler: There are not a lot of retailers out here, so there isn’t a lot of back and forth with retail pricing. There’s really not a lot of movement. But one thing operationally that really surprised me compared to my experiences in Minnesota—we are in a state that’s heavy in agriculture, heavy in corn, but our customers are not all that interested in ethanol. It’s the No. 1 crop in North Dakota, and we grow a lot of it here. I was surprised at how many North Dakota residents prefer gasoline without ethanol—clear 87 octane is in high demand.
What is your opinion on branded versus unbranded?
Scheeler: I think there can be incredible value to a company that hasn’t established its own brand. It gives a greater sense of credibility to your business and some resources that you may not have on your own—credit card networks, marketing, fleet cards and things like that. On the flip side, I think for a company that has established itself as a legitimate convenience brand—large or small company—it behooves them to look at the potential of being unbranded.
We’re facing that right now. Our company has existed for six years, and our first fuel contract was for 10 years. We have a big decision to make in the future because people don’t know us as Mobile, they know us as The Hub, and we’ve worked very hard to establish that branding. At some point we’re going to have to take advantage of that, whether it’s this time around, or maybe the next contract.
As a smaller operation, do you think technology helps you level the playing field with some of these large chains?
Scheeler: I’m not so certain it helps us level the playing field. I think it keeps us relevant because all these bigger companies are already there. For a small business, such as myself, it is a lot harder. I think it’s necessary for us to continue to compete with them, now and in the future.